Long Text
stringlengths 142
1.67M
| Summary
stringlengths 14
6.69k
|
|---|---|
They are employed by the Leighton Kumagai Joint Venture ("LKJV") which is constructing a railway from Perth to Mandurah in Western Australia. This includes the construction of the New Metro Rail City Project - Package F ("the Project"). It is a major public project, and is all but completed. Most of the respondents failed to attend work on 24, 25, 27 and 28 February and 1, 2, 3 March 2006. The 9 th , 14 th and 16 th respondents, failed to attend work on four of those days. The applicant, an ABC Commissioner instituted civil penalty proceedings originally against 107 respondents in July 2006. Proceedings have been discontinued against a number of these. An order is also sought imposing a pecuniary penalty on each respondent pursuant to s 49(1) of the BCII Act for engaging in unlawful industrial action during the Period. A declaration is sought that each was in breach of clause 4 of the Australian Industrial Relations Commission ("AIRC") on 6 December 2005, known as the New Metro Rail City Project --- Leighton Kumagai Joint Venture Industrial Action Order December 2005 (PR 966078), (the s 127 Order), by engaging in industrial action during the Period. An order is also sought imposing a penalty on each under s 178 of the pre-reform WR Act for breach of the s 127 Order during the Period. Approximately two months before the trial was to commence the respondents admitted the alleged contraventions. The parties are to be commended for reaching agreement as to many factual matters which previously had been in issue. These are contained in written Statements of Agreed Facts. These establish the pleaded contraventions under both Acts by the relevant respondents, the general circumstances which gave rise to the breaches, certain consequences which resulted from the breaches as well as facts relevant to penalty and mitigation of penalty. I have also had the benefit of very detailed and written outlines of submissions from the parties. Most of these submissions, particularly in relation to the statutory framework of the two Acts and the relevant legal principles, are not controversial and I have adopted significant passages in these reasons. The BCII Act received Royal Assent on 12 September 2005. The respondents' contravention of s 38 of the BCII Act occurred when, during the Period, they engaged in unlawful industrial action by their failure to attend for building work during the construction of the Project. In the case of 67 of the respondents, their participation in that industrial action also constituted a breach of the s 127 Order that industrial action on the Project stop or not occur. Section 49 of the BCII Act provides that an "eligible person" may apply to this Court for an order imposing a pecuniary penalty for a contravention of a civil penalty provision (including s 38). The applicant is an eligible person under s 49(6)(b). The applicant, being an "inspector" within the meaning of that term in the WR Act, has standing pursuant to s 178(5)(a) to sue for and recover a penalty imposed under s 178(1). The circumstances of Ballard's appointment and later dismissal were set out in the affidavit of Mr Douglas Bevan affirmed 17 October 2007. Bevan is the Employee Relations Manager for Leighton Contractors Pty Ltd throughout Western Australia including, at all material times, the construction of the Project. The respondents accept the facts deposed to by Bevan. Ballard had been appointed as a Shop Steward following negotiations for the Certified Agreement at the CFMEU's offices in East Perth on 12 May 2004. Between then and 24 May 2004, when Ballard was appointed, there were discussions involving Leighton Contractors representatives and Ballard, during which he was informed as to how the dispute resolution procedure would work and the procedure that he would have to follow if there was any dispute on site. Ballard had given assurances to Bevan that he would follow the dispute resolution procedure. It was as a result of those assurances that LKJV agreed to employ Ballard. His appointment was in accordance with clause 7.2 of the Certified Agreement which provided for an employee to be elected to the position of job representative. On 29 June 2004, LKJV received a letter from Mr Kevin Reynolds, the State Secretary of the CFMEU, advising that at a meeting of its members that Ballard had been elected as Shop Steward to represent members of the CFMEU employed on the Project. On 14 February 2006, Ballard had told the workforce to stop work due to hot weather and on 15 February Ballard told the workforce to stop work due to wet weather. On both occasions he had failed to go through the inclement weather process set out in a Certified Agreement. Mr Robert John Wallwork, the Project Director told Ballard that he had until 10.00 am on Monday 20 February 2006 to sign an undertaking confirming that he would adhere to the terms of the Certified Agreement and that if he did not sign the undertaking, his employment with LKJV might be terminated. Reynolds offered to give the undertaking in his capacity as Secretary of the CFMEU but Wallwork told him that as Ballard was an employee of LKJV, Ballard himself would be required to give the undertaking. Reynolds said he would take legal advice as to whether Ballard should sign such an undertaking. On 22 February 2006, Wallwork and Bevan met with Ballard at his office at the Esplanade site compound. Wallwork asked Ballard whether he was going to sign the undertaking. He told them that if he did not, his employment would be terminated in writing by the LKJV. Ballard replied in words to the effect "you will do what you have to" and "as one door closes another opens". Later that day, there was a further meeting during which Ballard asked Wallwork, in effect, where his termination letter was. Wallwork again asked him if he would give the undertaking which had been requested. At 2.00 pm that afternoon at LKJV's Wellington Street offices, Wallwork and a solicitor from Freehill's solicitors acting for the LKJV met with a number of representatives of the CFMEU. The meeting in part was to attempt a resolution of the Ballard issue. Mr Joseph McDonald said that Ballard had gone home sick, that the CFMEU had received legal advice in relation to the proposed undertaking but was yet to advise Ballard. Wallwork told McDonald that he had spoken to Ballard twice that day and that on both occasions, Ballard had refused to undertake to comply with the requirements of the Certified Agreement. Wallwork told McDonald that Ballard's employment would be terminated with effect from close of business that day. Mr Kucera, a CFMEU representative, asked at that meeting for authorisation to hold a workforce meeting on 24 February 2006 in order to give feedback to the workforce on the RDO/PDO calendar. Just before 6.00 am on 24 February 2006 Ballard approached Bevan and Wallwork in the car park of the Esplanade compound. He said that he had noticed a sum of money in his bank account that he was not expecting and asked whether this had come from the LKJV. Wallwork told him that this was payment due to him on his termination of employment. Ballard then walked away and returned several minutes later with McDonald. There was a discussion about the termination letter which Wallwork told Ballard had been sent to his home address in Maylands by courier on the night of 22 February. Ballard said words to the effect that he had not lived there for two years. McDonald then interjected by saying to Wallwork "you lied on the s 127 application". Ballard then called Wallwork a liar several times. McDonald and Ballard then left to attend a workforce meeting on the Esplanade Reserve with the workforce. LKJV had authorised representatives of the CFMEU to conduct this meeting. The 24 February meeting was scheduled to commence at 6.00 am and LKJV had agreed to pay its employees, including the respondents, from 6.30 am onwards on the understanding with the CFMEU that the LKJV employees were to commence work by 7.00 am on that day. The employees of LKJV and employees of the various contractors on site at the time assembled near the podium in Alf Curlewis Gardens, Perth at about 6.30 am on 24 February 2006. Bevan was able to see from a walkway on top of a container near to the fence adjoining the Esplanade Reserve the workforce which had gathered at the Esplanade Reserve for the meeting. He estimated that about 400 LKJV employees and sub-contractors were at the meeting. He also saw McDonald and a number of others from the CFMEU in attendance. At 7.45 am McDonald, Ballard and several others approached Wallwork and an LKJV supervisor, Mr Farris and Bevan in the Esplanade car park. McDonald said that the demand from the meeting was for Ballard to have his job back. Following this, the CFMEU representatives reported back to the employees. On the evening of the same day, Le Miere J of the Supreme Court of Western Australia issued an interlocutory injunction against the CFMEU and McDonald, restraining each of them from interfering directly or indirectly with the due performance of the Deed and Subcontract Agreement by inducing, aiding, abetting, encouraging, directing, procuring, authorising or advising any person not to perform their employment with LKJV. 26 February 2006 was a Sunday and the respondents were not rostered to work on that day. On 27 February 2006, the respondents failed to attend for work and did not perform the work that they were contracted to perform on that day. CFMEU representatives convened the meeting. The CFMEU urged the employees in attendance to return to work immediately and told them that they were exposed to very serious penalties for taking unlawful industrial action. Following the meeting, the respondents continued to fail to attend for work and did not perform the work that they were contracted to perform on that day. CFMEU representatives convened the meeting. Again, the CFMEU urged the employees in attendance to return to work immediately and told them that they were exposed to very serious penalties for taking unlawful industrial action. Following the meeting, the respondents continued to fail to attend for work and did not perform the work that they were contracted to perform on that day. 4 March was a Paid Day Off. 5 March 2006 was a Sunday and the respondents were not rostered to work on that day. 6 March 2006 was a Public Holiday and the respondents were not rostered to work on that day. 7 March 2006 was a Rostered Day Off and the respondents were not rostered to work on that day. Section 36 of the BCII Act defines "building industrial action" to include, amongst other things, "a failure or refusal by persons to attend for building work". "Building work" is defined in s 5 of the BCII Act to include the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land, whether or not the buildings, structures or works are permanent: s 5(1)(a). The definition expressly extends to the construction of railways: s 5(1)(b). The respondents admit that the work that they were employed to perform on the Project was "building work". They also admit that they failed to attend for work on various days during the Period ("the Strike"). It follows from these admissions that the Strike constituted "building industrial action". These purposes are found within the meaning of "industrially motivated" in s 36(1) of the BCII Act. Each of these is included in the meaning of "constitutionally-connected" under s 36(1) of the BCII Act. There is no suggestion that the Strike was "excluded action", as that term is defined under s 36(1) of the BCII Act. It follows from the above admissions that the respondents engaged in unlawful industrial action during the Period, in contravention of s 38 of the BCII Act. Although the conduct giving rise to the admitted contraventions occurred during the Period, various amendments to the WR Act, including the repeal of s 178, came into operation on 27 March 2006 by force of the commencement of operation of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) ("the Work Choices Act"). However by regulation 2.19 of the Workplace Regulations 2006 (Cth), the amendments to the WR Act made by the Work Choices Act do not affect the enforcement, in a court, of rights and obligations that arose under the pre-reform WR Act, subject to any contrary intention appearing in the WR Act, the Work Choices Act, or any regulations made under of those two statutes. No such contrary intention appears in any of the legislation. The respondents admit that on 6 December 2005, Commissioner Gregor of the Australian Industrial Relations Commission ("AIRC") made the s 127 Order, expressed to be binding on the CFMEU and employees of LKJV who were members of the CFMEU engaged in work covered by the Certified Agreement. This Order was made against a background of repeated instances of industrial action by employees on the Project. This had resulted in total time lost of either 28 days according to the CFMEU or 46 days according to the LKJV. Commissioner Gregor regarded both as major delays and completely inappropriate. The failure by those 67 respondents to attend for work during the Strike, which amounted to "building industrial action", constituted a breach, by each of them, of a term of the s 127 Order, and each is thereby liable to the imposition of a penalty under s 178(1) of the WR Act. He did not attend the 24 February meeting. After that meeting, Biondillo told a supervisor that he wanted to resign, but he was told not to do so. Biondillo then left the site. He did not report for work on 27 and 28 February 2006. Biondillo asserts that on 1, 2 and 3 March 2006 he attended for work but no one else was there, so he went home. For these days, he is recorded on LKJV timesheets as having taken "industrial action. " He was not paid for any of the above six days. Nevertheless, Biondillo engaged in unlawful industrial action on each day of the Period. He asserts that, following the 2 March 2006 meeting, he offered to resign from his employment, but that this offer was not accepted by LKJV. Nevertheless, Bradbury engaged in unlawful industrial action on each day of the Period. Following disciplinary action by LKJV, on 22 February 2006 he gave notice of his resignation. He asserts that he gave 7 days notice. He worked on 22 and 23 February 2006 as usual. He attended the 24 February meeting, after which he went home because LKJV had terminated the employment of the shop steward. He was rostered to work on dayshift on 24, 27 and 28 February 2006 and 1 March 2006. He failed to report for work on each of these days. LKJV records state that his employment was terminated as at the end of business on 3 March 2006. However a week's notice from 22 February expired at the close of business on 1 March 2006. Accordingly, Bradley engaged in unlawful industrial action on 24, 27 and 28 February and 1 March 2006, being 4 days of the Period. On 15 August 2006 he voluntarily participated in an interview with ABC Investigators and provided a signed statement. The meeting was addressed by Joe McDonald of the CFMEU. McDonald told the meeting that Shop Steward Peter Ballard had been "put off" unfairly and that LKJV was not willing to negotiate over the matter. McDonald told the meeting that LKJV wanted Ballard to sign a piece of paper that would strip Ballard of his powers. (b) During the 24 February meeting, unknown workers put forward a motion that the workforce "go out" over the treatment of Ballard. At that point McDonald advised the meeting that he had to tell the workers not to go out on strike for legal reasons. The meeting voted to go out through a show of hands. At no time did McDonald explain to the meeting the ramifications of going out on strike. (c) Following the meeting he left the site. He did not ring his supervisor as he did not have his telephone number. (d) He was rostered to work on 25 February 2006. He did not report for work because he did not have a telephone number for his supervisor. (e) He was rostered for work on 27 February 2006 and did not report for work on that day. He did not receive any letter from LKJV requesting him to return to work. (f) He attended the 28 February meeting. He did not vote at this meeting. McDonald said at the meeting that he could not "put the motion up for the blokes to stay out". The vote was a show of hands, and that it was announced by McDonald that for persons who did not vote, their vote would be taken as a "yes". (g) Following the 28 February meeting, Brown went to a 'crib' hut to wait for his supervisor, and after about five minutes of waiting, he left the site. He feared that if he had worked he would have "copped absolute hell from the boys". (h) He did not attend work on 1 March 2006. (i) He attended the 2 March meeting. After the meeting he left the site. He did not report for work. (j) On 3 March 2006 he did not report for work. He was not contacted by anyone from LKJV, and nor did he contact his employer. (k) There had been prior industrial action on the site during November 2005, a period in which he had attended for work. After this, pieces of paper with the word "scab" were placed near his usual seating position in the 'crib' hut; and food belonging to him went missing. He was approached by workers who accused him of being a "scab", and told him that if he was not going to support the union he should "piss off out of here". (l) Had LKJV management contacted him, he would have reported for work. He would have explained to management that he would not have been comfortable working while other workers were 'out'. He does not believe in strikes. Nevertheless, Brown engaged in unlawful industrial action on each day of the Period. He was told by LKJV that night shift was cancelled and that he was not to come in to work until 28 February 2006. He attended the 28 February 2006 meeting, after which he went home. He attended the 2 March meeting and then went home. Accordingly Burke engaged in unlawful industrial action on 28 February and 1,2 and 3 March 2006, being 4 days of the Period. He did not attend the 24 February 2006 meeting and the timesheet describes him as taking "industrial action" on that day. He was not rostered to work on 25 February 2006. Accordingly Cameron engaged in unlawful industrial action on 28 February and 1, 2 and 3 March 2006, being 4 days of the Period. There is no LKJV timesheet for him for that day. Nevertheless, De Bari engaged in unlawful industrial action on each day of the Period. Nevertheless, Greaves engaged in unlawful industrial action on each day of the Period. He worked elsewhere on 27 February 2006. He asserts that in or about February and March 2006, Drummond told him that he would tell O'Donnell when he could come back to work. He further asserts that after attending the 28 February meeting he was instructed by Drummond not to come back to work until 2 March 2006. He failed to report for work on 2 and 3 March 2006. Nevertheless, O'Donnell engaged in unlawful industrial action on each day of the Period. Subsection 49(2) of the BCII Act provides that the maximum penalty for contravention of such a provision is 1,000 penalty units if the defendant is a body corporate and 200 penalty units otherwise. All of the respondents in these proceedings are individuals. Hence the maximum penalty for contravention of s 38 of the BCII Act is $22,000. The maximum penalty that may be imposed for the breach of a s 127 Order is 60 penalty units, or $6,600. That follows from s 178(4)(a)(ii) of the WR Act, this being an "other case" not covered by the preceding provisions of s 178(4). The principles identified in those cases have been applied to determining penalties under the BCII Act. The applicants' submissions were to the same effect. I accept this submission. This is not to say that specific deterrence is not of importance. This approach is consistent with the main object of the Act to which I have referred. In Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 "(Mobil Oil") the Full Federal Court acknowledged that deterrence is "one of the principal justifications, if not the only justification for imposing civil penalties" at [53]. Deterrence is a primary objective of penalties. See also Trade Practices Commission v Pye Industries Sales Pty Ltd (1978) ATPR p40-089 at 17,859; Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 per Lander J at [93] and per Jessop J at [164]. Young J in Australian Competition and Consumer Commission (ACCC) v IPM Operations Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66] said, concerning the two aspects of deterrence, "that for a penalty to achieve these objectives, it must be imposed at a meaningful level, consistent with the other considerations that must be taken into account in determining the appropriate level of penalty". There is a need, as his Honour said, to show "the seriousness with which the Court considers such contraventions". There was no cross-examination of any of the deponents. Indeed by agreement between the parties, they were not required to attend. The Project involved tunnelling below the Perth central business district and the unlawful industrial action occurred at a critical stage of this tunnelling. The applicant favours a disposition of this matter in terms that involve an immediately payable penalty, and a significant suspended penalty, that will apply for a considerable period of time, being three years. The penalty provisions contained in s 49(1)(c) of the BCII Act contemplate the making of "any other order that the court considers appropriate". This, it is submitted, will serve to achieve the objectives of both specific and general deterrence. It was further submitted that there ought be no penalty whatsoever imposed on the relevant respondents who have admitted contraventions of the WR Act by reason, analogously, of the Crimes Act 1914 (Cth) s 4C(1)(a). I will turn to this shortly. Senior counsel for the respondents informed the Court that the respondents would be personally liable for any suspended penalty which might become payable. The Mandurah Dispute Fighting Fund would not be available for that purpose. This, it was said, would achieve both a high degree of specific deterrence as well as general deterrence. They submitted that the correct approach to imposing a penalty for a contravention of s 38 of the BCII Act was explained by Le Miere J in Leighton Contractors Pty Ltd v CFME U. At [68], the Court noted that the BCII Act gives no explicit guidance as to the matters relevant to the determination of an appropriate penalty. The Court held that consideration ought be given to the nature and circumstances of the particular contraventions. That is consistent, broadly with the authorities to which I have referred. It was submitted, and I accept, that in the present case, the contravention of the BCII Act formed part of a course of conduct within the meaning of s 36(3)(b) of the BCII Act. Each respondent has committed one act of unlawful industrial action for which the maximum penalty is a fine of $22,000. This approach was common ground. Such is the case also in respect of the respondents who contravened s 178 of the WR Act for which the maximum penalty is a fine of $6,600. The contraventions were precipitated by the termination of the employment of Ballard. His employment was terminated on 22 February 2006 in the circumstances which I have set out above. It was not submitted by counsel that the respondents numbered 7, 8, 9, 12, 14, 16, 28, 37 and 63, who are the subject of the qualified statement of agreed facts, should receive a lesser penalty. For those respondents who were on strike for a lesser number of days, it was submitted that a marginally lesser penalty ought be imposed. The respondents referred to Ponzio , a recent Full Court decision about the imposition of penalties under the WR Act. This was a case against an employer under the former s 187AA and the CFMEU and two of its officials under former s 187AB of the WR Act. It concerned payment to employees for a period of industrial action. It adds nothing of significance to the relevant principles involved in the imposition of a penalty. In that case, a penalty of $5,000 was imposed on the employer; none of it was to be paid if the company did not breach any provision of the WR Act for a year. The employer was regarded as being less culpable than the union. A penalty of $6,000 was imposed on the CFMEU. No penalty was imposed on the two officials but declarations were made that they had breached the WR Act. This was the highest penalty imposed under those sections. The other penalties in the 4 earlier cases ranged from $200 to $4,000: [130]-[133] per Jessup J. There have been two cases where penalties have been imposed for contraventions of ss 127 and 178 of the former WR Act. In BHP Steel (AIS) Pty Ltd v CFMEU [2000] FCA 1908 , a penalty of $2,200 was imposed on the CFMEU in what the Court described as a "serious" case (at [8]). The maximum was $10,000. The CFMEU defended the case. In United Firefighters, a union was fined $2,500 and its secretary was fined $500 for contravening a s 127 Order. The maximum penalties were $30,000 and $6,000 respectively. The union defended the case. It was submitted that the present action being the first of its kind, seeking to penalise individual employees as distinct from a union or its officers should therefore be seen in the context of the imposition of penalties for new offences. It was further submitted that it is a clear principle of sentencing that for a new offence, the penalties will normally be regarded as having to start at a low level before any subsequent penalties are considered within a context of escalating requirements for deterrence and punishment. No authority was cited for such a principle. I invited senior counsel for the respondents, if he so wished, to provide such authority in supplementary submissions. None have been provided. Finally it was submitted that the appropriate penalty range in this case falls very much towards the bottom end of the range for the reasons and that because of the novelty of the application, that any penalty imposed should be fully suspended. In this way, it was said, the Court could, with justice, mark the punishment and issues of specific and general deterrence to the extent required in this instance. It was not submitted that s 4C of the Crimes Act 1914 (Cth) which prohibits a person from being punished twice for the same act or omission, has any direct application here. The admitted contraventions are not offences. In any event, it is not the case, in my opinion, that the contraventions arise from the same conduct, if by that it is meant that the elements which comprise the contraventions in the case of each of the BCII Act and the WR Act are the same. That is not a requirement in relation to the breach of s 38 of the BCII Act. Nonetheless, the contraventions in each case contain common elements, namely, unauthorised industrial action by involvement in the Strike. This is a relevant consideration in weighing the appropriate penalty to be imposed: The Community and Public Sector Union v Telstra Corporation Ltd (2001) 108 IR 228. To punish twice for conduct that contains an area of overlap "would be to punish offenders according to the accidents of legislative history, rather than according to their just desserts": Pearce v R [1998] HCA 57 ; (1998) 156 ALR 684 at [40] . These matters therefore give rise to considerations of cumulation and concurrence, as well as totality: Pearce at [45]; Mill v R [1988] HCA 70 ; (1988) 166 CLR 59; Finance Sector Union v The Commonwealth Bank of Australia (2005) 224 ALR 467 at [25]. Similarly the relevant facts to which those principles are to be applied were not in issue and indeed were largely the subject of agreement. I have referred to these in detail in relation to the parties' submissions on penalty. In my view, the breaches of s 38 of the BCII Act were serious for the combination of reasons submitted by the applicant. The conduct demonstrated a complete disregard for the terms of the Certified Agreement and struck at the very heart of the main object of the legislation. Such is the case also in relation to those respondents who have admitted contravention of the WR Act. This conduct was even more serious, as it deliberately flouted the very clear terms of an order of the AIRC. Each of the six or seven respondents concerned were provided with a copy of the order by the LKJV. There was no, and could not have been, any suggestion that they were not aware of its terms. Furthermore they were warned on several occasions during the Period at workforce meetings by representatives of the CMFEU that they should not take unlawful industrial action as they would be exposing themselves to very serious penalties if they did so. respondent 12, Mr Gregory Brown, asserted that the ramifications of going out on strike were not explained at the workforce meeting on 24 February. I accept that to be the case. In fact it was at the workforce meetings held on 28 February and 2 March 2006 that the warnings were given. Mr Brown attended both of those meetings but does not assert that at these he was not given such a warning. The consequences of the respondents' action were serious. It has involved very considerable costs to the LKJV, the delay of a very major infrastructure project in this State, involving public inconvenience, it had the potential to have caused substantial safety issues with associated damage to machinery and property. It was urged upon me that the conduct of the LKJV in its attempts to use the question of Ballard's reinstatement as a bargaining chip to enable the LKJV to prevail in respect of two contentious industrial issues, namely a disputed Rostered Day Off Calendar and whether the tunnelling would proceed as a 'special contract need' smacked of 'sharp practice'. It was also said to have been a provocative act on the part of the LKJV. I have given no weight in assessing the appropriate penalties to the view of the workforce that Ballard had been unfairly or unlawfully sacked or in relation to the asserted 'sharp practice' on the part of LKJV: Ponzio at [90] per Lander J. In any event I am unable, on the evidence, to conclude that the respondents' perception that Ballard was unfairly or unlawfully terminated was reasonably based or not. Nor am I in a position to characterise the conditions put by the LKJV for his reinstatement as constituting 'sharp practice', or as being provocative. There was no direct evidence as to this nor am I able to infer it. In any event, if Ballard considered that he had been either unfairly or unlawfully terminated in his employment, then he had both a contractual obligation and a remedy at law. There was a mandatory Dispute Resolution Procedure under the Certified Agreement (cl 4.5) for the resolution of disputes. Ballard was obliged to follow this. He did not. Additionally, an application for relief under s 643(1) of the WR Act was available to Ballard on the ground that the termination was allegedly harsh, unjust or unreasonable. Indeed it was a term of the LKJV New Metro Rail City Project Structural Certified Agreement 2004 that termination of employment by the Joint Venture shall not be harsh, unjust or unreasonable (cl 2.2.3). I was informed by senior counsel for the respondents that Ballard had made an application in relation to his alleged unfair dismissal, claiming that it was harsh, unjust and unreasonable and constituted discrimination. The respondents' perception that Ballard's dismissal was unfair or unlawful did not constitute a warrant for the unlawful industrial action, nor does it constitute any relevant mitigating circumstance. It would be extraordinary if a wilful disregard of the main object of the legislation, and in particular, in this case, the promotion of the rule of law, should be regarded as somehow mitigating the contravention. Mr Rozen, who represented the 7 th , 8 th , 9 th , 12 th , 14 th , 16 th , 28 th , 37 th and 64 th respondents, conceded in argument that the unlawful industrial action was, (in part) clearly motivated by an attempt to bring financial pressure to bear on the LKJV to achieve the reinstatement of Ballard rather than through lawful means. In my view, that concession was correctly made and underlines the seriousness of the conduct. I do not accept that merely because they are employees as opposed to a union, union officials, or an employer, that there is, in principle, any different approach which should be taken on the question of penalty. In any one case there may be different levels of culpability. Each matter requires to be considered by reference to its own facts and circumstances. I was told by senior counsel for the respondents that orders of the AIRC were frequently disobeyed and that this, traditionally, was not regarded as serious. It was also held that this was the first time in which penalty proceedings had been taken against employees in that capacity. This, it was said, was for historical reasons, grounded in the way that industrial disputes have in the past been fought. If that was the position then it is no longer the position. However, in recent years industrial legislation has increasingly codified and prescribed what is acceptable, and what is unacceptable, industrial conduct. The legislature has, over time, also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct. In my view, any light handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable. Importantly, however, Branson J (with whom Spender J agreed in relation to the reduction in penalty) indicated that there was no demonstrable error of principle affecting the penalty imposed by Merkel J at first instance. Her Honour reaffirmed the warning that it may well be that it is appropriate for penalties imposed under the WR Act to rise and rise appreciably. That case was not concerned with breaches by employees, but as I have said, I do not consider that they stand in any different category. In particular, unions know that the prospect of being held civilly responsible for the losses they cause is remote. For example, in 2003-04 the construction industry employed 8 per cent of all employed persons in Australia. For the same period, these workers accounted for over 21 per cent of working days lost. Industrial unrest and time lost through work stoppages cause immediate loss to head contractors, subcontractors and employees. Even short strikes can cause commercial damage because standing charges and overheads continue even if work on site stops. Commissioner Cole found project completion delays, with contractual penalties of up to $250,000 a day, are a compelling incentive for employers to surrender to union demands. In addition, the current system for recovery of loss due to unlawful industrial action is difficult, costly and time consuming. I have been advised that any penalties which I impose on the respondents will not be paid by them personally although this would not apply to any suspended penalties which became payable upon a further contravention. From around February 2007, the ACTU and CFMEU established and maintained a national fund, known as the Mandurah Dispute Fighting Fund. The monies in the fund will be used to meet the costs of the penalties and legal costs incurred by the respondents. The impecuniosity of individual respondents is not raised as an issue in the proceedings. I do not consider it a relevant matter to the penalties to be imposed that they are to be paid by a third party. I propose the following penalties. I would in the ordinary course have considered a period of two years suspension as appropriate, however I have reduced the period of suspension from two years to six months having regard to the fact that since these proceedings were instituted almost eighteen months ago, there has been no contravention by these respondents of either the BCII Act or the WR Act. The Project, as I said, is all but completed. I will impose a lesser penalty on each of the 9 th , 14 th and 16 th respondents who engaged in unlawful industrial action for only four out of the seven days of $7500 of which $2500 shall be payable within 45 days and the balance of $5000 suspended for six months only to be paid if that respondent contravenes the BCII Act or the WR Act during the period of suspension. However, I have taken into account the overlapping conduct in relation to each of the contraventions and I propose that there be an additional penalty of $1,000 of which $250 should be payable within 45 days and the balance of $750 suspended for six months. This additional penalty reflects the fact that the unlawful industrial action, as a discrete element, constituted a breach of the order of the AIRC. I will make similar reductions in the case of the 9 th , 14 th and 16 th respondents and impose a penalty upon each of $900 of which $300 should be payable within 45 days and the balance of $600 suspended for six months upon the same terms. I consider that the total penalties in each case, tempered by suspension of a significant part of each gives rise to the appropriate overall penalties. In my view, the penalties in each case give effect to the primacy of both specific and general deterrence and in that regard I have given reasonable weight to the submissions of the applicant: Mobil Oil at [53]. It is convenient and appropriate to do so in order to explain the basis for the penalties ordered: Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53. There is a public interest in knowing what conduct constitutes contravention and that it is considered to warrant an order recognising its seriousness. This may be done on the basis of admitted facts: ACCC v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665. Her Honour's approach in that case was expressly approved by a Full Federal Court upon appeal: ACCC v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 at [91] - [92] . In Ponzio , a Full Federal Court made a series of detailed declarations concerning contraventions of the WR Act, on the basis of facts established by an agreed statement of facts. It is apparent from that form of declaration in that case that the Full Court was prepared to accept the detail in the agreed statement of facts as a proper factual foundation for the making of declarations. I propose that equivalent declarations should be made in this case. | breaches of s 38 building and construction industry improvement act 2005 (cth) by unlawful industrial action breaches of order made under s 127 (pre-reform) workplace relations act 1996 (cth) by unlawful industrial action whether penalties should be suspended in whole or in part and for how long whether declarations should be made explaining basis of imposition of penalties principles of cumulation, concurrence and totality in fixing penalties whether declarations should be made by reference to admitted facts. industrial law |
The application before the Federal Magistrate sought judicial review of a decision of the Refugee Review Tribunal ("Tribunal") made on 23 February 2006 and handed down on 14 March 2006, to refuse to grant a protection visa to the applicant. 2 The applicant is a citizen of the People's Republic of China ("China") who claims fear of persecution by reason of her being a Falun Gong practitioner. She entered Australia on 11 October 2005. She claimed that she had been arrested in Beijing in 2000 while demonstrating against the Chinese government's attitude to Falun Gong. She also claimed she had protested in Guangzhou where she was arrested and detained for eight days and that, in 2003, her home was raided and she was detained for several months and mistreated while in custody. She further claimed that she was again detained in 2004 and held until January 2005. 3 The Tribunal did not accept that the applicant was a Falun Gong practitioner because she had very little knowledge about the banning of Falun Gong within China and could not name the exercises undertaken by practitioners. The Tribunal found that the applicant had fabricated her claims in order to advance her protection visa application; in particular, that photographs of her practising Falun Gong at Darling Harbour were made in order to assist in the success of that application. Further, the Tribunal held that the applicant would not attract adverse attention, if she were to return to China, for having attended Falun Gong sessions in Australia since she was not a persistent Falun Gong practitioner. 4 The applicant made an application to the Federal Magistrates Court on 12 April 2006. In that application, she claimed that the Tribunal had breached s 424A of the Migration Act 1958 (Cth) ("the Act ") and that the Tribunal had not assessed properly her chance of persecution if she were returned to China. She further claimed that the Tribunal's satisfaction that she was not a refugee was not founded upon reasoning which provided a rational or logical basis for that belief. 5 On 15 May 2006 the Federal Magistrate dismissed the application (filed on 12 April 2006) because the applicant had not attended at a directions hearing on that day. The applicant made another application, filed on 18 May 2006, in effect seeking the reinstatement of the show cause application of 12 April 2006. A hearing of this application was held on 23 May 2006. The appellant attended. 6 The Federal Magistrate found the applicant to be a most unimpressive witness. The applicant asserted that, on the night before the scheduled hearing on 15 May 2006, she had stayed at a friend's home in Strathfield and that she did not get to court on time because she had been told by that friend that it would take only half an hour to travel to the central business district of Sydney. She told the Federal Magistrate that she had travelled in a taxi and that she had paid fifty dollars but did not acquire a receipt. Later she claimed that she had attempted to telephone the Minister's solicitor. However, the Federal Magistrate found that the applicant was not a witness of truth and that she had shown a rather cavalier attitude regarding her attendance at court. She had not advanced a sufficient explanation for her non-attendance on 15 May 2006. In addition, the Federal Magistrate held that her show cause application did not raise a serious question to be tried and that she had failed before the Tribunal simply because her claims were completely disbelieved. This finding was based on the applicant's evidence at the hearing before the Tribunal. 7 On 7 June 2006, the applicant filed an application in this Court for leave to file a notice of appeal from the decision of the Federal Magistrate. The only ground contained in the draft notice of appeal is that that the Federal Magistrate did not have the power to make a decision or give the judgment in Chambers and without an oral hearing. She claims that there are no provisions within the Federal Magistrates Act 1999 (Cth) or the Federal Magistrates Court Rules 2001 (Cth) authorising this. When the application was called on for hearing the applicant did not appear. 8 The principles to be applied in dealing with an application such as the present are laid down in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 9 In my opinion the learned Magistrate's decision is not attended with sufficient doubt to warrant its reconsideration by this Court. The decision was not made in chambers. It was made following an oral hearing in open Court on 23 May 2006. Reasons were provided. 10 Accordingly, the application for leave to appeal is dismissed with costs. | no point of principle migration |
The Application came before the Court on an urgent basis on Tuesday, 14 November 2006 at 3.00pm on the footing that the proposed Respondent, the Commissioner of Taxation, has and retains possession of the computer and three hard drives and proposes to implement a protocol which would result in the 'imaging' or copying of the documents encoded on the computer and hard drives. 2 The Applicant appears by Mr Robertson of counsel and relies upon the affidavit of Esme Hui Ling Dean sworn 14 November 2006. Having regard to the urgency of the matter, the Applicant was not in a position to formulate, file and serve an Application formulating the scope of the proposed final and interlocutory relief. Rather, the Applicant sought to list the matter on the afternoon of 14 November 2006 and agitate the urgency of securing an interlocutory order. 3 Although the Applicant seeks an order pending trial, I propose to treat the Application as, in effect, an Application for an ex parte injunction, on notice, to restrain for an immediate and short period the proposed Respondent from engaging in conduct which might seriously prejudice the Applicant during the period between the making of this Application and a date when an Application on proper material can be dealt with, provided, of course, the Applicant is able to otherwise demonstrate the elements necessary to secure an interlocutory injunction even of limited duration. 4 Ms Brennan of counsel instructed by the Australian Government Solicitor ('AGS') appeared on behalf of the Commissioner of Taxation in response to the Application for an interlocutory order. The Commissioner of Taxation relies upon the affidavit of Katie Anne Lynch, a solicitor employed in the office of the AGS, sworn 14 November 2006. That affidavit annexes copies of correspondence exchanged between the solicitors for the Applicant and the Australian Taxation Office ('ATO') and correspondence between the solicitors for the Applicant and the AGS. 5 The background facts for present purposes are these. 6 On 8 November 2006, Mr Tyson Fawcett and other officers of the ATO entered the premises in Brisbane of Prescience Communications Limited at Railway Terrace, Dutton Park, Brisbane in reliance upon powers conferred upon the Commissioner of Taxation under s 263 of the Income Tax Assessment Act 1936 (Cth) ('the I T A Act'). The Applicant contends that Mr John Andrews of WHD Lawyers who attended the premises on behalf of the Applicant expressly objected to the imaging of the hard drives. Ms Lynch exhibits to her affidavit a copy of a written undertaking signed by Tyson Fawcett described in the document as 'Team Leader' and 'Authorised Officer of the Commissioner of Taxation' and John Andrews on behalf of Prescience Communications. The lawyers asserted that the proposal to image the hard drives was improper and impermissible and that only those documents relevant to the matters set out in a notice issued under s 263 of the I T A Act could properly be copied. 10 On 9 November 2006, Ms Lynch wrote to Coadys and advised that the relevant material was held in a sealed plastic bag by the AGS, asserted that Mr Andrews had agreed to such an arrangement by force of the written undertaking, advised that the Commissioner did not propose to image the hard drives until 10.00am that day and advised that the Commissioner, in view of the Applicant's objections, would refrain from imaging the hard drives that morning. Your client may be present during that process. The lawyers for the Applicant asserted that the proposal to image the hard drives was contrary to law and was objected to by the Applicant. Those lawyers requested the return of all hard drives to the Applicant immediately. The Applicant's lawyers proposed a method by which the ATO officers might access documents held in electronic form on the hard drives. The proposal was this. 14 On 9 November 2006, Ms Lynch responded to that letter and again advised that the computer and three hard drives had been removed from the Applicant's premises with the consent of the Applicant's agent, Mr John Andrews. Ms Lynch suggested that the computer and hard drives remain in the possession of the AGS overnight and be returned to the Applicant's premises at 10.00am on the following morning, 10 November 2006. We understand from our client that imaging of the hard drives is required to preserve the integrity of the documents contained in the hard drives. The erasure software and encryption software installed on your client's hard drives prevent our client from exercising its right to access the documents contained on those hard drives. In undertaking the above process tomorrow at your client's premises, we remind you of your client's obligation pursuant to s 263(3) of the ITAA 1936 to provide our client with all reasonable assistance in the exercise of his powers under s 263. Accordingly, the computer and hard drives remained with the ATO and Ms Lynch awaited urgent advice as to 'where and to whom to return the hard drives'. Ms Lynch reiterated in her letter that upon the return of the hard drives, officers of the Commissioner intended to exercise a right of access pursuant to s 263 of the I T A Act and would proceed to image the hard drives in accordance with the process outlined in the earlier letters [11] and [15]. 17 On 10 November 2006, WHD Lawyers responded and reasserted that the Applicant did not consent to the ATO officers taking an image of the contents of the computer and hard drives, asserted that no such right arose under s 263 of the I T A Act, asserted that the Applicant did not authorise ATO officers to image the hard drives and suggested that ATO officers ought to deliver the computer and hard drives to the officers of WHD Lawyers to be held on behalf of the Applicant. In that case, WHD Lawyers would seal and hold the computer and hard drives until a process agreed between the parties was adopted for enabling ATO officers to secure access to information stored on the material. 18 On 13 November 2006, Ms Lynch wrote to Coadys and advised that the computer and hard drives would be delivered to the offices of WHD Lawyers at 9.00am on 14 November 2006 and that until then, the computer and hard drives would remain held securely at the offices of the AGS. Ms Lynch advised that upon return of the computer and hard drives, officers of the Commissioner would exercise a right of access and proceed to image the hard drives in accordance with the process earlier identified. We advise that our client returned the computer tower and hard drives to your town agents, WHD Lawyers this morning with the intention of exercising his right to access pursuant to s 263 of the Income Tax Assessment Act 1936 (ITAA 1936) and proceed to image the hard drives in accordance with the process outlined in our previous letter, which preserves your client's right to make claims for legal professional privilege and dispute relevancy. As previously advised, imaging of the hard drives is required to preserve the integrity of the documents contained in the hard drives. The erasure software and encryption software installed on your client's hard drives prevent our client from exercising its right to access the documents contained on those hard drives. We understand that your client does not consent to our client proceeding to image the hard drives at the offices of WHD Lawyers. In the circumstances, our client has returned the sealed computer tower and hard drives to this office to be held securely in accordance with the previous arrangement. We note that your client now intends to bring an application to the court. We undertake that our client will not proceed to image the hard drives pending that application being determined. The ATO officers took the computer and hard drives to those offices. The gentleman described as Colin explained the process those officers intended to implement. The documents that are imaged cannot be altered. After the documents are imaged, they will be transferred to another hard drive which the ATO will provide. The ATO officers, according to Ms Dean, proposed that the ATO would not have access to the documents during that period. Ms Dean asked the officers whether the ATO would consent to more time than seven days to deal with the privilege question. Ms Dean says Mr Joblin said, 'Well, it will be kept at AGS for a period to be determined between the parties for your client to claim privilege. If your client wants 14 days then that should be ok' . 22 Coadys advised Ms Dean that the Applicant objected to the proposals of the ATO officers and suggested that the computer and three hard disk drives be held at the officers of WHD Lawyers until such time as the parties could agree a process. Ms Dean advised that the Applicant required the hard drives to be returned and disputed claims by the ATO to an entitlement to image the entire contents of the hard drives. The ATO officers maintained that they were entitled to take an image of the documents stored on the computer and the hard drives. Ms Dean asserted that the Applicant's position was that the ATO was not entitled to access the documents other than in accordance with the principles of the decision of this Court in JMA Accounting ( JMA Accounting Pty Ltd & Anor v Commissioner of Taxation & Ors [2004] FCAFC 274 ; (2004) 139 FCR 537) (' JMA Accounting' ). Ms Dean says that the ATO officers said they would take the hard drives away with them and image the electronic information that afternoon. Ms Dean reiterated that the Applicant did not consent to the ATO taking an image of the hard drives. Colin then said words to the following effect, "Can I ask a question? If we are able to establish that some documents are relevant why can we not take an image of the entire hard drive? I have already ascertained that a few thousand names on the hard drive are relevant and it is the deleted files which we need to access in order to find out if they are relevant to our investigations. " I replied, "It is the ATO's inability to establish relevance without first taking an image of the hard drive that my client objects to. Your client is not entitled to take an image of the entire contents without first establishing relevance" At this point, Ben [Joblin] stopped Colin from saying anything further. Nor do I have a copy of the s 263 notice. 25 Ms Brennan emphasises the difficulties that officers of the Commissioner have experienced in securing access to the premises, obtaining a password, the presence of encryption software, the presence of erasure software which would cause data to be deleted should files be opened, the apparent shredding of documents, the removal of hard drives from the premises, the deletion of electronic documents and attempts to remove hard drives from the premises. In addition, Ms Brennan says that the Application proceeds on the footing, identified in paragraph 18 of Ms Dean's affidavit, that officers of the Commissioner are not entitled to make a copy of a document unless and until those officers have been able to establish the relevance of the documents to be copied and that, according to the Applicant, officers of the Commissioner are not entitled to take an image of the entire contents of the hard drives without first establishing relevance. 26 Ms Brennan says that the 'purpose' enlivening the power conferred by s 263 of the I T A Act is the investigation of serious schemes to evade or avoid obligations to pay tax falling upon taxpayers under the I T A Act. Ms Brennan says that if the foundation of the arguable question the Applicant seeks to raise is that no power to make a copy of information contained on the hard drives arises in the Commissioner unless officers of the ATO have first determined the relevance of the documents electronically stored on the hard drives, for the purposes identified in the s 263 notice, that is not the law. Ms Brennan makes a further point that the proposal of the ATO officers is not that a copy of the documents will be taken but that the disks will be 'imaged' in accordance with the process identified in Ms Lynch's correspondence. The difference between an 'image' and a 'copy', as I understand the submission, is that the imaged material cannot be manipulated. For present purposes, I accept that an image of a document is relevantly a copy. In addition, Ms Brennan says that the public interest in the investigation of tax evasion schemes in conjunction with the risks to the integrity of the data previously described, inevitably weighs the balance of convenience heavily in favour of the Commissioner. 27 The Applicant contended in exchanges with the AGS and presently contends in this Application that JMA Accounting v Commissioner of Taxation makes it clear that no power resides in the Commissioner to simply image or copy a body of documentation whether held electronically or physically without first determining the relevance of that material to the matters the subject of examination for the purposes of the Act. 28 In JMA Accounting , the Commissioner's taskforce investigating tax evasion schemes wanted to inspect computer records of an accounting practice (JMA) conducted from two premises. The taskforce was apprehensive that documents might be destroyed and no notice was given to the operating entities of the accounting practice. Officers of the taskforce exercised powers conferred by s 263, entered JMA's offices, searched for and took copies of documents, took control of all documents located at two offices (a Sunnybank office and a Queen Street city site) including those contained on computer databases, denied JMA staff access to the documents for work or other purposes and spent two full days copying on to computer disks most of the documents under their control. At the end of the first day, the taskforce locked JMA's offices refusing JMA staff access to the premises. This method which resulted in taskforce officers taking control of JMA's offices was found to be beyond power. 29 The question ultimately dealt with by the Full Court was whether the Commissioner's offices had the power to copy records and take those records away. In deciding that question, the Full Court had to consider the balance between a citizen's right to privacy and the overriding public interest in preventing criminal conduct and evasion of the law and unnecessarily tying the hands of those charged by the Parliament with investigating fraud or evasion. 30 In JMA Accounting , the Full Court made a number of observations about the scope of s 263 and implementation protocols surrounding the exercise of the power conferred by s 263. 31 The Court recognised that although the power of search and seizure is very wide, it is not unlimited. Section 263 does not oust legal professional privilege. The preservation of privilege requires some method to be adopted for the determination of any claim for privilege to be tested before documents are read. Section 263 contains no such procedure and often, reaching agreement about a preferred procedure is difficult or not always a subject of cooperation. Accordingly, the Court, in a series of decisions, established that the exercise of search and seizure powers required the provision of a 'practical and realistic opportunity' ( Commissioner of Taxation v Citibank (1989) 20 FCR 403) in the party in possession of the documents or electronic information, to claim privilege. The exercise of such a statutory power is not necessarily conditioned in its validity by whether the Court regards the manner of exercise as reasonable. However, such a statutory power expressed in 'wider general terms' only authorises a search and seizure that is 'reasonable in all the circumstances'. Nevertheless, an officer of the Commissioner is not prevented from conducting a search under s 263 until all claims for privilege have been resolved. Mere seizure of a document without it being read will not infringe privilege. In the context of privilege, the Full Court observed that legal professional privilege is not infringed by merely taking a copy of the document and that an officer exercising s 263 powers may, in particular circumstances, 'look' at a privileged document, although 'not closely' but 'merely enough' to enable the officer to 'decide' whether the document may be copied. 32 The Full Court identified at [16] of the Reasons, three broad propositions concerning the conduct of search and seizure. Firstly, the person exercising such a power is only entitled to seize those documents which he is authorised to take consistent with the conferral of power properly construed . Secondly, the search and seizure must be carried out reasonably and thirdly, the repository of the power must do no more than is reasonably necessary to satisfy himself that he has the documents which he is entitled to seize. 33 In this Application, the Applicant says that the Commissioner has failed to act consistently with proposition 2, that is, the Commissioner has failed to carry out the search and seizure reasonably on the footing that officers of the Commissioner have made a decision to image every electronic document contained on the hard drives or alternatively on the hard drives in conjunction with the seized computer. In JMA Accounting , two particular criticisms were made of the ATO taskforce members. Firstly , that documents were copied and removed from the premises before a claim for privilege had been made and secondly , that documents were copied in such a way that 'no proper consideration could have been given to whether they were required "for the purposes of the [ Income Tax Assessment Act ]". ' As to the protocol for the protection of privilege, the Full Court found at [20] of the Reasons that the proposed protocol was a 'perfectly adequate' proposal to achieve the preservation of a practical or realistic opportunity to claim privilege. 34 The elements of that protocol are reflected in the proposal contained in the correspondence from Ms Lynch [11]. 35 Moreover, in JMA Accounting , the officers of the Commissioner were not obliged to 'reach an accommodation with JMA' about the protocol. Provided the proposal 'was a reasonable one, all that the officers were required to do was to ensure that the proposal was implemented'. 36 As to the second contention, the Full Court observed that the only documents which could be copied in the exercise of the s 263 power were those 'which had, or could reasonably be supposed to have had, some relevance to the investigation that was then being undertaken by the taskforce as well as other documents which might be relevant to other matters under the Income Tax Assessment Act and which came to light during the search' ( JMA Accounting v Commissioner of Taxation [24]). Provided the judge's statement [the hearing judge] that ATO officers were permitted to copy documents of "possible interest" was intended to mean (as we think it does) documents which the officers reasonably believed might be of interest to the ATO, it is unexceptional. If, on the other hand, the judge meant to say that the officers could also copy documents in relation to which there was only a remote chance that they were relevant for the purposes of the Act then with great respect he is in error. One problem which confronted the officers when conducting the search is that they were faced with a vast number of documents to go through. If the officers had looked at each document carefully they would be there for days. In our opinion, such a search is not required by s 263. At the end of the day the only obligation imposed upon the officers was to conduct the search in a reasonable fashion . Whether or not they were acting reasonably depended upon the circumstances of the case . Those circumstances included, among other things, the nature and volume of documents to be examined and their location. Further, any necessary sorting process in relation to items removed would then need to be carried out with reasonable expedition and those items found not to contain forged material or found not to be of evidential value should be returned reasonably promptly . 39 In the circumstances of the JMA Accounting case, ATO officers at the Sunnybank site copied 'all email store folders'. None of the contents of those folders were examined before the act of copying. They were simply copied in bulk and that copying was found to be impermissible. The ATO officers, having regard to the nature of the bulk material, could not be said to be acting reasonably or hold a reasonable belief that all of the material related to the subject matter of the investigation. 40 A second category of information contained on desktop computers and a server was copied by a computer technician at JMA's Sunnybank site. When searching the computers , the technician looked for key words, client lists, financial transactions and downloaded that information. The technician also downloaded Excel spreadsheets, Word documents and undertook key word searches for specific entities. The Court found that 'although brief, this was a sufficient examination in the circumstances '. 41 As to the server , a technician, Mr Chang, conducted a limited examination. The information on the server was contained in a 'work file directory' which was downloaded in full. Mr Chang gave evidence that to look at every file on the server or to search every work file would take several days and possibly weeks. The Full Court at [33] said, 'In other words, Mr Chang had no idea whether the information downloaded was relevant or not. Everything which was current was taken regardless of its relevance. This is not good enough. In legal terms, no reasonable effort was made to distinguish between the relevant and the irrelevant' . 42 As to the Queen Street city premises, an ATO computer technician conducted a search of documents contained in the hard drive of computers at those premises, databases, email files and PDF files. He selected all files initially and browsed files by title. Any file that was not relevant by title was not copied. The technician explained that selecting files on the basis of titles did not mean that every document or file might be relevant or that some relevant documents might not be missed. However, the alternative was to copy the entire contents of the hard drive. The technician elected not to take that course. The Full Court concluded that such a search of the computer files was 'brief but reasonable'. 43 As to the server at the Queen Street city site, the technician examined the directories by title, looked inside the directories, looked at random files within the directories and only those directories he then considered relevant were downloaded. This too was found by the Full Court to be 'a reasonable examination of the documents in order to determine their possible relevance'. 44 In this proceeding, the ultimate question to be determined prospectively is whether officers of the Commissioner would be acting reasonably in the manner of exercise of the power conferred by s 263 by taking an image of all documents stored on the three hard drives and/or the tower computer, in all the circumstances. The Applicant's present contention is that officers of the ATO have not formed any view of the relevance of the material contained on the hard drives because they have no apparent knowledge of the scope or content of the material. Unlike the technician in JMA that examined the desktop computers at the Sunnybank office and the technician who examined the desktop computers and the server at the Queen Street site, there has been, according to the Applicant, no 'brief but sufficient' and no 'brief but reasonable' examination of the documents and like the technician at the Sunnybank site who downloaded entire directories from the server at the Sunnybank site, no 'reasonable effort has been made to distinguish between the relevant and the irrelevant'. 45 The question of whether conduct in this context is reasonable must be judged contextually in all the circumstances of each case. In this case, Ms Dean at paragraph 18 of her affidavit refers to a proposition put to her by the ATO's officer 'Colin' which seems to suggest that on some unidentified basis the ATO officers have at least formed a view about relevance. Colin said, 'I have already ascertained that a few thousand names on the hard drive are relevant and it is the deleted files which we need to access in order to find out if they are relevant to our investigation. If we are able to establish that some documents are relevant why can we not take an image of the entire hard drive? ' The other contextual circumstances are those identified at [10] which Ms Brennan emphasises at [25]. 46 The 'organising principles' governing the grant of an interlocutory injunction are those identified at [19] of the joint judgment of Gleeson CJ and Crennan J in Australian Broadcasting Corporation v O'Neil [2006] HCA 46 and the explanation of the organising principles is set out in the Reasons of Gummow and Hayne JJ at paragraphs [65] --- [72]. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ and their reiteration that the doctrine of the court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 should be followed. In assessing whether the applicant has made out a prima facie case in the sense contemplated in Beecham , 'it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial' [65]. Their Honours discussed the apparent distinctions between the views expressed and assumptions made concerning the approach adopted in Beecham and that reflected in the speech of Lord Diplock in American Cyanamid Co. v Ethicon Ltd [1975] UKHL 1 ; [1975] AC 396. When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity and outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham. 50 The legal obligation cast upon the Commissioner in the exercise of the power conferred by s 263 is to conduct the search in a reasonable fashion having regard to all the circumstances of the case. Those circumstances include the need to preserve the integrity of the electronic information having regard to the constraints imposed by the encryption software and the risk of loss of information by the erasure software. Those considerations are also conditioned by the contentions on the part of the Commissioner set out at [10]. For present purposes, the Applicant contends that the imaging of the hard drives does not even reach the threshold of a 'brief but reasonable' or 'brief but sufficient' or alternatively 'a reasonable examination'. One difficulty for the Applicant is the evidence contained in Ms Dean's affidavit deposing to the expression of opinion by one of the ATO officers that he had already ascertained that information on the hard drives is relevant and therefore information contained on other files and some deleted files would, as a matter of inference, be relevant. Nevertheless, having regard to the contention that no attempt has been made to determine on any footing the relevance of the material on the hard drives, it seems to me that the interim position ought to be preserved until the matter can be properly addressed. However, having regard to the public interest in the proper investigation of tax avoidance or tax evasion arrangements and Parliament's conferral of powers for that purpose upon the Commissioner, it is important that the matter be resolved quickly. I will direct the Applicant to file and serve an Application document bearing Application No. QUD447 of 2006 in accordance with Form 5 of the Federal Court Rules which properly formulates the final and interlocutory relief sought pending the trial of the action by 4.00pm, Wednesday 22 November 2006. 2. I will direct the Applicant to file and serve all affidavits upon which the Applicant proposes to rely in support of an Application for interlocutory relief, by 4.00pm, Wednesday 22 November 2006. 3. I will direct the Respondent to file any affidavits in reply by 4.00pm, Friday 24 November 2006. 4. The Application for interlocutory orders shall be heard on a date to be nominated by the District Registrar. 5. The costs of this Application will be reserved. Subject to the question of whether the Commissioner of Taxation so undertakes pending the determination of the further Application, there will be no cause to make any Order restraining the Commissioner from imaging the information on the hard drives and computer. The material before me suggests that the Applicant is content, for the purposes of the interim Applications, with an arrangement that the computer and hard drives remain in the possession of the AGS in a sealed bag pending the resolution of these interlocutory Applications. That being so, there is no cause for any Order for the interim preservation of the material by force of an Order that the solicitor for the Commissioner retain possession of the material pending the determination of the interlocutory Applications. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | interlocutory injunction application for an interlocutory injunction to restrain the commissioner of taxation from exercising a power conferred by s 263 of the income tax assessment act 1936 (cth) consideration of australian broadcasting corporation v o'neil [2006] hca 46. income tax |
The current form of the application is a further amended application which was also filed on 15 August 2008. The proceeding has had a tortuous history which I need not recount. The proceeding arises out of events at Sydney (Kingsford-Smith) Airport on 15 February 2008, 16 February 2008 and 2 March 2008. On 15 February 2008 and 16 February 2008, the first applicant (Mr Whittaker) was at the Airport intending to board Singapore Airlines Flight SQ232 bound ultimately for Langkawi in Malaysia. Apparently he had his ticket and boarding pass and was at the Immigration Passport Checkpoint. It is common ground that on each of the two dates Mr Whittaker was not allowed to board the Flight. On 2 March 2008, Mr Whittaker was again at the Airport intending to board Singapore Airlines Flight SQ220. He was allegedly "detained" and his passport and boarding pass were allegedly retained by the second respondent (Commonwealth), yet he was eventually able to pass through Immigration and board the flight. The respondents' case is that the power to prevent his departure given by s 72U(2) of the Child Support (Registration and Collection) Act 1988 (Cth) (the Collection Act) was activated. It is also common ground that a purported departure prohibition order (DPO) in respect of Mr Whittaker was in force. However, he challenges the validity of the purported DPO with the consequence that s 72U(1)(b) was not satisfied. The applicants claim that Mr Whittaker: Mr Whittaker further claims that on or about 11 February 2008 he entered into a contract with Singapore Airlines Ltd, a common carrier by air, whereby it would carry him as a passenger on Flight SQ 232 on 15 February 2008 from Sydney and flight MI368 from Singapore to Langkawi in Malaysia. In summary, the ASC pleads three contracts: the carriage contract (between Singapore Airlines Ltd and Mr Whittaker), the employment contract (between Rotary and Mr Whittaker), and the supply contract (between Rotary and Phillips). The applicants' case is that both Mr Whittaker and his employer, Rotary, suffered loss in consequence of his not being permitted to board Flight SQ232 on 15 February 2008 and again on 16 February 2008. Mr Whittaker further claims that he suffered loss or damage arising from the events of 2 March 2008, in that the Commonwealth interfered with his liberty and/or the employment contract and/or the carriage contract. The respondents do not challenge paras 1 to 5, 14 to 20 or 22 of the ASC, but ultimately seek an order striking out paras 6, 7, 8, 9, 10, 11, 12, 13, 21, 23, 23A, 23B, 23C, 24, 25, 27, 28, 29, 30, 31, 32, 33 and 34 of the ASC. The applicants do not press paras 27, 30, 32 and 33 of the ASC or paras (d) and (e) of the particulars to para 24 of the ASC. Accordingly, all of those paragraphs will be struck out without leave to replead. By their motion, the respondents also seek summary dismissal of the proceeding in so far as it seeks the relief claimed in para 8 of the further amended application. Paragraph 6 relates to the events of 15 February and para 7 to those of 16 February. Apart from the difference in dates, they are identical. It will therefore suffice if I set out paras 6, 12 and 13, which are as follows: On 15 February 2008, whilst the First Applicant was performing the employment contract in furtherance of the supply contract and after the carriage contract had commenced and the First Applicant was attempting to pass through the Immigration Passport Checkpoint at Sydney International Airport to board Singapore Airlines flight SQ232, the Second Respondent by its servants or agents: approached the First Applicant at Kingsford Smith International Airport, Sydney and thereafter deprived him of his liberty, restraining him and threatening him that should he proceed further through the airport whereby he reasonably feared that unless he complied with such directions his liberty and person were threatened such that he would be compulsorily detained prosecuted and imprisoned, and further then seized the First Applicant's passport and boarding pass for flight SQ232, and retained his travel documents including his passport and boarding pass and directed that the carrier discharge the Applicant's luggage including his equipment and tools of trade from the aircraft of Singapore Airlines conducting flight SQ232, whereby the First Applicant was falsely imprisoned and/or the Respondents and each of them trespassed upon the First Applicant and/or his personal property. Further, or alternatively, on 15 and 16 February 2008 the Second Respondent by its servants or agents trespassed upon the First Applicant's goods by retaining his documents and removing or arranging for the removal of his luggage and equipment from the aircraft at the airport. The first complaint that the respondents make is that these paragraphs fail to plead material facts. The leading authority for that proposition is the judgment of Scott LJ in Bruce v Odhams Press, Limited [1936] 1 KB 697. He said that "particulars" are not to be used in order to fill material gaps in a statement of claim. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them. The defendant company had published a newspaper article which referred to certain aeroplane smuggling exploits of "an Englishwoman". By her statement of claim, the plaintiff merely asserted that these words were meant and were understood to mean her. This was held to be failure to plead material facts. It was necessary for the plaintiff to plead extrinsic facts on which she would rely to link the words "an Englishwoman" to herself. In H 1976 Nominees Pty Ltd v Galli and Apex Quarries Ltd , above, Northrop J, following Scott LJ in Bruce v Odhams Press, Limited , rejected (at 187) an argument that the particulars to a paragraph of a statement of claim should be treated as a statement of material facts for the purposes of the Federal Court Rules . The distinction between material facts and particulars was recognised by Fisher J in Trade Practices Commission v David Jones (Australia) Pty Ltd, above (at 112 ff). His Honour described the paragraph of the statement of claim in question in that case as "merely a statement of a conclusion drawn from facts which are not in the statement of claim" (at 114). The paragraph pleaded that certain respondents had "made an arrangement or arrived at an understanding". The deficiency in that allegation was not cured by the giving of particulars of the individuals who had represented those respondents at a certain meeting, the date and place of the meeting, the identity of those present, and the effect of the arrangement or understanding. It may be that the distinction between material facts and particulars is not insisted upon as strictly nowadays as it was a few decades ago. An advantage of maintaining the distinction is that it emphasises, for the benefit of both the parties and the Court, that the applicant's position is that it is the facts pleaded in the text of the statement of claim, no more and no less, that the applicant needs to prove in order to establish the asserted cause of action. So long as the distinction is understood and observed, there will not be the confusion that arises when either party, if and when it suits its own purposes, refers to the particulars as if they formed an undifferentiated part of the pleading. The text of paras 6 and 7 is deficient. The expression "deprived him of his liberty" may mean "locked him in a room", "forcibly man-handled him into a room and stood guard at the doorway", "handcuffed him", "encircled him" and so on. The expression "restraining him" is subject to the same kind of criticism. This criticism is fundamental. It is one thing to invite or direct a person to step to one side for a conversation and another to prevent a person physically from exercising his or her liberty of movement. The words "threatening him" that should he proceed further through the airport whereby he reasonably feared..." are grammatically incomplete. We are not told what the threat was. Perhaps it was "threatening him that should he proceed further through the airport he would be arrested " or "threatening him that should he proceed further through the airport he would commit a criminal offence " or "threatening him that should he proceed further through the airport he would not be allowed to board the plane ". Furthermore, it is alleged that Mr Whittaker was in fact deprived of his liberty and restrained, but it is then alleged that there was a threat that he would be "compulsorily detained, prosecuted and imprisoned". The making of the threat assumes that it was physically possible for Mr Whittaker to proceed further through the airport. If I eliminate from my mind the distinction between the pleading of material facts and particulars, it seems that the allegation is that someone "instructed" Mr Whittaker to remain in "a particular confined area". I have the impression that he was not manhandled but was instructed to accompany officers of the Commonwealth to a "confined area" and was instructed to stay there. I do not know, however, what the expression "confined area" means. It may be a room but it may be an open area marked off in some way from the public concourse. The allegation must be made clear. In a claim of false imprisonment, the precise nature of the alleged confinement is important. Some precedents for the pleading of false imprisonment can be found in Bullen & Leake & Jacob's Precedents of Pleadings (London, Sweet & Maxwell, 2008) at pp 58 ff (2-A13 ff) ( Bullen & Leake) . The respondents' first objection is sustained. The respondents' second contention is that the ASC fails to plead unlawfulness. The respondents contend that the pleading is deficient for a failure of the applicants to plead that the conduct of the Commonwealth's officers was not authorised by s 72U of the Collection Act because the officers did not have the relevant belief on reasonable grounds. The respondents point out that the pleading (at para 14) acknowledges that a DPO was at least purportedly made, which, on the face of things, would be sufficient to provide a basis for reasonable belief under s 72U. All of the relevant pleadings of false imprisonment in Bullen & Leake incorporate the word "wrongfully" and I think that that word should be incorporated into the text of paras 6 and 7. But that is as far as the applicants need go. I do not accept that the applicants must plead, and later prove, the absence of reasonable belief. It will be for the respondents to plead and prove by way of defence facts showing that s 72U of the Collection Act made the officers' conduct lawful. The respondents' third criticism of paragraphs 6, 7, 12 and 13 relates to the claim of trespass to Mr Whittaker's person. There is no allegation of physical contact that would constitute "battery", and no allegation "that the first applicant had at any time a reasonable apprehension of imminent physical contact" that would constitute assault. The ASC is embarrassing in this respect. Moreover, as mentioned earlier, trespass to the person is in terms alleged in paras 6 and 7 but is not repeated in terms in paras 12 or 13. Trespass to the person may be assault, battery or false imprisonment. Mr Whittaker may intend to allege one, two or all three of these. False imprisonment is often accompanied by an assault and a battery. Battery requires physical contact, whereas assault does not. If it is to be alleged that there was a battery, the ASC will need to be further amended. If there is to be an allegation of assault, likewise. At present the ASC alleges neither. The allegation of trespass to the person is consistent with an allegation of false imprisonment alone. In oral submissions, Mr King of counsel for the applicants did seem to press a case of "trespass upon the person". However, he said that he characterised the false imprisonment as a trespass. He was correct in the latter respect. He said that he did not accept counsel for the respondents' characterisation of the reference in paras 6 and 7 to "trespass upon the first applicant" as an "assault". The ASC is confusing. It should be amended to plead clearly the elements of battery or assault or false imprisonment or two or all three of these, according to Mr Whittaker's actual allegations. Since "trespass to the person" covers all three, that expression, in the interests of clarity, should not be used unless it is made clear at the same time which of the three forms of trespass to the person is alleged. The fourth and last criticism of paras 6, 7, 12 and 13 relates to the claim of trespass to Mr Whittaker's goods. Such a trespass may be constituted by taking goods out of the plaintiff's possession, moving them from one place to another or causing damage to them. The point that the respondents make is that the applicants contend only that the Commonwealth "directed that the carrier discharge the Applicant's [sic] luggage including his equipment and tools of trade from the aircraft...". The giving of a direction is not trespass to the luggage, equipment and tools of trade. Facts would need to be pleaded, if they can be, showing that the Commonwealth was liable for the carrier's conduct. Facts must be pleaded showing that the Commonwealth directly interfered with Mr Whittaker's luggage. Paragraphs 6 and 7 also allege that the Commonwealth, by its servants and agents "seized the First Applicant's passport and boarding pass for Flight SQ232, and retained his travel documents including his passport and boarding pass". It is not clear whether this allegation is also relied upon as supporting a trespass to Mr Whittaker's goods. The respondents do not attack this part of the pleading. It is not subject to the criticism that there was merely a direction to a third party (such as the carrier) to do something. It should, however, be made clear, one way or the other, whether a trespass to goods is being alleged in respect of the passport, boarding pass and "travel documents" (if there are travel documents apart from the passport and boarding pass). The notion of trespass to Mr Whittaker's "personal property" is too vague, having regard to the fact that the expression follows immediately upon the reference to luggage, equipment and tools of trade. For the above reasons, paragraphs 6, 7, 12 and 13 should be struck out, but with leave to replead. In the premises the Second Respondent by its servants or agents, intentionally and with knowledge interfered in the supply contract, and/or the employment contract and/or the carriage contact, whereby the First and Second Applicants and each of them have suffered loss and damage. They ask that it be read as though it said "...until discovery herein, such that they were aware..." (my emphasis). Even so read, para 8 does not tell us what Mr Whittaker informed the Australian Federal Police officers and an Immigration officer and a Customs officer. What it alleges is that he informed them of something that is not identified as a result of which they were aware of the existence of the three contracts. I may be able to imagine certain things that Mr Whittaker may have said, but this is not good enough; the applicants must plead the effect of the words that he spoke not the ultimate conclusion to be drawn from that effect. The respondents attack para 9 of the pleading by reason of its opening words "In the premises", a failure to plead that the conduct of the Commonwealth officers was not justified, and a failure to plead knowledge on the part of the Commonwealth officers of the supply contract or employment contract, or an intention of causing interference with them. In my view, however, it is clear that the words "In the premises" refer back to paras 6 and 7. It is not necessary for para 9 to allege "without lawful justification". The onus of pleading and proving lawful justification rests on the respondents. The words "with knowledge" are unsatisfactory. They do not identify that of which the Commonwealth's servants or agents are claimed to have had knowledge. The gravamen of the Commonwealth's attack emerged in oral submissions. The Commonwealth contended that the applicants must plead that the Commonwealth, through its officers, desired or wanted or aimed to procure the breaches of the contracts or to interfere with performance of them. With respect, both parties' submissions on this part of the pleading did not begin to address the issues that arise. No doubt the Commonwealth would attribute any shortcoming in its submissions in this respect to the ambiguity of the ASC. Recently in OBG Ltd v Allan; Douglas v Hello! Ltd (No 3); Mainstream Properties Ltd v Young [2008] 1 AC 1 ( OBG ) the members of the House of Lords had occasion to consider in detail the elements of the torts of "inducing a breach of contract" and "interference with contractual relations by unlawful means". The former is a secondary liability, the primary liability being that of the contract breaker. The latter is a primary liability alone. The present case is not one of the Commonwealth officers' having induced Rotary or Mr Whittaker or both to decide to breach contracts giving rise to a secondary liability of the Commonwealth to the other contracting parties. Yet counsel for the applicants cited Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040 ; (2001) 110 FCR 157 , a case of inducement of a breach of contract. If it is anything, the present case is one of direct interference by unlawful means with the performance by Rotary and Mr Whittaker of the respective contracts. Admittedly, the two bases of liability to which I have referred have often not been distinguished. Direct physical prevention of contractual performance by unlawful means has been treated as a species of inducing a breach of contract. See, for example, Ranger Uranium Mines Pty Ltd v Federated Miscellaneous Workers' Union of Australia (1987) 89 FLR 349 at 350-1. In Trindade, Cane and Lunney, The Law of Torts in Australia (4 th ed, OUP, 2007), the authors give as an example of the procurement of a breach of contract, a defendant's physically detaining a contracting party or depriving him of his tools, so that he cannot perform a contract with the plaintiff (at [6.6.2.2] p 307). See, too, John Murphy, Street on Torts (12 th ed, OUP, 2007) at 368-369; and The Laws of Australia (Lawbook Co., subscription service) 33 Torts at [8.1140]. It will be necessary for the pleading to be amended in order to conform, not with the notion of inducing or procuring a breach of contract, but with that of direct inference by unlawful means with the performance of a contract. I discussed this question of the required state of mind of the inducer in a case of inducing breach of contract in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1995] FCA 1368 ; (1995) 58 FCR 26 ( Allstate ) at 43 (in a judgment with which Lockhart and Tamberlin JJ agreed). Malice, in the sense of spite or ill will, is not an element of that tort: Zhu v Treasurer of the State of New South Wales [2004] HCA 56 ; (2004) 218 CLR 530 at [114] ; cf Northern Territory of Australia v Mengel (1995) 185 CLR 307 ( Mengel ) at 341-342. Because the matter was not debated before me, I simply refer the parties, especially the applicants, to the discussion of the elements of the tort of direct interference with contractual relations by unlawful means in OBG . In particular, they will need to consider (a) the unlawful means element, and (b) the element of the required state of mind of the respondents in the case of that species of tortious conduct, as distinct from the required state of mind in the case of inducing a breach of contract. There is, however, a more fundamental question which was also not raised on the hearing. This is whether the action lies for the benefit of Mr Whittaker and Rotary at all. The action for inducement of breach of contract does not lie for the benefit of the contract breaker. It lies only for the benefit of the other contracting party. Much of the debate on the hearing treated the claim as a species of inducement of breach of contract of the Lumley v Gye (1853) 2 El & Bl 216 (118 ER 749) kind, yet this point was not raised. Is the position different when the claim is for direct interference with contractual relations by unlawful means? It may well be. On the other hand, the argument is open that it is no different, and that the applicants' remedy includes a claim for their economic loss in the damages they seek to recover for some other tort, such as, false imprisonment. In conclusion, the "Heads of Loss and Damage" document filed by the applicants on 24 April 2008 showed that the allegation is not that the supply contract was breached, but that additional costs were incurred by the applicants in connection with its performance. Again, on the hearing it seems to have been assumed by both counsel that the applicants' claim was that the Commonwealth, through its officers, had prevented performance of the contracts. Paragraphs 8 and 9 will be struck out with leave to replead. The most careful consideration will need to be given as to what cause of action, if any, can properly be pleaded in their place. If claims are to be pursued for direct interference with contractual relations by unlawful means, they must be separately pleaded in respect of each applicant and each of the three contracts. What "intent"? What "interference"? What "trade"? A tort of interference with trade or business interests by unlawful means, as distinct from interference with contractual relations, has not yet been recognised by the High Court, although neither has it been rejected. In Mengel at 343 and Sanders v Snell [1998] HCA 64 ; (1998) 196 CLR 329 at [35] - [40] , it was referred to as an embryonic or emerging tort. For the purposes of the present motion, I proceed on the assumption that it forms part of Australian law. I do not understand the basis on which "interference with trade" is pleaded as distinct from a pleading of interference with contractual relations by unlawful means. If the tort is recognised, the unlawfulness concerned will be not just unauthorised conduct but prohibited conduct: see Sanders v Snell , above, at [35]-[36]. Counsel for Mr Whittaker puts the interference with trade case on two bases: an intentional interference with the business of the applicants, or an interference with their business by illegal means . The former seems to be nothing other than the claim of interference with contractual relations. As to the alternative, the illegal means identified is "the threat of an illegal act, namely what we have previously pleaded, or alternatively illegal false imprisonment, or alternatively trespass to goods. " The "illegal means" must be pleaded with specificity. "What we have previously pleaded" is not good enough. As well, I do not understand how a threat of false imprisonment or a threat of trespass to goods, without more, could have interfered with the applicants' trade. Unlike paras 8 and 9, para 10 does not state that it is based on "the premises" of paras 6 and 7. It seems to add no cause of action beyond that of interference with the performance of the three contracts. Unless "interference with trade" is intended to be different, and the difference is clearly articulated, it should not be repleaded. Paragraph 10 will be struck out with leave to replead, but the applicants should replead only if they can plead with clarity a cause of action different from that of direct interference with contractual relations by unlawful means. Section 15 of that Act provides that the Registrar may, in writing, delegate all "or any of the Registrar's powers or functions" under the Collection Act to an officer or employee of the Department. The applicants contend that the power given to the Registrar by s 15 to delegate all or any of the Registrar's powers or functions does not include a power to delegate the power given to the Registrar by s 72D(1) to make a DPO, independently of a delegation of other powers. The argument is that that power can be delegated only if it is delegated as part of a delegation of the Registrars' powers to do all of the various things in relation to DPOs that are referred to in ss 72I, 72J, 72K, 72M and 72O of the Collection Act. The applicants contend that the Registrar's powers are "not divisible". The applicants also contend that the power given by s 72D is a "personal" power that the Registrar alone could exercise. I reject both grounds of attack. The power given by s 72D to make a DPO is a power of the Registrar under the Collection Act and is clearly a delegable power by virtue of s 15. Section 72D(1) gives a power to make a DPO, not an obligation to make a DPO. Accordingly, the power is to be seen as a discretionary power to make or not to make a DPO. Of course, a DPO may only be made if the conditions set out in s 72D(1) exist, including the Registrar's (or delegate's) being satisfied of the matters referred to in paras (c) and (d) of s 72D(1). There is no reason why the power given by s 72D(1) might not alone be delegated. In any event, there is no suggestion in the ASC that the delegation to Ms Scott was not a delegation of all of the Registrars powers under Pt VA. Paragraph 21 should be struck out without leave to replead. There was no or no proper basis for finding that the First Applicant had a valid child support debt. There was no or no proper basis for finding that the First Applicant had persistently and without reasonable grounds failed to pay a child support debt. To the First respondent's knowledge no legal action had been taken to recover the debt. There was no or no sufficient basis for concluding that the First Applicant had the capacity to pay any such debt. It was not objectively desirable as at December 2006 to make an Order in the circumstances referred to above in paragraphs 23(b), 23(c), 23(d) and 23(e). It was not objectively desirable to make an Order where the First Applicant had existing family and other ties in Australia. The Applicants will supplement the particulars after discovery. (3) A departure prohibition order must be in the approved form. One element of the definition is that a person has a "registrable maintenance liability" of a kind mentioned in ss 17 or 17A of the Collection Act. Paragraph 23 does not allege facts constituting lack of good faith and should be struck out to the extent that it so alleges, with leave to replead. No doubt those advising the applicants will not replead lack of good faith if there are not material facts capable of supporting that allegation. On 28 February 2008 the Federal Court of Australia in this matter Ordered that the departure prohibition order made by the First Respondent on or about 6 December 2006 be stayed until 5 pm AEST on Thursday 6 March 2008 and as a consequence of the Order the First Respondent and the Second Respondent undertook by its counsel to allow the First Respondent to depart Australia in furtherance of the employment contract. The respondents submit that because the allegation is not that Mr Whittaker missed the flight, but that he was briefly delayed, while his circumstances were checked before being allowed to proceed to board his flight, the applicants have not identified any interference with any contractual rights as a result of that brief delay. A direction to wait, even if accompanied by an unreasonable refusal to give an explanation, does not give rise to either cause of action pleaded. In any event, there is no tort known as "interference with liberty". In the absence of a pleading of facts revealing a direct interference with contractual rights by unlawful means, the cause of action has no reasonable prospects of success. Paragraphs 23A --- 23C should be struck out without leave to replead. Child Support Income is determined by the First Respondent by reference to Taxable Income obtained by reference to a tax file number. Child Support Income is assessable under the administrative formula in Part 5 of the Child Support (Assessment) Act 1989 . ... ... As a consequence, in order for the First Applicant having a Tax File Number to fulfil a tax obligation, section 150D of the Child Support (Assessment) Act 1989 purports to facilitate the forceful exaction of an administratively assessed child support liability by authorising use of the same Tax File Number. Further or alternatively there was no or no sufficient basis for the child support liability in the present matter in that the Child Support (Assessment) Act 1989 is invalid insofar as it purports to confer judicial power upon the First Respondent in contravention of the Constitution , s. 71. Section 10(2) of the Child Support (Registration & Collection) Act 1988, prior to amendment in 2001, nominated the Commissioner of Taxation as holding the Office of the Child Support Registrar having powers under the Child Support (Assessment) Act 1989 . Section 8WD (Repealed in 2001 after the commencement of the original administrative assessment) of the Taxation Administration Act 1953 authorised the Commissioner of Taxation to take, store and use the First Applicant's Tax File Number to determine the First Applicant's Child Support Income Amount upon which the Liability is assessed. Section 117(2) of the Child Support (Assessment) Act 1989 prevents judicial review or recourse unless a special circumstance exists by the establishment of one of the particular statutory grounds. The grounds of review or of judicial recourse do not allow an administrative assessment to be reviewed or considered in a case where the sole ground is that the assessment is unjust or inequitable. As a consequence, section 30 of the Child Support (Assessment) Act 1989 purports to compel the First Applicant to pay the administratively assessed Child Support Liability. The applicants (at para 24) argue that the Child Support (Assessment) Act 1989 (Cth) (Assessment Act) is invalid because it purports to confer a taxation power upon the Registrar in contravention of ss 53 and 55 of the Commonwealth of Australia Constitution Act 1900 (Imp) 63 & 64 Vict, c 12, s 9 (the Constitution ) and (at para 25) purports to confer judicial power on the Registrar in contravention of s 71 of the Constitution . There is no substance in these attacks: see Luton v Lessels [2002] HCA 13 ; (2002) 210 CLR 333. Mr Whittaker has previously taken these contentions to the stage of a special leave application before the High Court: see Whittaker v Child Support Registrar [2004] HCATrans 252. Special leave was refused. Previously Mr Whittaker's judicial power argument was rejected by Drummond J in Whittaker v Child Support Registrar [2000] FCA 1733 ; (2000) 106 FCR 105 and Dowsett J in Whittaker v Child Support Registrar [2002] FCA 1429. His taxation power argument was rejected by Dowsett J in Whittaker v Child Support Registrar [2002] FCA 1430. On appeal, the Full Court held that Luton v Lessels "foreclos[ed] any constitutional challenge" ( Whittaker v Child Support Registrar [2003] FCAFC 114 at [4] ). As noted above, the High Court refused special leave to appeal. Further, an attempt to limit the scope of the operation of Luton v Lessels failed in Weekes and Child Support Registrar [2006] FLC p93-273 ; [2006] FamCA 598. I note that para 3 has been deleted from the further amended application. Paragraphs 24 and 25 should have been removed from the ASC. The applicants have merely added some particulars. Paragraphs 24 and 25 should be struck out without leave to replead. Mr Whittaker (in person with leave) submitted that Luton v Lessels does not constitute a binding precedent because the originating process on the High Court file in that case did not bear the seal of the High Court. The submission is devoid of merit. I also note that the deletion of para 1 in the further amended application was consistent with an abandonment of the submission. The First Applicant did not at any time give to the First Respondent a written statement of the First Applicant's tax file number. The First Applicant did not at any time give to the First Respondent a written statement of any kind authorising the Commissioner of Taxation to provide the First Respondent with information about the First Applicant, including tax file numbers, being information that is in the possession of the Commissioner of Taxation. The First Applicant did not at any time give to the First Respondent a statement in writing that the First Applicant has a tax file number but does not know what it is and has not asked the Commissioner of Taxation to inform the First Applicant of the First Applicant's tax file number and authorising the Commissioner of Taxation to tell the First Respondent the tax file number. The First Applicant did not at any time give to the First Respondent a statement in writing that the First Applicant has an application for a tax file number pending and authorising the Commissioner of Taxation to tell the First Respondent if a tax file number is issued to the First Applicant --- that number or if the application is refused --- that the application has been refused or if the application is withdrawn --- that the application has been withdrawn. The First Respondent did, without lawful basis, require the Commissioner of Taxation to provide the First Respondent with information about the First Applicant, including the First Applicant's tax file number and/or, without lawful basis, accessed confidential or private information, including the First Applicant's tax file number, being information that was in the possession of the Commissioner of Taxation. The First Respondent did, without the consent or authority of the First Applicant, obtain the First Applicant's tax file number, stored and maintained a record of the said tax file number and used the said tax file number in connection with the First Applicant's identity in breach of section 8WB of the Taxation Administration Act 1953 and/or in breach of the Privacy At 1988. The First Applicant reserves the right to supplement or amend these particulars after discovery. As a result of the negligence or breach of duty of the First Respondent his servants or agents the First Applicant has suffered loss and damage. The First Applicant did not at any time give to the First Respondent a written statement of the First Applicant's tax file number. The First Applicant did not at any time give to the First Respondent a written statement of any kind authorising the Commissioner of Taxation to provide the First Respondent with information about the First Applicant, including tax file numbers, being information that is in the possession of the Commissioner of Taxation. The First Applicant did not at any time give to the First Respondent a statement in writing that the First Applicant has a tax file number but does not know what it is and has asked the Commissioner of Taxation to inform the First Applicant of the First Applicant's tax file number and authorising the Commissioner of Taxation to tell the First Respondent the tax file number. The First Applicant did not at any time give to the First Respondent a statement in writing that the First Applicant has an application for a tax file number pending and authorising the Commissioner of Taxation to tell the First Respondent if a tax file number is issued to the First Applicant --- that number or if the application is refused --- that the application has been refused or if the application is withdrawn --- that the application has been withdrawn. The First Respondent did, without lawful basis, require the Commissioner of Taxation to provide the First Respondent with information about the First Applicant, including the First Applicant's tax file number and/or, without lawful basis, accessed confidential or private information, including the First Applicant's tax file number, being information that was in the possession of the Commissioner of Taxation. The First Respondent did, without the permission or authority of the First Applicant, obtain the First Applicant's tax file number, store and maintain a record of the said tax file number and use the said tax file number in connection with the First Applicant's identity to determine the First Applicant's Child Support Income amount and the said assessment of child support liability. Section 16B of the Collection Act, referred to in the ASC, provides that the Registrar may request, but not compel, a person who is a payer or payee in relation to a registrable maintenance liability to give the Registrar a written statement of the person's tax file number. Section 8WB of the Taxation Administration Act 1953 (Cth) (TA Act) referred to in the ASC prohibits a person, under penalty, from recording another person's tax file number or maintaining such a record, using another person's tax file number in a manner connecting it with the other person's identity, or divulging or communicating another person's tax file number to a third person. Section 150B of the Assessment Act referred to in the ASC empowers the Registrar to request, but not to compel, certain persons to give the Registrar a written statement of the person's tax file number or, if the person does not have one, to apply to the Commissioner for a tax file number and to give to the Registrar a written statement of that number after the Commissioner has issued it to the person. Paragraphs 28, 29 and 31 are defective for not pleading the elements of a claim in negligence, namely, material facts showing that a duty of care was owed, breach of that duty, and causation of loss. Similarly, the paragraphs are defective for not pleading material facts showing the existence of an obligation of confidence in relation to specific information, that the information had the required quality of confidence, and that there was unauthorised disclosure or use of the information. The respondents make the following submission : A further reason to strike out the paragraphs is that they are premised upon reasoning that led to the original paragraph 7 of the Amended Application. The respondents contended that there should be summary dismissal of that part of the proceedings relating to ... this aspect of the case. The relief is premised upon the view that s 8WB(1) of the Taxation Administration Act 1953 (Cth) prevents the Registrar from exercising powers under ss 16C(1) of the Registration Act [a reference to the Collection Act] or s 150D(1) of the Assessment Act to require the Commissioner of Taxation to provide the Registrar with information about people, including their tax file numbers, unless and until the person or persons concerned have first provided statements under ss 16B(4) or (5) and 150C(2) or (3) of those respective Acts. The short answer is that s 8WB(1) of the Taxation Administration Act does not apply in connection with the Registrar exercising powers or performing functions under, or in relation to, the Assessment Act and the Registration Act : see s 8WB(1A)(b) of the Taxation Administration Act and s 202(ga) of the Income Tax Assessment Act 1936 (Cth). This argument or one materially identical was considered and rejected by Dowsett J in Whittaker v Child Support Registrar [2002] FCA 1430 at [4] . It has not merit whatsoever and this part of the proceeding should be summarily dismissed under s 31A of the Federal Court of Australia Act . Section 16C(1) of the Collection Act and s 150D(1) of the Assessment Act empower the Registrar to require the Commissioner of Taxation to provide the Registrar with information about people, including tax file numbers, being information that is in the possession of the Commissioner. In each case, information provided by the Commissioner to the Registrar may be used only for the purposes that are specified in s 16C(2) or 150D(2) as the case may be. The general prohibition of s 8WB of the TA Act and the power given by the Assessment Act to the Registrar do not impinge on the specific powers given to the Registrar by s 16C of the Collection Act and s 150D of the Assessment Act. Paragraphs 28 and 29 of the ASC should be struck out without leave to replead. I note that the associated paragraphs of relief have already been deleted in the further amended application. Paragraph 31 of the ASC has the same defects as paras 28 and 29. It should also be struck out without leave to replead. However, since the pleading of negligence or breach of duty has been struck out, para 34 should also be struck out, without leave to replead. Since paras 24, 25, 30, 32 and 33 of the amended statement of claim are struck out, without leave to replead, the proceeding should be dismissed in so far as it seeks the relief identified in para 8 of the further amended application. The expression "in the premises" should not be used unless it is clear that the reference is to that which immediately precedes it. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | pleading motion to strike out paragraphs of pleading distinction between pleading of material facts and giving of "particulars". direct interference with contractual relations by unlawful means inducement of breach of contract distinction between the two grounds of tortious liability requirement as to alleged tortfeasor's state of mind pleading. practice and procedure torts |
The application asserted that the first and second respondents were in contempt of orders made by Greenwood J on 28 April 2006, Spender J on 18 April 2007, and Spender J on 15 November 2007. 2 The Amended Notice of Motion also sought orders consequential on any finding of contempt. As Mr Catlin of Counsel for the applicants submitted, " (T)he orders we do seek are not simply in the nature of criminal contempt penalties. ... We do seek the restitution of the funds from the cattle sales and the Davis mortgage. 4 Extensive affidavit material was filed by the parties to the Amended Notice of Motion seeking committal for contempt. A hearing of the Amended Notice of Motion occurred on 2 April 2008. In addition to the affidavit evidence, oral evidence was called and cross-examination of Mr Wallader occurred on that date. At the conclusion of the oral hearing, the Court reserved its decision in relation to the Amended Notice of Motion. The proceeding is now considered settled amongst the parties. However, the parties have not agreed to discontinue the proceeding given there are various tasks to complete and accordingly the applicant will not be filing and serving a notice of discontinuance. 6 Subsequent to the above correspondence by the parties with Deputy District Registrar Belcher of the Queensland Registry, the Court wrote to the solicitors for the parties seeking clarification of their position in relation to the Amended Notice of Motion. The applicant agreed it would not make any further submissions in the Federal Court on the contempt Notice of Motion. However, the parties acknowledged in the settlement that they could not finally resolve the contempt Notice of Motion as it was a matter within the discretion of the Federal Court and they also acknowledged the Federal Court may still give judgment on the contempt Notice of Motion. 10 The solicitor for the respondents later reaffirmed his view that " the settlement between the parties negates the need for Justice Spender to decide the Notice of Motion. 12 Having regard to the above communications, in my view, there is no utility in proceeding to determine a matter which has been overtaken by the further negotiations and agreements reached between the parties. It is not the function of the Court to give advisory opinions on disputed questions of fact, where there is no current controversy concerning what had previously been claimed by way of relief in a dispute between the parties. The Amended Notice of Motion, in addition to orders of committal, sought consequential orders concerning the proceeds of cattle sales and the restitution of funds obtained by the grant of the Davis mortgage, matters which, I infer from the correspondence, are caught by the settlement agreement. 13 For these reasons, it is not appropriate to make any order on the Amended Notice of Motion. The Amended Notice of Motion seeking that relief is therefore dismissed. In those circumstances it is appropriate that the Court make no order as to costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender . | alleged breach of court orders dispute settled subsequent to hearing notice of motion seeking order that respondents are in contempt of court for breaching interlocutory freezing orders further negotiation occurred subsequent to hearing of notice of motion parties entered into deed of settlement settling the matter after hearing but before judgment in light of settlement no utility in a practical sense in pronouncing judgment on the committal application notice of motion dismissed contempt |
The registrar also made an order fixing the costs for the plaintiff, the Deputy Commissioner of Taxation (the Commissioner). At the time of making the orders, the Company was the subject of voluntary administration. On 29 October 2007, Mr Mitchell Ball (the Administrator) had been appointed as administrator pursuant to the Corporations Act 2001 (Cth) (the Act). An application was then made for review of the registrar's order. More specifically, the registrar had been asked to adjourn the hearing of the winding up application pursuant to s 440A(2) of the Act. By that provision, the Court must adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. The reason why the Company had sought an adjournment under s 440A(2) is that a meeting of creditors had been convened for 23 November 2007 for the purpose of considering a proposal that the Company enter into a Deed of Company Arrangement. The application for review came before me on 19 November 2007 when I made orders that the orders of the Deputy Registrar be stayed up to 5 pm on 23 November 2007. The Administrator gave undertakings to the Court that he would not sign any Deed of Company Arrangement prior to 5 pm on 23 November 2007. On 23 November 2007, the meeting of creditors was held at which approval of a somewhat varied proposal was given. Later in the day I adjourned the hearing of the application for review to today and extended the stay up to and including today. I have now heard full argument on behalf of the Company and the Commissioner on the question of the review. The review is by way of hearing de novo , on the basis that the Court hearing the review must exercise whatever discretions were to be exercised by the registrar originally exercising power. That in effect requires the Court, on the basis of the evidence before it at the hearing of the review, to determine whether the application for an order to wind up the company should be adjourned on the basis that the Court is satisfied that it is in the interests of the Company's creditors for the Company to continue under administration rather than be wound up. The Company indicated that, if the Court is not satisfied that all of the prerequisites for the making of the winding up order are satisfied, it would consent, to the extent necessary, to the waiver of any rules or other formal requirements necessary for the making up of winding up order. The object of Part 5.3A, which deals with the administration of a company's affairs with a view to executing a Deed of Company Arrangement, is to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or so much as is possible of its business, continuing in existence or, if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditors and members than would result from an immediate winding up of the company. At the meeting of creditors of thr Company held on 23 November 2007, the Administrator rejected proofs of related creditors on the basis that there was insufficient evidence to support those proofs. The Administrator also referred creditors to a written statement prepared on behalf of the Commissioner, which had been circulated to creditors, urging them to vote against the proposal for the Company to execute a Deed of Company Arrangement. The Administrator also tabled a copy of a licence agreement between the Company and Distinctive Cleaning Enterprises Pty Limited (Cleaning Enterprises). Under that licence, Cleaning Enterprises agrees to perform the Company's obligations under cleaning contracts entered into with Westfield Shopping Centre Management Co Pty Ltd. That appears to be necessary because the Company no longer has any fixed assets with which it could perform its obligations under the cleaning contracts and it appears that the Company no longer has any employees. Indeed, there is evidence that the Company's fixed assets were transferred to Cleaning Enterprises at some time in the reasonably recent past for a sum of $800,000. The precise circumstances in which that transfer took place are not clear. Motor vehicles at depreciated value $ 83,708. Office furniture and equipment at depreciated value $ 22,528. The balance sheet as at 30 June 2007 shows no such assets. The accounts also show a liability of the Company for "Directors Loan". The liability as at 30 June 2006 was $2,037,931 and as at 30 June 2007 was $1,718,180. The circumstances of the reduction are by no means clear and the connection between the deduction and the disposal of the Company's fixed assets is also unclear. When the proposal was put to the meeting, four creditors voted in favour, being Mack Partnership, Koppa Cleaning, Z & M Corporate Cleaning Services and the, for debts totalling $1,834,022.66. The two other creditors who were present, being the Commissioner and the Office of State Revenue, voted against the proposal in respect of debts totalling $1,379,645.04. The Administrator therefore determined that the resolution was passed. It is by no means clear how the director proposes to pay the amount of the Director Penalty Notice. The extent of his assets is uncertain. Inconsistent information has been provided at different times concerning his assets. The most recent information indicates an asset of some $800,000 owing by Cleaning Enterprises. That may well be the amount of the consideration received by the Company for the sale of its fixed assets. However, as I have said, the loan account of the director is quite uncertain as are the transactions that have affected it in the recent past. The licence agreement to which I have referred operates only for so long as the Administrator acts in that capacity. It would not continue after the proposed Deed of Company Arrangement is entered into. The Commissioner suggests that, therefore, the objects of s 439A would not really be achieved. On the other hand, one of the objects is to ensure that, if it is not possible for the Company or its business to continue in existence, there is a better return for the Company's creditors and members than would result from an immediate winding up of the Company. The answer to that question is by no means clear. The Administrator estimates a possible return of slightly in excess of 13 cents in the dollar to creditors if the liabilities are as he understands them and the Deed of Company Arrangement proceeds. On the other hand, if the Company goes into liquidation at present it has a deficiency of assets to liabilities of some $2,060,838. Further, it has an operating loss for the year ended 30 June 2006 of $366,046 and for the year ended 30 June 2007 of $588,252. The material presently available does not indicate how the Company came to incur those losses and why it continued to trade in circumstances where it was incurring such losses. Thus it cannot be said that, if the Company went into liquidation, there would necessarily be no return to creditors. Certainly the assets of the Company as they presently stand would not result in any return. However, the solicitors for the Commissioner have indicted to the Administrator that, after an appropriate investigation has been conducted by a liquidator, the Commissioner would be prepared to consider any application made for funding to proceed against the director for insolvent trading, voidable transactions or unreasonable director related transactions. It is by no means totally clear, therefore, that the creditors are better served by the proposed Deed of Company Arrangement. Further, the return of 13 cents is dependent upon the payment by the director of the amount of the Penalty Notice Payment thereby reducing the liability of the Company to the Commissioner. The Commissioner also points to other matters as being contrary to the public interest and possibly contrary to the interests of creditors as a whole. The proposal that was put to the creditors involves the director not foregoing his debt but capitalising the debt. Further, the provision of the deed fund of $250,000 is to be by way of loan by the director. Thus it is theoretically possible that, if the Company became profitable, the director would be repaid in full, whereas the present creditors would have no more than at best the 13 cents in the dollar. However, those are not matters which are directly relevant to the interests of creditors. On the other hand, the question of whether $160,000 will be paid and the possibility of a claim against the director in respect of the transfer of fixed assets and insolvent trading, do not persuade me that it is clear that the creditors are likely to receive more by reason of the proposed Deed of Company Arrangement. In any event it would always open to the director to put a proposal to a liquidator that involved a Deed of Company Arrangement and a termination of the winding up if, after appropriate inquiry, the liquidator was satisfied that there was no prospect of further recovery. It may well be that that is unlikely and that the only reason why the director is prepared to put forward the present proposal is in order to avoid investigation. That is a matter of speculation. I am not persuaded that it is in the best interests of the creditors for the Company to remain in administration. Accordingly I would conclude that there ought to have been no adjournment of the winding up application. It follows that, on review of the application for an adjournment, I would refuse the adjournment. It also follows therefore that the winding up order that was made on 16 November 2007 would stand and when the stay ceases that would become an effective order. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | application to adjourn winding up order review of order of registrar hearing de novo whether in interests of creditors of company for company to remain in administration. corporations |
The Liquidators have brought this proceeding in the name of Pan and in their capacity as liquidators of Pan. I shall refer to all plaintiffs as the Liquidators. 2 The defendant, Mr James Selim, was the chief executive officer of Pan. The Liquidators are claiming damages against Mr Selim on the basis that he breached the duties that he owed to Pan as its chief executive officer. More specifically, the Liquidators say that Mr Selim failed to ensure that Pan adopted and applied good manufacturing principles ( GMP ). 3 The proceeding has been on foot for some years and it is presently fixed for hearing commencing on 2 June 2008. Questions have arisen concerning the extent to which the Court should permit the Liquidators to rely upon expert evidence concerning aspects of the operations of Pan that are alleged to have resulted in breach of duties by Mr Selim, including opinion evidence under ss 79 and 80 of the Evidence Act 1995 ( the Evidence Act ). The questions arise in a context where the Liquidators have failed to comply with the Court's directions in relation to the filing of such evidence. 4 On 9 June 2006, the Court ordered that, by 1 December 2006, the Liquidators serve, inter alia, all affidavits, both lay and expert, on which they wish to rely. On 16 November 2006, because the Liquidators were unable to comply with that order, the Court ordered that that order be vacated and that, by 31 May 2007, the Liquidators serve all lay affidavits on which they intend to rely and all expert affidavits on which they intend to rely. However, on 12 March 2007, those orders were also vacated and the Court ordered that the Liquidators serve all lay affidavits on which they intend to rely and all expert affidavits on which they intend to rely by 31 May 2007. 5 The Liquidators failed to comply with the directions of 12 March 2007 so far as they concern expert opinion evidence. No satisfactory explanation has been provided for the failure, other than that the task was more complex and the identification of appropriate experts was more difficult than had been anticipated. It is somewhat surprising that no attempt was made by the Liquidators and their advisers, until well after 31 May 2008, to have the matter relisted for the purpose of proffering some explanation and seeking an extension of time for compliance with the directions. The Court ordered the Liquidators to file and serve a motion in relation to variation of the then current orders for filing the Liquidators' evidence, together with any supporting affidavits on which they wish to rely. The motion and affidavits were to be filed by 3 October 2007 and the motion was initially listed for hearing on 12 October 2007. The Liquidators filed an outline pursuant to that direction, explaining the reliance that they wished to place on the Disputed Reports. 8 The material in the Disputed Reports is voluminous and detailed. Reliance upon the material is vehemently opposed by Mr Selim. Mr Selim, for reasons related to his health, is anxious that the proceeding be heard as soon as reasonably practicable and contends that he would be placed under unfair pressure and stress by having to respond, at this stage, to the material on which the Liquidators now seek to rely. Apart from the failure of the Liquidators to comply with the Court's directions, Mr Selim also opposes the admission of the Disputed Reports on the bases that much of their contents is irrelevant or of little weight, that they do not satisfy the requirements of s 79 of the Evidence Act for the admission of opinion evidence and that, even if some of the material is otherwise admissible, it should be rejected under s 135 of the Evidence Act . By reason of the provisions of the Therapeutic Goods Act 1989 (Cth) ( the TG Act ), Pan was not permitted to manufacture therapeutic goods unless it was the holder of a licence under the TG Act. Under the TG Act, the Secretary of the Department of Health and Ageing ( the Secretary ) had power to suspend or revoke a licence if the holder failed to comply with any conditions of the licence. 11 Pan was the holder of a licence under the TG Act until April 2003. The conditions of that licence included that Pan must observe the requirements of the 1990 Australian Code of Good Manufacturing Practice for Therapeutic Goods --- Medicinal Products ( the Code ) and that the person nominated as having control over quality control measures must maintain such control. The Code included requirements that the quality assurance manager be promptly notified of all departures from the master formulae for products, that the quality assurance or quality control department should participate in the investigation of deviations and that Pan have in place a documented procedure for the review of reports of such deviations, the assessment of whether a significant problem exists and the allocation of tasks for corrective action. 12 Most of the goods manufactured by Pan were either registered or listed on the Australian Register of Therapeutic Goods ( the Register ) kept under the TG Act. Such goods had to be manufactured in compliance with the information provided as part of the application for listing or registration. The Secretary had power to cancel the registration or listing of goods on the Register if it appeared to the Secretary that the quality, safety or efficacy of the goods was unacceptable. 13 On 5 February 2003, the Therapeutic Goods Administration ( TGA ), which is part of the Department of Health and Ageing, identified a number of alleged critical deficiencies in Pan's compliance with the Code and, as a result, a delegate of the Secretary imposed a new condition on Pan's licence, preventing it from manufacturing certain products. Following that, the TGA conducted a broader audit of Pan's operations, which led to an audit report in April 2003 that identified additional alleged critical deficiencies in Pan's compliance with the Code. As a result of those reports, and on the recommendation of an expert advisory group appointed by the TGA, Pan's licence was suspended by a delegate of the Secretary on 28 April 2003. 14 Mr Selim was the only director of Pan with executive management responsibility and he was involved in various aspects of Pan's manufacturing operations. Prior to the listing of Pan for quotation on the Australian Securities Exchange ( the ASX ) in 1999, Mr Selim was aware of serious problems with product quality, compliance with the Code and quality assurance and quality control procedures. He was aware that serious problems of that type continued to occur from the time of Pan's listing on the ASX up until April 2003. 15 Paragraphs 69 and 70 of the second further amended statement of claim filed by the Liquidators ( the Statement of Claim ) assert that a person in the position of Mr Selim would have ensured or, alternatively, would have taken reasonable steps to ensure, that he was regularly and sufficiently informed as to whether or not Pan was acting in compliance with the Code and the conditions of Pan's licence. • Requiring that Pan's general manager provide Mr Selim with written monthly reports dealing with other specified matters. • If Mr Selim had delegated any of his powers in relation to Pan's compliance with the Code and the conditions of its licence to the general manager, requiring that the general manager provide him with such written reports as when necessary to ensure that the general manager was exercising the powers in conformity with the duties alleged in the statement of claim. • Requiring copies of minutes of regular meetings between managers and from time to time attending such meetings. • From time to time Pan's General Manager was authorising the release of raw materials for use in manufacturing and the release of finished products for sale prior to the completion of all the testing required by the Code. • From time to time raw materials specified in the registered formulation for a product were substituted for other raw materials. • From time to time, finished products were released and dispatched without the completion of any or all quality control testing of the raw materials utilised. • One of Pan's standard operating procedures ( SOPs ), dealing with the acceptance of finished products and raw material analytical results which are outside specification, was in breach of a requirement of the Regulations made under the TG Act, requiring that control over quality control measures remain with Pan's quality assurance manager. • There was an entrenched practice at Pan of changing formulations of products to enable a satisfactory product to be made. • Pan's Validation Master Plan had been implemented only in limited respects. • The computer controls at Pan were inadequate and there had been no validation of the computer system. • There were serious deficiencies in the measures employed at Pan to present cross contamination. • There were significant deviations in the products manufactured by Pan. • There were instances of poor GMP practices throughout Pan's operations. • There was a practice by which the control by Pan's quality assurance manager over quality control matters was regularly overridden by Dr Brennan, Pan's general manager. • There was an inadequate number of staff to carry out all the quality assurance and quality control testing required by the Code. • Pan did not implement reasonable procedures for the regular audit of its compliance with GMP. • Pan did not have in place adequate training procedures. • Pan did not have in place or did not adequately implement certain identified systems, practices, procedures and policies. • Correspondence between Pan on the one hand and the TGA concerning a proposed validation master plan. The Liquidators claim that, in breach of his duties, Mr Selim failed to take reasonable steps to ensure each of those seven matters. The Liquidators say that that alleged breach by Mr Selim of his duties caused the adverse findings in the audits conducted by the TGA, leading to the loss of Pan's business. There are then seven sections dealing with each of the seven aspects identified in the instructions and the questions, running to some 88 pages. Thus, the total GMP Report is 97 pages in length, ignoring the table of contents. • As expert opinion evidence of Pan's non-compliance with the Code. The Remediation Costs Report follows on from that first purpose, by providing estimates of the likely costs, as at May 2002, of implementing the corrective action identified in the GMP Report. 20 The Clark Report itself, without its attachments and annexures, consists of 192 paragraphs running to some 76 pages, ignoring the table of contents. 22 The Liquidators say that the rejection of the Disputed Reports would be highly prejudicial to their case and that the interests of justice dictate that they be permitted to rely upon them, notwithstanding the very significant and almost contumelious failure to comply with the Court's orders. Mr Selim responds that the rejection of the Disputed Reports would not be unduly prejudicial to the Liquidators' case because they are either entirely, or for the most part, inadmissible or, to the extent that they are admissible, they would have so little weight that their rejection would not prejudice the Liquidators' case to any significant degree. • They do not establish what it is that the opinions are based on. • They are not reports based on opinions derived as a result of an explanation of how a defined field of specialised knowledge possessed by the witness, by reason of training, study or experience, and on which the opinion is wholly or substantially based, applies to the facts established or assumed, so as to produce the opinion. Rather, the Disputed Reports are, in many respects, an adoption, without more, of a highly detailed, lengthy set of assumptions, the drafting of which results in their being nothing more than answers to grossly leading questions. • In the case of the Clark Report, Dr Clark does not possess the necessary and required degree of independence, in so far as his initial retainer was to assist the Liquidators' legal team to draft the claim against Mr Selim: in undertaking that role, Dr Clark prepared parts of the statement of claim and the schedules to it; further, he provided advice to the Liquidators, in respect of which the Liquidators claim legal professional privilege and which they have declined to provide to Mr Selim or his legal advisors, and Dr Clark incorporated substantial parts of the advice that he gave into the Clark Report. On 21 December 2007, the Liquidators filed a document in relation to each of the Disputed Reports, extracting opinions on which the Liquidators wish to rely ( the Extracts Documents ). (See Arnotts Limited v Trade Practices Commission (1990) 24 FCR 313 at 350-352). 26 A person experienced in a particular discipline may, in the course of a lifetime, accumulate a mass of material about the subject of the person's expertise, from his or her own practice, from journals, from newspaper reports and from discussion with fellow practitioners, much of which the person may not be able to recall but which enables him or her to express an opinion more accurately than one who has examined only the facts regarding particular instances. Such a witness may base an opinion on his or her experience, without having to prove by admissible evidence all the facts on which the opinion is based. Such witnesses regularly generalise from experience, calling in aid all their training and professional experience in expressing an opinion upon a matter within their field (see Arnotts at 350-1). 27 In many instances, a witness who has experience in a particular discipline may not himself or herself know the answer to a particular problem from his or her own study or experience. However, being trained in the relevant discipline, the witness may be able to refer to works of authority in which the answer is given. In that sense, the witness may be said to be acting as a librarian. In that function, the witness is not giving evidence of his or her own opinion, except to say that, in his or her opinion, the books to which reference is made are of sufficient standing to be accepted by the Court (see Arnotts at 351.). 28 The third function of such a witness can be to apply statistical methods to material available from various sources in order to draw relevant conclusions. The statistical expertise and experience of the witness may be brought to bear on material otherwise in evidence (see Arnotts at 351-2). 29 However, it is not permissible for such a witness to take over the role of advocate, although a witness having expertise in a particular discipline may have a legitimate role of advocacy in that the evidence given by the witness may include arguments as to the conclusions that can be drawn, and perhaps should be drawn, from the facts that the witness is asked to assume. Nevertheless, the extent to which opinion evidence, if so given, will have greater or less weight will depend upon the extent to which the witness furnishes specific detail as to the actual experience of the witness. Even if the witness is not required to prove by admissible evidence all the facts on which an opinion is based, those facts ought to be stated with sufficient specificity to enable them to be tested by cross examination (see Arnotts at 352). • The opinion sought to be relied upon must be shown to be wholly or substantially based on that specialised knowledge. Knowledge is "more than subjective belief or unsupported speculation": it refers to "any body of known facts or any body of ideas inferred from [known] facts or accepted as truth on good grounds" (see R v Tang (2006) 65 NSWLR 681 at 712). Further, under s 80 , evidence of an opinion is not inadmissible only because it is about a fact in issue or an alternate issue or about a matter of common knowledge. 31 The prerequisites contained in s 79 may well have the practical effect of emphasising the need for attention to requirements of form. By directing attention to whether an opinion is wholly or substantially based on specialised knowledge, which is in turn based on training, study or experience, the section will not be satisfied unless the opinion is "presented in the form that makes it possible to answer that question" ( HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414 at 427). The Court must be furnished with the necessary scientific criteria for testing the accuracy of the conclusion. 32 Opinion evidence must go beyond a bare ipse dixit ( Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 745 and R v Tang at 715). Before opinion evidence will be admissible under s 79 , the witness must explain how the field of specialised knowledge in which the witness is expert by reason of training, study or experience and on which the opinion is wholly or substantially based applies to the facts assumed or observed so as to produce the opinion given. Unless those two prerequisites are satisfied, the opinion evidence will be of no value to the Court, in the sense that it would be accorded no weight. It should not be left to the cross-examiner to attempt to illicit the facts or assumptions upon which opinions are based. The evidence must demonstrate an identifiable reasoning process against which the conclusions can be tested ( Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd [2000] FCA 1463 ; (2000) 120 FCR 146 at 151). 33 In considering the weight of so-called expert evidence, it is necessary to consider two aspects of the evidence. The first aspect is the expertise or experience of the expert. 34 Alternatively, such special knowledge or expertise might be the result of experience, where no particular technical study or education has been undertaken by the witness, such as in the case of managers and the like. Such evidence will often have less weight afforded to it. While it may be admissible as opinion evidence, because of the provisions of ss 79 and 80 , the Court may often be in as good a position as the so-called expert to assess such matters if it simply goes to ordinary experience. 35 The second aspect to be considered in assessing the weight of expert evidence is the nature of the evidence that the expert is to give. 36 Very little, if any weight, should ever be accorded the last category of opinion evidence. It may be admissible by reason of the operation of s 80 , however, in so far as it is an opinion by reference to a legal standard, it will be essential, before it can be admissible and certainly before any weight can be afforded to it, that the expert's understanding of the relevant legal standard be established and be shown to be in accordance with the law. 37 Thus, an opinion as to whether conduct satisfies or falls short of a particular standard, such as whether particular conduct was in breach of a duty of care entails an examination as to what the expert's understanding is of the duty of care. Where the so-called opinion is proffered as to whether conduct satisfies or falls short of a statutory requirement, such as the Code, the expert must make clear just what his understanding of the effect of the Code might be. Unless the witness makes perfectly clear what he understands the Code to mean, his evidence as to whether particular conduct satisfies or falls short of it cannot be tested and can have no weight. The letter of instructions also informed Mr Williams that the Liquidators' solicitors wished to meet with him before he commenced drafting his report. 39 Mr Williams was asked to assume that the Code set out the relevant quality principles with what Pan was required to comply. It also informed him that the questions related to aspects of Pan's operations and quality control that generally correspond with the Liquidators' allegations concerning Mr Selim's failure to take reasonable steps, as outlined above. 40 For each of those seven aspects, Mr Williams was asked to provide his opinion on what he would have advised in a report to Pan had he been retained by Pan as a consultant on GMP, in or about May 2002, and requested to conduct a full GMP audit of Pan and to prepare, in conjunction with Pan's own quality assurance manager, a plan of corrective action to ensure the compliance of Pan's practices and procedures with the Code and the conditions of Pan's licence. He was also asked to provide an explanation as to what matters he would take into account in giving that opinion and the reasons for that opinion, together with his opinion and reasons on whether a number of particular actions specified by the solicitors in the questions should have been taken. 41 The questions in relation to each matter were in a similar form. Each matter was the subject of two questions. That of itself has the consequence that the Court does not have the benefit of Mr Williams untutored evidence as to what such a hypothetical report from him would have included. One of the very significant questions that will fall for decision by the Court was thus pre-empted, namely, whether, if such a hypothetical report had been sought by Mr Selim at the relevant time, any of the seven aspects complained of would have been the subject of such a report. 42 That difficulty is exacerbated by the form of the second question in relation to each of the seven matters. • If in your opinion no action would have been taken, please explain why. Accordingly, the Court would not have the benefit of Mr Williams's untutored evidence as to whether in his hypothetical report, Mr Williams would have had regard to those specific questions. 44 Attached to the Statement of Assumptions was a schedule listing relevant officers and employees of Pan and another schedule containing a glossary of terms used in the Statement of Assumptions. The assumptions that Mr Williams was invited to make for the purposes of his opinion went through several versions. The version attached to the GMP Report is dated 27 August 2007 and runs to 49 pages. 45 The Statement of Assumptions is a detailed statement of facts relating to Pan and its operations containing the kind of detail that it would be necessary for the Court to include in its findings in the course of its reasons for judgment. The Statement of Assumptions also contains legal propositions concerning Pan's regulatory environment, statements concerning Pan's contractual arrangements with parties with whom Pan had entered into written supply agreements and statements concerning Pan's potential liability to consumers under the Trade Practices Act 1974 (Cth). The GMP Report itself also cross-refers to both the Statement of Assumptions and the nine volumes of other documents. • A deficiency may be "other" either because it is judged as minor, or because there is insufficient information to classify it as major or critical. • One-off minor lapses or less significant issues are usually not formally reported, but are brought to the attention of the manufacturer. He does not refer to any TGA material in support of that assertion. 48 Having regard to the detail of the material placed before Mr Williams and the detail contained in the GMP Report itself, the analysis of the GMP Report, and the testing of the opinions contained in it, many of which will be contested by Mr Selim, would occupy a very considerable amount of Court time as well as judicial time out of Court. I do not propose to deal exhaustively with the whole of the GMP Report. However, in order to explain the nature of the evidence and the deficiencies in the material, I shall say something about the various sections of the GMP Report. Since particular attention was focussed on Section 2 , I shall begin with Section 2 as exemplifying the GMP Report and its deficiencies. However, before dealing with the detail of the GMP Report, I shall say something about Mr Williams expertise and experience. That shows that Mr Williams has been employed in the pharmaceutical industry since 1971. During that period he held line management positions in quality assurance, quality control, production and packaging in Australian based multinationals such as CSL Limited and Faulding (Mayne Pharma and now Hospira). During the period, Mr Williams prepared for and hosted a number of GNP audits including audits from sponsors, the TGA, the United Kingdom's Medicines and Health Care Regulatory Authority and the United States' Federal Drug Agency ( FDA ). 51 Since 1989, Mr Williams has been a full time professional consultant in GMP and quality assurance within the pharmaceutical industry. He says that his contact with those companies was in fields directly related to quality assurance, GMP compliance, training and validation. In the affidavit, Mr Williams also answered a series of further questions posed to him by the Liquidators' solicitors. 55 Mr Williams said that he has been a fulltime consultant, specialising in providing advice and training in relation to GMP since 1989. About 75% of his work involved consulting to manufacturing companies within Australia. The balance involved consulting to manufacturing companies in South East Asia. • Developing and delivering GMP, good laboratory practices, quality assurance and validation training packages, for prescription, over the counter and complimentary manufacturers. • Golden Glow, a manufacturer of complimentary medicines with a staff of around 30 to 40 and a range of in excess of 100 products. • Parke-Davis, a manufacturer of over the counter and prescription products with in excess of 250 staff and a product range well in excess of 150 products. • Probiotech, formerly PharmAction, a contract manufacturer of prescription, over the counter and complimentary medicines with in excess of 80 staff manufacturing in excess of 150 products. • Herron Pharmaceuticals, a manufacturer of complimentary medicines and over the counter products with in excess of 150 staff and a product range in excess of 250 products. 58 In the period up to May 2002, Mr Williams was engaged, either by himself or with another consultant, on around 15 occasions to carry out a full GMP audit and recommend any corrective action. Those occasions related to one or other of the above clients, other than Probiotech. 59 During the period from 1989 onwards, Mr Williams has worked for SeerPharma Pty Ltd ( SeerPharma ) and its predecessor, Pharma Systems International (PSI) Pty Ltd. As at May 2002, SeerPharma had active projects for around 30 to 40 companies to whom consultancy services regarding GMP validation training on quality systems were being provided on a continuing or ad-hoc basis. Mr Williams had direct experience with approximately 20 to 25% of those projects. 60 Mr Williams said that there is extensive discussion between the GMP consultants in relation to the projects on which they are working, which involves a discussion in relation to the nature of manufacturing practices and operations. In the two years up to May 2002, Mr Williams had direct or indirect experience, as I have described, with more than 30 manufacturing companies. Over the five year period to May 2002, he had direct or indirect experience with more than 100 manufacturing companies. 61 Mr Williams was cross examined on his affidavit of 29 November 2007. In particular, he was asked about the statements made in paragraph 49 of the GMP Report. He said that, before he formed and expressed that opinion, he turned his mind to an industry survey that he was asked to carry out by Bristol-Myers on their quality assurance and quality control levels. He surveyed three other companies and compared them to Bristol-Myers. The other three companies that he surveyed were Sigma, Parke-Davis and Pfizer. Mr Williams also said that his consulting experience at Herron, Parke-Davis and PharmAction and his experience when he was a quality assurance manager and a quality control manager were matters to which he turned his mind when considering staffing levels. Mr Williams said that he turned his mind to the staff levels in the quality assurance department in each of Herron Pharmaceuticals, Parke-Davis, PharmAction and Sigma. Would your report have included recommendations regarding measures relating to staffing levels in the quality control department? (b) Employing mechanisms such as "key ratio" systems. (c) Any investigating or reporting obligations that were appropriate for Mr Elia [Quality Assurance Manager] in relation to the adequacy of Pan's quality control resources. (d) The number of staff to be employed for testing raw materials, process controls, finished products, stability and validation. (e) Actions upon identifying any deficiency in the number of staff. • If in your opinion no action would have been taken, please explain why. Paragraph 49: With respect to the staffing levels within the Quality Assurance area and Quality Control laboratories I would advise that the QA and QC groups were significantly understaffed for the rate of new products being introduced, and the number of raw materials/finished products being tested each month. The basis for my opinion is primarily the range of activities required under the [Code], the large production/testing throughput and the large volume of existing products having to be maintained compared to the low number of staff employed within the QA/QC departments and in comparison to industry norms. The QA Manager should re-introduce monthly reporting by the QA Manager to the General Manager and ensure that those monthly reports include key ratio metrics on such items as testing throughput, backlogs, constraints and resource requirements. In the event that the laboratory and/or the QA Manager could not meet their requirements the General Manager should confer with the CEO in regard to provision of more permanent staff, a pool of contract staff or out-sourcing work to qualified contract testing laboratories. 64 The GMP Report then proceeds to say why those steps would have been recommended. Mr Williams quoted extracts from cll 302 and 802, which relevantly require that key personnel should be "adequate in number" and that provision for the management of quality should include "an adequately staffed laboratory". However, no criteria for adequacy are stated in the Code. 66 In the Extracts Document for the GMP Report, the Liquidators set out the opinions of Mr Williams that they seek to have admitted pursuant to s 79 of the Evidence Act . Since QA and QC activities are often seen as an operating overhead it is important to have metrics in place to justify resource levels. The balance of the extract appears to be part of the reasoning leading to those opinions. 68 In one sense, the first opinion leads nowhere. The Liquidators did not put forward the statement contained in para 49, which is set out above, as an opinion of Mr Williams upon which they would rely. That statement was that the quality assurance and quality control groups were significantly understaffed for the rate of new products being introduced and the number of raw materials/finished products being tested each month. The present absence of key ratios is simply a mechanism whereby one determines the adequacy of staff level. In my opinion both the QA and the QC staffing levels were well below industry norms, even allowing for a mix of complementary and registered medicines. • According to the Statement of Assumptions, the number of employees in quality control, which means a combination of quality assurance and quality control staff, was fourteen as at December 2001. • According to the Statement of Assumptions, the laboratory needed to test somewhere between 1,100 and 1,700 batches per month. • As a minimum, no less than five tests would normally be conducted on any batch on average and, accordingly, a reasonable estimate of the number of tests would be around 7,000 per month. • On the assumption that there were approximately eight laboratory staff, every analyst had to test up to 200 lots per month or up to ten per day: if each lot or batch required five tests, that amounted to 50 tests per day or 6 per hour. • The staff levels in the laboratory must have been grossly inadequate to handle the testing volume required: in running laboratories analysts generally manage at best three to four batches per day. • Therefore, key personnel responsible for managing and supervising manufacture, quality assurance and quality control were not adequate in number. 71 The only question of opinion that is contained in the reasoning and the conclusion is the assertion that analysts generally manage at best three to four batches per day. Mr Williams asserts that conclusion is based on studies that he has previously conducted relating to laboratory staffing loads and on his experience. However, he does not identify in the GMP Report those studies or the particular experience that gives rise to that opinion. • According to cl 805 of the Code, the QA Department is responsible for a number of separate tasks. • Pan had a library of over 4,000 products, each of which required quality assurance approvals, oversight and maintenance of product related documents. • The introduction of a new product, even if it is a variation of an existing product, required at least some twelve separate steps. • It would take two to three full time quality assurance staff just to manage the documentation associated with that activity. • Given the number of subordinate managers required to deal with the activities referred to above and the number of staff required to deal with the activity connected with the introduction of a new product, the staffing levels of the QA Department were inadequate. 73 The gravamen of the reasoning is that Pan needed a group of subordinate managers. No specific or concrete examples are given of the use of such managers by companies comparable to Pan. The assertion is not susceptible of testing. However, as I have already said, the studies and the particular experience are not identified in the GMP Report. 75 The Liquidators assert that Mr Williams' opinion concerning the number of tests that would normally be conducted and the number of batches that could be managed by an analyst per day is based on Mr Williams' specialised knowledge of such matters. They say that such knowledge is based on his experience in working in and running laboratories and in preparing resource budgets, his experience in consulting to companies in relation to their laboratory operations and a specific study he has conducted of four pharmaceutical manufacturers, which involved assessing their level of staffing relative to their level of production. 76 The GMP Report says that it is normal industry practice for functional departments, such as the QA Department and the QC Laboratory, to report formally to a general manager on a regular basis, usually monthly. In a subsequent affidavit, Mr Williams says that, in his experience, around eighty percent of manufacturing companies have such a practice in place. However, he does not identify any such company. 77 The GMP Report also states that the level of staff in Pan's QA Department and its QC Laboratory was below "industry norms" and that high numbers of staff were required to cope with the volume of tests and the documentation that needed to be maintained. However, the GMP Report says nothing of the so called industry norms. ... • He identified the range of tasks for which the QA Department is responsible. • It is usual for a QA Department to have a series of subordinate managers to deal with those tasks. • The QA Department would need between 7 and 10 staff to maintain the portfolio, in addition to the current 2 to 3 staff, and around 6 subordinate managers of the type identified in paragraphs (i) --- (vi) quoted above. • Identifying the staffing levels typical in industry to manage the documentation involved with introduction of new products. • Therefore, it would be very difficult to perform the necessary QA tasks in relation to the introduction of new products, on the basis of the assumed staffing levels at Pan. They point to the evidence contained in Mr Williams' subsequent affidavit, as to his training, study or experience, upon which his claimed specialised knowledge is based. However, it is significant that Mr Williams refers to no specific staffing levels in relation to any particular company with which he has had experience. While that may not be fatal to the admissibility of his opinion, it goes very much to the weight of the evidence, if it were admitted. 82 The Extracts Document also refers to Mr Williams' conclusion that, in paragraph 52 of the GMP Report, the deficiencies in staffing levels to which he refers constituted a "major deficiency". The Liquidators say that the classification of deficiencies in complying with GMP involves the application of specialised knowledge regarding the possible consequences and risks attached to the deficiency and the assessment of the significance of those risks. The Liquidators again point to Mr Williams' subsequent affidavit as to his training, study and experience as the basis for his specialised knowledge on which the opinion is based. It follows the structure of Section 2, as outlined above. The purpose of this is to ensure clear, traceable and regular communication to senior management of activities, risks and issues. Paragraph 40.2: The [standard operating procedures] that describe position descriptions for the QA and QC Managers do not sufficiently define their levels and authority and reporting relationships to demonstrate the independence of the person in charge of Quality Control on the TGA licence. ...the effect of this deficiency is that the authority of the QA Manager is insufficiently clear and [that] he could be bypassed in decisions relating to independently evaluating product quality and the testing of raw materials and finished products. The GMP Report does not identify any specific expertise or furnish any particulars of standards generally observed in the industry. The Liquidators point to assertions in Mr Williams' later affidavit that, in his experience, around 80% of manufacturing companies have such a practice in place. He says that the manufacturing companies that do not have that practice are usually smaller and exchange information informally. However, no particular companies are identified and no explanation is given as to how the figure of 80% was arrived at. Mr Williams asserted in cross-examination that his assertions were based on his auditing experience and his consulting experience. 85 Mr Williams identifies particular features that are absent from relevant standard operating procedures as a result of which he says there was no separation between those having authority for production and for quality. However, the so called opinion is an assertion about Pan's job descriptions, in terms that they "do not sufficiently define ... levels and authority and reporting relationships", without specifying any standard of which the job descriptions fall short. 86 The conclusion that there is a "critical deficiency" is simply a conclusion without reference to any other instance of a company that has exhibited a critical deficiency. They follow the format of Sections 1 and 2. Paragraph 64.1: ...the effect of this deficiency ... is that the existing audit program would not be effective, particularly in relation to implementing corrective actions and prevention of re-occurrence of compliance problems. ...the effect of this deficiency is that [Pan] does not have assurance that all GMP related employees are effectively training to carry out their tasks. Paragraph 73.2(b): ...the SOP training program did not have any system for assessment of skill or knowledge transfer to operators. Paragraph 73.2(e): There was a computerised GMP program... The value of this product is dependent on the English literacy of the employee and the utilisation of the assessments to identify those staff who lack understanding of GMP principles. Paragraph 73.3(c): The training requirements include the following --- training schedules, training events, assessments and records/evidence of training. Each of these require [sic] management oversight and co-ordination. It may be that Mr Williams has experience that would enable him to say what is normally done in pharmaceutical companies carrying on a business similar to that of Pan. It is not apparent from the GMP Report what that experience is. 89 In his subsequent affidavit, Mr Williams says that, in his experience, around 90% of the SOPs relating to internal audit all contain most of the steps he identifies as missing from Pan's SOPs. He says that, in the case of large companies, they almost always contain all or most of those steps. He says that the manufacturing companies that do not have that practice are usually smaller and exchange information informally (paragraph 74(c)). 90 No explanation is given as to how the figure of 90% was reached and Mr Williams concedes that some of the steps he refers to are not contained in such unidentified SOPs. Significantly, Mr Williams does not address the fact that the TGA audit of Pan carried out in May 2002 found no difficulty with Pan's SOPs and found that Pan's operators were conversant with the SOPs. 92 The substance of the opinions expressed in Section 5 is that it is a critical deficiency not to employ a trend register or other quality metric. Mr Williams provides no identification of other companies who maintained trend registers as at May 2002 or what is covered by such a register. Mr Williams say that the reason for focussing on those four areas is that they are areas where "ineffective controls" could most likely result in the release of "defective product" to the market place or the failure to identify released products that "could merit recall action". However, the conclusion is simply not shown to be based on any particular experience and a complete absence of reasoning makes the opinion worthless. 95 Subsequently, the GMP Report contained a notation that the failure to ensure all product related complaints were routed via the QA Department for investigation was a major deficiency. (d) There did not appear to be any consideration of the potential impact of a new product on the cleaning of common equipment. The GMP Report makes no effort to identify the particular training, study or experience on which the so-called specialised knowledge is based other than his general experience described already. 97 Section 7 is Mr Williams' assessment of alleged deficiencies in implementing a recommended validation plan. Paragraph 107.5: ...validation is a core compliance requirement and the site supports over 4,000 products --- this workload would easily justify the appointment of a full time resource group headed by a validation officer. It is most likely this officer would need support resources such as protocol writer(s) and clerical assistants. Paragraph 109: In my experience the TGA directed industry to the Pharmaceutical Inspection Cooperation Scheme (PIC/S) guidance for validation called "Validation Master Plan --- Installation and Operational Qualification, non sterile process validation and cleaning validation". The TGA was a member of the PIC/S Scheme and supported the guidelines introduced by PIC/S. The PIC/S [Validation Master Plan] document was adopted by PIC/S in December 1998 and brought into force in March 1999. In my experience, TGA auditors generally applied the principles in that document to the industry as a means of interpreting [the Code] requirements for validation. Many of these weaknesses were introduced at the final draft by Dr Brennan's changes. One key effect is that new products and significant changes to existing products do not automatically fall under consideration for validation. Given that new products were regularly introduced... it is highly likely that many products would be in commercial manufacture without validation support under the requirements of the [Validation Master Plan]. Paragraph 113: [There were a] significant number of manufacturing deviations, changes to formulations, incidents of raw material and finished product being out of specifications, and complaints from customers/sponsors over the previous three years. These four factors are, in my opinion, reliable indicators of the effectiveness of in-process controls and therefore process validations... End point testing, on a limited number of samples, has been shown to not be effective in assuring safety, efficacy or purity of pharmaceutical products. Paragraph 115: ...the failure of the Validation Master Plan and programs to address in sufficient detail the requirements for computer validation, process validation, validation of changes and validation of new product introduction [is a] Major Deficiency. 99 In relation to the assertions in paragraph 109 concerning the pharmaceutical inspection to operation scheme, the Extracts Documents says that that material is factual evidence admissible apart from s 79 of the Evidence Act . However, it is no more than bald assertion about what TGA did or did not do. If the TGA "directed industry" as the GMP Report asserts, that can be proved. The assertion is no more than a conclusion based on unidentified primary facts. The Liquidators refer specifically to paragraph 72 of the Statement of Claim. 101 Mr Selim complains that the GMP Report, however, is not premised on paragraph 72. Rather, it is premised on the 49 pages of the Statement of Assumptions and 9 volumes of documents, which go well beyond paragraph 72 and have taken the Liquidators four years to compile. 102 The GMP Report and the further affidavits affirmed by Mr Williams furnish no evidence of what a full GMP audit or corrective action plan customarily looked like in May 2002. While Mr Williams asserted in cross-examination that he had conducted 72 audits in his career, many with multiple repeats, he did not produce in answer to a subpoena any audit reports that looked anything like the GMP Report. 103 Mr Williams and SeerPharma failed to produce, in answer to subpoenas, any documents that would demonstrate whether Mr Williams had relevant expertise in providing the sort of report he was asked to assume that he had been retained to provide in May 2002. If Mr Williams had provided a full GMP audit and corrective action plan for a company in Australia in an industry similar to Pan in the years prior to May 2002, there should have been no difficulty in identifying the client and the approximate date upon which the plan or audit was provided. The inference is clearly open that Mr Williams never did such work and that the conclusionary statements in Mr Williams' curriculum vitáe, mask Mr Williams' lack of relevant expertise to express the opinions contained in the GMP Report. 104 None of the documents produced in answer to subpoenas is similar to what a GMP compliance audit at May 2002 or any other relevant time would have looked like. Even if it be accepted that the purpose of the GMP Report was not to produce a counterfactual audit report, but to indicate the deficiencies that would have been identified if an audit had been conducted and the corrective action that would have been recommended, the Court could not conclude with any safety or specificity what Mr Williams would have found or recommended, particularly in circumstances where he was comprehensively assisted by the written work and consultative assistance of solicitors and counsel for the Liquidators. Mr Williams had never previously produced anything similar in size or scope to the GMP Report for a company that resembles Pan. He had never produced anything during the relevant period that took the extraordinary amount of time that the GMP Report took to produce and that required the background assistance of four years of legal work and subsequent consultation with lawyers. In contrast, the GMP Report took about 15 or 16 days of full time work over a period of four to five months, involved at least five lengthy meetings with lawyers at which the content of the report was discussed and was assisted by the provision of ten volumes of documents concerning Pan. 106 Mr Williams indicated that a particular report that he furnished to Morgan Grenfell, which was produced in answer to a subpoena, had similarities with the way he normally conducted audit reports. The substance and length of the Morgan Grenfell report is entirely different from the GMP Report. The Morgan Grenfell report related to a company called MediHerb. In the Morgan Grenfell report, the TGA view of MediHerb at the relevant time was considered central to the audit. 107 The GMP Report does not purport to be a full GMP audit or corrective action plan. Rather it is a series of answers to the highly specific and leading questions posed by the solicitors for the Liquidators. Mr Williams was led to provide answers to highly specific questions as to the actions that the Liquidators assert should have been taken. The questions go into such detail as, for example, employing "key ratio" mechanisms, making recommendations about internal audits, what a written training program should address and what reporting procedures for the QA manager should be established. 108 Nowhere in the GMP Report, which Mr Williams took months to prepare and which was based on assumptions that took the Liquidators' legal team years to generate, does Mr Williams identify an actual example of an industry company, similar to Pan or otherwise, that followed or did not follow what Mr Williams identified as norms or practices. His opinions therefore are virtually incapable of being tested. 110 However, Mr Williams does not identify any independent body of GMP standards generally observed by businesses like Pan's, other than the Code. Rather, much of the GMP Report represents Mr Williams' conclusions as to whether standards in the Code were breached. Of necessity, that involves either the construction of the Code or the application of the Code to the facts that Mr Williams was asked to assume. They are roles for the Court and not for opinion evidence. Even if opinion evidence as to those matters might strictly, so long as s 79 were satisfied, be admissible under s 80 of the Evidence Act , the evidence would have little, if any, weight. 111 Even if the construction of the Code were something on which expert evidence were required, because of technical or scientific ambiguity or some particular technical or scientific usage, Mr Williams does not address such matters in the GMP Report. In particular, the GMP Report contains no statement of Mr Williams' view of the interpretation of the Code, in so far as that might be different from its meaning in ordinary English. There is no reference to any particular experience on the part of Mr Williams where the Code has been interpreted in a particular way different from its meaning in ordinary English and there is no reference to any general body of opinion on the interpretation of the Code. There are merely assertions that Pan has breached the Code. At its highest, the GMP Report represents a statement by Mr Williams of what he now says he would have concluded, had he been furnished, in or before May 2002, with the Statement of Assumptions and the nine volumes of documents. 112 For opinion evidence of Mr Williams to be afforded any weight, it would be necessary to demonstrate that he has had broad experience in the types of matters under consideration and has been called upon to perform the tasks about which he expresses opinions or that he has scientifically researched such tasks. It would be necessary to show how his experience and specialised knowledge in the particular field forms a basis for his opinion. 113 An example is Mr Williams' treatment of key ratios. Mr Williams outlines what he considers to be relevant key ratio indicators. He refers to the Code, implying that the Code requires a key ratio system. The Code does not mention such a concept. The GMP Report makes no suggestion that "key ratios" were matters considered by the industry at any time prior to May 2002. Those observations appear to be prompted by the specific question posed to Mr Williams by the Liquidators' solicitors. 114 There is no suggestion in the GMP Report or in Mr Williams' affidavits that there is any single company in Australia that uses a key ratio system. There is no evidence of levels of staff in QA Departments or QC Laboratories at any other companies like Pan at the relevant time. There is no evidence about the effect, in terms of quality, of the testing done by different levels of staff. 115 The most that can be gleaned from the GMP Report is that Mr Williams is of the opinion that key ratios are something to which a company should aspire. However, in the absence of some specific indication that key ratios were employed in the industry prior to May 2002 and the way in which they were employed by comparable businesses, that opinion has no weight. Neither the GMP Report nor Mr Williams' affidavits afford any means of testing his opinions as to how many people Pan should have employed and what impact any deficiency would actually have had on the products manufactured by Pan. 116 Mr Williams on several occasions uses phrases such as "industry norm" and asserts matters based on his "experience". However, neither the GMP Report nor Mr Williams' affidavits contain evidence of practices generally observed in the industry. No examples are given to demonstrate that there is any norm and Mr Williams does not at any time specifically identify any practice observed by any other company. After months of work, Mr Williams does not identify any specific company where the industry norms and practices to which he purports to refer were either observed or not observed. Mr Williams accepted that he did not spell out the actual basis of any of the claimed industry norms by reference to actual examples; nor did he identify a single occasion in his career where he had been confronted with any of the situations of which he wrote in the GMP Report. 117 In cross-examination, Mr Williams accepted that the so called industry norm as to staffing levels was no more than the notion that the more work there is, the more people are needed in the laboratory, although automation can reduce the number of analysts needed. Nevertheless, Mr Williams purports to express opinions about the specific number of extra staff required, based on an alleged industry norm. 118 Mr Williams was asked to assume, for the purposes of the GMP Report, that the Pan QA Department had two or three staff. Mr Williams was then asked what was the industry norm that he derived from his knowledge of the number of people at the four other companies. His response was that he would expect to see somebody controlling documentation, somebody controlling internal audit, somebody controlling invalidation, somebody looking at registration of the product and somebody sometimes looking after specification and looking after deviations and batch release. He acknowledged that no such industry norm was spelt out in the GMP Report. 119 Mr Williams was then asked where in the GMP Report he identified the respects in which Pan did not meet that so called industry norm. Mr Williams then drew a distinction between quality assurance and quality control, suggesting that companies would have substantially more people in the QC Laboratory, which involved laboratory testing. Mr Williams accepted that none of those figures were included in the GMP Report. His explanation was that he was not sure it was necessary to do so. 120 Mr Williams was then directed to one of the Assumptions that he had been asked to make, namely that Pan had 18 people in the laboratory in addition to the quality assurance manager and the quality control manager. The assumption was that approximately 5 staff members undertook raw materials testing, 9 staff members undertook in-process controls, 1 or 2 staff members undertook finished product testing and 2 staff members undertook stability testing. The assumption also went on to state that the number of staff employed in the laboratory was never assessed or determined by reference to any form of key ratio system or any other system based on how many products Pan produced. 121 Mr Williams was asked, in the light of that assumption, what was the industry norm from which he derived the number of people needed in the QC Laboratory as of May 2002. His response was that it would depend on the level of activity in the business, in relation to the number of batches they were testing or releasing. He said that it in a QC Laboratory the number of analysts is dependant upon the volume of work, so it would vary from company to company. That led to his acceptance of the proposition that the industry norm was no more than that the more work there was the more people were needed in the laboratory, subject to the level of automation. 122 The Liquidators say that the gist of Mr Williams' opinion was that, although he refers to "the industry norm", Pan simply did not have sufficient staff to meet its workload. Nevertheless, for the reasons already indicated, the GMP Report does not demonstrate how the allegedly specialised knowledge on which that opinion is said to be based is based on any specific or particular training, study or experience of Mr Williams. There is no indication in the GMP Report of any quantifiable technical or scientific analysis that would assist the Court in identifying the industry norms referred to by Mr Williams. The various bases for the industry norms or practices to which Mr Williams refers are no more than a most general rule of thumb, unconstrained by any specific actual or practical experience on the part of Mr Williams. 123 The Liquidators respond to the criticism of Section 2 of the GMP Report by suggesting that the GMP Report provides cogent reasons for the adoption of a key ratio system. They rely on the proposition that s 79 of the Evidence Act does not preclude an expert from generalising from experience in forming an opinion, so long as the expert possesses specialised knowledge and the opinion is wholly or substantially based on that knowledge. The expert does not need to identify individual examples in support of an opinion for that to be so. Be that as it may, the absence of specific examples in support of an opinion will go to the weight that should be afforded to the opinion. 124 The evidence of the GMP Report is not based on the fields of expertise described above, such as hard science, applied science or one of the social sciences. Nor is it the result of particular education or learning. Rather, it is based only on the experience of the witness. 125 There may be admissible opinion evidence within the GMP Report. However, substantial parts of the GMP Report consist of impermissible interpretation of the Code, and reproduction of the detailed assumptions that Mr Williams was asked to make and the voluminous supporting documents with which he was provided, which are prejudicial and of little weight. Neither Mr Selim nor the Court should be required to spend time extracting admissible evidence in the GMP Report in circumstances where it was produced four months after the date fixed by the Court, without any approach on behalf of the Liquidators to the Court for an extension of time or explanation for the blatant failure to comply with the Court's direction. In fact, the GMP Report was produced some 15 months after the Court first gave directions about its filing. On the earlier occasions when it was apparent that the Liquidators were unable to comply with the Court's directions, the time for compliance was extended. It is now apparent that Mr Williams had not even been instructed until well after the expiry of the time originally fixed. 126 Having regard to the argumentative nature of the GMP Report and the leading nature of the questions posed for Mr Williams' opinion, it should be given little weight of its own. It would be unfair for Mr Selim to have to cross-examine on the GMP Report in its current form, thereby running the risk of eliciting answers that may have greater weight than the GMP Report itself. 127 The GMP Report is cast in highly prejudicial terms from Mr Selim's point of view, apart from the prejudice arising from its late provision. Any admissible opinion evidence in the GMP Report is of such equivocal weight and would generate such further hearing time that I do not consider that any inconvenience or detriment from its rejection outweighs the inconvenience and unfairness involved for Mr Selim in preparing to answer the GMP Report at this stage. In the circumstances, to the extent that there is admissible evidence in the GMP Report, I would reject it under s 135 of the Evidence Act . 128 Nevertheless, the GMP Report appears to represent a substantial part of the case that the Liquidators seek to mount against Mr Selim, albeit not in an admissible form as evidence. Accordingly, while I would reject the GMP Report as evidence, it could possibly constitute a substantial submission on behalf of the Liquidators. If the material in the Statement of Assumptions is established by admissible evidence, a great deal of the work of counsel for the Liquidators will have been done by the GMP Report. That observation itself emphasises the defects of so called opinion evidence in a form such as the GMP Report. In response, Mr Williams provided the Remediation Costs Report of 10 October 2007. The Liquidators seek to rely on the Remediation Costs Report as evidence of the equipment, consultancy and other matters likely to be required to satisfy the recommendations in the GMP Report and the quantum of the cost of the equipment, consultancy and other matters. 130 In respect of each of the additional questions, Mr Williams was asked what he would have advised in the report to Pan had he been asked, in or about June 2002, to provide further details on the conclusions set out in the GMP Report. • Rewrite management and job descriptions and quality assurance procedures to reflect separation of authority and responsibility between quality assurance/quality control and production. • Establish quality metrics, trend analysis and a quality forum for regular reporting on GMP compliance and quality members and introduce a corrective action tracking system to verify closeout of problems. • Commission a study to evaluate what additional quality assurance and quality control resources are required. • Employ additional staff to ensure that such resources are available for the QA Department and QC Laboratory and introduce key ratio metrics to manage forward resource planning. • Commission a comprehensive independent external GMP and quality assurance compliance audit to establish a real base line of the gaps between current internal practices and the requirements of the Code and the TGA manufacturing principles. • Commission a literacy review of existing employees to identify those that may have difficulty understanding instructions or documenting records. • Commission a study to evaluate the additional training resources needed to deliver effective and compliant training. • Employ or internally appoint a dedicated training coordinator or manager to set up a structured training system. • Engage external expertise to deliver sustained GMP and quality assurance principles training. • Revise completely the customer complaints systems and introduce a searchable software based solution for managing and tracking complaints and their resolution. • Engage an independent pharmaceutical formulation expert to conduct a systematic review of all products manufactured over the last three years. • Commission an external GMP expert consultant/engineer to review the factory's potential for cross contamination of products. • Conduct a retrospective review of the training practices for all common equipment and revalidate cleaning effectiveness. • Appoint a validation officer and establish a dedicated validation team to implement validation programs. • Revise existing new product introduction procedures to include risk based process validation programs. 133 The Remediation Costs report contains Mr Williams' estimate of costs, either on a one off or annual basis for each of those items. The Liquidators rely on s 79 only in respect of those estimates. That is to say, in relation to each of the items, the Liquidators rely on Mr Williams' opinion as to the range of costs in respect of each recommendation. 134 The Liquidators support the admission of the Remediation Costs Report on the basis that, where Mr Williams has recommended an external service provider be retained, the costing is based upon Mr Williams' estimate of the hours required to complete that task and his knowledge of the prevailing daily rates. Where Mr Williams has recommended that additional staff be employed, the costing is based upon Mr Williams' recommendation as to the number of position and level of staff to be employed. The Liquidators say that there is no reason to find that Mr Williams' experience does not equip him to estimate the totality, in circumstances where Mr Williams has prepared the costing for the activities set out in most of the sections at some point, including for Herron and PharmAction. 135 None of Mr Williams' evidence discloses expertise in the area of costs estimates so as to support the opinions contained in the Remediation Costs report. Mr Williams gives no example of ever having done a similar exercise himself. He accepted in cross-examination that he has never previously been called upon to cost a corrective plan of the magnitude he suggests. The detail of the Remediation Costs Report effectively recommends rebuilding Pan from the ground up through complicated and extreme measures, with the assistance of numerous external consultants. The course suggested would take at least twelve months. No attention is given to the possible impact of those measures in the context of a listed company, which would require disclosure to ASX, investors and the TGA, or to the question of whether the other directors of Pan would have approved the course suggested. 136 The first recommendation involves the complete redrafting of all procedures, which Mr Williams estimates would take between 5,000 and 6,500 man hours. There is no suggestion that such a project has ever been shown to have been undertaken or done before in any other company. The estimated cost is between $328,000 and $666,875. Mr Selim suggests that such a proposal should not be accepted by the Court, in circumstances where Mr Williams has neither performed a similar process nor given any example where a company was required to undertake such a vast quantity of work. 137 In relation to the rewriting of procedures, Mr Williams states that his rationale for the recommendation is that the upgrade of the quality system needs to be outsourced rather than completed internally because he does not consider that the management of Pan had the depth of knowledge or demonstrated skills to bring Pan up to standard without external advice. He says that this view is based on the disrepair of the quality system itself, as set out in the GMP Report. 138 In relation to the question of rewriting procedures, Mr Williams says that his estimate is based on the engagement of an external party consisting of a senior consultant, a team of technical writers and clerical administration support. 139 However, there is nothing in the Remediation Costs Report to explain the basis upon which that estimate is derived from any particular training, study or experience on the part of Mr Williams. While the estimates of Mr Williams as to rates of particular personnel may be admissible, his conclusions and opinions as to what would be entailed can be afforded little weight. 140 In any event, the Remediation Costs Report cannot stand without the GMP Report. Since I propose to reject the GMP Report, the Remediation Cost Report should also be rejected. The attachment sets out numerous extracts from the Clark Report. The Liquidators say specifically that they do not rely on the Clark Report as evidence that the steps identified by Dr Clark were necessary, that failure to implement the steps showed a lack of care or skill or that it was common to implement the steps. The Liquidators propose that Dr Clark's evidence be admitted on the basis that it is evidence only of measures that were reasonably practicable to adopt and not as evidence of what ought to have been done or what a hypothetical reasonable officer would have done. 142 As to whether measures were reasonably practicable, the Liquidators say that Dr Clark's specialised knowledge regarding whether or not measures are reasonably practicable is based on his experience as a senior executive officer of Faulding, with responsibility for Faulding's manufacturing operations, including its manufacture of complementary medicines and as chief executive officer of Pharmacia LBK Biotechnology and Biochrom. The Liquidators say that his knowledge is also based on his experience in observing the practices in place at Faulding prior to his appointment to the role of chief executive officer, in observing the practices in place at Faulding after he ceased that appointment and in observing the practices adopted at Cenovis and Golden Glow, which were also manufacturers of complementary medicines. 143 While the questions posed to Dr Clark for the purposes of the Clark Report were different from those posed to Mr Williams, the substance of the areas covered by the questions was similar. The questions covered the seven aspects that were the subject of the allegations of breach by Mr Selim. Dr Clark's attention was drawn to specific matters, many of which corresponded with the matters that were the subject of the questions to Mr Williams. The introduction to the questions referred to the Statement of Assumptions and drew attention to defined terms in the Statement of Assumptions. Would a Reasonable Officer have taken any steps in relation to staffing levels for carrying out the testing required by [the Code] in relation to the products that Pan manufactured? 4. Would a Reasonable Officer have taken any steps in response to the request for an increase in staff numbers from Mr Elia at the meeting of 22 November 2001 (referred to in paragraph 225 of the Assumptions)? Would a Reasonable Officer have taken any steps in response to becoming aware at any time within the Period that Pan did not employ an adequate number of staff to carry out the testing required by the GMP Code? (b) Employing mechanisms such as "key ratio" systems. (c) Any investigating or reporting obligations that were appropriate for Mr Elia in relation to the adequacy of Pan's quality control resources. (d) The number of staff to be employed for testing. • If in your opinion no action would have been taken, please explain why. The Extract Document for the Clark Report contains extracts from paragraphs 51, 52, 54, 55, 56 and 58. In each case, however, the extract is cast in terms of what a reasonable officer "would" or "should" do. At no time does the Clark Report speak in terms of the reasonable practicability of particular measures. At no stage does the Clark report identify the criteria of practicability. Rather, it appears that the Liquidators invite the Court simply to conclude from Dr Clark's assertion that certain things should be done that those things were reasonably practicable. 146 The Clark Report does not purport to be evidence of the matters upon which the Liquidators now seek to have it admitted. That is to say, before the substance of the Clark Report could be admitted for the limited purpose for which the Liquidators now seek to rely on it, it would have to be completely recast. It should not be admitted as evidence of something that it does not say. On 22 July 2003, well before the proceeding was commenced, the Liquidators' solicitors wrote to Dr Clark in connection with their investigation of a potential claim against Mr Selim. Dr Clark agreed to assess the conduct of Mr Selim and to provide a report to the Liquidator. 148 Between November 2003 and May 2004, Dr Clark provided his views, as requested, in respect of sections of a draft statement of claim and in respect of the standards that he considered that a reasonable chief executive officer in the position of Mr Selim would adhere to. He was provided with additional documents for review throughout the period and considered those documents in formulating his opinions at the time. 149 The proceeding was commenced on 7 April 2004. Following service of the original statement of claim, the Liquidators' solicitors requested Dr Clark to commence work on the preparation of a report. In July 2004, they provided him with a copy of Mr Selim's request for particulars of the original statement of claim and asked him to review and discuss appropriate answers to certain of the requests. Dr Clark drafted a response. Between October 2004 and April 2005, Dr Clark worked on a draft report, which was to be used by the Liquidators' solicitors for the purposes of a mediation with Mr Selim that was to be conducted at the end of April 2005. 150 Between May 2005 and May 2007, Dr Clark had no involvement with the proceeding. However, on 3 May 2007, he was retained by the Liquidators' solicitors to provide a report for the purpose of tendering it in the proceeding. It is significant, in the present context, that this occurred some 10 months after the Liquidators were first directed to file affidavits as to expert evidence. The Statement of Assumptions was amended from time to time . 152 Ultimately, Dr Clark produced the Clark Report dated 6 September 2007. He originally said, in an affidavit affirmed on 18 October 2007, that, although there was some overlap between documents provided to him prior to May 2005 and the documents provided to him in May 2007, in preparing the Clark Report he relied only on the material in the Statement of Assumptions. However, in the course of cross-examination, Dr Clark accepted that he "cut-and-pasted" many paragraphs of the earlier reports into the Clark Report. 153 In 1998 and 1999 Dr Clark was the executive general manager of the health care consumer division of FH Faulding Pty Limited. In about 1998, Dr Clark visited Pan and met Mr Selim and Mr John Brennan in that capacity. The purpose of his visit was to obtain an overview of Pan's capabilities. He asserted in his affidavit that he did not rely on any observations he had made in dealings that he had had with Pan during that visit. Dr Clark also visited Pan's premises in November 2003 in connection with the retainer he had from the Liquidators at that time. He asserted in the affidavit that, for the purposes of the Clark Report, he did not rely on any discussions he had during that visit. 154 Between August 2003 and May 2005, Dr Clark played the role of advising the Liquidators' solicitors on matters relevant to the claim, suggesting questions for further investigation and assisting in the drafting of the original statement of claim and responses to requests for particulars of the statement of claim. The drafts prepared by Dr Clark have been the subject of a claim for privilege by the Liquidators, such that the extent of his involvement is not capable of being fully tested. That is significant in circumstances where Dr Clark accepted that he relied on earlier draft reports prepared by him in preparing the Clark Report, which the Liquidators now seek to tender. 155 Dr Clark says that he recognises that his primary duty is to the Court and to provide independent evidence such that no matters of significance that he regards as relevant have been withheld from the Court. On the other hand, he declines to reveal in his affidavit or give evidence as to the substance of the numerous prior communications that he has had with the Liquidators' solicitors in helping them to formulate their case against Mr Selim. It is well nigh impossible to test his credibility or reliability in circumstances where his role in the formulation of the case against Mr Selim is substantially unknown. 156 Dr Clark accepted that, by 13 August 2003, he had provided to the Liquidators a draft report that was critical of Mr Selim in respect of a number of the areas that appear in the Clark Report and six or seven areas in which Mr Selim is said to have failed in his duty. Dr Clark was also the author of detailed schedules to the original statement of claim making serious allegations against Mr Selim. 157 The prior involvement of Dr Clark in the preparation of the Liquidators' case against Mr Selim is not necessarily fatal to the admissibility of the Clark Report. However, in the light of Dr Clark's lack of independence and the insistence on professional privilege on the part of the Liquidators, it would be unfair to Mr Selim for Dr Clark's evidence to be before the Court. It cannot be properly tested. It should be afforded so little weight that its exclusion would not prejudice the Liquidators' case. First, he says Dr Clark does not have the required degree of specialised knowledge of how an appropriate chief executive officer performs in a business equivalent to Pan's. Secondly, the format of the evidence given by Dr Clark is challenged. 159 Dr Clark was never chief executive officer of a company equivalent to Pan. The highest position that he has held was head of division within Faulding but he was not chief executive officer. Dr Clark was never a member of the board of Faulding and did not have a direct line of reporting to the board of Faulding. There were many functions performed by Mr Selim, such as being responsible for investor relations, that were not performed by Dr Clark. Dr Clark frankly admitted that he was not experienced in dealing with the TGA. 160 While Dr Clark conducted a consultancy from 1999 onwards, he did not identify any consultancy that brought him into direct contact with chief executive officers of pharmaceutical companies such as Pan, in a way that would enable him to observe the practices of such companies. Dr Clark accepted in cross-examination that he understood only a bit about the practices of chief executive officers and could not recall any specific discussion relating to GMP. He also conceded that he just did not know how chief executive officers facing similar situations to Mr Selim had in fact behaved in Australia at the relevant time. He could not remember any of the specific practices of the two businesses, Cenovis and Golden Glow, that were acquired while he worked at Faulding. 161 That lack of experience is recognised, in a sense, in Dr Clark's affidavit of 6 December 2007, in which the standards and practices of responsible senior executives are touched on rather than that of a chief executive officer . Dr Clark observed in that affidavit that, while at Faulding, he did not provide to the management of any rival company any details of the practices and procedures adopted within Faulding in relation to manufacturing operations and cannot recall being provided with such information by the management of any other company, other than in the context of an acquisition of that company by Faulding. 162 Mr Selim also complains that the Clark Report does not satisfy the prerequisites of s 79 of the Evidence Act in that he does not set out material from which a conclusion could be drawn that Dr Clark's expressed opinions are wholly or substantially based on any specialised knowledge that he possesses. Nor does his report disclose how his opinions are based upon the experience described in those general terms. 164 The Liquidators also seek to rely upon the affidavit of Dr Clark affirmed on 6 December 2007. In that affidavit, Dr Clark responded to a series of questions posed by the Liquidators' solicitors. In particular, paragraphs 48 to 55 of the affidavit contain Dr Clarks response to a request to "identify the range of general considerations that a reasonably competent and careful CEO ( or equivalent responsible senior executive ) would take into account, when making decisions regarding GMP and Quality Issues" (my emphasis). In addition, the Liquidators seek to rely on paragraphs 57 to 62 of Dr Clark's affidavit as evidence of the fact that senior executives of specific companies identified in the affidavit adopted the practices and procedures identified in the paragraphs at the relevant time. I am aware that my predecessor in the equivalent role at Faulding... also adopted those practices prior to my appointment. It is no more than bald assertion by Dr Clark. It would have been possible for him to give evidence about what he actually observed in the particular companies to which he refers in his affidavit. Rather, the question to which paragraphs 56 to 62 are a response to pick up the language of the Clark Report. Dr Clark's response, the bald assertion that he adopted the measures set out in those paragraphs, has no real weight at all. • There is no evidence of what in fact occurred and the assertions are general as to be incapable of being tested. • As to at least two of the eight matters that he says he adopted at Faulding, he cannot confirm whether they were maintained at Faulding after he left. • As to half of the matters, he cannot say whether they were in place at Cenovis and Golden Glow, which were acquired by Faulding. • Dr Clark accepts that he was never in fact faced with a situation involving information that he was asked to assume was faced by Mr Selim. • To the extent that Dr Clark says that he engaged consultants to prepare a GMP audit, he has produced no evidence of the form that the audit took. • Significantly, Dr Clark concedes that he was not in a position to observe whether chief executive officers of pharmaceutical companies outside the Faulding group observed any of the practices to which he refers and the matters were never raised in discussions with other chief executive officers. Thus, Mr Selim says, Dr Clark's evidence is mere conclusory assertion, incapable of being tested, about practices that were in place in Faulding up to 1999 and in part in place in two companies acquired by Faulding. Such evidence does not establish any industry norm or standard. There is great substance and merit in those complaints, which would be bases for rejection of the affidavit. 170 I do not regard Dr Clark's report or his affidavit of 6 December 2007 as having any significant evidentiary weight on the limited basis upon which the Liquidators seek to have the material admitted. In order to test the assertions made by Dr Clark, it would be necessary for Mr Selim's counsel to spend an inordinate time in cross-examining Dr Clark as to the specific matters about which he makes broad generalisations. That is both unfair for Mr Selim and a substantial waste of time and costs, particularly in circumstances where the Clark Report was produced some four months and the affidavit some six months after the time fixed by the Court for the filing of expert evidence. On the other hand, the admission of the Disputed Reports at this stage would be unfairly prejudicial to Mr Selim. In addition, substantial judicial and court time, involving substantial cost, would be occupied by the examination of the content of the Disputed Reports. Accordingly, in circumstances where the Liquidators failed to comply with the Court's explicit directions, I do not propose to admit the Disputed Reports, although I may, at an appropriate time, to a limited extent, admit them as submissions. I certify that the preceding one hundred and one-hundred and seventy-one (171) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | expert evidence opinion rule admissibility of experts' reports under section 79 of the evidence act 1995 (cth) whether evidence is based on specialised knowledge based on training, study or experience whether the facts and assumptions upon which the opinions are based are adequate whether evidence is more than a bare ipse dixit general discretion to exclude evidence section 135 of the evidence act 1995 (cth) leave to file evidence out of time whether probative value is substantially outweighed by prejudicial effect whether admissible opinion evidence is of significant probative value if the facts and assumptions upon which the opinion are based are inadequately detailed in an expert's report effect of expert's involvement in preparation of one party's case including involvement in drafting of that party's statement of claim whether expert is sufficiently independent evidence evidence |
These reasons for decision record why, in my view, it was appropriate for the Court to grant declaratory relief as set out in those orders. I note that much of the material in these reasons has been taking from a joint submission which was helpfully prepared by the parties. In January 2009, the Australian Competition and Consumer Commission commenced proceedings against the respondent, AMV Holding Ltd, alleging that AMV had engaged in misleading and deceptive conduct in promoting certain content services through what the ACCC referred to as "BLiNG" advertisements published in 2008 in a magazine published by ACP Magazines Limited ("Dolly" magazine) and in certain magazines published by Pacific Magazines Pty Limited ("Girlfriend" magazine and "TV Hits" magazine). (The relevant advertisements are set out as Annexure C to these reasons. ) The ACCC alleged that in promoting the relevant content services, AMV acted in contravention of sections 52(1) and 53 (aa), (e) and (g) of the Trade Practices Act 1974 (Cth) (TPA). The ACCC sought declaratory and injunctive relief and other orders. The parties agreed to settle the matter, and the orders I made, which are set out as Annexure B to reasons, were made by consent. Both parties were represented by counsel. The agreed facts alleged by the ACCC in the statement of claim are set out as Annexure A to these reasons. 2) [2002] FCA 1548 at [1] and BMW Australia Limited v ACCC (2004) FCAFC 167 , (2004) 207 ALR 452 , (2004) ATPR 42-012 ( 'BMW' ) at [35]. On this aspect it should be noted that there is a long held view that a declaration, being a judicial act, should only be made on evidence and not simply on admissions or deemed admissions: see Bank of Kuwait and the Middle East v Ship MV Mawashi Al Gasseem (No.2) (2007) FCA 815 at [10] per Mansfield J and the cases referred to therein, particularly the observations of Kiefel J in ACCC v Dataline.Net.Au Pty Ltd [2006] FCA 1427 , (2006) 236 ALR 665. Further the Court is required to ensure that the party seeking the declaration has a real interest in seeking that relief: see Forster at 437 and Ainsworth at 582. And, finally, the Court has to ensure that there are sufficient consequences flowing from the making of the declaration that it is appropriate for it to exercise its discretion to do so. Thus, the Court should be slow to substitute its own view of the orders or undertakings for those which have been agreed by the parties as part of the terms of settlement: see ACCC v Real Estate Institute Western Australia (above ) at [22], ACCC v Virgin Mobile Australia Pty Ltd (No. 2) (above) at [2] and ACCC v Info4PC.com (above) at [18]. The practice [of refusing to make declarations on deemed admissions] is one of long standing and might be seen as derived from views about litigation which pre-date more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest. A caution with respect to the use of older authority is made in the White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2). Millett J made declaratory orders in Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 where justice to the plaintiff required it. The order however operated principally inter partes and it might be doubted whether it would be of interest to other persons. Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made 'upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the Court'. However, approaching the matter in an orthodox way, I was satisfied that the declarations I made were justified having regard to the facts conceded by the respondent which, in large measure, were evident in any event from the copies of the advertisements relied on by the ACCC in its application. For the preceding reasons I made the orders in Annexure B on 8 April 2009. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. May/June 2008 issue of TV Hits magazine (the Sixth BLiNG Advertisement ), a copy of which is annexed to the Statement of Claim and marked ' F '. "Free 4 U": including mobile video galleries and games, and accompanied by text reading: "No subscriptions! No rip-offs! "hotties": comprising images of men, accompanied by text reading: "No subscriptions! Subscribe to BLiNG! Is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Java Games cost $8 per week. HUNKS CLUB & FREE 4 U: Free to access no subscriptions. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. For customer support call 1300 857 633 or [email protected]. A $4 subscription fee applies to all new users. BLiNG! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK. "Java Games": comprising video games, accompanied by the text: "txt the itemcode to 194400" and "Subscribe to BLiNG! Subscribe to BLiNG! is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. Users under 15 must seek the account holders (sic) permission. For customer support call 1300 857 633 or [email protected]. A $4 subscription fee applies to all new users. BLiNG! "Mobile Games": comprising video games, accompanied by the text: "Join BLiNG! Is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. You must be over 14 to use this service. A $4 subscription fee applies to all new users. For customer support call 1300 857 633 or [email protected]. BLING! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK. "Steamy Celebrity": comprising images of celebrities, accompanied by text reading "100% no subscriptions! Subscribe to BLING! is a subscription club offering pics, tones, animations & more for just $4 per week until you send STOP to 19 44 00. Naked Celebrity is a non-subscription service. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. Play On tones are not recorded by the original artist and no representation is made to this effect. You must be over 14 to use this service. For customer support call 1300 857 633 or [email protected]. A $4 subscription fee applies to all new users. BLING! Is a brand of AMV Group PO Box 2952 London WC1N 3XX, UK. "Bare Celebrity": comprising images of celebrities, accompanied by text reading "no subscriptions! Subscribe to BLING! (c) MMVI New Line Productions, Inc. Shadowalker (c) 2007 Glu Mobile Ltd. All Rights Reserved. BLiNG! is a subscription club offering pics, tones animations & more for just $4 per week until you send STOP to 19 44 00. BLiNG! Java Games cost $8 per week. Customers will also incur normal operator SMS & browsing charges. You must be over 14 to use this service. Ringtones are not recorded by the original artist and no representation is made to this effect. A $4 subscription fee applies to new members. Bare Celebrity is a non-subscription service. For customer support call 1300 857 633 or [email protected]. BLiNG! The statement of claim alleges and particularises six distinct advertisements (respectively the first to sixth advertisement). AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(aa) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false representations with respect to the particular standard, quality, value or grade of the Content Services being advertised. AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(e) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false or misleading representations with respect to the price of the Content Services being advertised. AMV, while engaged in trade or commerce within Australia or between Australia and a place or places outside Australia, contravened s 53(g) of the Act by causing the BLiNG Advertisements to be published in connexion with the supply and promotion of Content Services in circumstances where the BLiNG Advertisements made false or misleading representations concerning the availability of the Content Services being advertised. | misleading and deceptive conduct power of the court to make declarations by consent trade practices |
I refer to this design as the Review Design. At the same time, the Court also dismissed Redberry's cross-claim for design registration invalidity: see Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588. 2 The question of costs now falls for determination. The details of the settlement offers were included in the parties' written submissions in support of the costs orders they seek: see O 23 r 8 of the Federal Court Rules (Cth). 4 The proceeding began on 10 April 2007 when the first applicant filed an application and a statement of claim. On 18 May 2007, Redberry filed its defence. Shortly thereafter, by a letter dated 1 June 2007, Redberry, through its then solicitors, Rose Chai Lawyers and Consultants, made an offer to settle the proceeding for the sum of $1,862 --- said to be the amount of profit made by Redberry in selling the allegedly infringing garments --- plus the first applicant's reasonable legal costs. This was Redberry's first settlement offer. The amount offered was said to be the profit made by Redberry on 133 imported garments sold at a price of $20 per garment less $6.00 as costs per garment. The letter also offered Redberry's undertaking that Redberry would cease to import, distribute or sell the garments. This offer was made "without prejudice except as to costs" and was open until 3.00 pm on 8 June 2007. 5 In the following week, Redberry filed and served an unverified list of documents. On 13 June 2007, Redberry swore its list of documents, which included reference to documents showing that Redberry had made the 133 garment sales as claimed. Redberry said that copies of these documents were sent to the applicants' solicitors on 25 June 2007. 6 By a letter dated 8 June 2007, the first applicant rejected Redberry's offer. In that letter, the first applicant offered to settle the matter on the basis that Redberry: (1) provide a written undertaking that it would cease and forever refrain from importing, selling or distributing garments infringing the Review Design; (2) would immediately deliver up any remaining stock of the allegedly infringing garments; and (3) pay the first applicant the sum of $200,000 for damages and costs. 7 On 4 July 2007, the parties attended Court-ordered mediation, which was unsuccessful. By notice of motion dated 11 July 2007, the first applicant sought: (1) leave to join Review Australia Pty Ltd as the second applicant in the proceeding; (2) leave to file an amended defence and amended statement of claim; and (3) summary judgment against Redberry. Also on 11 July 2007, Redberry gave notice that its solicitors on the record had become Clayton Utz. 8 After the hearing of the motion on 10 August 2007, the Court made various orders, including dismissing the motion and granting the first applicant leave to join Review Australia as the second applicant. 9 On 17 August 2007, Redberry filed its amended defence and a cross-claim. On 21 August 2007, Redberry, through Clayton Utz, made an offer of compromise, relying on Order 23 of the Rules. By this offer, Redberry offered to compromise the claim and cross-claim on the basis that: (1) Redberry would pay the sum of $20,000 to the applicants/cross-respondents, plus costs as taxed or agreed; (2) the payment would be made within 28 days after acceptance of the offer; and (3) the offer would be open for acceptance for 14 days beginning on the day after service of the notice. In its covering letter, Redberry stated that the offer was made "[w]ithout prejudice save as to costs". The letter also stated that the offer was exclusive of costs and that, if accepted, Redberry would also pay the applicants' costs in respect of the claim and cross-claim, as agreed or taxed on a party and party basis, incurred up to and including the day the offer was accepted. 10 By a letter dated 31 August 2007, the applicants rejected Redberry's second offer of compromise, but offered to settle the matter on the basis that Redberry: (1) provide a written undertaking in the terms sought in its earlier letter of 8 June 2007; (2) deliver up any remaining stock of the garments; and (3) pay the applicants/cross-respondents the sum of $100,000 for damages and costs. 11 On 21 September 2007, following a request for security for costs by Redberry, the second applicant provided an undertaking to the Court that it would pay any costs orders made against the first applicant in favour of Redberry. The effect of Redberry's letter of 21 August 2007 and the accompanying offer of compromise is that there were two offers: (a) an offer to settle the applicants' claim by payment of $20,000 plus party/party costs of the claim; and (b) an offer to dismiss the cross-claim and pay the applicants' party/party costs of the cross-claim. 2. An applicant's rejection of an offer of compromise made under O 23 of the Rules, where an applicant wholly fails in the proceedings, will not ordinarily result in an award of indemnity costs unless the rejection was "imprudent or unreasonable". 3. Even under O 23 r 11(4) of the Rules, the mere refusal of an offer followed by a judgment no less favourable than the offer does not automatically lead to indemnity costs. 4. Where a party advances an entitlement to an award of costs on a higher than party/party basis, it carries the onus of establishing the other party's conduct was imprudent or unreasonable. 5. 1.2 There was close similarity between the allegedly infringing garment and the Review Design, and the question of whether the differences were sufficient to reach a conclusion that there was no infringement was a matter of the judge's impression, which could not be predicted with certainty. 1.3 This was not a claim that was bound to fail, or even, more likely than not to fail. 1.4 The result turned upon the judge's impression, which was in favour of the applicants' case up to the point of considering the prior art. 1.5 There was a close similarity between the garment in question in this proceeding and the dresses in Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589. The fact that there was no infringement in this proceeding but infringements in the New Cover proceeding, and taking into account the state of discovery, the limited prior art relied upon at the time of the offer and Redberry's prior instances of copying, it was not unreasonable for the applicants to have considered that Redberry's garments were infringing. 1.6 To have accepted Redberry's offer of compromise at that time would have required the applicants to accept, in effect, that a person in China had independently conceived a design that was startling similar to the applicants' design and at the same time when another retailer --- New Cover Group Pty Ltd --- was also selling a dress remarkably similar to the applicants' design. It should be borne in mind that the Court made an award of $85,000 in damages against New Cover. 1.7 The prior art relied on by Redberry at the time of the offer was limited to 9 items, although supplemented to an eventual tally of 120 items. The case that the applicants were required to meet on the cross-claim (and indirectly on the claim to the extent that the cross-claim fed into the defence of the claim) was not known at the time of the offer. 1.8 It was reasonable for the applicants to believe that Redberry, as a wholesaler, would have imported substantially larger quantities than 133 garments and, therefore, the sum offered to have understated the amount of damages that might be obtained. 1.9 The applicants could not have predicted that the Court would accept Mr Liu's evidence. 1.10 The issue of whether Redberry could be regarded as the maker of infringing garments if it commissioned their manufacture outside Australia was not pleaded in the defence and was raised by the Court when judgment was reserved. 1.11 Redberry's letter of 21 August 2007 did not indicate with sufficient particularity how and why the applicants' case must fail and why the amount offered was such that its refusal would be unreasonable. 1.12 The applicants' counter-offer in its letter dated 31 August 2007 "cannot sensibly bear on the question of whether their rejection of [Redberry's] offer was unreasonable or imprudent, and should therefore be disregarded". The applicants summarily rejected the two settlement offers made by Redberry. Redberry's first offer of compromise was commercially reasonable and its rejection was unreasonable in light of both the legal position of the first applicant and commercial interest of the Review group more generally. 2. It is clear from the applicants' counter-offers and their conduct in the proceeding generally that the bulk of the damages claim was seen as being additional damages under s 75(3) of the Designs Act based on Redberry's alleged previous history in copying garments designed and created by others. Therefore, although it may be said that the applicants were not in a position to quantify their claims until the full extent of infringement was verified through discovery, it is fair to assume that confirmation of the extent of the alleged infringement was not the reason for rejection of Redberry's offers. 3. The applicants' claim, which rested in a claim for additional damages, was completely misconceived. This is illustrated by the rejection of the evidence of past alleged copying as being irrelevant and the finding that Redberry satisfied s 75(2)(b) of the Designs Act . 4. The applicants' position was unreasonable from the beginning. To pursue a claim for $200,000 in general damages and $400,000 in additional damages when the alleged infringement constituted the admitted importation and sale at $20 each of 133 garments is of itself unusual. To do so in the face of reasonable commercial offers of settlement is unreasonable. 5. The proceeding was commenced by the wrong party. In particular, Review 2 had already transferred the Review Design to Review Australia on 28 February 2007 when the proceeding was issued on 10 April 2007. Thus, the claim was bound to fail at least until Review Australia was joined as a party on 10 August 2007. 6. The conduct of the applicants in seeking to re-open and re-litigate past claims involving unproved allegations of infringement, which were both irrelevant and subject to written terms of settlement and releases. As a result, a substantial amount of time was spent on these irrelevant matters. 7. The fact that the proceeding was one of the first under the new Designs Act was no justification in rejecting the reasonable commercial offers of settlement. 15 Furthermore, Redberry relied on the terms of the offer of compromise of 21 August 2007 and O 23 of the Rules in support of its claim for indemnity costs in respect of the claim and cross-claim. 16 Subsequently, Redberry filed additional costs submission, with leave, to address the fact that, as the Court noted, O 23 r 11(6) did not commence operation until 2 August 2008. In these submissions, Redberry submitted that, if the Court were bound to follow Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 , in order for an award of indemnity costs to be made, the test was whether it was imprudent or unreasonable to reject the offer of 21 August 2007. 17 In relation to the costs of the cross-claim, Redberry submitted that it was to be treated as an "applicant" for the purposes of O 23 of the Rules: see O 5 r 11 and O 23 r 1 (where an "applicant" is defined to include a "cross-claimant" and a "respondent" is defined to include a "cross-respondent"). Thus, ordinarily, the applicants would pay Redberry's costs of the application and Redberry would pay the cross-respondents' costs of the cross-claim. In this case, however, the position is complicated by Redberry's offers of settlement. 19 I turn first to Redberry's latest offer of compromise of 21 August 2007, which invoked O 23 of the Rules. The offer complied with the formal requirements of the order, which are set out in O 23 r 3. The offer also provided a time for acceptance in accordance with O 23 r 5(3). 20 Currently, O 23 r 11(6) of the Rules applies "[i]f ... an offer is made by a respondent and not accepted by the applicant; and ... the respondent obtains an order or judgment on the claim to which the offer relates as favourable to the respondent, or more favourable to the respondent, than the terms of the offer". If applicable, this provision creates a presumptive entitlement in the respondent to indemnity costs after 11 am on the day after the offer was made. This provision is, however, a comparatively new one, having commenced operation only on 2 August 2008. The provision cannot apply to Redberry's offer of compromise, which was made in the preceding year, in August 2007: see Federal Court of Australia Act 1976 (Cth), s 59(4) and the Legislative Instruments Act 2003 (Cth), s 12(2)(b). 21 As at August 2007, the only provision in connection with costs following an applicant's rejection of a respondent's offer of compromise was O 23 r 11(5), which deals with the position "[i]f ... an offer is made by a respondent and not accepted by the applicant; and ... the applicant obtains judgment on the claim to which the offer relates not more favourable than the terms of the offer". If applicable, this provision also creates a presumptive entitlement in the respondent to indemnity costs. The provision cannot apply to Redberry's offer of compromise, however, because the applicant not only rejected the respondent's offer but was wholly unsuccessful in the claim. In this circumstance, O 23 r 11(5) of the Rules has no application: see Coshott v Learoyd [1999] FCA 276 at [37] per Wilcox J; Dukemaster [2003] FCAFC 1 at [6] per Sundberg and Emmett JJ; and Seven Network Ltd v News Ltd (2007) 244 ALR 374 at [32] per Sackville J. 22 Further, Redberry cannot rely on the terms of O 23 r 11(4) in relation to the applicants' rejection of the offer to compromise its cross-claim. Order 23 r 11(4) applies "[i]f ... an offer is made by [cross-claimant] and not accepted by the [cross-respondent]; and ... the [cross-claimant] obtains judgment on the claim to which the offer relates not less favourable than the terms of the offer". Although it gives rise to a presumptive entitlement to indemnity costs in favour of the offeror in the circumstances to which it applies, it cannot apply here because the cross-claimant's cross-claim was wholly unsuccessful. 23 The authorities recognise that the making of an offer outside O 23 by a respondent, which is rejected by an applicant who turns out to be wholly unsuccessful, is a matter to be taken into account in determining the nature of the costs order to be made. In such a case, a respondent claiming indemnity costs must show that the rejection of the offer of compromise was imprudent or unreasonable: see Dukemaster [2003] FCAFC 1 at [7] ; University of Western Australia v Gray (No 21) [2008] FCA 1056 at [36] per French J; and Seven Network 244 ALR 374 at [39] and [51]. Where a cross-claimant makes an offer, which is rejected by a cross-respondent, and the cross-claimant ultimately fails, the position is quite different since there is little, if any, basis for saying that the rejection of the offer of compromise was imprudent and unreasonable. 24 The question is, therefore, whether or not it can be said that the applicants acted imprudently or unreasonably in rejecting Redberry's offer of compromise in relation to the applicants' claim. Plainly enough, even in the present circumstances, the mere refusal of an offer of compromise is not sufficient to satisfy this test: see John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 206 per Hill J and Dukemaster [2003] FCAFC 1 at [7] . Although the refusal of the offer is a factor to take into account, it is not determinative on the question of indemnity costs. As Sackville J said in Seven Network 244 ALR 374 at [65], "the court is required to consider whether the rejection of the offer of compromise was unreasonable by considering, among any other relevant circumstances, the strengths and weaknesses of the applicants' case, looking at the claim prospectively at the time the offer was made" (emphasis original). 25 The following factors support the conclusion that the applicants' rejection was not imprudent or unreasonable. 1. The Designs Act introduced a comparatively new statutory framework and, as at August 2007, there were few decisions under the Act concerning the issues arising in this case. The authorities, therefore, provided limited guidance as to the likely outcome. 2. The applicants' claim was tenable. It was not unreasonable. There were what I referred to as "clear similarities between the Review Design and the design embodied in the Redberry garment"; and there was also the direction in s 19(1) of the Designs Act to be considered. Of course, the directions in ss 19(2)(a) , (c) and (d), 19 (3) and (4) had to be borne in mind and standard of the informed user applied. The application of this standard depended, however, on the evidence adduced at trial, including the evidence of Ms Mudie. Her affidavit had not been filed and served --- let alone read --- at the time Redberry made its offer. The prior art, which was significant in this case, was also not fully explored until the trial. As at August 2007, the prior art relied on by Redberry was apparently limited to between 9 to 12 items: see the particulars under [7] to the Amended Defence and Cross Claim filed on 17 August 2007. Many more items formed part of the prior art relied on at trial. Further, had the applicants been successful, they might ordinarily have expected damages or an account of profits, at their election. Had they been successful, they might reasonably have expected to recover rather more than the amount Redberry offered. I doubt that the difficulties the applicants faced at trial in connection with their claims for general damages and additional damages would have been apparent to them at the time of the rejection of the offer of compromise. In one sense, these difficulties were the product of a relatively new legislative regime as applied to the fashion industry, most of which became manifest at trial. 3. As I acknowledged in my earlier reasons for judgment, had the applicants' claim for infringement been made out, a question would have arisen as to whether Redberry could successfully invoke s 75(2)(b) of the Designs Act . Consideration of this issue led to consideration of evidence adduced by Redberry, including the evidence of Mr Liu. It may be recalled that, although I ultimately accepted his evidence as essentially truthful, it is correct to say, as the applicants did, that there were some unexplained deficiencies in his account. His evidence was not available to the applicants at the time of the offer and hence it is not open to the applicants to rely on these deficiencies in explaining their rejection of the offer. I accept, however, that, even at time of offer, the applicants might reasonably have perceived that there were aspects of Redberry's case that tended against accepting Redberry's account of things and that it would have been difficult for them then to have predicted how these matters might turn out at the trial. 4. I accept that neither the applicants nor Redberry raised the issue as to the effect of commissioning manufacture outside of Australia. 5. Further, neither the offer of compromise nor the letter accompanying it contained a statement of reasons as to why Redberry believed that the application would fail: see Dukemaster [2003] FCAFC 1 at [8] . 26 I do not consider that there are countervailing matters that outweigh these considerations. Accordingly, viewed as at 31 August 2007, it was not imprudent and unreasonable for the applicants to reject Redberry's offer of compromise so far as the applicants' claim was concerned. 27 It may follow from this discussion that the rejection of Redberry's earlier settlement offer also provides no basis for an award of indemnity costs. Further, as at 1 June 2007, when this earlier offer was made, the applicants knew comparatively little about Redberry's case. The applicants had Redberry's defence but, as they noted in their letter rejecting the offer, as at 8 June 2007, they did not have the respondent's verified list of documents or copies of documents showing that only 133 of the allegedly infringing garments had been imported. The letter containing the offer did not contain any statement of reasons as to why Redberry believed that the application would fail. 28 Redberry relied on the fact that Review Australia was not joined as a party to the proceeding until 10 August 2007. The omission of Review Australia was clearly an oversight, which was capable of ready amendment without prejudice to the parties. This omission was of little moment at the time and it was remedied. It provides little support for Redberry's claim for indemnity costs. 29 Relying on the accepted propositions that the undue prolongation of a case by groundless contentions and other misconduct that improperly wastes time and increases expenses may attract an award of indemnity costs, Redberry also made much of the applicants' allegations that Redberry was essentially a copyist. Redberry submitted that the applicants' pursuit of these allegations wasted a considerable amount of Court time and substantially increased the parties' costs. 30 The applicants were unsuccessful on this aspect of their case: see Redberry [2008] FCA 1588 at [85] - [87] . By itself this does not establish misconduct on their part; and nor does it establish that they sought to advance "groundless contentions" in the sense used in the authorities: see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233 per Sheppard J. The applicants pressed these arguments in good faith. The arguments were not so untenable that it could be said that the applicants acted unreasonably in pressing them. Much of the applicants' conduct in this regard is attributable to the newness of the statutory regime, especially in its application to the fashion industry. In the circumstances, I would not take the view that the applicants' conduct with regard to this aspect of their case was so unreasonable as to justify an award of indemnity costs: see Hamod v New South Wales [2002] FCA 424 ; (2002) 188 ALR 659 at [20] per Gray J, with whom Carr and Goldberg JJ agreed. 31 With the benefit of hindsight, some of the applicants' assumptions about their position proved misplaced, and the quantum of their claim to pecuniary relief --- should they prove to be successful --- now seems a little high. Hindsight is, however, an unreliable guide in such an application as this. Having regard to all the circumstances of the case, this is not an occasion for the award of indemnity costs against the unsuccessful parties. I would not regard the conduct of the applicants' case as relevantly unreasonable. Accordingly, I would make the usual order, given the outcome of the proceeding. For the reasons stated, I would order that: (1) the applicants pay the respondent's costs of the application; and (2) the cross-claimant pay the cross-respondents' costs of the cross-claim. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | settlement offer and offer of compromise under o 23 of the federal court rules (cth) purportedly made by respondent/cross-claimant to the applicants/cross-respondents applicants/cross-respondents rejected offers o 23 r 11(6) not in operation when the purported offer of compromise was rejected no presumptive entitlement to indemnity costs under o 23 of the rules whether rejection of offers imprudent or unreasonable whether applicants/cross-respondents advanced groundless contentions no award of indemnity costs costs |
The applicants submit that by these representations, Mama's breached ss 52 and 53(g) of the TPA and, so far as the impugned conduct occurred after 11 March 2002, ss 12DA(1) and 12DB(1)(g) of the ASIC Act. These provisions are virtually identical. The reasons for the inclusion of the two applicants and the distinct application of the parallel provisions are explained below. The applicants submit that the second and third respondents aided and abetted various of Mama's contraventions, and were knowingly concerned in and a party to the respective misleading conduct complained of. 3 All of the representations the subject of complaint were made in the course of arranging for "pizza oven systems" to be supplied to the business owners. Each of the oven systems supplied to those proprietors was subject to a finance arrangement with a third-party finance company. The representations made, and the details of the finance arrangement, differed in some cases. The circumstances surrounding the representations, and the details of the representations are set out below. 5 At relevant times, it was apparently not uncommon for foodstuffs distributors, for example of soft drink and coffee, to make available to retail outlets valuable equipment at no or concessional cost. 6 Mama's was incorporated in about June 2000 and traded until about August 2003. It was liquidated in February 2006. Mama's employed at various times a total of four sales representatives, including Mr Soo (the third respondent). 7 Mr Hilder (the second respondent) was the controlling force of Mama's --- its founder, principal brains and main sales and organisational hand. It is fair to see Mama's as his corporate alter ego. 8 Mr Hilder is in his 60s and Mr Soo in his 50s. Both had experience of arranging finance contracts in connection with the sale of food preparation/dispensing and other machines used by take-away food outlets and others. Each was an astute and experienced salesman of such machines to such buyers. Each had a good basic understanding of the usual tightness of standard form contracts employed by financiers of such transactions and of their usual insistence that finance contracts be adhered to by the borrowers. 9 Mr Hilder had had associations with other ventures, involving the supply of such equipment to food outlets. 10 Before any of the five cases investigated here, Mr Hilder had previously supplied pizza systems using other trading names or product description such as Countrylink Promotions and Pub Pizza. He also had some substantial connection with a business called the Original Poppa's Pizza and Ribs. 11 Mr Hilder estimated that, by late 2003, via one or more of his ventures, he had supplied about 250 customers with pizza oven systems. (Mama's financial records suggested fewer sales). Only about 10 purchasers paid cash. The others were signed up with third-party financiers for terms generally of 48 or 60 months. The precise nature of the finance contracts varied. It was Mr Hilder's role to train the sales representatives as to what they should say to prospective customers. They would accompany him to see and hear what Mr Hilder said and did. 12 Mama's neither built the ovens nor made the uncooked pizzas it was envisaged the purchasers would use. The sole source of income was the price paid for the ovens by the purchasers. Overwhelmingly the sale prices were in fact paid by the third-party financiers who legally became the owners of the ovens, as Mr Hilder and Mr Soo well knew. 13 Part of the system marketed by Mama's was that oven-buyers would obtain uncooked pizzas from suppliers nominated by Mama's. An apparently unrelated Brisbane firm called Mario's Pizzas (Mario's) originally supplied the pizza makings and continued to do so until 2003. Mr Hilder said that he and his brother had operated a pizza shop in Brisbane, that Mario's devised "the whole concept" and asked him if he would be interested in selling it. He was. 14 Mr Hilder's (i.e. (ii) Selling them with a large mark-up, initially, for about $15,000 and rising to about $19,500 (present cash values) plus GST later. (iii) Demonstrating what was a demonstrable calculation, namely that if an oven buyer sold a fairly small number of pizzas on a daily basis, the customer could thereby afford the monthly repayment of the price, as financed. (iv) Representing to prospective customers that, if they were good at promoting and selling the pizzas, they should be able to make a decent profit out of the oven. (v) Because of the large mark-up, Mr Hilder felt able to tell customers that, if they gave the system a "fair go" for a nominated period, usually 6 months, but were not making any money from it, he would take the oven etc back, pay out the financier and resell it, with no extra expense for the customer. (vi) Mr Hilder felt that the mark-up was also sufficient to enable him to offer to pay, from what Mama's received from the financier, the first six months' "rent" to the financier, and he did so offer. (vii) In about 90% of cases customers were given a document headed "Deed of Assignment". This agreement cannot be enforced by myself for [a stated period, usually 6 months] from the time of delivery of the goods. (ix) Customers who did "buy" an oven were generally given a cheque by Mama's equal to the first six months' payments due to the financier. However Mr Soo told a different story. It appears that Mr Soo, an experienced salesman, sold about 17 ovens in over a year. However, on a fairly conservative estimate, he canvassed well over 1000 prospects to achieve that result, that is he had to canvass an average of 70 plus establishments to effect a sale of a new machine. As Mr Soo sensibly agreed, it would be harder to sell a second hand machine than a new one. The picture presented by Mr Soo is the more likely one. 17 My conclusion is that it never was a realistic or reasonable thing to suggest that Mama's could, without substantial cost to it, pay out the finance contract of a dissatisfied customer so as to free the customer of obligations to the financier upon return of an oven as contemplated by the Deed of Assignment. As a practical matter, it was unlikely that second-hand ovens could be quickly resold. Unless resold, there would be a very large expense to Mama's in relation to a returned oven, if the purchaser were to be relieved of all obligations to the financier. Mr Hilder and Mama's proved reluctant to take the ovens back. 18 It is now convenient to summarise the stories in relation to each "buyer" of the pizza system. 1. Fourourkidz owned a coffee shop/mixed business in Violet Town, in western Victoria. Forourkidz operated the business until it leased the shop to another operator in April 2003. 20 In late August or early September 2001 Mr and Mrs Jeffery met Mr Hilder. In the course of arranging to purchase a car from Mr Hilder, Mr and Mrs Jeffery expressed interest in a pizza system similar to that which Mr Hilder told them he was organising for a nearby hotel. Mr Hilder subsequently visited the shop a number of times in the next few weeks. It comprises a pizza oven, a pizza cutter and paddles, illuminated display board, footpath sign, customer service training and monthly advertising and prompt supply of a quality product. The system is paid for over 48 monthly payments. If you purchase a set amount of stock a month we will make the monthly payment for you. Mr Hilder denies that he led them to believe that Mama's would be lending them any money. 23 On 5 October 2001 Mr Hilder met Mr and Mrs Jeffery to discuss the pizza system and have the necessary documentation signed. The Jefferys say that this was the first time they became aware that the finance for the oven was to come from Esanda Finance Corporation Limited (Esanda). Mr Hilder asserts that the Jefferys were aware prior to this that their finance was to come from Esanda. The Jefferys also say that 5 October 2001 was the first time they were told the total cost of the pizza system: $28,914.48, being $21,450 for the oven, $192 "establishment fee" (presumably for Esanda), $5,322.48 term charges and $1,950 GST. 24 Mr and Mrs Jeffery understood from Mr Hilder that there would be a 12 month trial period of the pizza system. According to them, the nature of the trial period was that Mama's would make the repayments on the system for the first six months, and the second six months was a "probationary period". Also we will provide you with an incentive scheme whereby you do not have to make the monthly repayment if you purchase $1,000 of stock in that month; and an initial no repayment period of six months. 25 The purported assurance of the 12 month trial period was contained in a document of the "Deed of Assignment" type which Mr Hilder handed to the Jefferys. The Equipment being [blank]. I understand the equipment will be sold for an amount equal to the full amount owing and that this will cease any obligation held by myself with my Financier. This agreement cannot be enforced by myself for one calendar year from the date of delivery of the goods. The 12 months is made up of a six month no repayment period and a six month trial period ... At the end of the combined 12 months period you will be allowed to exit the deal if you do not think it is working for you. Mama's Pizza would include it in the contract as a guarantee to you. - Do not sell $1,000 per month after 6 mth probationary period. He told her that it was the money "to cover the six month no repayment period". The pizza system was delivered to the shop on the same day. 29 Mr Hilder asserts that he told the Jefferys that they were required to give the system a "fair go" and do everything that they could to make the system work. If, at the end of 12 months, the Jefferys could demonstrate that the system was not viable, then Mama's would sell the equipment for them and pay the finance company any money still owed. The Jefferys deny that these additional conditions were stated by Mr Hilder, although Mr Jeffery admits that Mr Hilder said that they had to give the system "a go". I am going to put up my own signs and make my own pizzas. All agreements between Mama's and you are no longer legal and binding. 31 In September 2002 Mrs Jeffery took steps to terminate the agreement with Esanda and arrange for the oven to be sold by Mr Hilder, in accordance with her understanding of the Deed of Assignment. She wrote letters dated 18 September 2002 to this effect to both Esanda and Mr Hilder at Mama's. Mrs Jeffery was contacted by Esanda and told that the finance contract could not be cancelled. When she referred to the Deed of Assignment she was told that investigations would be made. However the Jefferys subsequently received a Repossession Warning from Esanda with respect to payments in arrears. The Jefferys say that they attempted to contact Mr Hilder by telephone and letter, and received no response. Mr Hilder denies that he did not return calls but admits he received a letter dated 18 September 2002 requesting termination of the contract in accordance with the Deed of Assignment. 32 On or about 8 November 2002 Mrs Jeffery received a letter from Mr Hilder in which he advised that Mama's was under no obligation to sell the equipment, but would assist if Esanda was willing to provide finance to a new owner of the oven. Mr Hilder claims that he sent a second letter dated 10 December 2002 which says that any agreement between the parties had been terminated following Mr Jeffery's decision to make additions to the pizzas supplied to the Jefferys. Mr and Mrs Jeffery deny ever having received this letter. The applicants' case is that there were no such rights or no such unconditional rights, or, if the representations related to future matters, there were no reasonable grounds for making that representations. 34 In response, the second respondent's case was that he never told the Jefferys that they had a right to cancel the lease with Esanda, or that Mama's could cancel the lease with Esanda. He further claimed that the representations included the conditions that the Jefferys give the oven a "fair go" and that Mama's would "reallocate" the system if they complied with this condition, and at all times during the 12 month trial, use stock supplied by a supplier appointed by Mama's. Mr Hilder says that Mrs Jefferys did not give the system a "fair go". 2. This company is owned by Ziad Nader in partnership with two of his brothers. Ziad Nader was the manager of BP Silverwater and worked there on a daily basis. 36 In around June 2002 he was approached by a man named Milan, an employee of Mama's. He asked if Mr Nader would be interested in a "completely risk free" pizza system and, after demonstrating the pizza oven at a later date, arranged for Brett Hilder (as he was known to Mr Nader) to come and meet Mr Nader. Shortly after this Mr Nader had a telephone conversation with Mr Hilder and they arranged to meet at BP Silverwater. 37 Mr Nader asserts, and Mr Hilder denies, that at this first meeting Mr Hilder said words to the effect of "You get the oven for a risk free 6 month trial period after which time we'll take it back if you're not happy". After this initial meeting Mr Nader says, and Mr Hilder denies, that Mr Hilder visited the service station on a frequent basis. In early to mid-August 2002 Mr Nader and Mr Hilder had a conversation regarding a six month trial period. ... You give the system a fair go and if the system proves to be commercially not viable, I will reallocate the equipment. You must give the system a fair go". Mr Hilder admits that he told Mr Nader he would give him the first 6 months' payment for the oven. 39 In mid-October 2002 Mr Hilder returned to BP Silverwater with documents requiring Mr Nader's signature. Mr Nader says that by this time he trusted Mr Hilder so much that he did not read any of the documents he signed. Mr Nader states that he had received the impression that all arrangements were being entered into with Mama's alone, from what Mr Hilder had previously said. In particular, Mr Nader says that he had no idea that he would be dealing with a finance company, and that Mr Hilder had never mentioned any arrangements with any finance company. Mr Hilder denies having done or said anything to give Mr Nader the impression he had. 40 Delivery of the oven was effected in late October 2002, along with associated items, similar to those provided to the Jefferys. 41 After three to four months Mr Nader decided that he wanted to terminate the arrangement and contacted Mr Hilder to tell him so. Mr Nader says that he made numerous telephone calls to Mr Hilder. On the occasions that he was able to speak to Mr Hilder, Mr Nader says that he reiterated his wish to return the pizza oven to Mama's. Mr Nader says that, following these conversations, he was left with the impression that Mama's would soon take the oven back. However, Mr Hilder denies that he would have led Mr Nader to believe this. 42 According to Mr Nader, Mr Hilder came to BP Silverwater in mid-2003 with a document for him to sign. This document was a "Deed of Assignment" similar to that signed by the Jefferys. Mr Nader says that Mr Hilder assured him he would pick the oven up within one to two weeks. Mr Hilder conceded, among other things, that Mr Nader asked him to take back the oven and Mr Hilder said he would do so but he failed to take the oven away after six months had elapsed and that Mr Nader's obligations in relation to the oven did not then cease. Mr Hilder admits that he said words to the effect: "I will try and reallocate your equipment" and that he accepted Mr Nader's assertion that the system was not commercially viable. Mr Hilder did not return to BP Silverwater after this. 43 At about this time it became clear to Mr Nader that he had entered into a contract with GE Commercial Corporation (Aust) Pty Ltd (GE Commercial). He contacted GE Commercial and was provided with a copy of the documents he had signed and told that if he stopped making payments action would be taken against him. Nevertheless Mr Nader stopped making payments and the pizza system was duly repossessed. GE Commercial commenced legal proceedings against Mr Nader for the full amount owing: $21,956.17. 44 The respondents did not call the former Mama's employee Milan to give evidence nor explain his absence. By making these representations the applicants submit that Mama's engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of s 12DA(1) of the ASIC Act. 47 By the respondents' defence, Mama's and Mr Hilder denied having made these representations. However, Mr Hilder admitted during cross-examination that he had told Mr Nader that he could return the oven after six months if he was not happy with it, and have no further obligations in relation to the oven, provided that he demonstrated that the system was not commercially viable. He further admitted that he had implied to Mr Nader that taking on the system would be risk free. 3. Hi-Jaz Pty Ltd operated a store trading as City Quick Stop in Potts Point in inner Sydney. Since Hi-Jaz Pty Ltd was deregistered Mr Hijazi has continued to operate the shop as a sole trader. 49 In late 2002 Mr Hijazi was approached by the third respondent, Richard Soo, about the Mama's pizza system. Mr Hijazi says that Mr Soo then said to him words to the effect: "I know you're only interested in doing it for 6 months and we can arrange a 6 months free trial. If it doesn't work out, we will take everything back at no cost to you". Mr Soo denies that he said words to this effect. 50 After some further meetings with Mr Soo, Mr Hilder and Mr Soo came to meet Mr Hijazi in late November 2002 in order to have him sign documents related to the pizza oven system arrangements. Mr Hijazi states that he glanced over the documents but did not fully read them before signing. He did not suspect, and did not see anything in the documents which suggested, that he was entering an agreement with anyone other than Mama's. Mr Hijazi says he did not read the documents closely because he trusted Mr Soo and thought it was a risk free 6 month trial. Mr Hilder says that he saw Mr Hijazi read all the documents before signing them. After Mr Hijazi signed the documents, Mr Hilder gave him a cheque in the sum of $2,623.68 made payable to "Hi-Jaz". Mr Hijazi says that Mr Hilder said words to the effect: "This cheque is for the first 3 instalments you have to pay, to cover the Direct Debit payments". Mr Hilder then asked Mr Hijazi to draw a cheque payable to Business and Professional Leasing for $874.56 and said words to the effect: "This is to cover the first month's rental for the equipment. It is payable to the finance company that we are working with. " Mr Hijazi says that, at that time, he thought that Mama's was getting the equipment from Business and Professional Leasing (B&P Leasing). Mr Hijazi says that the equipment the subject of the agreement was delivered by Richard Soo to City Quick Stop. Mr Hijazi says the oven he received was second-hand. 51 Mr Soo said that he was aware that under the lease Mr Hijazi was to be provided with a brand new oven. He would find it "quite surprising" if Mr Hijazi had not been delivered a new oven and agreed that that would not have been in accordance with the lease. It is to be noted that Mr Soo attended at the shop a short time after the oven was delivered (the same day) to deliver some free stock. Mr Hijazi further complains that he was given no instruction in how to operate the pizza oven. 52 Mr Hijazi subsequently attempted to contact Mr Soo and Mr Hilder, but was unsuccessful. About four months after signing the papers Mr Hijazi contacted his bank to stop direct debit payments to B&P Leasing. 53 He was later contacted by B&P Leasing advising that his rental payments were three months in arrears. Mr Hijazi telephoned B&P Leasing and was advised that the agreement he had entered into had been prepared by Mama's on behalf of B&P Leasing. Mr Hijazi told B&P Leasing of his intention to discontinue payment due to his problems with Mama's. He was informed that Mama's and Mr Hilder had "nothing to do with" B&P Leasing, and his liability was to the latter company. 54 On or about 31 March 2003 BPL (NSW) Pty Ltd commenced proceedings in the District Court of New South Wales against Hi-Jaz Pty Ltd and Mr Hijazi seeking to recover the money due under the rental agreement Mr Hijazi had signed. 55 The applicants submit that the following representation was made to Mr Hijazi as agent for Hi-Jaz Pty Ltd by Mama's through Mr Soo that if Hi-Jaz Pty Ltd was not satisfied with the oven, and provided that a 6 month period had expired since the oven was supplied, Hi-Jaz Pty Ltd had a right to require Mama's to take the oven back whereupon Hi-Jaz Pty Ltd would be released from all financial obligations in respect of the oven. Whereas in fact there were no such rights or no such unconditional rights, or, if the representation related to future matters, there was no reasonable ground for making the representations. 2. the supply of the oven did present a financial risk to Hi-Jaz Pty Ltd, or alternatively, if the representation was a representation as to future matters, Mama's did not have reasonable grounds for making that representation. 57 By making these representations Mama's engaged in conduct that was misleading and deceptive or likely to mislead and deceive, in contravention of s 12DA(1) of the ASIC Act. 58 Mr Soo denies having made these representations. He says that Mr Hilder told Mr Hijazi he must give the system a "fair go" and purchase stock from a supplier nominated by Mama's. If these conditions were met, and the system was not commercially viable, Mama's would "re-allocate" the equipment to another customer. Mr Hilder acknowledged during his oral evidence that he did not explicitly tell Mr Hijazi that the agreement being signed was with a third-party finance company. 4. In late February 2003 Ms Zhou was approached by Richard Soo and given a bundle of brochures for various food products, including pizzas. Ms Zhou gave these documents to Mr Hong. 60 Mr Soo subsequently visited the shop a number of times and discussed the pizza system with Mr Hong while Ms Zhou was present. Ms Zhou states that on one such occasion Mr Soo said words to the effect: "We are offering a 6 month free trial of the pizza system. We will pay for the oven for the first 6 months and if you are not happy with the system at any time after the first 6 months, we will take it away. " Mr Hong also says that Mr Soo indicated that there would be a 6 month trial of the oven, after which time the oven could be returned. 61 Mr Soo denies making these comments and says that he would have said words to the effect: "As part of the system, you will receive free initial stock, 6 months rent upfront free to do what you wish with it and promotional material. The oven costs $3000. The first 6 months for the rent for the oven is free. You can try it for 6 months. If you are happy after 6 months you pay rent for the oven. If you're not happy after 6 months, you can give the oven back. You can stop any time after the first 6 months. 64 In late March 2003 Mr Hilder and Mr Soo visited the shop with documents for Mr Hong and Ms Zhou to sign. During the signing process Mr Hong became aware that B&P Leasing was involved in the arrangement. Mr Hilder provided Mr Hong with a cheque for $2,161.09 made out to PV Corner Store and requested a cheque made out to B&P Leasing, which Mr Hong provided. 65 The oven (with other components of the pizza "system") was delivered to PV Corner Store a day or two after the papers were signed. Mr Hong and Ms Zhou say that it only subsequently became clear to them that the documents they had signed related to a leasing agreement entered into with B&P Leasing for a term of 60 months. Mr Hong and Ms Zhou both say that they were, at the time of signing, unaware that they were entering into an agreement for 60 months. 66 Mr Hong then contacted Mr Soo to ask for the 6 month trial period to be guaranteed in writing. In late April 2003 Mr Soo came to the shop and provided Mr Hong with a "Deed of Assignment" document. The Equipment being WISCO PIZZA SYSTEM. I understand the equipment will be sold for an amount equal to the full amount owing and that this will cease any obligation held by myself with my Financier. This request cannot be acted upon by myself/ourselves for six months from the time of delivery of the goods. Mr Hong says that Mr Soo then said words to the effect: "Technically you will have to continue paying the finance company but you shouldn't worry about it. If you don't want it after 6 months, then we will take it away and give it to someone else. " Mr Soo denies that he said this to Mr Hong. 67 Ms Zhou contacted Mr Soo some weeks after the transaction. She requested that the agreement be cancelled immediately. Mr Soo and Mr Hilder visited PV Corner Store and explained to Ms Zhou that she had entered into an agreement for 60 months. They say that they told her that if she gave the system a fair go for six months, and it did not work, Mama's would reallocate the equipment. 68 Mr Hong says that, after making contact with B&P Leasing, he became aware of the nature of the agreement with B&P Leasing and that he would be unable to terminate the agreement. 69 Sometime later Mr Hong began to receive letters from B&P Leasing demanding payments be made to them as per the agreement entered into. In August 2003 Mr Hong was served with a Statement of Claim which had been filed in the Local Court by B&P Leasing seeking $34,791.29. He is currently defending that action. 70 The applicants say that representations were made by Mr Soo and/or Mr Hilder to Mr Hong which were similar to those in the first two cases outlined, and that by making these representations, Mama's engaged in conduct that was misleading and deceptive or likely to mislead and deceive, in contravention of ss 12DA(1) and 12DB(1)(g) of the ASIC Act. 71 Mr Soo denies having made these representations and submits that it was Mr Hilder who told Mr Hong that the oven could be reallocated after six months, if it was not commercially viable. Mr Hilder also denies having made these representations, though admits telling Mr Hong that Mama's would reallocate the system to another customer after six months if it was not commercially viable, and would pay out the balance owing under the lease. The business traded under the name of "Mr Mac's Food Store" (Mr Mac's). Mr Macarounas' daughter Effie Macarounas worked part-time in the shop. 73 In March 2003 Yvette Barron, an employee of Mama's visited Mr Mac's. Ms Barron explained the nature of the Mama's pizza system and gave Mr Macarounas a bundle of documents with information about the products and pizza oven. We'll pay the first 6 months of the lease and if you are not happy with the system or the turnover of sales then we will take it back. ... There are no strings attached and you are under no obligations. If you are not completely satisfied at the end of the 6 months, you can just return the oven and everything will be cancelled. 75 After further discussions with Ms Barron and some discussion with his daughter, Mr Macarounas decided to go ahead with the pizza system. He then received documents in the mail from B&P Leasing requesting information. Mr Macarounas understood B&P Leasing to be the would-be lessor of the oven. 76 In late March 2003 Ms Barron returned to the store with Mr Hilder, whom she introduced as her boss. Mr Hilder explained that he would give Mr Macarounas a cheque for the first six months' rent for the oven. Mr Hilder then provided Mr Macarounas with documents to sign, one of which was an Equipment Rental Plan with B&P Leasing. This document specifies a rental term of 60 months. However, Mr Macarounas claims that he has no recollection of this document being for such a term, and that he would not have signed it if he had known at that time. He claims that the document had referred to a 6 month term of obligation and was later tampered with. 77 Mr Hilder also provided Mr Macarounas with a Deed of Assignment, similar to that provided to the Jefferys. Mr Macarounas says, and Mr Hilder denies, that Mr Hilder then said words to the effect: "If you are not happy with the product all you have to do is call me or Yvette after 6 months and sign this document and then I will make arrangements for the oven to be collected from your shop and your obligations to B&P Leasing will cease. " Mr Macarounas says that he asked Mr Hilder "If this doesn't work after 6 months then you will take it back won't you? If you are not completely satisfied, we'll take the oven back --- you'll have no obligation to keep the oven after 6 months. 78 The pizza system and some stock were delivered to Mr Mac's on or about 4 April 2003. 79 In or around August 2003 Mr Macarounas telephoned Yvette Barron to arrange for the system to be taken away at the end of what Mr Macarounas believed to be the 6 month trial period. Ms Barron said that she no longer worked for Mama's. 80 Mr Macarounas continued to make payments to B&P Leasing as he had been given a cheque by Mr Hilder to cover these payments for the first 6 months. Mr Macarounas says that he attempted unsuccessfully to contact Mr Hilder a number of times by telephone around this time. Mr Hilder denies being aware that Mr Macarounas attempted to contact him. 81 Mr Macarounas ceased making payments to B&P Leasing on 26 November 2003. 83 Mr Hilder denies the representations attributed to him, but says that he did tell Mr Macarounas that if he worked the pizza system and gave it a fair go and purchased stock from a supplier nominated by Mama's and if, at the end of six months, it was found that the pizza system was not commercially viable, Mama's would then on-sell and re-allocate the equipment. The respondents did not call Ms Barron nor explain her absence. I now turn to consider the relationship between the TPA and the ASIC Act in the present case. In summary, the applicants submit, and I agree, that in respect of all of the conduct occurring on or after 11 March 2002 (that is, all cases other than the Jefferys), the conduct is properly to be treated as a contravention of the ASIC Act rather than the TPA and relief should be granted under the terms of the ASIC Act. This explains why there are two applicants: the first applicant enforces the TPA and the second applicant was duly delegated by the Australian Securities and Investment Commission (ASIC) to conduct these proceedings, so far as they depend on the ASIC Act, on its behalf. 85 This is because on 11 March 2002, amendments to the ASIC Act came into force which broadened the definition of "financial services" so as to include credit agreements such as equipment leasing or hire purchase contracts (which fall within the definition of "financial products"). Section 51AF has the effect that s 52 of the TPA and likely s 53(g) of the TPA do not apply when the conduct in respect of which complaint is made is "in relation to financial services" (as the latter term defined by the ASIC Act). In such cases, complaint must be made under the parallel provisions of the ASIC Act instead. 87 The better view appears to be, as the applicants submit, that the alleged misleading conduct of Mama's in relation to the Jefferys, having occurred before 11 March 2002, is appropriately to be seen as contraventions of ss 52 and 53(g) of the TPA respectively. However, the misleading conduct in relation to the remaining proprietors, having occurred after 11 March 2002, needs to be considered under the parallel provisions in the ASIC Act rather than the TPA. 88 Section 51AF of the TPA limits the application of Part V of the TPA (which contains ss 52 and 53(g)) where "financial services" are concerned. Section 12BAB (contained in Div 2 of Part 2) of the ASIC Act sets out a lengthy definition of the term "financial service". 92 It appears to be the case, as the applicants submit, that the leasing agreements with the third-party financiers are "financial products". By s 5 of the ASIC Act, "financial product" has the meaning, in Div 2 of Part 2, assigned to it in s 12BAA of the ASIC Act. In turn, s 12BAA sets out a complex definition of "financial product". It follows that a goods rental agreement is a "credit facility" within the meaning of s 12BAA(7)(k) and thus a "financial product". 95 In addition, reg 2B(1)(h) of the ASIC Regulations provides that a guarantee of obligations under a credit contract is a "credit facility" for the purposes of s 12BAA(7)(k) of the ASIC Act. It follows that wherever a proprietor has executed a guarantee in favour of a financier to secure rental payments (as happened in the cases of the Jefferys and Mr Nader), that is a further reason for characterising the agreement with the financier as a "financial product. Rather, the proprietors applied for, and acquired those agreements. In the submission of the applicants, the fact that the respondents facilitated the making of those applications does not affect this conclusion. Further, it is the financiers who issued the rental agreements, not the respondents. This approach seems to me to be correct. This has the result that the respondents were providing "financial services". 100 As noted above, the definitions of "financial services" and "financial products" were not always so wide. When the ASIC Act was originally enacted, these terms were much more narrowly defined in s12BA(1) as it then stood. The far more extensive definitions discussed above did not come into effect until 11 March 2002, when the Financial Services Reform Act 2001 (Cth) repealed the relevant definitions in s 12BA(1) and introduced ss 12BAA and 12BAB into the ASIC Act. 101 It is unlikely that an equipment rental agreement would have fallen within the old definition of "financial product", so that the respondents were not providing a "financial service" at that time. It follows that in respect of conduct engaged in before 11 March 2002, s 51AF of the TPA would not operate to prevent ss 52 and 53(g) of the TPA applying. However, the question of what happens after that time is more complex. 102 As indicated above, s 51AF of the TPA limits the application of Pt V of the TPA where "financial services" are concerned. Section 51AF(1) provides the general rule that Pt V does not apply to the "supply" of "financial services". Section 12BAB(1) of the ASIC Act uses the language of "providing" rather than "supplying" financial services, however nothing appears to turn on this distinction: a person who provides financial services would naturally be seen as supplying them. It follows that, to the extent that the misleading conduct is said to relate to the respondents having arranged for the proprietors to enter into the rental agreements, it falls outside Pt V of the TPA by virtue of s 51AF(1). If a misleading representation otherwise within s 53(g) of the TPA is "in relation to" supplying (by assisting in applying for) rental agreements, then s 51AF(1) would have the effect that s 53(g) should not apply. However, if the Court were to characterise a misleading representation within s 53(g) of the TPA as relating only to supplying of pizza ovens, and not to assisting applications for rental agreements, then s 51AF(1) would not have that effect. 104 The case law to which the applicants referred provides little assistance in determining what characterisation should properly be placed on the conduct in the circumstances of this case. 106 The position of s 52 of the TPA is dealt with expressly by s 51AF(2)(a). It provides that s 52 does not apply to conduct engaged in "in relation to financial services". The scope of s 51AF(2) was considered by Austin J in Cleary v Australian Co-operative Foods (No.2) (1999) 32 ACSR 701 ; [1999] NSWSC 991. The fact that conduct is in relation to other matters does not prevent it from being in relation to financial services as well. Once it is so classified, the Trade Practices Act is inapplicable and the matter falls within legislation for which ASIC has sole responsibility, namely the ASIC Act and the Corporations Law. 108 However, his Honour's observations do not provide guidance for answering the anterior question, namely, when can conduct be taken as being engaged in "in relation to financial services". 109 The extrinsic material to which I was referred suggests that the exemption in s 51AF of the TPA should be broadly construed. Section 51AF was inserted into the TPA by the Financial Sector Reform (Consequential Amendments) Act 1998 (Cth). In the second reading speech to the Bill which became that Act, the Treasurer said that the relevant amendment would "confer on ASIC sole responsibility for consumer protection in relation to financial services". The Treasurer also said that the amendment would remove regulatory overlap and that ASIC would become "the specialist regulator for consumer protection in the financial system". Comments such as these suggest that if there is a possibility of jurisdictional overlap, then the Parliament intended that the matter should more properly fall within the jurisdiction of ASIC and thus within the ambit of the ASIC Act rather than the TPA. 110 While it is true that, in general, the words "in relation to" are words of expansive meaning, it is also the case, as the applicants submit, that words of that kind take colour from their particular statutory context. The phrase gathers meaning from the context in which it appears and it is that context which will determine the matters to which it extends. (Emphasis added. It is, to my mind, inescapable that, whether there is a "rational" link or a "material" connection involves a degree of judgment about the sufficiency of the link or connection for the relevant statutory purpose. 112 In Technical Products [1989] HCA 24 ; 167 CLR 45 , a man fell off a pallet which was supported by a forklift, and sustained injury. He was on the pallet in order to load bags of cheese salt onto a trailer (a "motor vehicle" as relevantly defined). There was no adequate system to prevent him falling seven feet to the ground. The injured man sued his employer, which sought indemnification under a motor vehicle insurance policy taken out for the trailer. Whether or not the employer was entitled to indemnification turned upon whether the employer fell within s 3(1) of the Motor Vehicle Insurance Act 1936 (Qld). (Emphasis added. Indeed, they have a chameleon-like quality in that they commonly reflect the context in which they appear . The nexus between legal liability and motor vehicle which their use introduces in s 3(1) is a broad one which is not susceptible of precise definition. That nexus will not, however, exist unless there be some discernible and rational link between the basis of legal liability and the particular motor vehicle. What is required is that there be a relationship between the motor vehicle and the very act or omission which gives rise to that liability . The point can be illustrated by example. If, for example, a passenger in a motor vehicle is injured when the driver of the vehicle brakes suddenly to avoid another vehicle whose brakes have failed because of a mechanic's negligence in servicing them, the passenger's injuries can properly be seen as caused "in connection with" each of the two vehicles involved. Any liability of the mechanic in damages for the passenger's injuries would be a liability "in respect of" the second vehicle whose brakes he had negligently serviced. The mechanic's liability could not, however, rationally be seen as a liability "in respect of" the first vehicle with which he had no connexion at all. (Footnotes omitted. Emphasis added. To the extent that the employer's liability was a liability "in respect of" any vehicle, it was a liability with respect to the unregistered fork-lift. There is nothing in the present case which would justify a conclusion that the trailer and container had any involvement in the employee's accident beyond their passive presence as the receptacle into which the bags were being loaded. The words take their colour from the context in which they are found. Those matters are liability for damages for accidental injury on the one hand and, on the other, a motor vehicle. Having regard to the immediate context of s 3(1), a merely coincidental or extraneous connexion between those two things can hardly be sufficient and the wider context of the Act takes the matter no further . (Emphasis added. It is not likely that the intention was to burden ASIC with responsibility for consumer complaints as to every transaction for the provision of goods or services which coincidentally involves the financing by credit arrangements of such provision. "Jurisdictional overlap" was to be avoided by changed statutory arrangements: such would however be needlessly created if proper limits were not attached to the expression "in relation to financial services" in s 51AF of the TPA. 118 There are many cases in which misleading conduct would not have a material connection to financial services even though there be some connection between the conduct and financial services. The applicants gave as an example the case of a sales assistant who makes untrue representations about certain qualities of a television set so that the consumer is induced by those representations to purchase the television and does so using the store's charge card. The charge card is a credit facility and hence a "financial product". The store deals in the "financial product" by offering the charge card and hence provides a "financial service". There is therefore at least some connection between the representations made by the sales assistant and the credit purchase because the representations induced the consumer to make the purchase. However, it could hardly be said that, without more, there was a material connection. In the words of Dawson J in Technical Products 167 CLR at 51 it was a purely "coincidental or extraneous" connection. Such a case is hardly one that should be pursued under the ASIC Act. The misrepresentations have nothing of any substance to do with the financial service, no "material connection" with it. Such a misrepresentation about the nature and quality of a product would appear to fall squarely within the TPA. There might however be more. There might have been a concessional promotion of use of the store card and the store might have had a run of complaints about the product but be shown to have considered that profits and benefits occurring from use of the store card would pay for anticipated claims about product quality. In some cases, the judgment might not be a simple one. It is in such cases that the generally expansive nature of the phrase "in relation to" may come into its own. 119 It is impossible, were it thought desirable, to specify in advance all the situations in which it may be properly said that conduct is engaged in "in relation to financial services". Rather, the question should be decided on a case-by-case basis. 120 All that need be decided in this case is whether the conduct in respect of which complaint is made was engaged in relation to financial services. In this case, there is, in my opinion, a clear and material connection between the impugned conduct and the provision of the financial services. This is because it is alleged that the respondents' misrepresentations induced the shop owners to enter into long term equipment leases (which are "financial products"). More specifically, each of the impugned representations related to the financial product (the lease) because they were misrepresentations about the legal and financial effect of the lease, including the circumstances in which the lease could be brought to an end. The impugned representations did not in any way relate to the attributes or performance of the pizza oven system as such (although the proprietors were none too happy about such aspects). Further, it was integral to Mama's system of marketing as explained at paras [4] to [16] above that the "purchasers" of the pizza ovens should finance their acquisition by leases from third parties. That remains so, even if there were a couple of cases where Mr Hilder was able to sell the ovens for cash. 121 I note that recently, in Australian Securities & Investment Commission v Citrofresh [2007] FCA 1873 , Goldberg J (at [71]) expressed similar cautions about a too expansive approach to the phrase "in relation to". No special provision is made within s 51AF as to s 53(g) of the TPA. Accordingly, to determine whether a matter should be pursued under s 53(g) of the TPA or its ASIC Act analogue requires recourse only to s 51AF(1) which provides: "This Part does not apply to the supply, or possible supply, of services that are financial services. However, I agree with the applicants that such a construction makes little sense, particularly given that the same conduct can often involve the closest of distinctions as to whether it contravenes s 52 or s 53(g). 124 In the result, I agree with the applicants that if the first respondent engaged in misleading conduct after 11 March 2002 (when the definitions of "financial product" and "financial services" were broadened) in which the second and/or third respondents were knowingly concerned, then the respondents should be held to have contravened the ASIC Act and relief should be granted under that Act. The practical effect, would be to conclude that in dealing with Mr Hijazi, Mr Nader, Mr Hong and Ms Zhou, and Mr Macarounas, the ASIC Act was contravened. Mr Hilder would have the Court accept that, in general, he merely promised to "reallocate" the oven to some other intending customer and, on at least one occasion, he claimed that he had made this expressly conditional on the financier's being prepared to accept the new customer as the lessor of the goods. It might be thought that if any such reallocation had been promised that would imply at least a period during which the existing customer would remain liable to the financier. 126 As to this, I reject Mr Hilder's account and in each case prefer the alternative account given by the customers in each of the five cases at issue. My reasons for this include: (1) the intended economies of Mama's system (see [14] above) --- there would be no reason for Mama's sales representative to quibble about the extent of the "risk-free" attractions of the scheme they were marketing, and (2) except as to the particular matters mentioned below, I decidedly prefer the credit of the applicants' witnesses to those of the respondent, particularly Mr Hilder. In general, except on particular issues I refer to, the oven recipients were truthful and, I thought, reliable, or in some cases over-concerned to make everyone understand their grievances. These claims are not crucial to the applicants' case, as precisely and properly pleaded. But I do not accept these claims, even of the most plausible, namely that of Mr Hijazi. These were all established small business people. All spoke and read English, except Mr Hong, whose wife, Ms Zhou did. They could all handle themselves commercially well enough at least to ask the nature of the various papers they were asked to sign. I accept that they may have relied on the Mama's representative, usually Mr Hilder, to give them an explanation of the effect of the documents and that such explanation as was given was partial, inadequate and misleading in various ways. However I am not persuaded that any who signed the documents did not understand that he or she was entering into a third-party financial arrangement. The Mama's sale pitch was that Mama's would meet the "rent" or "payments" for the oven for a few months and Mama's did in fact, on signing or soon after, supply cheques to them for such purposes. They were not so entirely naïve or deceived as they might now wish to believe. 128 The other frequent factual issue was whether Mr Hilder indicated that before he would accept the return of the oven, the operator should give it a fair trial --- a "fair go" as Mr Hilder conceived it. It is highly likely that he and his sales people did indicate such a condition: Mr Hilder would not wish to be troubled with mere game-players. Secondly, it accords with my impression of Mr Hilder --- that he subjectively saw himself as a fair man and entitled to expect a fair trial of what he had designed as an attractive system for potential customers. Thirdly, to suggest such a condition would assist his presentation of himself as a trustworthy person who wished to deal with fair-minded people. Some witnesses agree he indicated such a thing --- why do it with some and not others? 129 To the extent that I do not accept some witnesses who have denied that Mr Hilder said such a thing, they have clearly been told or heard that Mr Hilder is an outright rogue; it assists their own self-esteem to consider him so, and they wish to see no fault or default in themselves. They were not, in my view, telling lies. Those returning the ovens were bound to feel and say that they had given it a fair trial and it had been found wanting. In cases where Mr Hilder thought there had been no fair trial, his views did not withstand testing. 131 The other matter urged by two of the witnesses for the applicants that I do not accept is the suggestion that Mr Macarounas was presented with a six month lease and the "6" was then later dishonestly changed to "60". Firstly I should exonerate him, on such evidence as is before me, of the more extreme characterisations of his and Mama's conduct which at least some of the applicants' witnesses would make. Mr Hilder did not, as it seems to me, set up Mama's as an exercise in wholesale deception. It is likely that he believed that he could make plenty of money out of selling a marketable system that would provide decent profits to a capable business operator and would be able to afford, because of the very high mark-up he intended to impose, entirely to placate other customers. To a degree, he misled and deceived himself along with others. I believe that, in the inception of the venture, he thought that he would be able to resell the ovens and, in such case, pay out the loan contracts of the dissatisfied customers. As is often the case, experience did not match up to hopes. Mr Soo, an experienced salesman, found it hard going to move Mama's product. It likely proved hard for Mama's as a whole to do so. There were evidently problems with the availability and supply of good quality uncooked pizzas for use by the oven operators. There was a substantial number of complaints, probably more than had been foreseen. At least in the instant cases, Mr Hilder largely reacted by refusing to respond to telephone calls, presumably hoping that the complainants might simply go away. 133 That said, Mr Hilder was, on contested issues, with the exception of the specific matters referred to above, not a witness who inspired confidence, and the evidence of others, including Mr Soo, where their evidence differed, is to be preferred. 134 I recorded my contemporaneous impressions of Mr Hilder in exchanges with counsel for the applicants and Mr Hilder's solicitor in the course of their closing addresses: see especially pp 380, 382, 390-1, 392-3, 399, 401, 404-7, 408-9, 414, 447 and 453 of the transcript. A re-reading of the whole of the evidence in the case renews my confidence in these impressions. 135 The applicants mounted a wholesale attack on Mr Hilder's credit. I agree with much of the criticism but not with some of it. The exchanges during addresses adequately indicated the scope of my reservations. He tended to answer in ways that he thought would assist him, only to change his evidence in the light of more objective materials and considerations being drawn to his attention. 137 As an experienced business equipment salesman, necessarily experienced in arranging finance, his protestations of being, in effect, at most an unwitting participant in Mama's regrettable conduct were unconvincing. 139 In each case, apart from that of Mr Hijazi, a "Deed of Assignment" was handed over. 140 There is no reason to think that Mr Hijazi was not told similar things by Mr Soo (though Mr Hijazi denies he knew anything about a financier or a long-term lease, and Mr Soo denies saying that he promised a "six month free trial" or a preparedness thereafter to accept the oven back "at no cost to" Mr Hijazi. (More than the original price would be required if Mama's were to avoid a loss in the transaction. ) As noted above, according to Mr Soo there was a low success rate with canvassing the supply of new ovens. 142 The return of the oven and even its resale would not, by themselves, cease the oven recipient's obligations to the financier. The financier would want the full pay-out value and, in at least one instance, there was no discount for payment-out of the finance contract (in the form of a chattel lease with no option to purchase). 143 In any case Mr Hilder ultimately conceded that, in each of the five cases, he did convey to the customer(s) concerned that they had a right to have Mama's take the oven back and be released from all financial obligations after the nominated trial period. 144 Thus there was clearly a modus operandi for Mama's devised by Mr Hilder which involved such representations. There is no reason to think that the various sales representatives including Mr Soo would not have acted in accordance with that method of operation. I am satisfied that, where he was involved, Mr Soo did so. The Court must decide objectively whether conduct had such a character. Both propositions are now well-settled, but were clarified by Gibbs CJ in Parkdale Custom Furniture Pty Ltd v Puxn Pty Ltd [1982] HCA 44 ; (1981-2) 149 CLR 191 at 198. 146 The applicants rely also on s 51A of the TPA (mirrored in s 12BB of the ASIC Act): where a corporation does not have reasonable grounds (proof being on the corporation) for making a representation as to a future matter, the representation is to be taken to be misleading. 147 Pursuant to s 75B of the TPA, any personal liability of Mr Hilder or Mr Soo requires proof that he had actual knowledge of the essential elements of the alleged contravention of the Act and that he intentionally participated in it: Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661. See also Medical Benefits Fund of Australia Limited v Cassidy (2003) 135 FCR 1 ; [2003] FCAFC 289. 148 A representation can be characterised as bearing both a present and a future character, see e.g. Ting v Blanche [1993] FCA 524 ; (1993) 118 ALR 543 and Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217. 149 Whether Mama's had reasonable grounds for believing the truth of representations about a future matter involves an objective test. Nor, unlike the corporation involved (cf s 51 TPA) does a natural person bear any onus. As to Mr Hilder and Mr Soo respectively, to the extent that each was involved, he knew that the representation was made and either knew that it was misleading or that Mama's had no reasonable grounds for making it. Nor were the oven operators released from their financial obligations to the financiers. They were landed with an overpriced oven which, on the respondents' recommended system, had proven unprofitable, and were subject to substantial credit charges under a long-term contract. That is a long way from supposedly having entered into a financially risk-free arrangement. • Neither Mama's nor Mr Hilder had any arrangement with the financiers that envisaged a six (or 12) month trial period or a release of the lessee from obligations after 6 (or 12) months for any reason whatsoever. • Both Mr Hilder and Mr Soo (especially Mr Hilder but, quite firmly in my mind, also Mr Soo) well knew that they were at least gilding the lily. They both knew the propensity of financiers to insist upon the performance of obligations to them by their borrowers and quasi-borrowers. They both knew that what they were telling their prospects who became oven recipients was not in accordance with the realities of loan financing and the ease of resale of a second-hand oven originally sold at greatly over value. • They both knew all the essential ingredients of the misleading and deceptive aspect of the transactions which I have identified. Mr Soo understood the financing arrangements. He knew that, as between the oven "owners" and the financiers, there was a 60 month deal, not one for a risk free 6 month trial. Mr Hilder negotiated the financing. • Mr Hilder preferred not to face up to the complainants. Mama's entire system of operations was his invention. 152 While it is not necessary for the applicants to show that the business owners who took the ovens were actually misled or deceived (see [168]-[169] and [172] above, it is clear that they were in each of the five cases, misled. There is a well-recognised public interest in the declaration of a right in the public and individual members of it not to be misled or deceived from misrepresentations. See eg Sackville J's review of the matter in Australian Competition and Consumer Commission v Chen [2003] FCA 897 ; (2003) 132 FCR 309 at 322. The relevant applicant in each case has a real interest in seeking relief: Australian Competition and Consumer Commission v Albert [2005] FCA 1311 at [30] . Even a would-be judicial heretic has bowed under the weight of authority: see Australian Competition & Consumer Commission v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2004] FCA 517 at [7] per Gray J. 155 Declarations should be reasonably explicit and specific: Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 at [89] - [90] . 156 I will make suitable declarations against each respondent. In any case s 80 has given the Court, as Lockhart J put it in ICI Australia Operations Pty Ltd v Trade Practices Commission [1991] FCA 527 ; (1992) 38 FCR 248 at 256: "the widest possible injunctive powers, devoid of traditional constraints, though the power must be exercised judicially and sensibly". That deterrence is effected by attaching to the repetition of the contravention the range of sanctions available for contempt of court. I will issue appropriate injunctions. There are other proceedings on foot against the respondents and there may well be more to come. The applicants, however, appear to conceive that s 83 is the source of a positive remedy for the instant applicants , presumably for members of the public generally. They seek "findings of fact against [Mr Hilder and Mr Soo] pursuant to s 83 ... and under its ASIC analogue ..." (emphasis added). In ACCC v Leahy Petroleum (No 2) [2005] FCA 254 (at [74]) it appears from Merkel J's judgment that the ACCC "sought an order under s 83 ... that the findings of fact contained in my reasons of judgment be findings of fact for the purposes of s 83". 162 In Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd [2006] FCA 244 Nicholson J, apparently following his line of thought, considered that the Court should formally record findings of fact in its orders. 163 The applicants say that such a practice reduces the difficulty for other courts in deciding whether a passage in reasons for judgment amounts to or contains a finding of fact, cf Australian Competition & Consumer Commission v Emerald Ocean Distributors Pty Ltd [2004] FCA 303 at [17] per Nicholson J. Merkel J had declined to do this. He thought it was enough (but, it seems, necessary) to order that a copy of the reasons "be under the seal of the Court and be held in the Melbourne Registry...". Nicholson J thought (and on this scope I agree with him) that such an order was unnecessary. 164 While s 83 occurs in Part VI of the TPA, entitled "Enforcement and Remedies", I do not see it as having been intended to provide a present applicant with a positive present remedy, even for other misled or deceived people, except insofar as that applicant might, like anyone else, wish to take advantage of the evidentiary help which the section provides of its own force to people at large against an erring respondent. It is to be contrasted with s 86C. In particular cases, it may indeed be generally helpful for the Court to collect and formalise its findings of fact. There is however no requirement for a busy court to do so. The suggested practice may also actually run up costs in some cases by causing debate (or even appeal) about the precise content of the proposed formal findings of fact. What degree of formality the findings of fact should take should be left to the good sense of the judge in the particular case. 165 I have, I hope, expressed myself with reasonable clarity. This case does not depend on fine distinctions. I do not intend to follow the course suggested. 167 I will make the requested orders referred to as (1) to (5) inclusive above. I will however allow liberty to the second and third respondents to apply in relation to any bona fide difficulty either of them may face in complying with the orders as framed. 168 I will not make the sought orders referred to in (6). Neither personal respondent is stupid. By the time each has understood and attended to the foregoing orders and the costs orders against him, he is unlikely to need to be coerced into enlarging his appreciation of the relevant provisions of the two Acts referred to. The personal respondents submit that, in effect, a sledgehammer has been used by the applicants to crack a nut, and that a good many collateral complaints were made by the business people in the five transactions examined that were not sustained and/or did not relate to the crucial misrepresentations, that enlarged the hearing time unreasonably. 170 To any extent that the respondents might now be, and perhaps might have been, inclined to admit at least some of the actual but limited statutory misconduct complained of, there were avenues for them to do so that might have minimised costs. Likewise in relation to any unreasonable enlargement of the length and documentary density of the proceedings. The avenues to which I allude were not availed of. I would not be justified in reducing the total amount of costs that might be recovered by the applicants. 171 However, there should be some limitation of Mr Soo's liability. He was about half responsible for two of the five proven instances of misconduct. I will limit his liability to one fifth of the costs. As to such one-fifth, as between the second and third respondents they should be equally liable: Mr Soo was implementing Mr Hilder's recommended and demonstrated methods. 172 The second respondent is to pay the applicants' costs of the proceedings. 173 The third respondent is to pay one-fifth of the applicants' costs of the proceedings. 174 As to such one-fifth, as between themselves, the second and third respondents shall be equally liable. The first is that my debt to the very detailed submissions of the applicants will be obvious to the parties but should be recorded. 176 Secondly, it may bear examination that financiers should be able to profit from transactions induced by unlawful conduct such as the respondents engaged in here when in fact, whatever the legal position may be, the perpetrators of the unlawful conduct constitute the means and bridge, in non-technical language: the agency, by which the financiers acquire their borrowers. I certify that the preceding one hundred and seventy-six (176) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | trade practices act 1974 (cth) and related legislation consumer protection misleading or deceptive conduct or false representations operation of s 51af(2) and parallel provisions in the australian securities and investment commission act 2001 (cth) trade practices act 1974 (cth) enforcement and remedies s 83 an evidentiary provision, not a positive remedy for instant applicants australian securities and investment act 2001 (cth) consumer protection " in relation to financial services " trade and commerce trade and commerce trade and commerce words and phrases |
I dealt with such an application in the matter of Ex parte Vouris; in the matter of Marrickville Bowling & Recreation Club Ltd (under administration) [2008] FCA 622. However, the present application is not quite as straight forward as that with which I dealt in Ex parte Vouris . The circumstances in which the application is made are set out in an affidavit of Mr Geoffrey Philip Reidy, who is the administrator of Collective Olive Groves Limited ("COGL"). Mr Reidy was appointed administrator on 19 November 2008. COGL owns a substantial parcel of land at Speers Creek Road, Stonehenge, Queensland upon which olives are grown. The land forms part of the assets of a managed investment scheme. A company known as Australian Olives Limited ("AOL") was at one stage responsible for the management of the land. COGL and AOL have the same directors but different shareholders. A third company which is involved in the management investment scheme is Australian Olive Holdings Limited ("AOHL"), which also has common directors with COGL and AOL. Prior to the appointment of Mr Reidy as administrator, the members of one of the projects which forms part of the managed investment schemes voted to remove AOL as the manager of the scheme. A company known as Huntley Management Limited became the responsible entity for that project and Huntley now appears to be the manager of the project. The constituent agreements under which the scheme was established include a clause of an agreement described as the Water Agreement. The relevant clause is clause 7.1(b). The effect of that clause is that, if AOL is removed as the responsible entity, AOL is bound to transfer ownership of the pumping and reticulation equipment to COGL at a price no less than the replacement cost of the pumping and reticulation equipment. It would appear that the purpose of this clause was to ensure that if AOL was removed as the responsible entity, the investors in the managed investment scheme would nevertheless be able to proceed upon the basis that all of the relevant assets of the scheme were held by COGL. This is obviously important because the pumping and reticulation equipment is an essential part of the managed investment scheme and enables it to be carried out. Without ownership of that asset, the scheme would not be able to proceed. However, the directors of COGL considered that the enlivenment of the obligation to purchase the equipment from AOL put COGL in the position that it was insolvent or likely to become insolvent. This was because the cost of the equipment was originally put at slightly in excess of $8 million. The directors therefore resolved on 19 November 2008 that Mr Reidy be appointed as administrator of COGL pursuant to section 436A of the Act. The first meeting of creditors was held on 1 December 2008. Mr Reidy admitted the debt owed to AOL at approximately $2.5 million, being the book value of the pumping and reticulation equipment. The second meeting of creditors was held on 23 December 2008 but it was adjourned for up to 45 business days, being the maximum period permitted under section 439B(2) of the Act. It was not until 30 January 2009 that Mr Reidy ascertained that the plant and equipment owned by AOL is subject to a mortgage debenture to the ANZ Bank Limited. This places Mr Reidy in a difficult position because it now appears that there are discussions between the ANZ Bank and AOL, the effect of which would be to enable AOL to obtain a release from the mortgage debenture, thereby enabling COGL to obtain a clear title to the plant and equipment. Mr Reidy has set out at [29] of his affidavit the difficulties which now arise. They include, in particular, the fact that until the discussions between the ANZ Bank and AOL conclude, Mr Reidy will not be in a position to determine the amount which should be attributed to the AOL debt nor to take any steps which would enable him to be sure that AOL is in a position to provide clear title to the equipment. Mr Reidy considers that the discussions between the ANZ Bank and AOL must be concluded before he will be in a position to resolve the questions which arise from the obligation on COGL to purchase the plant and equipment and to determine the appropriate future of COGL. The particular difficulty which arises is that the amount due by AOL to the ANZ Bank is at present in the order of $7.5 million. I do have evidence before me that the ANZ Bank is presently engaged in negotiations with AOL. If the negotiations are concluded to the satisfaction of both parties, the ANZ Bank may agree to release its security over the equipment. I do not have any evidence as to when the negotiations are likely to conclude or whether there are real prospects of the negotiations concluding successfully. Nevertheless, on the evidence before me, the only creditor of COGL is AOL. It seems to me that the proper approach to this application is to permit the creditors to adjourn the date of the second meeting. I refer to [15] of Ex parte Vouris and to the observations of Barrett J in Re Porter and Another as joint administrators of Priceright Construction Pty Limited (2006) 57 ACSR 206, in which his Honour observed that it is now well recognised that the Court has power to extend the convening period under section 447A in a way that section 439A does not allow. This is not an application to extend the convening period but to permit a further adjournment of the date of the second meeting of creditors. It seems to me that the principles which should inform the exercise of the discretion are those which have been referred to in earlier authorities. What I need to do is to strike an appropriate balance between the expectation that the administration would be a relatively speedy and summary matter and the requirement that undue speed not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders. Whilst the evidence before me is somewhat sketchy, I think this has been caused by the fact that some of the matters in question are outside the personal knowledge or control of the administrator. In particular, much will turn upon the negotiations between AOL and the ANZ Bank, to which, of course, COGL will not be party nor, of course, will Mr Reidy have any first-hand knowledge. I can see that there is some utility in the present matter in permitting the administrator to be able to sort out what may well be a complex administration. He has observed in his affidavit that there are many difficulties to overcome, including determining which of the olive trees that are planted on the property are owned by particular investors. One of the orders sought in the application is an order that leave be granted to any person claiming to be interested to make an application to vary these orders. In Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [12] , Barrett J observed that this is a sensible precaution. It was one which was followed by Lindgren J in Re Double V Marketing Pty Ltd [1995] FCA 1151 ; (1995) 16 ACSR 498. This seems to me to provide for sufficient protection for any creditor or member who may be concerned about the extension of time for the holding of the second meeting of creditors. Provision is to be made for the orders which I am about to make to be advertised in appropriate newspapers so that I am satisfied that the making of these orders will come to the attention of any interested person. Mr Reidy considers that a period of 60 business days would give him sufficient time to determine what assets belong to COGL and to determine the other matters which he needs to resolve before the second meeting of creditors is held. It seems to me that on the sketchy information which has been provided to me, this period is too long. I dealt with the authorities relating to the appropriate extension of time in [16] and [17] of Ex parte Vouris . In my view, the adjournment which should be permitted should be not more than 20 business days from Monday 23 February 2009. I have selected that date as the date from which to measure the time because that was the date to which the second meeting was adjourned. I will make orders in terms of the six orders that are set out in the Application, but inserting in the paragraph numbered 3 after the words "extend beyond" the words "20 March 2009". I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | application by company administer to permit creditors to further adjourn second meeting negotiations ongoing between bank and sole creditor which would affect administration of company adjournment said to be in best interests of creditors and members application granted leave granted to any person claiming to be interested to make an application to vary orders corporations |
Statements of the two accounts that record all movement of the sum of $120,432.00 referred to in paragraph 10 of the affidavit of Ian Carey dated 5 November 2007. 2. Records of the purchase of shares between 7 and 30 April 2000 referred to in paragraph 19 of the affidavit of Ian Carey dated 5 November 2007 (the "TMT shares"). 3. Statements recording the fluctuating value of the TMT shares following purchase. 4. Statements recording the sale of the TMT shares. 5. Statements of investments referred to in paragraph 30 of the affidavit of Ian Carey dated 5 November 2007. 6. Statements of Swiss accounts belonging to Ian Carey referred to in paragraph 38 of the Affidavit of Ian Carey dated 5 November 2007. 7. The share account statements referred to in paragraph 47 of the affidavit of Ian Carey dated 5 November 2007. 2 Also before the Court is an oral application made by the Respondent seeking to set aside a second Notice to Produce served by the Applicants and dated 1 February 2008. 4 Argument this morning proceeded upon the basis that the success or failure of the Motion could be tested by looking at the first document described in the Notice to Produce , namely, the statement of the two accounts. This account was later closed and the funds transferred to another account of mine in Australia. Left to one side has been the resolution of any question as to whether compliance with previous orders of this Court, or non-compliance, could contribute to the Court forming a view that there was a " reasonable cause to believe ". 6 For present purposes it was accepted by the Respondent that the bank accounts referred to in paragraph 10 of the Affidavit indicated that there were documents likely to have been in the possession of the Respondent, and that such documents could " relat [e] to " the question of whether the Applicants had a " right to obtain the relief ". Attention on behalf of the Respondent was thus focused upon the exercise of the Court's discretion. 7 Considerable caution must be exercised in ordering the production of documents in circumstances where the application before the Court is an order under Order 15A of the Federal Court Rules . It is not designed to secure for a prospective plaintiff all the documents and other information that would be discoverable if a proceeding were commenced against the defendant. Nevertheless, some "fishing" must be permitted, for otherwise there will be little scope for the operation of the rule. Speaking generally, however, once a person is in a position to make a decision whether he has a good (or perhaps arguable) cause of action, the criteria to be satisfied before an order can be made under O15A, r6 will not be satisfied. Relevant to the exercise of the discretion is the potential importance of the documents which have been sought in the resolution of the question as to whether the Applicants have a right to obtain relief. The statements of the two accounts referred to in paragraph 10 of the Respondent's Affidavit , it is considered, are of considerable potential importance. 9 In the absence of any distinction being drawn between the documents identified in paragraph 1, as opposed to the Notice to Produce generally, it is thus considered that production should be ordered of all of those documents identified in paragraphs 1---7 of the first Notice to Produce . 10 The second Notice to Produce , dated 1 February 2008, seeks the production of an advice from Naomi Sharp of counsel. 11 It has been said on behalf of the Applicants that whatever privilege may have attached to this advice has been waived. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". On 9 January 2008 I received instructions from my client to file an Appeal against the decision of Justice Flick dated 29 November 2008 [sic] which provides that the Respondent attend Australia to be cross-examined on 1 and 2 May 2008. Accordingly, production is not ordered of that advice. 14 Such further orders as have been made were not the subject of argument. The Notice of Motion dated 14 December 2007 in respect to the Notice to Produce dated 29 November 2007 be dismissed. 2. The documents in respect to that Notice to Produce be produced to the Applicants on or before 31 March 2008. 3. The Notice to Produce served by the Applicants upon the Respondent dated 1 February 2008 be set aside. 4. Costs be reserved. Order 1(e) as made on 29 November 2007 be further varied by extending the time in respect to which an Affidavit is to be filed to 17 March 2008. 6. The Notice to Produce served by the Respondent upon the Applicants dated 23 November 2007 be set aside. 7. Costs in respect to the setting aside of that Notice to Produce be reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | preliminary discovery notices to produce exercise of discretion practice and procedure |
2 The Application presently before the Court seeks to restrain a review of a decision to suspend the Applicant. 3 At present the Applicant has been suspended with pay. What any future decision may be remains a matter for the future. The present Application is concerned with the " conduct " of the Respondent being engaged in for the purpose of making a decision. 4 The jurisdiction of the Court being invoked is that conferred by s 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The recent media statements made by a lawyer, Mr. Newhouse, said to be on your behalf. You failed to disclose an apparent conflict of interest. There is information which indicates that you have been involved in the inappropriate release and transmission of confidential information to parties not authorised to receive this information. Those actions also involve the inappropriate use of departmental resources and are serious enough to be the subject of investigation by the Australian Federal Police. 6 The decision taken on 23 July 2006 was a decision to suspend the Applicant with pay. The letter further foreshadowed, however, that another decision was to be made and, as part of that future decision-making process, a decision would be made as to whether she should be suspended without pay. Details of the matters to be considered, the letter stated, would be provided together with an opportunity make submissions. 7 The Applicant's annual salary is $ 95,363. 8 Further letters were thereafter forwarded to the Applicant advising her that the decision already taken would be reviewed. 9 On 24 November 2006, a further letter was forwarded to the Applicant by Mr Andrew Wood, Group Manager, advising her that he was to review her suspension and inviting submissions. Submissions were made. On 28 September 2007 Mr Wood again wrote to the Applicant advising her that he intended " to make my new decision as soon as possible . " Subsequent correspondence addressed the making of further submissions. 10 On 2 November 2007, Mr Steve Jennaway, the Acting Group Manager, wrote to the Applicant advising her that the " deadline " for further submissions was 5 November 2007 and further advising her that he intended " to make my decision soon after that date . " A new " deadline " was then set for 9 November 2007. 11 The practical or forensic difficulty confronting the Applicant in making submissions is the fact that on 29 October 2007 she was committed to stand trial in the Supreme Court of the Australian Capital Territory. The subject matter of those charges is the same, or substantially the same, as those for which she was suspended. 12 In more recent correspondence the Applicant has been advised that any new decision proposed to take into account the fact that she had been committed to stand trial. 13 Such submissions as have been made by the Applicant have focussed attention upon the inadequacy of the material initially relied upon and her " right to silence ". (2) The suspension may be with remuneration. (4) The Agency Head must review the suspension at reasonable intervals. (7) In exercising powers under this regulation, the Agency Head must have due regard to procedural fairness unless the Agency Head is satisfied on reasonable grounds that, in the particular circumstances, it would not be appropriate. Nor is it considered that the Applicant has established any legal error in the manner in which the Respondent is intending to proceed. That conclusion necessarily follows from the phrase, the Agency Head " must review ". The word " must " usually is construed as imposing a duty as opposed to a discretion. 17 Further, in the context of the Public Service Regulations 1999 (Cth), there is no indication that the word should not be construed as imposing a duty. The suspension of an employee is a serious step. Presumably in order to avoid a suspension operating for an indefinite period or being tantamount to dismissal, the regulation imposes the obligation to keep the suspension under review. Such an obligation is hardly surprising. The obligation to keep a suspension under review is thus not seen as being a requirement which may or may not be undertaken at the discretion of the Agency Head; it is a requirement which " must " be undertaken. The only matter left undetermined is that which constitutes " reasonable intervals . The review is being undertaken because of the regulatory requirement that it " must " be undertaken. The manner in which it operates upon an administrative decision-making process, however, is less certain. The phrase is a convenient rubric for several rules and practices which have various origins and serve various purposes. In the process of investigation of crime and the interrogation of suspects it comprehends the fact that it is not normally an offence to refuse to answer questions or to fail to provide an explanation or account of events. Not only is refusal or failure not an offence, but it cannot be used to draw an adverse inference against the person concerned at his trial. This aspect of the right of silence was greatly strengthened by the Judges' Rules which provided for the cautioning of suspects. Serving some of the same purposes but of different origin is the law relating to confessions in criminal cases, which cannot be used unless they are fully voluntary. In terms of procedure at a criminal trial, the "right of silence" covers the situation that the accused is not obliged to give evidence -- indeed he may make an unsworn statement about which he cannot be questioned -- and for the most part no comment can be made to the jury on his failure to go in the box. Finally, in legal proceedings generally, civil and criminal, a witness has a privilege to refuse to answer a question which might tend to incriminate him. Naturally this does not apply to a defendant who chooses to give evidence in a criminal case. 22 Civil proceedings and administrative decision-making processes may be stayed pending the conclusion of pending criminal proceedings. Factors relevant to the discretion to be exercised have been discussed by Wilcox J in Cameron's Unit Services Pty Ltd v Kevin R Whelpton Associate Pty Ltd (1984) 4 FCR 428. Instances where an Administrative Tribunal has stayed its own proceedings pending the conclusion of criminal proceedings include Re Sogo Duty Free Pty Ltd and Commissioner of Taxation [2005] AATA 1298 , 89 ALD 236 and Street Nation Pty Ltd v Australian Communications Authority [2004] AATA 1251 , 86 ALD 413. But there is no " right " to have an administrative process stayed simply by reason of parallel criminal proceedings: Elliot v Australian Prudential Regulation Authority [2004] FCA 586. 23 In deciding whether or not an administrative or civil process should be stayed pending the resolution of criminal proceedings, it may be that too little weight is now given to the practical difficulties confronting a person facing both criminal and civil proceedings: Baker v Commissioner of Federal Police [2000] FCA 1339 , 104 FCR 359. [34] In my opinion, there is some merit in the submission that there should be reconsideration of the manner in which the McMahon v Gould line of authority is now applied so as to decide whether too little weight is given to the practical as well as legal prejudice to the accused and to the primacy of criminal proceedings in our justice system. The decision in Reid v Howard [(1995) [1995] HCA 40 ; 184 CLR 1] adds force to remarks to this effect by Kirby P (as he then was) in Yuill v Spedley Securities Ltd (In liq) (1992) 8 ACSR 272 at 274-275. Whether or not such proceedings are stayed or postponed pending the resolution of criminal proceedings depends ultimately upon the terms of any relevant legislative provisions and is, in the absence of any such provisions, a discretionary matter for the decision-maker. 25 Even in the absence of any statutory or regulatory provision, the mere fact that there are pending criminal proceedings does not necessarily dictate any conclusion that an administrative decision-making process cannot continue, even if there be a substantial correlation between the facts being taken into account in the administrative process and the criminal process. 26 And, in the context of the present proceedings, the language of reg 3.10(4) dictates that the review " must " proceed. The fact that an employee may have been charged with criminal offences cannot be seen as a reason why that review should not be undertaken. 27 The " right to silence " cannot be relied upon as a reason why the Agency Head should not undertake the task entrusted to him by the regulation. The issue to be resolved, it is considered, is not to restrain the review from being undertaken but to ensure that the review is undertaken in accordance with law and, in particular, in as procedurally as fair a manner as possible. The only guide provided by the regulation is that the Agency Head must conduct a review " at reasonable intervals . 30 Other than such letters being written, what action was being pursued internally within the Department remains unknown. It is not to be assumed, however, that in the absence of explanation the Department or its officers did not conduct a review or consider such responses as were made on behalf of the Applicant. 31 There is nothing in this chronology and, more importantly, nothing in the review now being undertaken to evidence either bad faith or unreasonableness. A conferral of a statutory power or discretion must be exercised in accordance with law, the law implicitly imposing a constraint that the power or discretion must be exercised bona fide and for the purpose for which it was conferred and exercised in a reasonable and rational manner. No power or discretion should be construed as conferring authority to act in bad faith or unreasonably. 32 Both the grounds of review -- bad faith and unreasonableness -- are difficult to establish. 33 An allegation of bad faith should not lightly be made and cases of bad faith are rare: see SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361 , 194 ALR 749. Second, the allegation is not to be lightly made and must be clearly alleged and proved. Third, there are many ways in which bad faith can occur and it is not possible to give a comprehensive definition. 35 Nor has any " improper purpose " been established. The Respondent is doing the task entrusted to him by the regulation. No inference should be drawn that he is exercising the power for some " punitive " purpose. 36 " Unreasonableness ", also, has not been established. One of the difficulties inherent in the application of this ground of review is the well-recognised and well-trodden need to confine a repository of authority within the bounds of the power conferred but, at the same time, to leave the merits of a decision taken to the decision-maker. But " unreasonableness " is a recognised ground of review, both at common law and pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth). 37 At common law there is an overriding principle that an authority must act reasonably: see Associated Provincial Picture Houses Ltd v Wednesbury Corp (Wednesbury case) [1947] EWCA Civ 1 ; [1948] 1 KB 223; [1947] 2 All ER 680. That, I think, is quite right; but to prove a case of that kind would require something overwhelming and, in this case the facts do not come anywhere near anything of that kind. Acting on the implied intention of the legislature that a power be exercised reasonably, the court holds invalid a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action. The limitation is extremely confined. 40 To now exercise the duty to review the suspension, it is considered, is neither an unreasonable exercise of that power nor an exercise of power at a time that can be regarded as not being at a " reasonable interval ". 41 In determining when the next " review " was to take place, it may be assumed that it would have been open to those undertaking the review to have formed a view as to when the criminal proceedings against the Applicant were most likely to take place and possibly to have even formed the view that a " review " subsequent to those criminal proceedings was a review undertaken at a " reasonable interval . For this Court to conclude that it was " unreasonable ", it is considered, would be to impermissibly trespass into a review of the merits. 43 Nor is it considered that the Applicant has made out any case relying upon an error of law or a failure to consider the merits of her case. It may be assumed that the review to be undertaken pursuant to reg 3.10. (4) is a review conducted in accordance with procedural fairness, including an opportunity to adduce materials to be taken into account and submissions. Neither contention, it is considered, should be accepted. 46 The rules of procedural fairness canot dictate in the present case a conclusion that the review, which " must " be undertaken, can only take place once the criminal proceedings have been concluded. If the review is to be undertaken, the issue to be addressed is to give content to what procedural fairness now requires. That requires a disclosure of the materials to be taken into account and a reasonable period of time within which to make such submissions as are now considered appropriate. 47 No conclusion should be reached that the Applicant is not being given a real opportunity because to effectively participate in the review process necessarily involves waiver of the right to silence. That conclusion should not be reached because to accept such a proposition so broadly expressed would be to accept that the charging of an employee with a criminal offence could of itself preclude the review process being pursued. 48 In the present case it may be accepted that there is a very real risk that the Applicant cannot address in detail the facts essential to both the review process and the criminal proceedings. There is a substantial overlap of facts and issues of credit will necessarily arise in the criminal proceedings. It is accepted that there is a " real prejudice or injustice ": cf Hurley v Federal Commissioner of Taxation (1992) 37 FCR 11 at [13] per Hill J. 49 Neither can it be concluded that the Applicant has already had an effective opportunity to advance her case before the reviewing officers by reason of detailed submissions previously made in December 2006. The " Case Statement " in the criminal proceedings was only made available in December 2007 and sets forth in considerably greater detail the facts confronting the Applicant and those needing to be addressed in any further submissions. 50 A " real prejudice or injustice ", however, does not ordain the postponement, perhaps for an indefinite period, of an administrative process. 51 It should not be concluded lightly that the making of submissions on behalf of the Applicant necessarily involves her in waiving her right to silence or that, if she does waive her " right to silence ", she is thereby exposed to irrevocable prejudice in the criminal proceedings: Edelsten v Investigating Committee (1987) 14 ALD 122. There can be no presumption that if he does give evidence before the Committee he cannot receive a fair committal or a fair trial, if trial there is to be. The exercise of "the right to silence" is peculiarly a matter for the accused, and no doubt in some cases it is a matter of great difficulty for him to decide whether he should exercise it or not. But it is always for him to decide, and the Court is indifferent to whether he does exercise it or whether he disregards it in whole or in part. If he decides to speak out, the Court does not regard him as having suffered an injustice, or not having had a fair trial merely because of that decision on his part. In short, whilst he can assert here that the infringement of his "right to silence" by his being obliged, in his own interest, to give evidence before the Committee (if he does, of course) will deprive him of possible advantages in the criminal proceedings from the exercise of that right, the essential concern of the Court here is whether in fact there is a real danger that he will suffer or may suffer injustice in the criminal proceedings. The Court must examine the circumstances put before it and determine from them whether the continuance of the proceedings before the Committee will cause actual injustice to him at the committal or the trial. As Wootten J pointed out in McMahon v Gould [(1982) 7 ACLR 202 at [207], 1 ACLC 98] the Court is not concerned with the tactical use to which the plaintiff may put the "right". But the Applicant may presently be in the position whereby she can adduce materials to be taken into account without waiving that right. Presumably the financial position of the Applicant will form part of any submission which can presently be made. Part of her submission may also be a submission that the existing decision to suspend her with pay should be continued because she has elected not to waive her right to silence and because of the imminence of the forthcoming criminal proceedings. 53 Any assessment as to the difficulties confronting the Applicant in making submissions remains a matter for the decision-maker. That assessment would include an assessment as to the ability of the Applicant to presently make meaningful submissions and an assessment as to the impediment placed upon the Applicant by reason of her in fact having been charged. 54 Insofar as the latter alternative is concerned, and had it been necessary to resolve the argument, it would have been resolved against the Applicant. 55 The shortness of time within which to respond in the present proceedings, it is considered, did not expose any procedural unfairness. Procedural fairness requires a meaningful amount of time within which to prepare for proceedings and respond: Brock v United States of America [2007] FCAFC 3 , 157 FCR 121. But nor can the expression be used to import guarantees about access to resources. The present proceeding is not one in which the factual basis upon which the Respondent is proceeding has changed, other than in one respect. That is the intention to now take into account the fact that the Applicant has been charged. 57 The correspondence annexed to the Affidavit as filed on behalf of the Applicant raises asserted difficulties as to the ability to make submissions within the times prescribed. The most recent correspondence, for example, from the solicitors for the Applicant to the Department dated 2 November 2007, refers to the " new and shortened deadline - twenty-four hours " and to the " unseemly rush to decision which, in the circumstances, suggest that it will be adverse to our client's interest . " Procedural fairness, it was stated " requires that decision-makers be impartial and give those affected reasonable opportunity ". But the reply from the Respondent on 5 November 2007 extended the time for making submissions from 2 November 2007 to 9 November 2007. 58 In the absence of reason to draw any different conclusion, it would have been concluded that the extension of time granted adequately addressed the implicit request being made on behalf of the Applicant for further time. The request for further submissions, on this occasion, it should be noted, was made on 31 October 2007. The Applicant thus had from 31 October to 9 November in which to make submissions. 59 In any event, however, the submission now being addressed need not be resolved. The Respondent has agreed to refrain from making any decision pending the resolution of these proceedings. The Application be dismissed. 2. The Applicant to pay the costs of the Respondent. 3. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | public service regulations 1999 (cth) reg 3.10 reg 3.10(4) imposes a duty to review a decision to suspend an aps employee under reg 3.10(1) right to silence no right exists to have an administrative process stayed simply by reason of parallel criminal proceedings administrative law administrative law |
Put shortly, the contravening conduct was evidenced in Hobie's terms of trade with its dealers which specified the prices below which they were not permitted to sell, or to advertise for sale. The possibility that Hobie was contravening the Act was raised by the Australian Competition and Consumer Commission with it by letter of 1 November 2006. In response to that letter, Hobie instructed lawyers to redraft its documentation to ensure it conformed with the Act and it notified the ACCC accordingly. Its revised documentation has been tendered in this proceeding. Liability for the contraventions alleged by the ACCC has been admitted. The parties seek that I make consent orders in this matter. Before I consider those orders, it is necessary that I consider the circumstances and context of the admitted contraventions. I should add I have been supplied by the parties with a Statement of Agreed Facts. Hobie is a manufacturer and importer of Hobie brand recreational watercraft, principally, for present purposes, sail boats and associated sail boat products and kayaks and associated kayak products. Hobie appointed Australian retailers of its watercraft as either, or both, dealers in sail boats and dealers in kayaks. At times of present relevance there were 12 sail boat dealers and 18 kayak dealers throughout Australia. Beginning in May 2003 until about 1 October 2006 Hobie supplied its dealers with an array of documents each of which stated prices for Hobie products. The price lists contained in those documents each referred to the Manufacturer's Recommended Retail Price ("MRRP") and the Manufacturer's Recommended Retail Price inclusive of GST. The documents were updated on an annual basis. The conduct contravening s 48 of the Act commenced in August 2004 when Hobie entered into a written agreement with Glascraft Marine Pty Ltd. The decision to stipulate such terms was taken by the Managing Director in Australia of Hobie, Mr Steve Fields. Mr Fields was the sole resident Australian director. He was responsible for the conduct of Hobie's operations in Australia, for its dealer network and for its pricing policies. Hobie did not obtain any legal advice in stipulating terms to the above effect or to their later use. Mr Fields was unaware of the provisions of s 48 of the Act. The parties have agreed, properly in my view, that the contravening conduct was founded upon the decision of Mr Fields referred to above, which decision it continued to implement, as will be seen, until the ACCC's notification to Hobie of its concerns on 1 November 2006. For this reason they have not sought to disaggregate the individual contraventions to which that decision gave rise. Rather, they invite me to deal in aggregate with the decision and its implementation. From about September 2005 to September 2006, Hobie entered into written agreements with both dealers in sail boats and dealers in kayaks which contained, inter alia, express terms to the same effect as those referred to above in relation to the Glascraft dealership. Glascraft executed that application on 28 September 2005. In October 2005 Hobie sent Glascraft a "Domestic Sail Boat and Kayak Dealer Handbook" which included express terms to like effect as in the above application. In particular it has admitted, in relation to the Glascraft kayak dealership agreement, that its contravention involved conduct of the kinds described in ss 96(3)(a) , (b), (c) and (f) of the Act. It equally admits that, in relation to the sail boat dealers and kayak dealers respectively, it contravened s 48 by engaging in conduct of the same kinds. Further, Hobie has admitted that in respect of the "Hobie Dealer --- Account Application" which was executed by Glascraft, it contravened s 48 through conduct of the kinds described in ss 96(3)(b) , (c) and (f) and that in supplying Glascraft with the Handbook it contravened s 48 by conduct of the kinds described in ss 96(3)(b) and (f). Hobie admits that it engaged in the above conduct in respect of Glascraft with the intention that Glascraft would not sell and/or advertise for sale kayaks or Hobie products at prices less than the prices specified by Hobie. A similar admission of intention is made in respect of its conduct with respect to the sail boat dealers and kayak dealers. First, as I have already indicated, Hobie is the subsidiary of a United States corporation. It currently has less than 10 employees. While its whole year profit and loss statement for 2007 has been tendered, I am content to rely upon the above which has been agreed as no issue of solvency arises in light of the pecuniary penalty agreed to by the parties. As I noted earlier, Mr Fields was responsible for inserting into Hobie's documentation the clauses which gave rise to the contravening conduct. What is to be noted about the obligations so imposed is that they were not repeated orally to any of the dealers nor did Hobie terminate or penalise any of the dealers for non-compliance with them. On 25 October 2007 Hobie sent a letter to all of its then current dealers notifying them of the ACCC's application. It emphasised that the dealers were free to set their own selling price for the Hobie products they re-sold. The ACCC considers that Hobie has cooperated with it during its investigation by providing information and documents voluntarily. As already noted, Mr Fields, on being notified of the Commission's investigation, acknowledged the contravention of the Act and expressed Hobie's willingness both to cease that conduct and to take steps necessary to correct it, and, to this end, Hobie has agreed to the consent orders and to the Statement of Agreed Facts in these proceedings. Prior to the contravening conduct, Mr Fields had not undertaken trade practices compliance training nor did Hobie have a compliance programme in place. Hobie now consents to the establishment of such a programme. Finally, I should note Hobie has not previously been found to have contravened the Act. Though I will revert to this matter specifically when dealing with the proposed pecuniary penalty, I should emphasise at the outset, and the parties themselves acknowledge, that the Court retains the responsibility for imposing penalties and for making orders, the parties' agreement notwithstanding. That responsibility derives ultimately from s 71 of the Constitution and cannot be circumscribed by private agreement: see Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 ; (1999) 161 ALR 79 at [18] . This said, the Court has long recognised the propriety of encouraging fair and appropriate settlements so reducing the burden of litigation on public and private resources: see eg Australian Competition and Consumer Commission v Econovite Pty Ltd [2003] FCA 964 at [11] ; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134 ; (1996) 71 FCR 285 at 290-291. I am satisfied that there is utility in making the declarations both to publicise the types of conduct that can give rise to contravention of s 48 and also to provide the basis for the orders by way of injunction and pecuniary penalty. I equally am satisfied with the form in which the declaratory orders have been cast. They relate directly to the contraventions found to have occurred and against which injunctive relief can be granted: cf ICI Australia Operations Pty Ltd v Trade Practices Commission [1992] FCA 474 ; (1992) 38 FCR 248 at 267. Further they have been formulated with sufficient precision so as to be capable of being complied with without the continual supervision of the Court. I am satisfied they are consistent with the public interest in the matter. Notwithstanding that Hobie has ceased to engage in contravening conduct, it nonetheless continues to wholesale Hobie products within Australia. The three year duration of the injunction parallels the proposed order relating to the compliance programme and will assist in preventing a recurrence of contravening conduct notwithstanding that such a recurrence is not now reasonably to be anticipated: cf s 80(4)(a). The first, which embodies a number of interlocking orders, requires the establishment and implementation of a trade practices compliance programme which is to be maintained for three years and relatedly imposes periodic reporting obligations to the ACCC. The second would require Hobie to provide information to all of its dealers in letter format concerning this proceeding and its outcome in terms annexed to the proposed consent order. As to the first of the above, I am with some hesitation prepared to make the orders proposed. On the material before me only Mr Fields has been shown to have been engaged in the conduct founding the contravention; the company has less than 10 employees; and there is no evidence as to the respective responsibilities of those employees such as to permit a judgment to be made as to the utility of making the relatively elaborate orders proposed. Nonetheless, because Hobie has consented to what is proposed; because the orders, in intent at least, have both preventative and educational purposes and this is reflected in their design: cf Australian Competition and Consumer Commission v Danoz Direct Pty Ltd [2003] FCA 881 at [267] ; and because the programme is one to be tailored to Hobie's circumstances (notwithstanding the reference to the Australian Standard on Compliance Programs AS3806: cf Econovite at [17]), I am prepared to make the proposed compliance programme orders. The orders requiring communication with the dealers in terms prescribed in the annexure to the proposed orders do little more than formalise the course that Hobie had foreshadowed in its 25 October 2007 correspondence with its dealers. I am prepared to make these orders in the terms agreed. That sum represents a 30 per cent discount on the penalty that otherwise would have been sought but for Hobie's cooperation during the ACCC's investigations, its early acceptance that its conduct contravened the Act and its willingness to correct its conduct and to resolve the proceedings by consent orders. I have referred already to the requirements of s 76(1) and to the considerations it includes amongst matters relevant for the Court to have regard to in determining an appropriate pecuniary penalty. I need not repeat them. Additionally, a considerable body of authority has enlarged upon the principles governing the imposition of pecuniary penalties. Those principles were helpfully distilled by Kenny J in Australian Competition and Consumer Commission v TEAC Australia Pty Ltd [2007] FCA 1859 at [16] . The question is not that; it is simply whether, in the performance of the Court's duty under s 76 , this particular penalty, proposed with the consent of the corporation involved and of the Commission, is one that the Court should determine to be appropriate. It was directed at all of Hobie's sail boat and kayak dealers across Australia. It was the product of the unilateral action of Mr Fields which was taken without legal advice. Its documentary expression was clear and unequivocal in its purport: Hobie did not want its dealers to discount Hobie products. This said, I do not consider the absence of such evidence in the circumstances to be either a mitigating or an aggravating factor: cf Trade Practices Commission v ICI Operations Pty Ltd [1991] FCA 527 ; (1991) 105 ALR 115 at 119. Nonetheless, the evidence indicates it has substantial and growing revenue and net profits. There is no evidence of its market power or of the commercial impact of its conduct on the market. Even if that impact (if measurable with any precision at all) was slight, it would be no less blameworthy for that reason: cf Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152 ; (2005) 215 ALR 482 at [81] . (v) Was the conduct systematic, deliberate or covert? The decision taken by Mr Fields and its implementation was intentional and purposive but it involved no knowing (or deliberate) contravention of the Act. It was systematic in the sense that there was no differentiation between dealers, but it was not covert in that on the evidence before me it simply cannot be said that it did other than represent Hobie's terms of trade with any prospective dealer. In relation to all other dealers, the only conduct relied upon occurred between September 2005 and September 2006. The company did not then have either a compliance programme or a culture conducive to compliance. The level of cooperation Hobie has demonstrated has resulted in a 30 per cent discount in the proposed pecuniary penalty. The reason the parties have agreed to payment by two instalments over one year is to assist Hobie's cashflow. Such is not uncommon in cases concerned with TP Act contraventions: cf the observations of Burchett and Kiefel JJ in NW Frozen Foods at 295. In determining whether the proposed pecuniary penalty is appropriate, it is of course important to recognise that the sum agreed represents a settlement between the parties: cf Trade Practices Commission v Milreis Pty Ltd (No 2) [1978] FCA 20 ; (1978) 32 FLR 234 at 243. However, it is also important to acknowledge the deterrent function, specific and general, of such a penalty. Obviously the sum required to achieve this object will be larger where the Court is setting a penalty for a company with vast resources. However, as specific deterrence is only one element and general deterrence must also be achieved, consideration of the party's capacity to pay must be weighed against the need to impose a sum which members of the public will recognise as significant and proportionate to the seriousness of the contravention. I equally am satisfied that the penalty proposed is an appropriate one, having regard to the considerations to which I have referred. It is substantial and significant for a company of Hobie's size and is proportionate to the seriousness of the contraventions. I will make orders in the terms of the proposed consent orders. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | resale price maintenance contraventions admitted proposed consent orders court's function in such circumstances trade practices |
This morning the respondents faxed the Court signed affidavits of the respondent Mr Troy Thomas and his solicitor Mr Mossman, and an unsigned affidavit of Mr Rhys Thomas. Mr Troy Thomas has deposed, inter alia , that although he did visit Ms Chaloner on 5 June 2009 as a friend, he never said that he would not enforce the subpoena or that she was not required to give evidence. Mr Mossman deposed, inter alia , that at no time did he threaten, induce or coerce Ms Chaloner into making an affidavit - rather Ms Chaloner was agreeable to giving the affidavit. Mr Rhys Thomas has subsequently executed his affidavit and it was filed in Court this morning. Mr Thomas has also deposed that he did not pressure, induce or coerce Ms Chaloner into making the affidavit. Ms Chaloner lives in Broome, Western Australia. The subpoena required Ms Chaloner to attend the Federal Court in Brisbane today. However earlier this week after consulting with me, Deputy District Registrar Belcher informed the parties that I would give leave for Ms Chaloner to give evidence by video link from Broome, rather than being required to travel to Brisbane. Order 27 r 4 of the Federal Court Rules empowers the Court to set aside a subpoena in whole or in part on the application of any party or person having a sufficient interest. Ms Chaloner is clearly such a person. Grounds upon which subpoenas are traditionally set aside include the excessive width of documents sought or whether the subpoena on its face is oppressive. In this context injustice is not simply a question of the purpose for which the relevant proceedings were instituted but includes a consideration of the consequences for the person invoking the power. The terms oppressive and vexatious are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in an appropriate context, the meaning that the proceedings are seriously and unfairly burdensome, prejudicial or damaging and productive of serious and unjustified trouble and harassment. I take this view for the following reasons: The appropriate order is that the notice of motion be dismissed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | order 27 rule 4 of the federal court rules notice of motion to set aside subpoena to appear as witness important witness experiencing anxiety and heart palpitations since subpoenaed whether subpoena oppressive or vexatious witness to appear by video link for short cross examination practice and procedure |
These are the reasons why I made those orders. 3 Full details of the Share Scheme, the SAINTS Scheme and the Options Scheme were contained in helpful written submissions which were provided to me by Senior Counsel for St George, Mr Jackman SC, prior to the first court hearing on 29 September 2008. I marked the submissions MFI 1 at the hearing. 4 The reasons why I made the orders were essentially those set out in the written submissions which I adopted. It is unnecessary for me to repeat the content of the submissions but I will refer briefly to four matters to which Mr Jackman drew my attention. 5 The first was the issue of performance risk. This is an issue which has been raised in a number of cases to which Mr Jackman referred. The most recent case is Re APN News & Media Limited [2007] FCA 770 at [23] . 6 I was satisfied that the "performance risk" was sufficiently addressed in relation to each of the Schemes for the reasons set out in the written submissions. 7 The second matter to which reference was made was an exclusivity provision contained in clause 19 of the Merger Implementation Agreement. This contained a "no shop restriction", a "no talk restriction" and a "no due diligence restriction". 8 Each of the concerns in relation to exclusivity clauses expressed by Santow J in Re Arthur Yates & Co Ltd [2001] NSWSC 40 ; (2001) 36 ACSR 758 at [9] was addressed in the written submissions. 9 The third issue to which Mr Jackman referred was the question of a break fee of $100 million provided for in cl 20.2 of the Merger Implementation Agreement. 10 I was satisfied that the break fee provision did not offend the principles stated in the authorities including Re SFE Corporation Ltd [2006] FCA 670 at [6] --- [7]. 11 The fourth issue was the deemed warranty in cl 4.5 of the Share Scheme that the shares be free from encumbrances. Mr Jackman referred me to the view which is accepted in this Court as stated in Re Hostworks Group Ltd (2008) 26 ACLC 137 at [41]. This view has been followed in the Supreme Court of New South Wales by Barrett J in Macquarie Private Capital A Ltd (2008) 26 ACLC 366. The clause was therefore in accordance with established authority and it was drawn to the attention of scheme participants: see further Re APN News & Media Ltd at [63]. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | scheme of arrangement performance risk exclusivity provision break fee deemed warranty that shares be unencumbered orders that meetings to consider scheme of arrangement be convened corporations |
He arrived in Australia on his most recent visit on 22 March 2005. On 20 April 2005 he lodged an application for a protection (class XA) visa. That application was refused by a delegate of the first respondent, Minister for Immigration and Citizenship' ('the Minister') on 9 August 2005. The appellant applied to the Refugee Review Tribunal ('the RRT') on 23 August 2005 for a review of the delegate's decision. 2 It is evident from the transcript of the hearing before the RRT and from the decision of the RRT that it developed serious reservations about the appellant's credibility during the hearing. Those concerns were raised directly with the appellant. One matter of concern was the difficulty of reconciling the appellant's claimed fear of persecution in his own country with his pattern of travel between India on the one hand and New Zealand (where he has a brother) and Australia on the other. On his application form for a protection visa the appellant represented that he had never before travelled outside India. In his accompanying statement, however, he disclosed that before his arrival in Australia on 22 March 2005 he had visited New Zealand between 21 December 2004 and 10 March 2005. No application for a protection visa was made in New Zealand. The appellant told the RRT he did not want to live there. The appellant's two most recent passports in fact showed upon examination that in the seven years between January 1998 and March 2005 the appellant had spent about three and a half years in either New Zealand or Australia. 3 The appellant's explanations for his departure from India on 21 December 2004, return to India on 10 March 2005 and departure for Australia on 21 March 2005 were as follows. In his original statement he said that as a result of various kinds of mistreatment and persecution he was advised by his parents 'to leave the country for good'. He went to New Zealand. He did not apply for a protection visa despite his suggestion that he had left India permanently. He returned to India nearly three months later because his wife said everything had been cleared up and his life was not in danger. However, when he returned to India the police caught him at the airport and he was badly tortured. He was released when his wife and friends paid a 'huge bribe to the police and authorities'. His wife and parents, he said succeeded in getting him a visitor's visa to Australia. 4 However, it was apparent that the appellant had obtained his visa to visit Australia in New Zealand, before he returned to India. The RRT found the appellant unconvincing in his claims. In particular, it did not accept his claims that he was persecuted and sought a protection visa because he was in fear of his life. It also gave little weight to his documents purporting to show he had been falsely charged by police or to his claims to be a member of the Badal Group, a political party that lost government in his state of Punjab in elections in 2002, or that he had been subjected to attacks by police and Congress Party supporters in 2004 as a result. 5 The RRT made a series of findings rejecting the factual foundation of the appellant's claims. It did so accepting the principle stated by a Full Court in Minister for Immigration and Multicultural Affairs v Rajalingam [1999] FCA 719 ; (1999) 93 FCR 220 ( 'Rajalingam' ). ( See MIMA v Rajalingam (1999) FCR 220 ). He claims to have been bashed by both police and Congress party supporters, that he is wanted on false charges and has been declared a "proclaimed offender. It made clear the part that the appellant's lack of credibility played, if at all, in the assessment of each aspect. 8 It explained why little weight was given to documents which the appellant provided. These assessments were all matters for the RRT and not for this Court or the Federal Magistrates Court. No jurisdictional issue arises from them. 9 Based on its findings the RRT concluded that it was 'therefore not satisfied that the applicant has a well-founded fear of persecution in India'. 10 There can be no suggestion the RRT did not give attention to the matters relied on by the appellant. It did give those matters attention and decided them against the appellant's claims. Subject to one issue to be discussed later there is no basis to suggest jurisdictional error. 11 The RRT rejected the appellant's claims in a decision signed on 20 October 2005 which was sent to the appellant with a letter dated 10 November 2005. The appellant filed an application for judicial review of the RRT decision in the Federal Magistrates Court on 7 December 2005. There were three grounds advanced. They asserted, in summary, that the RRT had failed to assess the appellant's 'fears of harm', denied him procedural fairness and was biased. On 13 March 2007 Driver FM dismissed the application for judicial review. His Honour concluded that none of the grounds were made out. The applicant failed before the Tribunal because it did not believe his claims. It is obvious from the record of the Tribunal decision that the presiding member had serious concerns about the internal consistency and plausibility of those claims. The adverse credibility findings made by the Tribunal were open to it on the material before it. Having rejected the applicant's claims as a fabrication in unequivocal terms, it was unnecessary for the Tribunal to consider those claims as if they were true. Accordingly, there was no relevant failure to apply the relevant test of persecution under either the Convention or s.91R of the Migration Act. Neither was there any failure on the part of the Tribunal to perform its statutory functions under either s.65 or s.414 of the Migration Act. There was also nothing procedurally unfair about the manner in which the Tribunal performed its functions. The Tribunal met its statutory obligations to invite the applicant to a hearing and to give him the opportunity to present his claims and address the Tribunal's concerns. The Tribunal did not fail to meet its obligations under s.424A of the Migration Act to disclose in writing adverse material that appeared to be determinative. I note in that connection that, although the Tribunal was concerned about inconsistencies between what the applicant said at the hearing conducted by the Tribunal and what he had put in his protection visa claims, the latter were re-presented by the applicant to the Tribunal in writing at the hearing. Neither is there any substance to the assertion of bias. While the applicant was not believed, the manner in which the presiding member expressed himself does not indicate either a closed mind or pre-judgment. I find that the applicant has failed to establish any jurisdictional error on the part of the Tribunal. Neither on my own perusal of the material, is any jurisdictional error apparent to me. Accordingly, the decision is a privative clause decision and the application must be dismissed. I will so order. The Notice of Appeal contains two grounds. They raise the same issues disposed of by Driver FM in paras 7 and 8 quoted above. They allege that his Honour erred in not coming to the opposite conclusion. In my view there is no substance in the grounds of appeal. 13 Findings about credibility in circumstances such as those which arose in the present case, where obvious and unsatisfactory inconsistencies were presented which went to the heart of the appellant's claims, are matters for assessment by the RRT. They are not matters for this Court or the Federal Magistrates Court, which may not intervene unless jurisdictional error is shown, and then only to remit a matter for further attention. 14 However, there was one feature of the RRT decision which I found troubling. It finds that he was not subjected to attacks by police and Congress Supporters in August 2004 or at other times. It finds he was not, and is not the subject of criminal charges in Punjab, false or otherwise and is not wanted by Indian authorities. It finds that his journeys to New Zealand and Australia were not motivated by any fear on his part, but by other reasons unrelated to the Convention. They may be seen as expressing a positive satisfaction that certain things did not in fact occur. 16 It does not seem necessary for the RRT to go as far as it did. The work of the RRT does not proceed upon the balance of probabilities in the same way as in a civil trial and it is not necessary, as it is in a court, 'to decide where, on the balance of probabilities, the truth lies as between the evidence the parties to the litigation have thought it in their respective interests to adduce at the trial' (see Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 282 ( Wu Shan Liang' ). Moreover, I have some doubt about the underlying foundation for such definite pronouncements about detailed issues of fact. 17 As I read the decision of the RRT, the material before it, while not sufficiently establishing the appellant's claims, in most cases did not positively contradict them either . A notable exception was the appellant's claim that his decision to come to Australia at the time of his entry on 22 March 2005 was only made once back in India after his three month visit to New Zealand, whereas the visa for Australia was obtained while he was still in New Zealand. However, a foundation of this kind, not just to reject the appellant's claims as not established by a substantial margin, but to positively reject them as contrary to fact, does not appear to have been available in the same way for most of his claims. 18 A finding made without an adequate foundation may cease to be simply a finding of fact. A consideration of the circumstances may reveal that an error of law has occurred. That possibility, of course, must be assessed in a legal context that gives full weight to the nature of the task committed to the RRT and the limits on judicial review. Confidence (or at least a lack of uncertainty) by the RRT that its findings on factual matters are sound may be of substantial importance to the question of whether it should leave room, in its ultimate assessment, for the possibility that a claimed event had occurred. (See Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559 at 576; Rajalingam at [62]). However, the RRT is not bound to make explicit its degree of conviction ( Rajalingam at [64]). In the present case it should be accepted that the RRT had a high degree of confidence that there was no sufficient basis to accept the appellant's claims, and good reason, including his lack of credibility, to reject them. 19 Although it was not necessary for the RRT to make positive findings that certain circumstances and events, claimed by the appellant to exist, did not in fact exist (as opposed to not being established) and even though I have some doubt that such findings, had they been necessary, were open on the limited material before the RRT, the present is not a case where the appellant can claim that the RRT made an error of law because it asked itself the wrong question. If the findings go beyond indicating a high degree of confidence by the RRT in its conclusions, at worst it may be said that it was not necessary for the findings to have been made in those terms. As the manner of expression, upon examination, does not affect the way in which the RRT reasoned to its conclusions and does not reveal jurisdictional error my initial reservations about those issues cannot provide any foundation upon which the appeal might succeed (see Wu Shan Liang at 272). 20 Mr Reilly, who appeared for the Minister, also drew my attention to a decision of a Full Court in Minister for Immigration and Multicultural Affairs v W64/01A [2003] FCAFC 12. The case turned on whether the RRT had properly given attention to the likelihood of future persecution. It does not deal directly with the matter which has exercised my mind in the present case. The Tribunal progressed from difficulty in accepting the respondent's evidence, to findings of implausibility in respect of key aspects of it, to non-acceptance of those key aspects and thence to a positive finding of fabrication. ... An accumulation of logical or other difficulties in an applicant's claims may constitute a basis for rejecting them. Similarly, where a number of claims are made which are found to be implausible, that accumulation may warrant the global finding that they are not true, not merely that they are unlikely to have happened. ... When read together the conjugation of difficulty in accepting various elements of the evidence, the implausibility of the claims and their non-acceptance coalesce in an unsurprising finding of fabrication. That finding, read in context, suggests that the conclusions of implausibility were more than conclusions about likelihood. For not only were the respondent's claims implausible, they were not accepted. They are consistent with accepting, as I do in this case, that there was a proper foundation for a confident view by the RRT that the claim for a protection visa should be rejected. The observations made by French J do not go directly to the matter which concerned me, which was the possibility the RRT may have made findings necessary to its conclusions which lacked adequate support as a matter of law, not just as a matter of fact or available inference. Nevertheless, I accept that the circumstances of the present case do not present a problem of jurisdictional error. 22 As no jurisdictional error has been shown in the present case, nor any error in the judgment under appeal the appeal must be dismissed. It is appropriate to dismiss it with costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan J. | findings made by the refugee review tribunal about credibility consideration of whether there was adequate foundation for definite pronouncements of fact no jurisdictional error migration |
The first that I propose to deal with is the notice of motion brought by the applicants filed on 29 May which seeks four orders. The following two orders that are sought in the notice of motion are consequential upon the success of that first order. Those two other orders sought in effect (a) that before the Court hears the respondents' Motions existing claims, they be directed to file their defences to the amended, in effect, to the amended statement of claim and (b) that the respondents' motions to strike out the applicants' claims not be heard until filing of those defences. 3 The reality is that if I grant leave to file the amended statement of claim, then subject to questions of costs, the respondents' motions to strike out the existing claims in effect evaporate. The applicants' motion then seeks, alternatively, in order 4, four suborders, the first two of which seek orders (a) that the respondents file their defences; and (b) that by a date in July the first respondent be provided by an identified company with quantification of the precise claims made by the respective applicants. 5 The third and fourth subparagraphs seeks orders (a) that by a date in August, the second and fifth respondents provide their acceptance or denial of the claims made by that company on behalf of the applicants; and (b) that by a date in September, settlement terms be filed with the Federal Court for the matter to be relisted for hearing. 6 I do not understand how the orders in 4 could be an appropriate exercise of power given the rest of the "pleading"; and I do not propose to make them. 7 The second and third orders depend on the success of the claims for the first order. Therefore, I really need to deal with whether I should grant leave to amend the statement of claim in terms of the amended statement of claim, annexed to the affidavit of Mr Healey. It is unnecessary for the purposes of this notice of motion to deal with the apparent deficiencies of the earlier documentation in these proceedings and I need to look at this document as a freestanding pleading to support an application which is in existence, which application was filed in December last year, which sought orders including an order that the losses of the applicant as verified by forensic accountancy analysis pursuant to the contract of insurance be paid to the applicants. 8 The application made passing reference to three examples of Commonwealth legislative power, the Trade Practices Act 1974 (Cth), the Insurance Contracts Act 1984 (Cth) and the Insurance (Agents and Brokers) Act 1984 (Cth) (repealed by Financial Services Reform (Consequential Provisions) Act 2001 (Cth) s 245). The application was originally supported by an affidavit of Mr Healey. The matter has taken six months to get to this stage after two or more directions hearings in which I have indicated my lack of understanding of the nature of the claims. Hence, at this point, with six months having passed, and the benefit of a number of directions hearings, the applicants plead as follows. Paragraph 1 pleads that the first to third applicants were solicitors of the Supreme Court of this State, that the fourth applicants were service companies of the practice and the formal corporate status of the relevant respondents. 9 The first respondent is a well-known insurance broker. The second to fifth respondents are well-known underwriters. What appears to have been broked or written under a binder, it is not clear which, by the first respondent is a property material damage and business interruption policy often called an ISR policy, being an Industrial Special Risks policy. There is available as exhibit 1, and it is available in earlier affidavit material filed by the applicants, a client coverage summary produced by the first respondent identifying the relevant period of insurance, being a document apparently produced in November 2000 dealing with the period of insurance 15 August 2000 to 31 December 2000. The document gives general policy information, including the associated practices of G.H. Healey and Co and various of the companies that are applicants. (No relevant issue about parties is taken by any party. ) The business is the business of solicitors. This coverage summary should be read in conjunction with the policy document. Mr Menzies on behalf of AON attempted to tender what may well be the policy document. Objection was taken to it by Mr Healy because he said that it was not proved at this point to be the policy underlying the binder or the broking of the risk. With that inadequate information I rejected the terms of the tendered policy, but the client coverage summary is sufficient for me to draw a conclusion that there was, in the ordinary course, an underlying ISR policy with the various limits for property and material damage at various locations and the consequential loss of section 2 , underwritten by the four well-known underwriters, some of which have changed their names, to a combined risk of a hundred per cent. 10 Going back to the proposed amended pleading, in paragraph 8, the undertaking of practices of the solicitors. The effecting of the insurance is pleaded without any specificity, other than that the first respondent on behalf of the applicants effected insurance with the second to fifth respondents. This much appears to be common ground. Paragraph 9, pleads that the applicants paid a premium. This is common ground. Paragraph 10 refers to the client coverage summary to which I have already referred. The applicants have not provided with the terms of the actual Insurance Policy by any of the respondents but wish to set same out herein in full when produced by the Respondents. It says no such thing. It states a fact that the applicants have not been provided with the terms of the policy. It does not allege a term of a breach of contract. 12 Paragraph 12 states in effect that the insurance was effected with the insurers to cover losses at 141-143 Elizabeth Street for the relevant period. I take those particulars as another material allegation. It is said that the fire caused property loss and damage to the applicants. No particulars about loss are given. There is then a heading "First Respondent". No clear pleading of what claim was made and when by the applicants is made. No coherent pleading of any body of facts, based on the relationship between the applicants and the first respondents supports that claimed relief. Secondly, a declaration is sought that the second to fifth respondents must settle and arrange for payment to the applicants of a claim flowing from the fire. There is no coherent pleading of any breach of contract by the insurers in any part of the proposed amended statement of claim. There is no allegation which supports with any clarity whatsoever any alleged breach by any respondent. There is no pleaded basis for these so-called declarations. 22 The third order is an order that appears to be an order against the applicants themselves. 23 The fourth order is that the broker must settle and arrange for payment to the applicant of a claim as to the applicant's losses within 14 weeks. 24 The fifth is an order that the second and fifth respondents must settle and arrange for payment of the claim, for the fire occurring on 17 September 2000 within a 14 week period. Interest is claimed as is costs. 25 I do not propose to grant leave to file the proposed amended statement of claim. It pleads no coherent cause of action against any of the respondents. 26 There is no pleading of a claim having been made and wrongfully refused, there is no allegation of breach of a term in the first respondent's contract with the applicants. There is no claim for any breach for the existence of any duty outside of contract which has been breached. There is no claim of any right arising under federal law which has not been complied with. That being the case, the notice of motion of the applicants of 29 May 2007 will be dismissed with costs. 27 I now deal with two notices of motion filed by the respondents. These two motions seek fundamentally the same thing: that is, the motion of the first respondent seeks an order that the proceeding be dismissed or in the alternative, the existing statement of claim be struck out and consequential orders. The second and fifth respondents seeks an order that the statement of claim be dismissed or in the alternative, struck out. That order is defective and the order sought by the first respondent is more appropriate in that a statement of claim is not the constitutive document of a proceeding, the application fulfils that role. But I take it that in effect both motions seek substantially the same relief. 28 I do not propose at the moment, though I am sorely tempted, to dismiss the proceeding; though, I think it may be kinder to the applicants to do so. Any continuation of these proceedings will be at their risk as to costs. I do however propose to strike out the existing statement of claim which was filed on 22 February 2007. 29 I have already indicated the lack of coherence and clarity in the proposed amended statement of claim. The existing statement of claim is worse. I do not propose to set out the terms of the paragraphs in any detail, suffice as to say that no pleading of any cause of action is made against either the first respondent or the second to fifth respondents. 30 The application which is at some risk in the future, of course, is not a pleading required to set out causes of action; but it is a document which seeks to at least contingently invoke the Trade Practices Act , the Insurance Contracts Act and a now repealed Act, the Insurance Agents and Brokers Act . 31 The matter is most unsatisfactory. The proceeding commenced on 29 December last year. It was said on a number of occasions that they were commenced to preserve some limitation point. The policy was effected for a period which expired on 31 December 2000 and incepted on 15 August 2000. The perceived limitation period is said to be six years after the end of the policy. That is no relevant limitation period whatsoever, simply by reason of reference to the expiration of the policy. 32 There was a fire within the period of the policy. That is agreed and is common ground. Almost immediately thereafter in the description of the mutual affairs of the parties one runs into a cloud of uncertainty. There appears to have been claims made which were adjusted by a well-known loss adjuster and payments made to certain parties. The applicants appear at the moment to say that those third parties were strangers to the proper payment of the claim. I would understand that the insurers do dispute that and that the payees of those moneys of some thirty thousand-odd dollars were relevant parties in the restitution of the property. 33 Quite what the dispute is about those is less than clear. It certainly is not illuminated by anything in the pleading. 34 Thereafter, the evidence that is before me on the motions discloses that the insurer has been saying, after those payments: "If you have any further claim, please make it". No further claim has apparently been made. However, today from the bar table on a number of occasions Mr Healey has accused the insurers of not complying with their policy. He is not able, however, to identify, today, on what occasions claims have been made and what claims have been refused. Those claims are not only not able to be identified today but they are not pleaded. There is simply no pleading of any relevant cause of action against either the broker or the insurers. There is no pleading of any claim with a federal element. The parties have not issued s 78B notices and therefore, today's argument has skated around, if I may use that expression, the fundamental problem of the applicants in relation to whatever their complaints may be. 35 I do not propose at the moment to dismiss the proceedings. I propose to give the applicants one month to identify in a letter to the relevant respondents the nature of their claims, the basis of their claims and how this Court has jurisdiction. (4) Proceedings will be stood over for directions to 19 July at 9.30 am at which time I can be informed by someone as to whether there is any claim in respect of which the applicants have a basis to think that this Court has jurisdiction to hear. 36 On 19 July I will deal with questions of costs, including questions of the appropriate level of payment of costs from the commencement of these proceedings, up to and including 19 June. It is essential that the applicants seek the assistance of competent counsel. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | statement of claims struck out incoherent pleading practice and procedure |
The Tribunal affirmed the decision of a delegate of the then Minister for Immigration and Multicultural and Indigenous Affairs ("the delegate") to refuse to grant a Cultural/Social (Temporary) (Class TE) visa, subclass 421 (Sport), ("sport visa") to the appellant. He is a badminton player and has been a member of the Egyptian national badminton team. The appellant initially arrived in Australia on 2 June 2004 on a short stay business visa. He was being granted a Cultural/Social (Temporary) (Class TE) visa, subclass 421 (Sport), ("sport visa") on 1 September 2004 valid until 7 April 2005. On 5 April 2005 the appellant applied to the Department of Immigration and Multicultural Affairs for a further sport visa on the basis of being employed as a badminton player and a coach. The visa application was accompanied by a sponsorship application from the Mountain District Badminton Association ("the sponsor"), with whom the appellant had entered into a player agreement both to play and coach the sponsor's state junior players on a part-time basis for a period of 12 months. Thereafter various other documents were provided following requests by the Department for additional information. Relevantly, in addition to two Player Agreements dated 28 July 2005 and 13 September 2005 respectively, were two letters from Mr Stuart Borrie, National Executive Director of Badminton Australia. [The proposed employer] has an active Junior Development Program and having a person of [the visa applicant's] badminton ability involved in this junior program and his assistant coaching activities at [the proposed employer] will contribute to the development of the sport in that community. On 12 October 2005 the appellant applied to the Tribunal for a review of that decision. The appellant injured his knee in April 2007. On 30 April 2007 the Tribunal sent a letter pursuant to ss 359A and 359 of the Migration Act 1958 (Cth) ("the Act") inviting the appellant to comment on certain information and to provide additional information. On 26 June 2007 the Tribunal received a response from the appellant's representative including further documentation supporting his claim. On 29 August 2007, the Tribunal wrote to Badminton Australia pursuant to s 359 of the Act requesting information about the appellant, particularly concerning his reputation in the field of badminton. Included in the request was a copy of Badminton Australia's letter dated 20 September 2005. Over the last 11 months [the visa applicant] has not competed in any national/international level Australian based tournaments. The last international event he competed in was the Australian International on the 10 September 2006. It should be noted that he was entered in the 2007 Osaka International but based on the information provided he was withdrawn in both the Men's Singles and Men's Doubles in fact he did not play in the event. As the appellant's application for the visa was made in the migration zone, clause 421.230 applied. In the appellant's case, subclause 421.222(4) is the pertinent clause. In assessing whether the appellant had an established reputation in the field of sport pursuant to subclause 421.222(4)(c)(iii), the Tribunal was guided by the Department's Procedures Advice Manual 3 (PAM3). The Tribunal observed that Badminton Australia was of the view that the appellant did not have the ability to play or coach at the national level, which meant the appellant did not meet the policy requirement. However the Tribunal noted that Departmental policy is not binding on the Tribunal. The Tribunal then considered whether, apart from policy, the appellant had an established reputation at the time of its decision. The Tribunal accepted that the appellant's knee injury had prevented him from playing for a significant period of time. The Tribunal did not accept the appellant's claim that he was successful in his last two tournaments, noting he had lost or withdrawn in early rounds of his most recent tournaments. The Tribunal gave weight to the letter of 29 August 2007 from Badminton Australia which claimed that these results indicated the appellant was not competitive at the national Australia level, and the letter of 20 September 2005 which noted he had not been competitive at that level since 2004. The Tribunal accorded some weight to the sponsor's claim that the appellant was responsible for the success of its junior players, but without medical evidence it could not give much weight to the appellant's claim that he expected to resume his international career in early 2008. The Tribunal took into account the purpose of the sport visa which was to improve the quality of a sport in Australia. Having regard to this factor, the Tribunal did not consider it should depart from policy, and even if it did, the Tribunal was not of the view that the appellant's claims established that he had an established reputation. Consequently the Tribunal finds that the visa applicant does not satisfy subclause 421.222(4)(c)(iii) and therefore clause 421.222. It follows that the Tribunal is not satisfied that there is no reason to believe that the visa applicant does not continue to satisfy the primary criteria for the grant of a subclass 421 visa at the time of the Tribunal's decision, so the visa applicant does not satisfy clause 421.230 of Schedule 2 to the Regulations. His Honour rejected each of the arguments raised by the appellant in support of the grounds of appeal. It had to consider the requirements of subreg 421 in reaching its decision. It found as a matter of fact that is was not satisfied that there was no reason to believe that the applicant does not continue to satisfy the primary criteria for a subclass 421 visa. That finding of fact is not open to challenge. The Tribunal was aware of the fact that the applicant held a 421 visa at the time of the application for the current visa as it used the phrase "continue to satisfy"... and referred to his subclass 421 (sport) visa. His Honour was of the view that the Tribunal correctly asked the question whether the appellant, having already established that he had an established reputation, had maintained it or lost it at the time of the decision. The Tribunal considered this according to policy and then separately. As the Tribunal decided that the appellant had not established that he had an established reputation at the time of the decision, it had therefore decided that the appellant had lost his established reputation which implied that the Tribunal accepted the appellant once had an established reputation. In summary, they are that his Honour erred in not finding that the Tribunal: failed to apply the correct time of decision criterion and applied the wrong test by applying subclause 421.222(4)(c)(iii) and asking whether it was satisfied at the time of the decision that the appellant had an established reputation in the field of sport; failed to apply clause 421.230 correctly by not finding that the appellant only had to satisfy the Tribunal that there was no reason to believe he did not continue to satisfy the primary criteria set out in clauses 421.221 to 421.229; erred in applying subclause 421.222(4)(c)(iii) as "an anterior step" to finding it was not satisfied there was no reason to believe the appellant did not continue to satisfy the primary criteria; and failed to ask itself the correct question, which his Honour accepted was whether the appellant continued to have an established reputation; and went beyond the Regulations in applying the policy that there be an endorsement from a national body. The appellant developed these grounds by submitting that in relation to the time of decision criteria within clause 421.222, there are two distinct types of visa requiring the satisfaction of separate primary criteria and that the Tribunal and the Federal Magistrate had fundamentally misunderstood this distinction. One type of sports visa applied to a person who was not the holder of a sports visa at the time of the application; the other type of sports visa applied to a person who was the holder of a sports visa at the time of the application for a further sports visa. Clause 421.221 requires the satisfaction of clauses 421.222 to 421.229 in relation to a person who is not the holder of a subclass 421 visa at the time of the application. Clause 421.230 relates to a person who is the holder of a subclass 421 visa at the time of the application. The appellant submitted that despite referring to clause 421.230 at various points in its decision, the Tribunal had erroneously asked itself an anterior question in its inquiry, whether the appellant had an established reputation in the field of sport. (I interpolate for later reference that what the Tribunal said (in par [55]) was "The Tribunal is not satisfied that the visa applicant has an established reputation in the field of sport at the time of the Tribunal's decision"). This anterior question was only to be asked where the applicant does not already hold a sport visa. The appellant further submitted that the Tribunal erroneously applied departmental policy. Contrary to the finding of the Federal Magistrate, the appellant submitted that the Tribunal's determination was not made independently of policy, whilst ostensibly considering the question separately. The appellant submitted that the policy travelled beyond the requirements of the Schedule 2 criteria in circumstances where the visa applicant is the holder of a subclass 421 visa and has already satisfied the test of established reputation. Requiring a mandatory endorsement testifying that the visa applicant was able to compete at the national level was said to be a more stringent requirement than the terms set out in subclause 421.222(4)(c)(iii) and imposed a more restrictive test. The respondent submitted that the proper construction of clause 421.230 required the decision-maker, at the time of making the decision to have regard to the primary criteria for the grant of a visa in order to consider whether or not there is or is not any reason to believe that the applicant does not continue to satisfy them. An inquiry resulting in the primary criteria remaining unsatisfied, implicitly and necessarily means that the visa applicant does not satisfy clause 421.230. The respondent further submitted that for this particular appellant to satisfy the relevant primary criteria, being subclause 421.222(4), and therefore to satisfy clause 421.230, the decision-maker at the time of the decision, had to be satisfied that there is no reason to believe that the appellant does not continue to establish that he has an established reputation in the field of sport. To this extent, the respondent submitted that the Tribunal's application of clause 421.230 did not disclose any error in misconstruing or misapplying the provision, particularly as it was entitled to consider whether the appellant satisfied the primary criteria for the grant of a subclass 421 visa at the time the decision was made. What the inquiry required was a consideration of whether or not the appellant could continue to establish that he had an established reputation at the time of the Tribunal's decision, which he clearly could not achieve. As to the Tribunal's use of policy, the respondent submitted that the Tribunal applied the relevant policy PAM 3 in considering whether the appellant had the ability to compete or coach at the Australian national level. Independently, the Tribunal also considered --- despite the policy guidelines --- whether the appellant had an established reputation in the field of sport at the time of its decision. The Federal Magistrate found that the Tribunal did not apply the incorrect regulation and, in my opinion, the Federal Magistrate did not err in so finding. This was made clear in the letters the Tribunal sent to the appellant on 30 April 2007 and 23 October 2007. Further, in the section of its decision headed "FINDINGS AND REASONS" the Tribunal made it clear at par [41] that the appellant was required to meet the criterion contained in clause 421.230 at the time the Tribunal made its decision. Although the Tribunal couched some of its analysis, findings and reasons in the terms of asking whether the appellant had an established reputation in the field of sport, that language occurred for the purpose of the Tribunal asking and answering the question whether at the time of its decision there was no reason to believe that the appellant did not continue to have, or to establish that he had, an "established reputation in the field of sport". That is to say, there was no reason to believe that the appellant did not continue to satisfy "the primary criteria for the grant of a subclass 421 visa" as required by clause 421.230. It was not possible for the Tribunal to ask and answer the question to be posed by clause 421.230 without determining what was the relevant primary criteria which the appellant continued to satisfy. In this case that criterion was that he had "an established reputation in the field of sport". The Tribunal was not satisfied that there was no reason to believe that the appellant did not continue to satisfy that primary criterion because of matters which had arisen after the first sport visa was granted to him on 1 September 2004, that is to say, Badminton Australia's opinion (found in its letter dated 29 August 2007), the appellant's competition results since 2004 and his inability to play since April 2007. For those reasons I am satisfied that neither the Federal Magistrate nor the Tribunal made any error in applying the relevant regulations and law and in reaching the conclusion they did. For these reasons the appeal should be dismissed. So far as the appeal is based upon the ground that the Tribunal went beyond the Regulations in applying the policy that there be an endorsement from a national body is concerned, the respondent did not make any submissions about the validity of the policy on the basis that even if it was not valid, the Tribunal's decision would still stand independently of any issue relating to the policy. That is the basis upon which I have decided that the appeal should be dismissed. The order of the Court will be that the appeal be dismissed with costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | judicial review sport visa application of regulations whether no reason to believe the appellant did not continue to have an established reputation in relevant field of sport. migration |
The Tribunal affirmed the decision of a delegate of the then Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa (Class XA) to the appellant under s 65 of the Migration Act 1958 (Cth) ("the Act"). He arrived in Australia initially in 2000 on a student visa and was subsequently granted further student visas. He returned to Sri Lanka between 1 April 2002 and 20 April 2002. The appellant initially enrolled in an information technology course at Box Hill TAFE and transferred to the Central Queensland University in July 2002 after completing only part of the course. The student visa held by the appellant at that time (subclass 573 Higher Education Sector visa) was cancelled on 25 August 2004. The appellant sought review of that decision in the Migration Review Tribunal. On 2 November 2006, the Migration Review Tribunal affirmed the decision to cancel the appellant's student visa. The appellant sought judicial review of the Migration Review Tribunal's decision in the Federal Magistrates Court but his application was dismissed. Subsequently, the appellant's representative wrote to the Minister seeking intervention under ss 417 and 351 of the Act in order to have a more favourable decision than that of the Migration Review Tribunal's substituted in its place. It was not clear why s 417 of the Act was invoked at this time, given that there had been no decision of the Refugee Review Tribunal by which the section could be enlivened. On 12 April 2007, the Minister advised the appellant by letter that he had decided to refuse to exercise his power under s 351. On 9 May 2007 the appellant applied for a protection visa. In his application, the appellant claimed that he had a well-founded fear of persecution if he returned to Sri Lanka on the basis of his actual or imputed political opinion arising from his father's political associations. He claimed that his father was promoted to a high position in a party called the JVP, and that as a result of this promotion, his father created many enemies within the party. The appellant said that certain members of the JVP told authorities that his father was supporting the Liberation Tigers of Tamil Eelam ("LTTE"), causing his father to be arrested and detained for a week. While in custody his father's position in the party was taken over by his enemy. The appellant's father challenged his removal in court. During the court case the appellant and his family received death threats, attempts were made to set their house on fire, the appellant was removed from school, and someone attempted to run him over. He said that the Police refused to assist because, according to the Police, his father supported the LTTE and had brought the trouble upon himself. The appellant claimed that on three separate occasions shots were fired at his father's car but his father escaped. As a result, the appellant said his father moved to Saudi Arabia so he would not be killed, and the appellant moved to his aunt's house. His father returned to Sri Lanka in 1999 in the belief that he would no longer be a target. However, two months after his arrival, the appellant claimed that their house was fire bombed. The appellant's family then moved to Dubai but the appellant was sent to Australia as his father was unable to act as a sponsor due to a condition of his visa. The appellant claimed that if he is required to return to Sri Lanka, he will be killed or kidnapped to force his father to return. On this basis, the appellant's claim was also considered as alleging risk of persecution on the basis of membership of a particular social group, namely the appellant's family. The Tribunal hearing was delayed and postponed on several occasions as a result of various adjournments sought by the appellant on account of the state of the appellant's mental health. On 23 July 2007, the appellant was invited to a Tribunal hearing on 10 August 2007. At 3.45pm on 9 August 2007, the appellant's representative sent to the Tribunal by facsimile a report dated 8 August 2007 prepared by a psychologist, Mr Edwin Kleynhans, stating that the appellant was suffering anxiety and depression. The representative claimed that the appellant was unfit to attend the hearing and sought an adjournment. The report stated that the appellant had previously consulted the psychologist on 9 October 2003 when the question of cancelling his student visa was under consideration, and again on 5 December 2006 which was around the time of the appellant's request that the Minister intervene in his student visa cancellation. The report stated that the appellant had again consulted the psychologist on 4 August 2007 when, for the first time, he described his protection concerns to the psychologist. The psychologist diagnosed a general anxiety disorder and expressed the opinion that the appellant was not able to face the Tribunal at this stage in relation to his application for a protection visa. On 13 August 2007, the Tribunal sent a letter to the appellant (via facsimile transmission to the authorised recipient) advising him that the hearing had been adjourned until 17 August 2007. In the letter, the Tribunal noted that it would only change that hearing date for a good reason and referred the appellant to paragraphs 50-54 of the Principal Member Direction 3/2005, a copy of which was attached. The Principal Member Direction, amongst other matters, advised that where a postponement of a hearing was sought on medical grounds, a certificate from a medical practitioner must be provided certifying that the review applicant is unable to attend, before the hearing will be rescheduled. On 16 August 2007 at 6.05pm, the appellant's representative sent the Tribunal a letter by facsimile transmission, advising that the appellant was now suicidal and sought another rescheduled hearing. No medical evidence was provided in support of this assertion. The next morning the Tribunal informed the appellant's representative that it was not prepared to adjourn the hearing as no medical evidence had been provided with the request in accordance with the Principal Member Direction. The appellant's authorised representative said that he had not been provided with any such evidence by the appellant. The Tribunal advised that it would only consider scheduling another hearing if it was provided with detailed evidence from a qualified medical practitioner (preferably a registered psychiatrist in light of the basis of the adjournment request) setting out the medical basis upon which the applicant was unfit to attend the hearing, what treatment he was receiving, and outlining the prognosis for the appellant recovering to the point where he would be fit to attend a hearing. On 17 August 2007 neither the appellant nor his representative attended the scheduled hearing. On 17 August 2007, the Tribunal sent a letter to the appellant's representative pursuant to s 424A of the Act inviting the appellant to comment by 31 August 2007 on certain information that would, subject to any comments the appellant made, be the reason or part of the reason, for affirming the delegate's decision. That information was identified as: an apparent lack of evidence that any problems suffered by the appellant's father might give rise to a real chance that the appellant would be persecuted for a convention reason in Sri Lanka in the foreseeable future; an apparent lack of evidence of ongoing threats to the appellant's family; an apparent delay in the appellant departing Sri Lanka after his student visa was issued and making the protection claims. On 31 August 2007, the appellant's representative sent a letter by facsimile transmission to the Tribunal requesting an extension of time to respond to the s 424A letter. Attached to the facsimile was another report from the psychologist Mr Kleynhans dated 30 August 2007 stating that the appellant was still not able to answer questions in relation to his current immigration matter. The report further stated that Mr Kleynhans had recommended to the appellant that he may need to see a General Practitioner for his depressed mood and anxiety with the view of perhaps prescribing medication. On 7 September 2007, the Tribunal granted the appellant an extension of time to respond to the s 424A letter until 5 October 2007, and noted it was unlikely to accede to any further adjournment request. If there were to be further requests, the Tribunal stated that they should be accompanied by detailed evidence from a qualified medical practitioner (preferably a registered psychiatrist) setting out the precise medical grounds preventing the appellant from attending a hearing or responding to the Tribunal's requests for information. The Tribunal also noted that the appellant's adjournment requests had been made repeatedly at the last minute. The Tribunal stated that if it did not receive the comments within the period allowed or as extended it might make a decision on the review without taking any further action to obtain the appellant's views on the information. On the same day, the Tribunal sent the appellant another s 424A letter. The information sought for comment on this occasion was identified under the heading "Validity of Reasons for Seeking Adjournment of Hearing and Extension of Time to Reply to s 424A Letter. " The appellant's comments were required by 21 September 2007. On 19 September 2007, the appellant's representative sent the Tribunal a letter by facsimile transmission requesting an extension of time to respond to the second s 424A letter. The letter referred the Tribunal to the earlier psychologist's report provided and cited the case of another applicant said to be in a similar situation to the present appellant who had apparently committed suicide due to pressure exerted by the Tribunal. No response to either of the s 424A letters was received by the Tribunal by 5 October 2007. On 8 October 2007, the Tribunal sent a letter to the appellant's representative stating that it was not prepared to extend the time for the appellant to respond to the s 424A letters as there was no medical evidence attached to the representative's request for an extension. On this basis, the Tribunal advised that it would proceed to make a decision, stating that it would take into account any information it received before the final decision was handed down. He has been seen by a psychologist, Dr Edwin Kleynhans who recommended a review by a GP with the possibility of the need for medication for his condition. It has been going for some time and I feel that his symptoms warrant a trial of medication. I have started him on Zoloft 50mg and will review how he is after a month on it. I am hopeful that it will help him. The appellant's representative's letter did not provide a response to the two s 424A letters. No other information was provided by or on behalf of the appellant to the Tribunal before the final decision was made. It concluded that the appellant's claims were not genuine. It found his claims to be inconsistent with other evidence before the Tribunal. When such inconsistencies had been put to the appellant, he had failed to respond. The Tribunal stated that "In the absence of any counter arguments, the Tribunal prefers the earlier or independent information before it and it does not believe the later versions relied on by the applicant. " The Tribunal referred to the appellant's five year delay in lodging his claim for refugee status after his arrival in Australia. Whilst acknowledging that applicants with legitimate protection claims may at times have valid reasons for delaying the protection visa application, the Tribunal did not accept that there was any valid reason for the appellant's delay and concluded that the delay by the applicant in raising any protection claims was a further indication that those claims were not in fact genuine, but had been recently invented by the applicant in an attempt to prolong his stay in Australia. The Tribunal said that this finding was reinforced by the applicant's failure to attend either of the scheduled hearings or respond to the s 424A requests for information. The Tribunal was not persuaded that the appellant was unfit to attend a Tribunal hearing or to respond to requests for additional information. The Tribunal concluded that the appellant did not face a real chance of persecution in Sri Lanka now or in the reasonably foreseeable future by reason of his actual imputed political opinion, membership of a particular social group comprising his family or any other Convention reason. The Federal Magistrate rejected all these grounds. In doing so, the Federal Magistrate said that it was open to the Tribunal to find that, in the absence of a statement in his General Practitioner's letter that the appellant was unfit to attend a hearing, the appellant was engaging in delaying tactics. This was a finding of fact which was not open to challenge. Having reached that finding of fact, there was no utility in it making enquiries of Dr Crimmins. The failure to make enquiries was not an error of law. The need for an enquiry did not arise. An error of law has not been shown. This Ground is dismissed. To this extent no breach of ss 426A or 425 was established. That finding of fact was properly open to the Tribunal and not subject to challenge. It follows from that finding that it was the applicant's conduct and decisions that prevented him from attending a hearing or responding to the s.424A letters. He failed to produce the medical evidence required by the Tribunal. That was his decision. He was given opportunities but denied them to himself. Notwithstanding that failure the Tribunal granted an adjournment and extension. The Federal Magistrate said there was no obligation on the Tribunal to embark on an open ended enquiry as to the fitness of an applicant to appear applying Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 207 ALR 12 at par [43]. The Federal Magistrate held that the Tribunal's invitation in accordance with s 425 had been meaningful. The issue of whether the applicant was medically unfit to attend a hearing or provide responses to s.424A letters was a matter of subsidiary importance, and the Tribunal dealt with the matter in a reasonable manner. The appellant submitted that he was not seeking to challenge the Tribunal's finding that the applications for extensions of time and rescheduling of hearings were delaying tactics. Rather, he was seeking to challenge the conduct of the Tribunal which necessarily preceded any conclusion that the applications for extensions of time and rescheduling hearings were delaying tactics. To this extent, the appellant submitted that the Federal Magistrate had misdirected himself in respect of the first ground of review before him. I have had some difficulty in understanding this ground of appeal. If the appellant is not challenging the Tribunal's finding that the applications for extensions of time and rescheduling of hearings were delaying tactics it must follow that the Tribunal did not err or act in breach of its duties under sections such as ss 425 and 426A of the Act or in the exercise of the discretion it had under s 426A. Insofar as the appellant is nevertheless still contending that the Tribunal did not apply properly ss 425 and 426 in failing to reschedule the hearing so as to enable the appellant to attend a hearing and respond to the s 424A letters, I reject that submission. The Federal Magistrate found that the Tribunal had given the appellant an adequate opportunity to attend a hearing and respond to the s 424A letters and in so finding the Federal Magistrate did not fall into error. There was ample evidence before the Federal Magistrate to support his finding. Further, the appellant has not demonstrated any basis upon which it can be contended that such obligation or discretion that the Tribunal was under, or able to exercise, in respect of ss 424A , 425 or 426A was not discharged or properly exercised. The Tribunal gave the appellant every opportunity to attend a hearing and to respond to the s 424A letters. It also explained to the appellant the basis upon which it would consider further adjournments and extensions of time but the appellant did not provide the material or evidence which the Tribunal required, in my opinion reasonably, in order to determine whether to grant further adjournments and extensions. I am quite satisfied that the Tribunal did not fail to observe any provision in the Act which applied to it, nor did it fail to exercise properly any discretion committed to it. In support of ground (b) of his Notice of Appeal the appellant submitted that the Tribunal acted capriciously, having regard to the purpose of s 425 of the Act, in affirming the delegate's decision without scheduling a further hearing for the appellant in circumstances where the Tribunal received a letter from the appellant's general practitioner six days prior to making the decision. It was submitted that this letter described the appellant's illness and prescribed medication and that it is a miscarriage of the discretion under s 426A of the Act if the Tribunal misdirects itself or fails to take into account relevant considerations and that such a miscarriage results if the Tribunal acts in a capricious or unreasonable manner. That proposition of law is not controversial but no such miscarriage occurred in the circumstances of this case. Contrary to the submissions of the appellant the Tribunal did not take into account improperly: the fact the appellant did not attend either of the scheduled hearings. The Tribunal was entitled to take these matters into account in considering whether there was any reason for the appellant's delay in applying for a protection visa. They were relevant to the Tribunal's consideration whether the appellant's claims were genuine. They formed links in the chain of conduct whereby the appellant did not respond to reasonable queries raised by the Tribunal. the Tribunal's experience in dealing with many appellants who have undergone traumatic experiences such as torture or who have psychiatric or psychological conditions. This matter did not form any part of the reasons for the Tribunal's decision. It was referred to in the Tribunal's letter of 13 August 2007 to the appellant's representative but only in the context of its acknowledgement that it was sensitive to the issues raised in the psychologist's report attached to the letter of 9 August 2007 seeking an adjournment of the hearing. the status of Mr Kleynhans as a registered psychologist but not a medical practitioner. This was relevant to the Tribunal's concern that the appellant had not provided any medical evidence in respect of the appellant's fitness to give evidence orally or in writing yet Mr Kleynhans had diagnosed a serious psychological condition but apparently had not referred the appellant for medical treatment. the Tribunal's opinion that Mr Kleynhans' recommendations that the appellant seek treatment from a medical practitioner did not accord with Mr Kleynhans' conclusion that the appellant was unable to answer questions in relation to his immigration matter. The Tribunal did not express an opinion in these precise terms. The Tribunal did not consider the evidence of Mr Kleynhans persuasive. It noted Mr Kleynhans had suggested in his two reports that the appellant "may need" to see a general practitioner about his depressed mood and anxiety with a view to the doctor prescribing medication. The Tribunal considered that that recommendation did not accord with Mr Kleynhans' conclusion that the appellant was "still not capable and coherent to answer questions in relation to his current immigration matter". In this respect the Tribunal did not take into account improperly an irrelevant matter nor did it act capriciously. On the material before it, it was open to the Tribunal to reason this way. The appellant also submitted that the Tribunal failed to take into account properly Mr Kleynhans' expertise and reports and also the contents of the letter from Dr Crimmins dated 11 October 2007. I reject this submission. The Tribunal gave full and detailed consideration to Mr Kleynhans' expertise and reports and the letter from Dr Crimmins. It was for the Tribunal to assess and determine the weight and significance to be accorded to them. What was significant for the Tribunal was the undoubted fact that Dr Crimmins did not refer "whatsoever" to the appellant being incapacitated to the extent that he was unable to attend a hearing or respond to a request for information. The appellant submitted that ground (c) of his Notice of Appeal was made out as the Tribunal failed to make enquiries of Dr Crimmins. The appellant submitted that the present circumstances were "exceptional" so as to render such a failure a ground of jurisdictional error because the ensuing decision was "unreasonable" in the Wednesbury sense. The appellant relied on the decision of Prasad v Minister for Immigration and Ethnic Affairs [1985] FCA 47 ; (1985) 6 FCR 155 at 169 for the proposition that a decision-maker's failure to obtain important information on a critical issue which the decision-maker knows or ought to reasonably know is readily available, can be characterised as so unreasonable that no reasonable decision-maker would proceed to decision without making such inquiry. It is no part of the duty of the decision-maker to make the applicant's case for him. It is not enough that the court find that the sounder course would have been to make inquiries. The appellant relied on Minister for Immigration and Citizenship v Le [2007] FCA 1318 ; (2007) 164 FCR 151. In Le , the primary decision-maker relied on a mistranslated version of the applicant's statement. The Tribunal's failure to allude to this and failure to make enquiries of the relevant department gave rise to a jurisdictional error. The circumstances in the present case are quite different. Given the background of the communications between the Tribunal and the appellant's representative prior to Dr Crimmins' letter and its contents, it was not unreasonable for the Tribunal to assume that Dr Crimmins had said all that he could relevantly say and that there was no point in making any enquiry of Dr Crimmins. I do not consider that the present circumstances fall into the category of a rare and exceptional circumstance which is an exception to the well accepted proposition that the Tribunal is not bound to initiate or make its own enquiries: Azzi v Minister for Immigration and Multicultural Affairs [2002] FCA 24 ; (2002) 120 FCR 48 at 73-74; Minister for Immigration and Citizenship v Le (2007) (supra) at 174-176. The Tribunal was under no obligation to call Dr Crimmins and clarify the appellant's capacity to attend the hearing or respond to questions having regard to the content of his letter and the previous communications to the appellant and his solicitor. This was not a matter which constituted "some obvious omission or obscurity that needs to be resolved before a decision is made": Videto v Minister for Immigration and Ethnic Affairs [1985] FCA 326 ; (1985) 8 FCR 167 at 178 per Toohey J. The appellant finally submitted that he had been denied procedural fairness as the Tribunal had failed to provide a real or meaningful invitation to him in the s 424A letters or to attend a hearing. The appellant relied on the chain of correspondence referred to above and the inaction of the Tribunal in not making enquiries of Dr Crimmins. This ground is not made out. The Federal Magistrate rejected the submission based on this ground and he was clearly correct in so doing. The appellant was given every opportunity to respond to the s 424A letters and to attend a hearing. The Federal Magistrate did not fall into error in rejecting this submission. The appeal will be dismissed with costs. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | judicial review protection visa whether failure to properly exercise discretion to reschedule hearing whether tribunal acted unreasonably in failing to make inquiries on critical issue. migration |
The core technology was based upon the results of research and development activities undertaken over a period of many years by the State Electricity Commission of Victoria. The syndicate comprised eleven companies each of whom was named as an applicant in these proceedings. The syndicate paid a total of $182 million by way of a core technology licence fee to HRL Treasury Pty Ltd (HRL) under a Licence, Development and Marketing Agreement. Various of the syndicate members contributed to the payment. 2 Under the Income Tax Assessment Act 1936 (Cth) (the ITAA) there were substantial incentives which encouraged companies and others to engage in research and development activities with prospects of commercial exploitation. The ITAA contemplated that such activities might be carried out by eligible companies in partnership or as a syndicate. For a syndicate member to be able to obtain tax deductions for relevant expenditure for a year of income s 73B(10) of the ITAA required them to be jointly registered under s 39P of the Industry Research and Development Act 1986 (Cth) (IRD Act). 3 Registration under the IRD Act was a function conferred upon the Industry Research and Development Board (the Board). It was empowered to confirm or revoke the decision or to vary it in such manner as it thought fit. 5 There was provision under s 39T for applications to be made to the Administrative Appeals Tribunal (the AAT) for review of decisions of the Board that had been confirmed or varied under s 39S. 6 Section 39U provided that where the Board made a decision to which s 39S applied and gave to a person whose interests where affected by the decision notice in writing of it, that notice had to include a statement to the effect that the person might, if dissatisfied with the decision, seek a reconsideration by the Board in accordance with subs 39S(2) and if still dissatisfied could apply to the AAT. 7 An agent of the members of the syndicate forwarded to the Board a letter and application form seeking registration of the companies under s 39P on 6 March 1995. The application was in respect of the income years 1993/1994 to 1997/1998 inclusive. In fact the application sent on that date was a revised application as the names of parent companies of the investor companies had been used rather than those of the investor companies themselves. The application was headed up "150% Research & Development Tax Concession Application for Syndicate Registration". The name of the syndicate was the "IDGCC R & D Syndication". The letters "IDGCC" stand for Integrated Drying and Gasification Combined Cycle, a reference to the relevant technology. 8 Under the heading "Year or Years of Income for which registration is being sought" the application form set out "1993/94, 94/95, 95/96, 96/97, 97/98". Those expenditures were shown in a column headed "Total" preceding the break-up of expenditure by years of income, as amounting to $99,346,689. In addition the sum of $182 million was shown in the total column for core technology. There was no expenditure under that description for the years of income 1994/95 through to 1997/1998. That amount represented the core technology fee paid to HRL on 30 June 1994. 9 Additional financial information included in the application for registration showed a break up of expenditure by reference to each investor in the syndicate. In the case of Candacal Pty Ltd (Candacal) it was shown to have research and development expenditure of $2,398,074 in 1993/94 and to have contributed to the core technology expenditure the amount of $18,200,000 in that year (ie 10% of the core technology fee). Investor 2, Erinbol Pty Ltd (Erinbol) was shown to have an expenditure of $10,467,591 on research and development in 1993/94 and to have contributed to the core technology expenditure the sum of $79,443,000. For the year 1993/94 Erinbol was therefore claiming a total s 73B tax deduction of $89,910,591. 10 It was common ground in an agreed statement of facts provided to the Court that the material made available to the Board referred to activities to be conducted and moneys to be expended in relation to the project in the income years 1993/94 to 1997/98 inclusive and that the project commenced on 30 June 1994. It was also an agreed fact that the financial information provided in the application form lodged on behalf of the syndicate indicated that a claim would be made in respect of the income year 1993/94 for core technology expenditure incurred in that year and totalling, across the various investors, $120,390,790. The balance of $61,609,210 would be claimed as deductions for the income year 1994/95. The Board had material available to it that the total cost of the core technology was $182 million. It is not in dispute that by letters dated 5 February 2001 and 15 June 2001 the syndicate members, through Deutsche Bank and Candacal, asked the Board to provide notification that they had been jointly registered in relation to the IDGCC project in respect of the 1993/94 year of income. These requests did not elicit the desired result. Indeed it appears that on 2 July 2001 the Board or its Taxation Concession Committee purportedly refused registration for the 1993/94 year and in September 2001 purported to confirm that refusal. 13 The present proceedings were commenced on 9 November 2001. Relief sought by the applicants included a declaration that each applicant was jointly registered under s 39P of the IRD Act in relation to the project in respect of the 1993/94 year of income. The proceedings have been characterised by a number of interlocutory hearings and amendments to the pleadings. They have been protracted by ongoing negotiations between the applicants and the Board. Of the 11 applicants, agreement has been reached with nine who have discontinued. The remaining two applicants, Candacal and Erinbol, have also reached agreement with the Board and have executed a deed to give effect to that agreement. The deed requires that as a condition of settlement declarations and an order be made in accordance with terms set out in Annexure A to the deed. This is done on the basis that the companies will seek the declarations from the Court and that the Board will not oppose the making of those declarations. (b) The declarations sought are similar to those which have been sought and contested by the Respondent since the commencement of the proceedings. (c) It may be inferred that both parties have had the benefit of considerable legal advice in relation to the proceedings and its resolution. (d) There is no other reasonably available remedy which would make the granting of declarations inappropriate. (e) The making of the declarations is in the parties' interests in facilitating the resolution of the litigation. (f) The resolution of the proceedings is in the public interest in bringing to an end the expenditure and Court time associated with the litigation. It stated that it does not oppose the making of the declaratory orders and acknowledges that the making of those orders would be in the parties' interests and the public interest in facilitating resolution of the litigation. The Respondent Board expressly reserves its entitlement (both in these proceedings and in proceedings before the Administrative Appeals Tribunal) to adduce evidence and to make such legal and factual submissions as it sees fit, should the proceedings not be resolved in the manner sought by the Applicants on 5 June 2007. It is not the function of the Court to impede settlements between parties who are legally represented and able to understand and evaluate the desirability of agreeing to a settlement. Nor will the Court refuse to give effect to the terms of a settlement by refusing to make orders or accept undertakings where they are within jurisdiction and otherwise unobjectionable. The Court will not substitute orders which it thinks appropriate if those proffered are within power and within the range of appropriate dispositions of the case. But in making orders by consent or otherwise, the Court must ensure that the orders are within power and appropriate for it is exercising a public function in doing so and must have regard to the public interest: Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc [1999] FCA 1387 ; (1999) 95 FCR 114 at 131. In this case I do not doubt their appropriateness. The only question is whether they are within power in the sense that they are supportable on the basis of the undisputed facts having regard to the legal submissions which have been made. 20 The undisputed facts are that the applicants made an application for registration in respect of years of income including 1993/94. Given that the Board was prepared to grant registration for the years 1994/95 onwards there was nothing on the materials before it to indicate any relevant distinction between expenditure in the years 1993/94 and the successive financial years. Nor was there anything in the response given by the Board to the applicants to indicate such a distinction. In my opinion the failure of the Board to include the 1993/94 year in its registration of the syndicate was a slip and the Board's decision was intended to cover that year. It is frankly surprising that this matter was not able to be resolved administratively and at far less expense to the public purse a long time ago. The rather equivocal attitude adopted by the Board before the Court was, in the circumstances, puzzling. The orders proposed do not come before the Court as consent orders. They are simply not opposed by the Board. Nevertheless, having regard to the agreed facts and in the absence of opposition, I am satisfied that the proposed declaration reflects the factual and legal realities. It would seem to follow that the purported decision of 2 July 2001 and 18 September 2001 refusing registration and confirming that refusal were of no force or effect. I will therefore make the declarations which are proposed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | administrative decision period covered by decision omission of one of a number of relevant years by oversight proceedings seeking declaration that decision applied to relevant year settlement of proceedings proposal for unopposed declaration that administrative decision covered relevant year declaration within power and appropriate industry research and development board registration of research and development syndicate for successive financial years application for a number of financial years registration decision inexplicably omitting first financial year slip application for declaration that registration decision applied to first financial year declaration unopposed on agreed facts no consent order declaration within power and appropriate declaration made administrative law |
The decisions under challenge were made in early June 2005 and on 12 October 2005 respectively. This is not the first time that these two decisions have been the subject of judicial review. For the reasons I am about to state, I would dismiss his application. 2 The applicant is a citizen of the People's Republic of China. The applicant arrived in Australia on 1 February 1997 on a Temporary Business Entry (Class UC) visa, subclass 456. He was subsequently granted a further subclass 456 visa, which expired on 26 May 1997. 3 The history of the applicant's further visas is a complicated one. On 23 May 1997, the applicant was granted a Bridging visa A (Class WA) visa, subclass 010 and also applied for a Business --- Long Stay visa, subclass 457. A delegate of the Minister refused his application for a long stay business visa on 16 June 1998. The applicant unsuccessfully applied to the Migration Internal Review Office, which affirmed the delegate's decision on 7 September 1998. The bridging visa granted in May 1997 allowed the applicant to remain in Australia until 28 days after he was notified of the decision of the Migration Internal Review Office. 4 Also in June 1997, Interpol contacted the Australian Federal Police regarding serious criminal offences allegedly committed by the applicant in China before he entered Australia. A year later, in June 1998, the Australian Federal Police received an arrest warrant issued by Tianjin Public Security Bureau in China. The Police passed this information to officers of the Minister's Department. 5 On 8 December 1998, the applicant was granted a Bridging visa A and lodged an application for a protection visa. A delegate of the Minister refused the applicant's protection visa application on 20 January 1999. The applicant unsuccessfully applied for review by the Refugee Review Tribunal, which affirmed the delegate's decision on 17 December 1999. The Tribunal's decision was set aside by this Court on 18 March 2008. The bridging visa granted in December 1998 expired 28 days after the Tribunal's decision, that is, on 14 January 2000. Assuming (as the Minister's Department did) that the applicant had no other visa than this visa, the applicant became an unlawful non-citizen after 14 January 2000. 6 Departmental efforts to locate the applicant failed until 24 February 2004, when the applicant was stopped by the Victorian police for a traffic offence. The police notified the Department and the applicant was taken into immigration detention. Shortly afterwards, on 27 February 2004, the applicant applied for a Bridging visa E. A delegate of the Minister refused this application on 2 March 2004. The applicant unsuccessfully applied for review by the Migration Review Tribunal, which affirmed the delegate's decision on 12 March 2004. 7 Two days earlier, on 10 March 2004, Interpol issued a "Red Notice" setting out information relating to the allegations made against the applicant by the Chinese authorities. Under the heading "Fugitive wanted for prosecution" the Interpol Red Notice gave particulars of the alleged fugitive, including name, birth, nationality, and physical description, as well as particulars of "judicial information". The charge was said to be kidnapping and murder. On 23 June 2004, the applicant was informed that a warrant for his arrest had been issued by the Chinese authorities. The applicant remained in immigration detention in Australia. 8 On 23 May 2005, a Departmental officer examined the relevant files and decided that the applicant had never been correctly notified of the decision of the Migration Internal Review Office in September 1998 affirming the delegate's decision to refuse the applicant a long stay business visa. A consequence of this failure was that the bridging visa granted in May 1997 was still current. Accordingly, on the basis of the Departmental officer's decision, the applicant was released from detention. 9 On 25 May 2005, Departmental officers interviewed the applicant and issued him with a notice of intention to consider cancellation of the May 1997 bridging visa. After the interview, a delegate of the Minister decided to cancel this bridging visa and the applicant was detained in immigration detention. On 26 May 2005, the applicant applied to the Migration Review Tribunal for review and, on 7 June 2005, the Tribunal set aside the delegate's decision. 10 In early June 2005, the Minister at the time made one of the decisions challenged in this proceeding. This was the Minister's decision to cancel the applicant's bridging visa under s 501(3) of the Migration Act 1958 (Cth). By a letter dated 9 June 2005, the applicant and his legal representatives were informed of the cancellation decision and were also given, amongst other things: (1) a statement of the Minister's reasons; (2) the Interpol Red Notice; (3) the warrant of arrest issued by the Tianjin Public Security Bureau; and (4) Ministerial General Direction Number 21 --- " Visa Refusal and Cancellation under Section 501 of the Migration Act 1958 ". 11 By letters dated 16 June 2005 and 9 August 2005, the applicant made representations to the Minister under s 501C of the Migration Act as to why the Minister's decision should be revoked. On 12 October 2005, the Minister made the second decision under challenge in this proceeding. This was the Minister's decision not to revoke her decision to cancel the applicant's bridging visa. 12 On 26 October 2005, the applicant commenced a proceeding in this Court, which was transferred in the following month to the Federal Magistrates Court. A Federal Magistrate dismissed the applicant's application to set aside the Minister's decisions on 26 May 2006. The applicant did not seek to appeal against this judgment. 13 On 22 May 2006, the Chinese Ministry of Foreign Affairs provided a note that "they will not carry out the death penalty for crimes that the individual whose repatriation has been requested, [the applicant], committed before repatriation". 14 Two years later, on 8 October 2007, the applicant filed an application in the High Court of Australia seeking constitutional writs in respect of the decisions under review. This application was supported by affidavits sworn by the applicant and his solicitor, Ms Psihogios-Billington. On 18 October 2007, the proceeding "including any application for enlargement of time" was remitted to the Federal Court, "to be heard and determined subject to Part 25 of the High Court Rules 2004 ". 16 The Minister's decision to cancel the applicant's visa was made under s 501(3). Otherwise, the person passes the character test. It is common ground that the applicant does not have a substantial criminal record as defined in s 501(7). (3) As soon as practicable after making the original decision, the Minister must: (a) give the person, in the way that the Minister considers appropriate in the circumstances: (i) a written notice that sets out the original decision; and (ii) particulars of the relevant information; and (b) except in a case where the person is not entitled to make representations about revocation of the original decision ... invite the person to make representations to the Minister, within the period and in the manner ascertained in accordance with the regulations, about revocation of the original decision. (4) The Minister may revoke the original decision if: (a) the person makes representations in accordance with the invitation; and (b) the person satisfies the Minister that the person passes the character test (as defined by section 501). (5) The power under subsection (4) may only be exercised by the Minister personally. ... (8) If the Minister makes a decision (the subsequent decision) to revoke, or not to revoke, the original decision, the Minister must cause notice of the making of the subsequent decision to be laid before each House of the Parliament within 15 sitting days of that House after the day on which the subsequent decision was made. ... (11) A decision not to exercise the power conferred by subsection (4) is not reviewable under Part 5 or 7 . 18 Section 5 defines "non-disclosable information" as, among other things, "information ... whose disclosure would, in the Minister's opinion, be contrary to the national interest because it would ... prejudice the security, defence or international relations of Australia". On 26 May 1997, an arrest warrant was issued by the Tianjin Public Security Bureau in respect of [the applicant]. 2. On 10 March 2004, an Interpol Red Notice was issued for the arrest of [the applicant]. This notice stated that, on 20 December 1996, [the applicant] and two accomplices kidnapped a 15-year old boy and killed him after they did not receive the ransom ... they had demanded. 3. My Department also received further information relating to [the applicant's] character, which is protected under section 503A of the [Migration Act]. 4. It is my practice to be guided by the General Direction 21 ... in considering the application of the character test. The Direction states (at paragraph 1.10) that, in the absence of countervailing factors, a non-citizen is not of good character if they are the subject of unresolved charges involving serious offences. 5. I considered [the applicant's] alleged conduct to be very serious, and noted that there was no evidence that he is seeking to address these allegations through the [Chinese] legal system. On this basis, I formed the necessary suspicion that [the applicant] is not of good character on account of his past and present general conduct, and that he therefore does not pass the character test by virtue of s 501(6)(c)(ii) of the Act. NATIONAL INTEREST 6. I considered that Australia's international reputation and good standing would be damaged if it provided, or was seen to provide, a safe haven for people who have committed serious crimes in another country, or are wanted to face charges for such crimes. On this basis, I was satisfied that cancellation of [the applicant's] visa was in the national interest. 20 Under the heading "Discretion" and the sub-heading "Protection of the Australian Community", the Minister stated that she gave "primary consideration to the protection of the Australian community, taking into account the seriousness and nature of [the applicant's] alleged conduct, the likelihood that such conduct might be repeated and whether visa cancellation in this instance would have a deterrent effect". [The applicant] has been accused by the [Chinese] authorities of kidnapping a 15-year-old boy and, later, killing him. This constitutes a crime that I consider to be very serious. 11. The nature of [the applicant's] alleged conduct, in the absence of any evidence to indicate that he is attempting to rectify or dispute these allegations with [Chinese] authorities, is such that I gave this consideration great weight. (b) Risk of recidivism 12. I considered that I had insufficient information before me to assess [the applicant's] risk of recidivism, given that he has not been convicted of any criminal offence. 13. Accordingly I did not place any weight on this consideration. (c) General deterrence 14. I considered that I had insufficient information before me to assess whether cancellation of [the applicant's] visa would have a deterrent effect on others. 15. Accordingly I did not place any weight on this consideration. Australians would not want their community to be a haven for non-citizens seeking to avoid prosecution for serious crimes in another country. In this regard, I noted that there is no evidence that [the applicant] is attempting to rectify or dispute these allegations through the [Chinese] legal system. 18. In view of the serious nature of [the applicant's] alleged offences, and given that there is no evidence that he is seeking to contest the allegations in [China], I believe that the Australian community would expect [the applicant's] visa to be cancelled. I gave moderate weight to this consideration. I considered all relevant matters including (1) the evidence set out in the issues paper and its attachments; (2) an assessment of the character test as defined by s 501(6) of the Act; (3) an assessment of the national interest; and (4) the Ministerial Direction under s 499 of the Act and decided to cancel [the applicant's] visa. 24. In reaching my decision, I concluded that the seriousness of the charges and the expectations of the Australian community outweighed all other considerations. I have considered all representations made on behalf of [the applicant] in relation to my decision to cancel [the applicant's] subclass 010 (Bridging A) visa under s 501(3) of the Act. 17. I have also considered all other relevant matters including (1) the evidence set out in the original issues paper and its attachments, (2) the character test as defined by s 501(6) of the Migration Act 1958, (3) Direction 21 under s 499 of that Act. 18. This amended application reflected the case made by the applicant at the hearing on 31 July 2008. By this amended application, which was filed on 4 August 2008, the applicant seeks judicial review of the Minister's decisions, first, to cancel his visa and, secondly, not to revoke the cancellation decision. To the extent necessary, the applicant also seeks an enlargement of time for the filing of the application. Put another way, "[t]he available material and the circumstances of this case support an inference that the Minister was actuated by the purpose of assisting the Chinese authorities in a form of disguised extradition". (2) there was no evidence to support the finding that the applicant did not pass the character test. At most, there were allegations of criminal conduct unsupported by evidence. (3) the Minister took into account an irrelevant consideration that there was no evidence that [the applicant] was seeking to address these allegations through the [Chinese] legal system. (4) the Minister's decision was so unreasonable that no reasonable decision-maker would have made it because the Minister took into account and relied heavily on the fact that there was no evidence that [the applicant] was seeking to address these allegations through the [Chinese] legal system. (5) The Minister could not, on any reasonable basis, have reached the decision that the applicant was not of good character. 27 The applicant did not pursue an earlier posited denial of natural justice/procedural fairness ground. If this were the Minister's purpose, then, so the applicant submitted, it was an improper purpose. 29 The applicant relied on the following factors as providing the basis for inferring that the Minister's purpose was to return the applicant to China to meet the charges against him. (a) At the time of the Minister's decision, there was no extradition treaty between China and Australia. (b) In the Minister's written statement of reasons, it was noted four times that the applicant had not sought to address these allegations through the [Chinese] legal system. (c) The decision to cancel the applicant's visa was "solely based on the outstanding alleged charges". (d) The Minister considered, as a relevant matter, that Australia could not be seen to provide, in the Minister's words, "a safe haven for people who have committed serious crimes in another country, or are wanted to face charges for such crimes". (e) The decision to cancel the applicant's visa was based on "mere allegations without any documentary foundation or proof, such as in the nature of an authenticated or signed warrant, charge sheets, witness statements, forensic evidence etc". (f) China had requested "the applicant's removal/extradition to face the alleged criminal charges". (g) The decision to cancel the applicant's visa was made, in part, on the basis of present conduct, that is, the applicant's failure to address the allegations through the Chinese legal system. (h) The Minister personally cancelled the applicant's visa immediately after the Tribunal's decision setting aside the decision to cancel the applicant's visa under s 116(1)(e) of the Migration Act . In its reasons for decision, the Tribunal had specifically noted that: (1) the charges against the applicant were serious, but that these were no more than allegations against the applicant, which he had denied; (2) Australia had done nothing to facilitate removal of the applicant to China, although aware of the allegations since 1997; and (3) there was neither an extradition request nor evidence justifying such an order. (i) Some time prior to the Minister's decision to cancel the applicant's visa, the executive government had undertaken "an international treaties obligations assessment". The applicant argued that, since there was evidence justifying an inference of improper purpose, then the "onus ... shifts to the Minister to disprove the purpose". 30 Secondly, the applicant argued that "[t]he decision that the applicant was not of good character was made on the basis that he had outstanding or unresolved charges" against him and "[t]here was no evidence of any outstanding or unresolved charges". Instead, according to the applicant, there were merely "allegations supported by scant material of a hearsay nature and unsourced". 31 Thirdly, the applicant contended that the Minister took into account an irrelevant consideration when referring, as she did, to the fact that that there was no evidence that the applicant was seeking to address the allegations against him through the Chinese legal system. The applicant argued that this consideration was irrelevant to the Minister's consideration of the character test and to the exercise of discretion. 32 The applicant contended that there could be no "positive expectation or obligation ... to contact the prosecuting country in relation to an outstanding prosecution". The applicant submitted that such an obligation "would be unfair and unduly harsh, particularly in light of the circumstances", including that: (1) the applicant had "previously represented that China has a ... system of corruption, abuse and unaccountability"; (2) the allegations against him "date back to 1996 and the applicant was first made aware of them in 2004"; (3) the applicant had "not been provided with any brief of evidence or, at the very least, charge sheets"; (4) the applicant had consistently denied his involvement in the alleged crimes; and (5) the applicant had been in immigration detention for the past several years. 33 The applicant sought such extensions of time as were necessary, although conceding that he had given no explanation for the delay. The applicant argued that, notwithstanding the dismissal of his previous application for judicial review, there were special circumstances justifying judicial re-examination of the Minister's decisions. The respondent submitted that the two years' delay between the making of the Minister's second decision in October 2005 and the commencement of this proceeding in the High Court in October 2007 was a "considerable" one, which had not been explained. 35 The respondent contended that there were no special circumstances that would justify the Court in holding that the applicant was not estopped from bringing the claims the subject of this application. 36 The respondent submitted that the applicant had not made out his case on improper purpose. ... The consideration of Australia being used or being seen to be used as a safe haven was a matter going to the regulation of aliens' entry and presence in Australia, and was a consideration within the scope of the provisions and the Act. 37 The respondent submitted that the Minister's reasons showed that she was actuated by her assessment of the Australian community's expectation that the bridging visa should be cancelled, and not by "the purpose of complying with a request from the [Chinese authorities] to surrender the Applicant". This was, so the respondent said, a proper consideration, which demonstrated a proper purpose. 38 The respondent contended that the existence and contents of the Interpol Red Notice meant that the no evidence ground must fail. The respondent further submitted that s 501 of the Migration Act conferred a broad discretion, which entitled the Minister to have regard to the matters mentioned in her reasons. Further, the respondent argued that "[t]he contents of the Interpol Red Notice [were] a probative basis for the finding of reasonable suspicion that the Applicant did not pass the character test, and a basis for the exercise of discretion against him". The question is not whether the reasoning process was 'unfair or unduly harsh', but whether there was a probative basis for the decision. The Interpol Red Notice provided such a basis. 39 In supplementary contentions filed with leave, the respondent submitted that it was not open to the applicant to rely on the Wednesbury unreasonableness ground in challenging the anterior process by which the Minister formed her satisfaction of reasonable suspicion that the applicant did not pass the character test, because this ground was directed to the outcome of the discretion and, in this case, it was plainly open to a reasonable decision-maker to cancel the applicant's visa on the basis of the Interpol Red Notice and the arrest warrant. Further, the respondent argued that the applicant's failure to contests the allegations was a probative matter in relation to each of two particular factors informing the exercise of the Minister's discretion: (a) the seriousness and nature of the allegations; and (b) community expectations. At the end of these reasons, I examine whether this assumption is correct. The applicant's argument was, presumably, that, if this decision were vitiated by an improper purpose, then neither it nor the Minister's subsequent decision under s 501C(4) not to revoke it would stand. Alternatively, perhaps, the applicant assumed that, if the Minister had an improper purpose in making the first decision, the Minister's purpose was the same in making the subsequent decision. It is unnecessary to explore whether these assumptions should be accepted, because I would reject the case the applicant seeks to make as to improper purpose. 42 The nature of the power that s 501(3) confers must be borne steadily in mind. Under s 501(3) of the Migration Act , the Minister may cancel a visa if the Minister reasonably suspects that the visa-holder does not pass the character test; and the Minister is satisfied that the cancellation is in the national interest. A visa-holder does not pass the character test if, having regard to "the person's past and present general conduct", the person is not of good character: see s 501(6)(c)(ii). 43 In June 2005, the Minister stated that she reasonably suspected that the applicant did not pass the character test, because, having regard to the applicant's past and present conduct, the applicant was not of good character. The Minister's statement of reasons made it clear that the Minister reached this conclusion having regard to the fact that: (1) the Tianjin Public Security Bureau had issued an arrest warrant for the applicant in May 1997; (2) an Interpol Red Notice had been issued for the applicant's arrest in March 2004, stating that the applicant was wanted for the kidnap and killing of a 15-year-old boy; (3) further information about the applicant's character had been received (which was protected under s 503A of the Migration Act ); and (4) General Direction No 21 stated in [1.10] that, in the absence of countervailing factors, a non-citizen was not of good character if he was the subject of unresolved charges involving serious offences. The Minister assessed the applicant's alleged conduct as "very serious" and noted there was "no evidence" that he was seeking "to address these allegations through" the Chinese legal system. 44 It was clearly open to the Minister to consider each of the facts to which her reasons referred and to assess the conduct alleged against the applicant as "very serious". The applicant did not challenge the effect of [1.10] of General Direction No 21, being a direction issued under s 499 of the Migration Act . If the Minister had been aware that the applicant had sought to address the allegations via the Chinese legal system and had taken this fact into account, it could scarcely be said that the Minister had acted improperly in so doing. It is, therefore, difficult to maintain (as the applicant does) that the Minister acted improperly in merely noting that the applicant had done nothing of this kind. Moreover, in this context, it does not appear that this "noting" indicated that the noted matter weighed heavily against the applicant. The "noting" might signify that little could be drawn from the applicant's conduct in this regard. Perhaps, the most that the noting indicated was that the applicant's response to the allegations was not a factor positively militating in his favour. This "noting" provides no basis for the inference as to improper purpose that the applicant would have the Court draw. 45 The terms of s 501(3) also required the Minister to have regard to whether cancellation was in the national interest. Absent anything in the statutory context that might limit the conception, national interest is a very broad conception indeed, which is ordinarily given content by the executive. The Minister concluded that cancellation was in the national interest because she "considered that Australia's international reputation and good standing would be damaged if it provided, or was seen to provide, a safe haven for people who have committed serious crimes in another country, or are wanted to face charges for such crimes". The damage to Australia's international reputation that might result from allowing a non-citizen to remain in the country plainly falls within the ordinary conception of national interest. An essential purpose of a power such as s 501(3) confers is to regulate the entry into, and presence in, Australia of non-citizens: see Migration Act , ss 4(1) and 4 (4). If (as in this case) the purpose of the exercise of the power is to bring to an end a non-citizen's presence in Australia, by reference to the very kind of matter to which the provision directs attention, the proposition that the exercise of power was for a purpose other than the statutory purpose fails. 46 The Minister's reasons show that there were two considerations to which she gave greatest weight in exercising her discretion: (1) the protection of the Australian community; and (2) the expectations of the Australian community. In connection with the former matter, the Minister considered, amongst other things, the seriousness and nature of the applicant's alleged conduct. In connection with the latter matter, the Minister sought to articulate community expectations. It was plainly open to the Minister to take this approach. The applicant relies on the Minister's articulation of community expectations, which after stating Australians would not want their community to be a safe haven for non-citizens seeking to avoid prosecution, again "noted" that there was "no evidence" that the applicant was "attempting to rectify or dispute these allegations through the [Chinese] legal system". The applicant also relies on the fact that the Minister made the same comment after again referring to the "very serious" nature of the conduct alleged against the applicant. In this regard, however, I would repeat my observations in [45] above. As indicated above, perhaps the most that this noting indicates is that the applicant's response to the allegations cannot amount to a factor positively militating in his favour. It provides no basis for the inference as to improper purpose that the applicant would have the Court draw. 47 As the respondent acknowledged, the Minister doubtless knew that, if the applicant were removed from Australia, he would be returned to China since he was a citizen of that country. It might reasonably be assumed that, on his return, he would be arrested and face the charges to which the Interpol Red Notice referred. It does not follow from this, however, that the Minister's purpose in cancelling the applicant's visa under s 501(3) was to effect his extradition to China. Unless it can be said that the Minister's purpose in exercising power under s 501(3) was to bring the applicant to justice in China, the exercise of power was not an improper one: see Schlieske v Minister for Immigration and Ethnic Affairs (1988) 84 ALR 719 at 731 per Wilcox and French JJ. But they are not entitled to go beyond that, and in purported exercise of powers under that Act, to take steps whose only purpose is the bringing to justice of the deportee in a foreign country. At that stage the Australian authorities would not be exercising deportation powers; they would be involved in an unlawful extradition. 48 The reasons that the Minister gave for the decision to cancel the applicant's visa under s 501(3) do not provide any sufficient basis for an inference of improper purpose. The cogency and weight of the material before the Minister was for the Minister to assess. Provided there was a probative basis for the decision, it is not open to the Court to second-guess the Minister in this regard and, in so doing, impute an improper purpose. Further, the fact that the Minister's decision followed almost immediately on the decision of the Migration Review Tribunal cannot be regarded as indicative of improper purpose since the Minister's powers under s 501 of the Migration Act are separate and distinct from those of the Tribunal: see Minister for Immigration and Multicultural Affairs v Gunner (1998) 84 FCR 400 at 408-09 per Heerey, Lindgren and Emmett JJ, approved in Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 535 per Gleeson CJ and Gummow J; also 565 per Hayne J. The applicant's reference to "an international treaties obligations assessment" is, as the respondent observes, irrelevant in the present connection. 49 For the reasons stated, even if the applicant passed the threshold difficulties of delay and estoppel, I would reject the first ground that the applicant advanced. Accordingly, I deal with these two grounds together. 51 The argument for the applicant focussed on the asserted fact that the applicant had no positive obligation to contact the Chinese prosecuting authorities; the time that had elapsed since the issue of a warrant for his arrest and his being made aware of the allegations against him; his position as an immigration detainee; his denials; and the lack of "a brief of evidence or charge sheets". If the applicant's failure was to take up the matter with the relevant Chinese authorities was not irrelevant, then, so the applicant said, it was "of no probative value" and, thus, the consideration was "unreasonable". I would reject these submissions. 52 Section 501 of the Migration Act confers a very wide discretion, which permits the Minister to take into account a variety of matters, providing they are within the subject-matter, scope and purpose of the Act: see Minister for Immigration and Multicultural and Indigenous Affairs v Huynh [2004] FCAFC 256 ; (2004) 139 FCR 505 at 523 per Kiefel and Bennett JJ; Djalic v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 151 ; (2004) 139 FCR 292 at 310 per Tamberlin, Sackville and Stone JJ; Howells v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 327 ; (2004) 139 FCR 580 at 595 per Ryan, Lander and Crennan JJ; and Shaw v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 106 ; (2005) 142 FCR 402 at 423 per Ryan and Tamberlin JJ. In exercise of the discretion that s 501 confers, the Minister may consider such matters as the protection of the community and community expectations. As the discussion concerning ground 1 shows, the Minister had a basis for regarding as relevant the fact that the applicant had not attempted to dispute the allegations with the authorities in China. The consideration was not irrelevant in the sense that it did not lie within the subject-matter, scope and purpose of the statutory power. It was for the Minister to determine whether she would have regard to the consideration and, if so, how much weight should be given to it. 53 For much the same reason, it cannot be said to have been unreasonable in the Wednesbury sense for the Minister to refer to the fact that the applicant had not sought to dispute the allegations with the authorities in China, assuming for the moment that Wednesbury unreasonableness might cover such a complaint as the applicant makes here. This is not to say that the applicant had a positive legal duty to take the matter up with the authorities. This would go too far. As indicated above, the point being made by the Minister is a narrow one. It may have been a fact militating in his favour had the applicant sought to contest the allegation within the Chinese legal system. The applicant had not done so and, therefore, this circumstance could not assist him. It was, as I have said, open to the Minister to take this approach. 54 Further, the Wednesbury unreasonableness ground, as stated by Brennan CJ in Kruger v The Commonwealth [1997] HCA 27 ; (1997) 190 CLR 1 at 36, relies upon the proposition that "when a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised": see also Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at 650 per Gummow J. Where a body fails to act in this way, the body acts beyond power. I am inclined to accept that, as the respondent submitted, the applicant's challenge is directed to a strand in the process of the Minister's reasoning, as opposed to the actual exercise of discretion. That is, the nature of the applicant's challenge is not one that falls within the principle of Wednesbury unreasonableness. 55 In relation to these irrelevant consideration and unreasonableness grounds, the applicant raised three other subsidiary arguments. First, a question was raised as to whether the Minister had proper regard to the applicant's "past and present general conduct" as s 501(6)(c)(ii) of the Migration Act required him to do. The Minster's reasons for deciding to cancel the applicant's visa made clear that she did. It will be recalled that the Minister stated that she considered the applicant's alleged (past) conduct to be very serious and noted that there was no evidence that he was (presently) seeking to address these allegations within the Chinese legal system. The fact that, so far as the Minister's decision was concerned, the most significant conduct was the applicant's past conduct does not detract from this conclusion. 56 Secondly, the applicant contended that the Minister's approach cast a positive burden of proof on him. There was no burden of proof as such cast on the applicant. What the applicant complained of was the product of the statutory regime. Under s 501(3) , the discretion to cancel a visa arises when the Minister "reasonably suspects" that the visa-holder does not pass the character test (as set out in s 501(6)). Section 501C(4) then operates so as to require a person whose visa has been so cancelled to satisfy the Minister that the person passes the character test before the discretion to revoke the cancellation decision is enlivened. The applicant in this case failed to satisfy the Minister that he passed the character test. As noted above, these grounds relied on the applicant's argument that there was no evidence to support the Minister's finding as to character. I would reject these grounds for the following reasons. 58 First, the applicant's argument disregarded the fact that, under s 501(3) , the Minister was merely required to form a "reasonable suspicion" that the applicant did not pass the character test. The contents of the Interpol Red Notice provided a legitimate basis for this finding. The Interpol Red Notice referred to a "charge" of kidnapping and murder. Secondly, the applicant sought to assess the Minister's exercise of discretion under s 501(3) by reference to principles applicable within the Australian criminal system. An assessment of this kind is inappropriate in the present context, which is concerned with an exercise of Ministerial discretion to cancel a visa, having regard to considerations disclosed to the Minister in the course of administering the Act. Procedures and standards applicable under the Australian criminal law are inapplicable in this context. 59 For the foregoing reasons, I would reject the challenge to the Minister's decisions that the applicant sought to make. 61 It will be recalled that the applicant had previously sought judicial review of the Minister's cancellation and non-revocation decisions in the Federal Magistrates Court on the ground that the decisions disclosed jurisdictional error in that the Minister: (1) failed to take into account a relevant matter; and (2) breached the rules of natural justice. 62 A Federal Magistrates dismissed the judicial review application on 26 May 2006, and the applicant did not seek to appeal against the judgment. In the circumstances, the Anshun principle applied: see Anshun [1981] HCA 45 ; 147 CLR 589 at 602. The applicant submitted, however, that he ought not be precluded from raising new grounds of judicial review as there were "special circumstances" within the meaning of the Anshun principle to justify him doing so. (b) The Minister did not take into account the applicant's concerns, including his complaints about the application of s 503A, although the applicant had raised them with the Minister. (c) There was a public interest in ensuring that the process of cancellation was a fair one. In this case, the Minister's decision was vitiated as a "disguised extradition" or for unreasonableness. (d) The Minster and/or her department became aware of these serious allegations in 1998 but they were not put to the applicant until 2004. (e) The applicant had unsuccessfully sought redress through other legal avenues. (f) The applicant had been in immigration detention since May 2005 and had been diagnosed as having a major depressive disorder. 64 For the following reasons, I consider that this submission should be rejected. This is because the executive is a respondent by force of statute or of the Constitution and is not subject to the same psychological burden that may weigh on individual litigants; they cannot be "vexed" in the same way by instigation of subsequent proceedings. That may be a more appropriate basis, namely that of accepted public policy, to ensure that representatives of the executive government cannot rely on the principle of Anshun estoppel to frustrate, in effect, the intended legislative mandate. However that proposition does not sit well with the authorities that apply the principle of Anshun estoppel equally to judicial review of administrative action. 65 Secondly, the grounds of review upon which the applicant would seek to rely were available to him when the Federal Magistrate heard the earlier proceeding. There was no relevant uncertainty in the law, which might explain and justify the failure to raise them at the earlier time: compare BC v Minister for Immigration and Multicultural Affairs [2002] FCAFC 221 at [31] - [37] per Carr, Tamberlin and Conti JJ. Further, although the applicant's written submissions questioned the application of s 503A, the applicant abandoned this argument at the hearing: see also Minister for Immigration and Multicultural and Indigenous Affairs v Ball [2004] FCAFC 91 ; (2004) 138 FCR 450 at [72] - [91] per Jacobson and Bennett JJ. It is also to be borne in mind that, in the Federal Magistrates Court, although not the subject of oral submissions, the applicant's amended application included a ground that resembled the "disguised extradition" ground, which the applicant sought to raise in this proceeding (see [61] above). 66 Thirdly, I do not consider it was open to the applicant to attribute fault to the respondent on account of the respondent's alleged delay. As the factual outline above discloses, the Department was unable to locate the applicant for the four years prior to his meeting with the Victoria Police in February 2004. In any event, I accept that any delay on the respondent's part had no bearing on the applicant's failure to raise the present grounds in his previous judicial review proceeding. Further, the applicant had legal representation in the Federal Magistrates Court proceeding, a factor which militates the relevance of arguments based on his immigration detention and alleged depression. The fact that the applicant had sought and failed to achieve a resolution of his immigration status that was favourable to him had little bearing and did not constitute a special circumstance. 67 Accordingly, the applicant did not, in my view, show special circumstances and he is estopped from bringing the claims that are the subject of the present application. The applicant applied in the High Court for orders to show cause why writs of certiorari, prohibition and mandamus should not issue, although he did not include a claim for mandamus in his amended application filed on 4 August 2008. The High Court Rules 2004 relevantly limit the time for making application for certiorari and mandamus. Rule 25.06.01 provides that an application for an order to show cause why a writ of certiorari should not issue must be made within six months after the date of the relevant judgment, order, conviction or other proceeding. Rule 25.07.2 provides that an application for an order to show cause why a writ of mandamus should not issue to a judicial tribunal must be made within two months of the date of the refusal to hear or within such time as is, under special circumstances, allowed by the Court or a Justice. Assuming that the time limits in rule 25.06.01 and 25.07.2 apply (see Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14 ; (2007) 234 ALR 114 at 120 indicating that r 25.07.2 does not), they may be enlarged under rule 4.02. 69 The application was made in the High Court some two years after the Minister made her decision not to revoke her cancellation decision. The applicant conceded that he had given no satisfactory explanation for the delay: see Re Commonwealth; Ex parte Marks [2000] HCA 67 ; (2000) 177 ALR 491 at 495 per McHugh J. Further, the applicant did not proffer any explanation as to why the grounds pursued in this proceeding were not pursued in the earlier proceeding in the Federal Magistrates Court. Just as importantly, as the forgoing discussion shows, the prospects of success on the application are not such as to warrant an extension of time. An extension of time for seeking relief of this kind "can only be granted if it is necessary to do justice between the parties": see Marks 177 ALR at 495. An extension of time is not necessary to do justice in this case. Accordingly, I would refuse the application for an enlargement of time. Application to enlarge time should also be refused. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | the minister cancelled the applicant's visa under s 501(3) of the migration act 1958 (cth) applicant made representations to the minister under s 501c of the migration act , but the minister decided not to revoke her decision to cancel the applicant's visa applicant unsuccessfully sought judicial review in the federal magistrates court and did not seek to appeal applicant filed an application for constitutional writs in the high court two years after minister's decisions hearing remitted to this court whether minister's decisions were in error no basis for an inference that minister's decisions were made for the improper purpose of extraditing the applicant to china to face alleged criminal charges minister did not take into account irrelevant consideration and did not decide unreasonably legitimate basis exists for finding that applicant did not pass the character test grounds not made out application dismissed anshun estoppel whether applicant estopped from bringing further judicial review proceedings grounds of review available in earlier proceeding delay not attributable to the respondent applicant had legal representation in earlier proceeding no "special circumstances" exist to justify bringing of present application whether application for an enlargement of time to seek constitutional writs ought to be allowed no satisfactory explanation for delay prospects of success does not warrant extension of time extension of time not necessary to do justice between the parties application refused migration estoppel practice and procedure |
The Kowanyama People assert a continuous exercise of traditional rights and interests by their people prior to and since sovereignty over the areas the subject of the claim, and in particular, the Part A area. The land and waters of the Determination Area described in detail in Schedules 2 and 3 of the orders made today and illustrated in the Determination Plan in Schedule 4 to the orders are more broadly described as comprising two sections of land and waters on the Western Cape which the applicant claim group describes, put simply, as a shape similar in its configuration, to the shape of a flag and flagpole. The first section of the Determination Area representing the flag shape is the land forming part of the Kowanyama Deed of Grant in Trust and term lease (more generally described as the "Kowanyama DOGIT land"). The second section is described as the flagpole part of the configuration otherwise described as the "coastal section". The Kowanyama DOGIT land (excluding the Kowanyama township within the DOGIT) is that part of the Determination Area where exclusive native title rights and interests are to be recognised by the determination. The Kowanyama DOGIT land is an area of approximately 2,520 square kilometres bounded in the north by the Coleman River, in the south by the Rutland Plains pastoral lease, in the east by the Mitchell-Alice Rivers National Park and in the west by the Gulf of Carpentaria. The coastal section of land and waters is that part of the Determination Area where non-exclusive native title rights and interests are to be recognised by the determination. The coastal section is an area of approximately 213 square kilometres. The coastal section runs along the western coastal boundary of the application area and is bounded in the north by the southern bank of the Coleman River, in the south by the latitudinal line at the southern end of the Fauna Sanctuary (Pelican Rookery) to the south of the Staaten River, and in the east by a line generally following the high water mark. The coastal section is bounded in the west in an unusual way. Consistent with customary patterns, the western boundary is defined by a line in the Gulf of Carpentaria which approximates a water depth to which a grown Kowanyama person can wade at low tide which is approximately 1.5 metres. The coastal section is adjacent to the Kowanyama DOGIT land, Rutland Plains pastoral lease and the Inkerman pastoral lease. The application is brought by Glenette Greenwool, Gary Hudson, Evans Josiah, Griffith Patrick, Dennis Michael, Ravin Greenwool, Richard Barney, Jenny Paul, Donna Brumby, Priscilla Major, Roslyn Gilbert, Una Claude, Corrine Daniel, Kelvin Greenwool, Douglas Eric, Teddy Bernard, Rosemary Henry, George William Adams, Christopher Henry, Roger Inkerman, Lyndell Michelle Anne Jimmy, Roy Dennis Maggable, Hazel Paul, Angela Fiona Edwards, Shaun Kalk Edwards, May Edwards, Lindsay Edwards, Glennis Rose Mudd, Shenane Jago, Colin Lawrence, Arthur Luke, Christine Lawrence, Ivan Jimmy, Shirley Yam, Maria Dick and Robert Holness, on their own behalf and for and on behalf of the members of the Kowanyama People. The parties who have joined the proceeding as respondents and who remain as respondents to the broader application are the State of Queensland, the Commonwealth of Australia, Kowanyama Aboriginal Shire Council, Cook Shire Council, Carpentaria Shire Council, Queensland Seafood Industry Association (representing nominated individuals), Telstra Corporation Limited, Tablelands Regional Council, Ergon Energy Corporation, Airservices Australia, Queensland Lapidary and Allied Craft Clubs Association, Herbert James Faloon, Bernard James Stumer, Inkerman Station Pty Ltd, Douglas Price and MDH Pty Limited. The Cape York Land Council is the native title representative body for the area the subject of the broader application and is the legal representative for the Kowanyama People in relation to the application and the proposed Part A determination. The application was lodged with the National Native Title Tribunal (the "Tribunal") on 25 March 1997. Federal Court proceeding QUD 6119 of 1998 was commenced on 30 September 1998. A proposed amended application was filed on 28 February 2001 and leave was granted to amend the application on 29 March 2001. Meetings of the members of the claim group took place in Kowanyama on 2 December 2008 together with representatives of the Cape York Land Council and an anthropologist, Dr John Taylor, with a view to considering amendments to the application and related matters. A further meeting took place on 26 August 2009 to consider and authorise amendments to the application for the purpose of framing the proposed Part A determination. The proposed draft Part A determination was circulated to the parties in September 2009. Leave pursuant to a notice of motion dated 23 September 2009 was granted by the Court to further amend the application. On 24 December 2001, the application passed the registration test pursuant to s 190A of the Act and has remained on the Register of Native Title claims. The application was notified by the Native Title Registrar in accordance with the Act and the notification period for the purposes of s 66 of the Act expired on 20 May 2002. The applicant, the State of Queensland and the Commonwealth of Australia agreed to prioritise mediation of the application in several parts . As a result of that mediation process, the applicant, State of Queensland, Commonwealth of Australia, Kowanyama Aboriginal Shire Council, Queensland Seafood Industry Association and Telstra Corporation Limited after mediation, to their great credit, reached agreement for the purposes of s 87A(1) of the Act to the terms of a proposed consent determination for part of the claim area the subject of the principal application. The determination area represents approximately 13 per cent of the application area. The above respondents are the consenting parties to the proposed Part A determination as these parties hold an interest in the land and waters within the Part A area. The agreement signed by these parties between 5 October 2009 and 9 October 2009 was filed under s 87A(2) of the Act by the Cape York Land Council on 9 October 2009. The consent orders which the parties ask the Court to make are attached to the agreement. Section 13(1) of the Act provides that an application for a determination of native title may be made under Part 3 of the Act in relation to an area for which there is no approved determination of native title. The present application is made under s 61 of the Act within Part 3 and there is no approved determination in relation to the land and waters within the Determination Area. I am familiar with the material in this application having been involved in the case management of the proceedings and having conducted a number of directions hearings in the proceedings. Section 87 of the Act provides, that if, after a particular date, the parties to a determination application reach agreement, in writing, on the terms of a proposed order the Court might make in relation to a part of the proceeding, the Court may, if the proposed orders are within the power of the Court (i.e. within jurisdiction) and, if it appears to the Court to be appropriate to do so, make orders in, or consistent with, the terms of the agreement without conducting a hearing of the proceeding. More particularly, s 87A of the Act provides, among other things, that if at any stage of the proceeding after the relevant date, agreement is reached on a proposed determination of native title in relation to an area included in the area covered by the native title determination application , the Court may make an order in, or consistent with, the proposed determination of native title without holding a hearing if the Court is satisfied that the proposed determination for that area is within power and that it would be appropriate to make the order. There are four factors prescribed by s 87A(1). The section applies if firstly there is a proceeding for a determination of native title on foot; secondly, an agreement has been reached on a proposed determination for a part of the claim area after the s 66 notification period; thirdly, all of the following persons are parties to the agreement, the applicant, each registered native title claimant in relation to any part of the determination area who is a party to the proceeding, each representative Aboriginal/Torres Strait Islander body for any part of the determination area, each person who holds and interest in any part of the determination area, each person who claims to hold native title in relation to land or waters in the determination area, the Commonwealth, and the relevant State and local government bodies; and fourthly, the terms of the proposed determination are in writing and signed by or on behalf of those parties. I am satisfied as to these matters. Section 87A(4) requires the Court to be satisfied that the orders are within power and that it would be appropriate to make the orders sought. Orders made under s 87A of the Act not only take effect inter-parties in the resolution of the claims made in the proceedings but represent an independent judicial determination, in the exercise of the judicial power of the Commonwealth, that may be asserted, as a matter of law, against anyone. Although the Act by s 223(1)(c) in part defines native title or native title rights and interests by reference to the rights and interests recognised by the common law of Australia, a determination of native title expresses the recognition and protection of those rights and interests in relation to land and waters defined and described in s 223 of the Act which find their origin in traditional laws and customs, not the Act ( Members of the Yorta Yorta Aboriginal Community v State of Victoria (2002) 214 CLR 422 at [75] and [76] per Gleeson CJ, Gummow and Hayne JJ). I am satisfied that the proposed orders are consistent with the proposed determination and within power. A number of considerations are to be taken into account in determining whether the proposed orders appear appropriate to the Court. Firstly, the Act recognises and encourages the resolution of applications by mediation, negotiation and ultimately agreement without the need for a hearing and the assessment of evidence and fact-finding by the Court necessary in the course of resolving a controversy. Similarly, the Act recognises and encourages the determination of native title in relation to an area within the area covered by an application, by mediation, negotiation and ultimately agreement without the need for a hearing. Secondly, the Court will be concerned to understand and place emphasis upon whether the agreement is freely made on an informed basis by all parties to the determination and whether the parties are represented by experienced independent lawyers. In the case of a State party representing the public interest, the Court will consider whether appropriate consideration has been given to the issues raised by the proposed consent determination. Thirdly, so far as the State is concerned, the Court recognises that a State has access to its own archival material and generally has had a long period of engagement with Aboriginal communities and is therefore likely to be familiar with the historical arrangements within those communities. Fourthly, although it is not necessary for the Court to consider the body of material that would be available to it in the course of a contested hearing, the Court ought to have regard to sufficient material which is capable of demonstrating that the agreement and the proposed orders are "rooted in reality" (" Native Title --- A Constitutional Shift? ", University of Melbourne Law School, JD Lecture Series, Chief Justice French, 24 March 2009): Wik and Wik Way Native Title Claim Group v State of Queensland [2009] FCA 789; (2009) 258 ALR 306. In that sense, the Court ought to be satisfied that the proposed orders are prima facie appropriate in order to satisfy the test under s 87A(4) of the Act. In this case, the parties to the proposed determination are represented by lawyers experienced in the conduct of native title proceedings and the analysis of issues arising in such proceedings. During the course of the processes leading to the proposed consent determination, the State of Queensland has been provided with extensive material between May 1996 and August 2009. It is not necessary to set out the content of that material in these reasons. Some of that material has been considered by other respondents with an interest in the proposed determination area. I am entirely satisfied that the parties to the Part A agreement have been represented by lawyers experienced in these issues and that the parties have come to a fully informed agreement. In addition, the State of Queensland has had a long engagement with the Aboriginal people of the Determination Area. In this application the applicants have been assisted by Dr John Taylor. Dr Taylor has been retained as an anthropological consultant in relation to the Kowanyama native title claim since 1997. More importantly, Dr Taylor has carried out studies of the Kowanyama native title claim group and worked with members of the group and their predecessors since 1971. During the course of his studies of the Kowanyama native title claim group, Dr Taylor has carried out research into the anthropological, historical, linguistic, genealogical and cultural materials that relate to members of the group and their predecessors in the Kowanyama region. Dr Taylor has mapped Aboriginal landscapes and ownership patterns which has involved extensive site mapping and the study of the principles of land ownership in the Kowanyama region. The nature and extent of Dr Taylor's research work in relation to the Kowanyama region including the land and waters the subject of the primary application is the subject of a document described as "Overview of Connection Materials in support of the Kowanyama Part A Native Title Determination". That report was filed in the Court on 28 September 2009. Dr Taylor's work on these anthropological questions is the subject of many publications. I have considered the detailed Overview of Connection Materials in support of the Part A determination application. I am entirely satisfied that it is appropriate to make the proposed orders. However, a number of things should be said about the elements of the Part A determination on behalf of the Kowanyama People. The archaeological evidence demonstrates that Aboriginal people have occupied Cape York Peninsula for over 37,000 years. The first European contacts with Aboriginal people inhabiting the claim area were recorded in the logs of the second Dutch expedition from Batavia to the Gulf of Carpentaria in 1623. The Pera and the Arnhem under the direction of Carstenez made landfall on 12 April 1623 on Cape York Peninsula near Cape Keerweer. Aboriginal people were observed burning grass near the shoreline. On 17 April 1623, the Pera stood off the coast just south of the mouth of the Mitchell River in the vicinity of Topsy Creek which now forms the northern boundary between the DOGIT lands and Rutland Plains Station. Later in the afternoon, when the boats returned, the skipper reported that as soon as the party had landed a great mob of blacks, some with arms and some without, had come up to them and were so bold and free as to touch the men's muskets and try to take them off their shoulders, and in fact, wanted to take everything they thought they might have a use for. These being kept interested with iron and beads, an opportunity was espied, and one of them was seized by a string which he had round his neck and taken on board the boat. The others who were on the beach made a great hubbub and outcry, but those who were concealed in the bush remained there. The said people are pitch black, thin in body, and stark naked, with basketwork or nets around their heads. As regards their hair and figure, they are like the blacks of the coast of Coromandel, but they seem to be less cunning, bold and wicked than the blacks at the west end of New Guinea. Their weapons, some of which we are bringing with us, are assegais, shields, clubs and sticks about 1½ fathoms in length, and are not as formidable as those we have seen among other blacks. As regards their manners and policy, and the nature of their country, Your Worships will in time perhaps be able to elicit some information from the captured blacks to whom I refer you. In June 1845, Ludwig Leichhardt's expedition entered the claim area. He observed Aboriginal people diving for water lily bulbs, and engaged in other activities. In 1864 and 1865, the Jardine brothers took a herd of 250 cattle from Carpentaria Downs to Somerset at the tip of Cape York Peninsula. The Jardine party entered the claim area along the Staaten River which they followed westwards until they reached the coastal plains. The party noted many signs of human occupation at campsites and fish weirs and often came upon Aboriginal groups hunting or fishing. Permanent European settlement commenced during the 1880s when large areas of land around the lower reaches of the Mitchell River were taken up for pastoral purposes including the Dunbar Station Selection in 1882. In 1897, Queensland's colonial legislature took steps to set aside significant areas of coastal land stretching from below the Mitchell River to the tip of Cape York Peninsula for the purpose of forming Aboriginal reserves. In 1902, Dr Gilbert White, the Anglican Bishop of the newly created diocese of Carpentaria, declared his intention to set up missions dedicated to the pastoral and physical care of Aboriginal people within the diocese. The most densely populated Aboriginal centre in Queensland and probably the only one where the natives have not come into more or less disastrous contact with civilisation. The mission was abandoned in 1915. A new site was chosen by J.W. Chapman on a creek in the western end of Koko Bera country. The site was called Kowanyama which was an English rendering of the Yir Yoront "kawn yama" meaning "many waters". In the 1950s, the Anglican Church began to critically examine its role in the advancement of the Aboriginal communities of Cape York Peninsula and its capacity to sustain its missions and pastoral role. In 1967, the Anglican Church transitioned the administrative control of Kowanyama and Pormpuraaw to the State of Queensland. Aboriginal people have consistently asserted access to their homelands for traditional owners which, on the anthropological evidence, has not been denied by station managers. In 1987, following the enactment of the Land Act (Aboriginal and Islander Land Grants) Amendment Act 1982 (Qld), the Land Act (Aboriginal and Islander Land Grants) Amendment Act 1984 (Qld) and the Community Services (Aborigines) Act 1984 (Qld), the title to the Mitchell River Aboriginal Reserve was vested in the Kowanyama Aboriginal Council as a Deed of Grant in Trust. This initiated a period of increasing community autonomy and control over lands and resources. Anthropological field research began in the claim area in the mid 1930s when Lauriston Sharp commenced his studies among the Yir Yoront and neighbouring groups (1934, 1937, 1939, 1940, 1952, 1958). Donald Thompson conducted brief kinship research among the "Koko Minjena" at the Mitchell River Mission (1929, 1933, 1972). For several months Thompson camped on the Coleman River in company with a large party of Aborigines. Dr Taylor, stationed at Kowanyama as a medical anthropologist attached to the Queensland Institute of Medical Research, commenced his work in 1971. The work included detailed genealogical studies and work to document land affiliations. Dr Veronica Strang commenced fieldwork at Kowanyama and on neighbouring pastoral properties in 1992. Work was undertaken by Dr Bruce Sommer in 1998 in relation to linguistic and communication patterns. Dr Taylor also prepared indexed family trees based on patrilines to assist others in coming to terms with Kowanyama families and their members. In 1996, Dr Taylor's genealogies were converted to digital format. Most family lines extend back to apical ancestors whose birth dates occurred well before the establishment of the Mitchell River Mission and the pastoral properties in the claim area. Dr Taylor also documented the landscape in such a way as to reflect the understandings and meanings that Aboriginal people project onto the landscape. These landscape mapping processes are called "close-grained mapping". Based on the anthropological research and access to historical documents and records, the Kowanyama People are properly understood as comprising those people known as the Yir Yoront (sometimes called Kokomenjen), Koko Bera, Kunjen and Koko Berrin Peoples, including the applicants and other claimants who together form the native title group. The Kowanyama People are those people who are the cognatic descendents of the individuals identified in Schedule 1 to the orders and those people recruited by adoption in accordance with the traditional laws and customs of the Yir Yoront, Koko Bera, Kunjen and Koko Berrin. The anthropological material demonstrates that the laws and traditions of the Kowanyama People flow from a totemic ideology constituting a normative system that is widely shared and has been reproduced over generations. The system of laws and traditions specifies obligations and duties and provides for sanctions and punishment. The interests of the claimants in land are acquired through descent which is why identifying family lines (patrilines) associated with parcels of land (estates) in the claim area has been important to identifying the scope of the claimant group. The material demonstrates that the regulation of land tenure has been one of the most important aspects of the totemic system in relating clans to clan domains and individual members to individual clan domains . The contemporary native title rights and interests of the claimants derive from what is described as a "uniquely Aboriginal world view" which has been substantially maintained by the Kowanyama community since it was first described. Dr Taylor identifies 10 central features characterising that world view as the foundation of the Kowanyama system of fundamental laws and principles and traditional ideology. Dr Taylor documents the substantial continuity of practice of Kowanyama traditional law and custom. Dr Taylor concludes that it is reasonable to infer that just as the contemporary system is descended from the classical system, so the classical system is descended from the traditional laws and customs in operation at the time of sovereignty. Dr Taylor identifies eight separate reasons why that is so. The four "interdependent and interlocking" traditional and customary "general rights" identified by Dr Taylor are: The physical possession, occupation, use and enjoyment of the claim area as of right. The carriage of responsibility for the care and maintenance of the claim area. The right to hold the claim area as the cultural property of the native title group and the source of its identity. The right to act as sole authority to speak for the country. Dr Taylor identifies the scope and content of each of those four general rights in considerable detail in his reports. Section 94A of the Act requires that an order for a determination of native title must set out details of the matters mentioned in s 225 of the Act which must be read together with s 223 of the Act. These sections give meaning to the terms "determination of native title" and "native title" and "native title rights and interests". In Members of the Yorta Yorta Aboriginal Community v State of Victoria (supra) at [76], Gleeson CJ, Gummow and Hayne JJ treated the statutory elements contained in s 223 as central. The mandatory requirements for a determination of native title are these. The native title rights and interests must be communal, group or individual. They must be rights and interests in relation to land or waters. They must be possessed under the traditional laws acknowledged and the traditional customs observed by Aboriginal peoples; Aboriginal people by their law and customs must have a connection with the land or waters; and the native title rights and interests must be recognised by the common law of Australia. I am satisfied that the anthropological material demonstrates that the Kowanyama People are descended from a society of Aboriginal people who were in occupation of the land and waters of the Determination Area, being a part of the claim area, at sovereignty and who formed a society united by their acknowledgement and observance of a normative body of traditional laws, customs and beliefs. Through their continued acknowledgement and observance of these normative laws and customs, the Kowanyama People have, since sovereignty, maintained a connection with the Determination Area. I am satisfied that the content of those native title rights and interests which derive from the practice of traditional laws and customs have been identified and established through the anthropological material. The agreement provides for orders entirely consistent with the anthropological material. I am satisfied the proposed orders address each of the elements of s 225 of the Act. Thus, I am satisfied that the orders appear appropriate in accordance with s 87A of the Act. Order 12 of the proposed orders provides that native title is not to be held in trust. By Order 13, Abn Elgoring Ambung Aboriginal Corporation (the "Corporation") is to be the prescribed body corporate for the purposes of s 57(2) of the Act and is to perform the functions set out in s 57(3) of the Act. Section 59 of the Act provides that regulations may prescribe the kinds of body corporate that may be determined to be a prescribed body corporate for the purposes of s 57(2)(b) of the Act. Regulation 4(1) of the Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth) ("the Native Title Regulations") provides that an Aboriginal and Torres Strait Islander corporation is prescribed if it is registered for the purposes of being the subject of a s 57 determination. The members of the claim group met in Kowanyama on 2 December 2008 and authorised the establishment of the Corporation and the adoption of its draft rule book and the making of an application for registration of the Corporation. At the first annual general meeting of the Corporation held on 26 August 2009 in Kowanyama, the Corporation consented to its nomination to act as prescribed body corporate consistent with its rule book. Consistent with the rule book, nomination and consent, two directors consequent upon a meeting of directors signed a notice of consent on behalf of the Corporation to so act. The only people eligible to hold membership of the Corporation are individuals of at least 15 years of age who are either a descendent of a person listed in Schedule 4 to the rule book (being those persons listed in Schedule 1 to the orders) or a person adopted by those descendents in Schedule 4 (Schedule 1 to the orders) in accordance with the traditional laws acknowledged and traditional customs observed by those descendents (rule 5.2.2). I am satisfied that the Corporation is a prescribed body corporate for the purposes of s 57 of the Act and Regulation 4(1), and that Regulation 4(2) is satisfied. These orders made today give recognition within the Australian legal system to the native title rights and interests of the Kowanyama People in relation to the Determination Area, being Part A of the claim area, born out of traditions honoured and customs practised by the ancestors of the claimants and observed and practised by their descendents continuously over time and recognised and protected under the Native Title Act 1993 (Cth). This is a proud day for the Kowanyama People. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for orders supported by an agreement for a consent determination of native title rights and interests in the land and waters of the determination area consisting of a part of the area the subject of the principal application consideration of s 87a of the native title act 1993 (cth) consideration of whether proposed orders appear "appropriate" to the court and whether orders ought to be made as sought determining native title rights and interests in the kowanyama people in land and waters on the western side of cape york peninsula bounded in the north by the coleman river, in the south by the rutland plains pastoral lease, in the east by the mitchell-alice rivers national park and in the west by the gulf of carpentaria together with coastal land bounded in the north by the southern bank of the coleman river, in the south to a point south of the staaten river and in the east to a line generally following the high water mark, and in the west to a line in the waters of the gulf of carpentaria which approximates a water depth to which a grown kowanyama person can wade at low tide native title |
That application was the subject of a decision in writing of the Tribunal, made on 28 October 2008. It affirmed the decision under review. It will be appreciated that s 43(1) of the AAT Act required the Tribunal to 'make a decision in writing' on the applicant's Application for Review of Decision. In addition, s 43(2) of the AAT Act required the Tribunal to give reasons for its decision, either orally or in writing, and s 43(2B) required the Tribunal to include certain matters in its reasons, if in writing. Under s 44(1) of the AAT Act a party to a proceeding before the Tribunal could appeal to this Court, on a question of law, from any decision of the Tribunal in that proceeding. Under s 44(4) the Court was empowered to hear and determine an appeal on a question of law brought under s 44(1) and to 'make such order as it thinks appropriate by reason of its decision'. Further powers were conferred on the Court by subsections (5) and (7) --- (10) of s 44. Under s 7(1)(c) a person who had rendered continuous full-time service (not being operational service) as a member of the Defence Force during World War 2, being service that commenced before 1 July 1947, was taken to have been rendering 'eligible war service' while so rendering continuous full-time service. On 21 July 2006 a delegate of the Repatriation Commission decided that the death of Mr Ronald J Milbourn was 'not related to service, and that a war widows' pension [was] therefore not payable'. The applicant sought review of the Repatriation Commission's Delegate's decision by the Veterans' Review Board. On 7 August 2007 the Veterans' Review Board decided to affirm the decision under review in relation to the death of the late Ronald James Milbourn. Section 120 of the Veterans' Entitlements Act dealt with the standard of proof in respect of claims for pensions. Section 120(6) of the Veterans' Entitlements Act negated the imposition of any onus of proof upon a claimant for a pension or upon the Commonwealth in relation to a claim for a pension. . 18 of 2006) on 26 April 2006 with effect from 10 May 2006. The Instrument was expressed to apply to all matters to which s 120B of the Veterans' Entitlements Act applied. On 20 June 2007 the Repatriation Medical Authority made an amendment to the Statement of Principles with effect from 4 July 2007. However, that amendment to the Statement of Principles is not presently relevant. The Statement of Principles (No. One tailor made cigarette approximates one gram of tobacco .... One pack year of tailor made cigarettes equates to 7 300 cigarettes, or 7.3kg of smoking tobacco by weight. In the circumstances, it is unnecessary to address the observations of Gummow J, when a member of this Court, in TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119 ; (1988) 19 ATR 1067 at 1069-1074 and the observations thereon of Branson and Stone JJ in Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 ; (2003) 38 AAR 55 , of Branson J, with whose reasons for judgment Spender and Nicholson JJ agreed, in Comcare v Etheridge [2006] FCAFC 27 ; (2006) 149 FCR 522 at 526-530 and of Perram J in Civil Aviation Safety Authority v Central Aviation Pty Ltd [2009] FCA 49 ('Central Aviation') at [23] et seq and the significance of the amendments to s 44 of the AAT Act effected by the Administrative Appeals Tribunal Amendment Act 2005 (Cth) (Act No. 38 of 2005). If we are satisfied his death was sufficiently related to his eligible service, Mr Milbourn's widow will be entitled to a widow's pension. He served in the Australian Army between 13 January 1942 and 1 February 1943, but his service was not operational service. He was approximately 21 years and 5 months old when his service commenced and approximately 22 years and 6 months old when his service ended. During the period mentioned his service was 'eligible war service' within the meaning of s 7(1)(c) of the Veterans' Entitlements Act . In these circumstances, the respondent Commission was charged with deciding 'to its reasonable satisfaction' whether Mr Milbourn's death 'arose out of, or was attributable to,' his service, no onus of proof resting upon any person. For a decision to be reached to the respondent's 'reasonable satisfaction', it was necessary for the Tribunal to have before it material which 'raise[d] a connection' between Mr Milbourn's death and some particular service rendered by him, and the smoking by him of at least one half of a pack year of cigarettes, which commenced at least 10 years before the clinical onset of his malignant neoplasm of the lung and was 'related to' his service. The critical finding of the Tribunal was that it was not satisfied, on balance, that Mr Milbourn had a war-caused smoking habit. It was not satisfied that his death arose out of or was attributable to his service. It was not satisfied, on the balance of probabilities, that he smoked during the period of his war service, nor was it satisfied that, if he smoked, his smoking was connected with his war service. When forming an opinion about any relationship to service, on balance, we are not satisfied that Mr Milbourn had a war-caused smoking habit. We do not consider that Mr Milbourn's death meets the requirements of factor 6(a)(ii) in demonstrating a relationship to service. Further, clause 5 explains that, subject to clause 7, at least one of the factors set out in clause 6 must be related to the relevant service rendered by the person. In consequence, we are not reasonably satisfied on the balance of probabilities in accordance with subsection 120(4) that Mr Milbourn's death was war-caused. This means his widow's claim must fail. Critically, the Tribunal did not make a finding of fact that Mr Milbourn smoked during the period of his army service, that his smoking, if any, was related to, connected with, attributable to or arose out of his service and that his smoking, if any, satisfied the requirements of factor 6(a)(ii) of the Statement of Principles. Being unable to make any such findings to its reasonable satisfaction on the balance of probabilities, it was not incumbent upon the Tribunal to include in its reasons references to any evidence or other material. Insofar as s 43(2B) of the AAT Act requires the Tribunal to include in its reasons for decision references to 'the evidence or other material' on which findings of fact, adjudged by it to be material, were based, it seems to me that the expression 'other material' was intended to contemplate matters such as an agreement as to relevant facts, other material to which the Tribunal may have had regard which did not constitute 'evidence' and material such as policy statements. When originally enacted (see Act No. 1) Act 1982 (Cth) (Act No. 26 of 1982). 26 of 1982, are not particularly enlightening in relation to the amendment of s 43(2) and the insertion of the new subsection 43(2B). ... New sub-section 43(2B) provides that, where the Tribunal gives written reasons for decision, those reasons are to include its findings on material questions of fact and a reference to the evidence or other material on which those findings were based - this is the same form in which written reasons are now required to be given. As the Act now stands, it is doubtful whether this may be done, even where a written statement is provided later. Accordingly, clause 33 of the Bill empowers the Tribunal to give either oral or written reasons at the time it hands down a decision. If it does not then give written reasons, it must do so if requested to do so by a party to the proceedings. Counsel for the parties in the matter presently before the Court accepted that 'any' in s 430(1)(c) of the Migration Act did not make the relevant provision different in substance from s 43(2B) of the AAT Act where 'any' did not appear. In the circumstances, the observations of the members of the High Court in relation to s 430(1) of the Migration Act in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 ('Yusuf') provide assistance in relation to the requirements imposed upon the Tribunal by s 43(2B) of the AAT Act. The Tribunal is required, in setting out its reasons for decision, to set out "the findings on any material questions of fact". If it does not set out a finding on some question of fact, that will indicate that it made no finding on that matter; and that, in turn, may indicate that the Tribunal did not consider the matter to be material. There is nothing in that language which imposes a requirement to make a finding on every question of fact which is regarded by the Federal Court, on judicial review of the Tribunal's decision, as being material. It is impossible to read the expression "the findings" as meaning anything other than the findings which the Tribunal has made. By setting out its findings, and thereby exposing its views on materiality, the Tribunal may disclose a failure to exercise jurisdiction or error ... or may provide some other ground for judicial review. ... But all the Tribunal is obliged to set out is such findings as it has made. In my opinion the question of law as identified in the Notice of Appeal in the present case should be answered in the negative in respect of both sub-question (a) and also sub-question (b). Section 43(2B) of the AAT Act is not concerned with the provision of reasons for findings made by the Tribunal on questions of fact judged by it to be material. In its terms it does not require reasons to be given to support why particular evidence or other material which could have supported a finding of fact, was not accepted. The obligation imposed upon the Tribunal by s 43(2) of the AAT Act called for reasons to be given by the Tribunal for 'its decision'. The observations of French J, as his Honour then was, Sackville and Hely JJ in relation to the obligation of the Refugee Review Tribunal to provide reasons in Applicant WAEE v Minister for Multicultural and Indigenous Affairs [2003] FCAFC 184 ; (2003) 75 ALD 630 at [46] are equally applicable to the Administrative Appeals Tribunal. It may be that some evidence is irrelevant to the criteria and some contentions misconceived. Moreover, there is a distinction between the tribunal failing to advert to evidence which, if accepted, might have led it to make a different finding of fact ... and a failure by the tribunal to address a contention which, if accepted, might establish that the applicant had a well-founded fear of persecution for a Convention reason. The tribunal is not a court. ... it is an administrative body and not a court and its reasons are not be scrutinised "with an eye keenly attuned to error". Nor is it necessarily required to provide reasons of the kind that might be expected of a court of law. Had the question of law in this case been formulated by reference to s 43(2) rather than s 43(2B) of the AAT Act, I would have reached the same conclusions. In relation to the question of whether or not Mr Milbourn smoked during the time of his war service and the question of whether or not his smoking was relevantly related or connected to his war service, it was sufficient to record the Tribunal's lack of satisfaction as it did in paragraph 14 of its reasons for decision. Its lack of satisfaction on the balance of probabilities is borne out in part by its observation at [14] 'In our opinion, the material before us is unclear about a temporal connection with army service and even less clear about any greater relationship to army service' (emphasis added). There was no obligation upon the Tribunal to provide reasons why evidence that was favourable to the applicant's case was not accepted. The evidence that tended one way, favourable to the applicant, took the form of hearsay from some years after the event, and evidence that tended the other way took the form of business records (an exception to the rule against hearsay) in respect of facts that would appear to have been admitted by the late Mr Milbourn during his lifetime. In the absence of any direct evidence, 'rejection' of evidence did not become an issue. As Sheppard J said in Brackenreg v Comcare Australia (1995) 56 FCR 335 at 350 'a tribunal may properly say that it does not accept the evidence of a witness and no more ...', especially where the evidence relied upon is hearsay. As Sheppard J made clear, a tribunal's conclusion in a matter of this kind may be largely intuitive. I must admit I didn't talk to [counsel for the respondent] about it. So we agree there was an initial commencement at age 18. Half a pack is a minimal thing to meet. The question is attributability. Mrs Milbourn believes her late husband smoked during service due to peer pressure, availability of tobacco in the army and stress related to service. Mrs Milbourn recollected that her late husband told her he and his army colleagues would smoke together and that he joined in for the company. He felt encouraged to smoke when the army gave him cigarettes. Smoking also eased his anxiety about the possibility of having to serve overseas. Mrs Milbourn said her late husband tried to give up smoking several times but these attempts never lasted more than a few weeks. She tried unsuccessfully to persuade him to stop smoking and he would try not to smoke in her presence. Eventually he stopped in 1977 about 10 years before he died of lung cancer. Mrs Milbourn gave evidence she met her late husband in 1945 when they were both aged 25 and Mr Milbourn was no longer serving. Her discussions with Mr Milbourn took place between 1945 and 1987, after he had completed his service, having been discharged in February 1943. She recalled that he also said that he would stop to buy cigarettes. It notes ... that Mr Milbourn had a chronic productive cough. ... no mention was made of smoking . On page 3 of this report, there are four questions about tobacco. For "age started", the information is "18yrs, cigarettes". For "average daily consumption" is added "less than 20 cig/day". "Still smoking" is crossed out and "if not when stopped? " is answered "21yrs" . This report does not , in our view, support a finding that Mr Milbourn smoked during his eligible service but rather indicates that he had stopped when he was aged 21. ... the report of 1983 does not support any finding that Mr Milbourn resumed smoking in the army let alone a finding that he developed a war-caused habit while he was in the army [emphasis added]. At the time of his second admission, he is recorded as saying he stopped smoking 12 years ago but there is no record made of when he started. ... The notes do not record when he commenced or re-commenced smoking. The question in each case, and it is a question of fact for the administrative decision-maker, is whether the eligible war service contributed causally to the injury or disease. Had the question posed been answered in the affirmative, in whole or in part, then, regardless of whether it was predicated on an obligation arising under s 43(2B) or 43(2) of the AAT Act, no consequential relief would be warranted. The Tribunal clearly articulated why it was not satisfied on the balance of probabilities that Mr Milbourn's death was 'war-caused'. In my opinion, the application should be dismissed with costs. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | extent of administrative appeals tribunal's obligations to provide reasons and to state its findings on material questions of fact and the evidence or other material on which those findings were based widow's pension whether husband's death was 'war-caused' tribunal not reasonably satisfied on the balance of probabilities that veteran's death was attributable to or arose out of a war-caused smoking habit administrative law defence and war |
One of the recommendations canvassed in the National Native Title Tribunal's (Tribunal) mediation report was that the order of French J (as his Honour then was) relating to the disposition of the Nullarbor claim be reconsidered. Order 2 of his Honour's orders of 29 November 2007 provided that: Any motions or submissions in relation to any failure to pass the registration test to be filed and served no later than 19 May 2008. To date no submissions have been filed with the Court. Mr O'Dell, who appeared on behalf of the applicants, indicated that he would not be seeking to file any submissions pursuant to French J's orders. He accepted that orders under s 190F of the Native Title Act 1993 (Cth) (the Act) would be appropriate as they were unable to take instructions. I invited the other parties to make submissions on the issue of dismissal. No submissions were made and no objection was raised. On that basis I dismissed the application and indicated that I would publish reasons shortly. 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 Act, the Court may consider any 'other reason' why an application should not be dismissed. The Explanatory Memorandum to the Native Title Act Amendment Bill 2006 suggests that the criterion set out in s 190F(6) '... will ensure that applications are not dismissed where there is good reason for a claim remaining in the system, despite being unregistered'. By way of example, the Explanatory Memorandum suggests that the Court may consider that an application should not be dismissed if, despite being unregistered, the claim is close to reaching resolution (par 4.331). As to the principles applicable to how s 190F(6) should operate, I refer to and respectfully adopt, (without repeating), the analysis by Logan J in Christine George & Ors on behalf of the Gurambilbarra People v State of Queensland [2008] FCA 1518. The application was filed in the Federal Court on 30 September 1998. An amended application was filed on 6 August 1999 (subsequently re-filed on 3 September 1999). The application was further amended by order of the Court in terms of an amended application filed on 19 October 1999. The application covers approximately 78000 square kilometres of land in the Goldfields, Great Victoria Desert and Nullarbor Plain regions of Western Australia. The application has several overlaps. The applicants are represented by Central Desert Native Title Services. Prior to July 2007 they were represented by Goldfields Land and Sea Council. The Delegate found that the application did not satisfy the following conditions: Subsection 190C(2) --- the Delegate was not satisfied that the application contained all of the details and other information and documents required by s 61 and s 62 of the Act; Subsection 190B(2) --- the Delegate was not satisfied that the information and map provided by the applicants were sufficient for it to be said with reasonable certainty that native title rights and interests are claimed in relation to the areas specified; Subsection 190B(5) --- the Delegate did not consider that the factual basis on which it was asserted that the native title rights and interests claimed exist was sufficient to support each of the particularised assertions in s 190B(5) ; Subsection 190B(6) --- the Delegate did not consider that, prima facie, the applicants had established their connection with the claim area and found that there was an insufficient factual basis for the claimed native title rights and interests; and Subsection 190B(7) --- the Delegate was not satisfied that at least one member of the native title claim group has a previous or current traditional physical connection with any part of the application area. The Registrar advised the applicants on 19 July 2007 that the registration test had to be applied again. The applicants replied to the Tribunal on 20 July 2007 advising that they did not wish to make any further amendments to their application. On 13 November 2007 the Nullarbor application underwent a second registration test. The Delegate decided not to accept the application for registration. The Delegate found that a number of conditions were not satisfied: Subsection 190C(4) --- the Delegate was not satisfied that the persons named as the applicants had been authorised by the native title claim group. The Delegate found that the information relevant to authorisation was either uncertain or insufficient; Subsection 190B(2) --- the Delegate was not satisfied that the information and map provided by the applicants were sufficient for it to be said with reasonable certainty that native title rights and interests are claimed in relation to the areas specified; Subsection 190B(5) --- the Delegate did not consider that the factual basis on which it was asserted that the native title rights and interests claimed exist was sufficient to support each of the particularised assertions in s 190B(5); Subsection 190B(6) --- the Delegate did not consider that, prima facie, the applicants had established their connection with the claim area and found that there was an insufficient factual basis for the claimed native title rights and interests; and Subsection 190B(7) --- the Delegate was not satisfied that at least one member of the native title claim group has a previous or current traditional physical connection with any part of the application area. The applicants have not applied to the Tribunal pursuant to s 190E(1) of the Act for reconsideration of the Delegate's decision nor have they applied to this Court pursuant to s 190F(1) of the Act for review of the decision. The applicants have not sought to amend their application since consideration by the Delegate, nor have they indicated any intention to do so. There is no evidence or indication that the application is likely to be amended in a way that would lead to any different conclusion being reached by the Registrar. There is no other reason why the application should not be dismissed. I note that there is nothing to prevent the applicants from filing a properly constituted claim in the future. The application will be dismissed. | court's discretionary power to dismiss an application on its own motion where application has failed registration test where application has not been amended since consideration by the registrar where application not likely to be amended in a way that would lead to a different outcome once considered by the registrar no other reason why the application should not be dismissed native title |
2 There are thirteen respondents to the proceedings. At the heart of the ACCC's case is that in June to August 2001, corporations within the Patrick Group entered into an arrangement (' the first arrangement ') with corporations within the P & O Group, whereby they agreed to operate existing and future automotive terminals at Australian ports jointly, rather than competing to provide individually operated terminals. The ACCC alleges that this and a subsequent second arrangement contained provisions that had the purpose, effect or likely effect of substantially lessening competition in a variety of markets, including those for the supply of automotive terminal services and automotive stevedoring services in particular ports. Accordingly, by making the arrangements, or by giving effect to provisions of the arrangements, the corporations contravened s 45(2)(a)(ii) and s 45(2)(b)(ii) of the TP Act. The ACCC claims that the corporations and other respondents, including the individual respondents, aided and abetted or were knowingly concerned in various contraventions of s45(2). 3 According to the Amended Statement of Claim (' Statement of Claim ') an automotive terminal comprises infrastructure for the loading or unloading of motor vehicles into or from a motor vehicle carrier and the temporary storage of those motor vehicles. The infrastructure includes a wharf at which a motor vehicle carrier can berth, quarantine and customs facilities and an area contiguous to the wharf for temporary storage of vehicles. The Statement of Claim defines ' automotive terminal services ' to mean access to and use of an automotive terminal supplied by an ' automotive terminal operator '. The expression ' automotive stevedoring services ' is defined to mean loading or unloading motor vehicles into and from a motor vehicle carrier at an automotive terminal and ancillary services. The ancillary services include arranging for customs and quarantine inspection, delivery and storage of the vehicles and provision of security systems. 4 Each of the respondents has filed or joined in a motion seeking to strike out the whole or various portions of the Amended Application (' Application ') and the Statement of Claim filed by the ACCC. For the purposes of dealing with the motions I have assumed that the allegations of fact made in the pleadings are true. If and when the matter goes to trial, many of the allegations will no doubt be disputed. Each of the five categories of respondents was separately represented at the hearing. The five categories are identified below. • The second respondent (' Patrick Holdings ') was a subsidiary of Patrick until 15 June 2007 and the holding company of the third and fourth respondents. • The third respondent (' Patrick Operations ') and the fourth respondent (' Patrick Operations No 2 ') were wholly owned subsidiaries of Patrick Holdings. • The fifth respondent (' Plzen ') was a subsidiary of Patrick until 15 June 2007. • The seventh respondent (' P&O Ports ') was a subsidiary of P&O Australia and the holding company of the eighth respondent. • The eighth respondent (' P&O Wharf Management ') was a subsidiary of P&O Ports and, since 11 July 2002, the beneficial owner of 50 per cent of the shares in the ninth respondent. • The twelfth respondent (' Mr Burgess ') had the authority and responsibilities of chief executive officer for P&O Australia and P&O Ports from 31 January 2001 to 30 June 2002. • The thirteenth respondent (' Mr Blood ') at all material times before June 2002 was the senior executive who had responsibility, subject to the direction of Mr Burgess, for P&O Ports' terminal and automotive stevedoring operations. Paragraphs 280-289 allege, inter alia , that P&O Australia, P&O Ports and P&O Wharf Management (' P&O Corporations ') entered into arrangements containing provisions which had the purpose or likely effect of substantially lessening competition in certain markets, in contravention of s 45(2)(a)(ii) of the TP Act . Paragraphs 302-308 allege that Mr Burgess and Mr Blood aided and abetted or were knowingly concerned in the contraventions. 12 The P&O Respondents also seek an order striking out paras 66 and 67 of the Application. • A number of allegations involve conduct said to have occurred ' through ' other bodies. One consequence is that conduct in one market is relied on to establish a contravention in another market. This form of pleading is confusing and embarrassing. • The pleading is internally inconsistent, insofar as it alleges conduct in the ' counterfactual ' world (that is, without the contravening conduct) inconsistent with the pleading relating to the various markets relied on by the ACCC. • The Statement of Claim alleges events that occurred after the making of the impugned arrangements and asserts that these events had the effect of substantially lessening competition in various markets. The pleading fails to identify material facts establishing the necessary link between the making of the arrangements, or giving effect to provisions contained therein, and the subsequent events. From December 2002, AAT carried on business in Australia managing and developing automotive terminals and supplying automotive terminal services to stevedores. AAT argues that, if the ACCC is right, anything it does in the conduct of its business, such as paying rent or performing obligations under its lease, constitutes giving effect to a provision of an allegedly contravening agreement. AAT submits that as a matter of law this cannot be the correct construction of s 45(2)(b)(ii) of the TP Act. Mr Corrigan was a director of AAT from October 2001 to October 2002 and he has been a director of P&O Wharf since April 2007. 19 Mr Corrigan seeks to strike out paras 293 to 296 of the Statement of Claim, which allege that he aided and abetted or was knowingly concerned in contraventions by other parties. Mr Corrigan's principal complaint is that the pleading is deficient because it lacks material facts to support the allegations against him. Mr Smithwick, at all material times until July 2006, was the senior executive who had authority, subject to Mr Corrigan's direction, within the Patrick Group for all aspects of its automotive terminal operations and automotive stevedoring operations. He was also a director of AAT from October 2001 to October 2002. 21 Paragraphs 297 to 301 plead a case of accessorial liability against Mr Smithwick in similar terms to those pleaded against Mr Corrigan. Mr Smithwick's response is much the same as Mr Corrigan's. There was a good deal of overlap among the written submissions filed on behalf of the various respondents. In addition, at the hearing each category of respondents adopted, to a greater or lesser extent, the submissions made on behalf of the other respondents. 23 The hearing proceeded on the basis that one of the respondents' counsel would take responsibility for presenting the argument on the issue of greatest concern to his client or clients. After affording counsel for the other respondents the opportunity to make any additional submissions on that issue, I invited Mr Burnside QC, senior counsel for the ACCC, to respond. 24 In relation to some issues, I was able to express a view at the hearing that the proposition advanced by the respondents was or was not well-founded. Since the reasons for the conclusions expressed by me at the hearing appear sufficiently from the transcript, I do not explain my reasoning for these conclusions in any great detail in this judgment. On other issues, I informed the parties that I would consider the arguments and give my conclusions and reasons in a reserved judgment. I address the various issues debated at the hearing in the order in which they were dealt with in oral argument. Mr Bannon pointed out that the Statement of Claim alleges, among other things, that AAT is giving effect to certain provisions of the second arrangement, made in April 2002, by entering into leases of facilities and supplying automotive terminal services to customers. Mr Bannon contended that as a matter of law a corporation cannot give effect to a provision in an arrangement to which it is not a party. Since the ACCC does not allege that AAT was a party to the relevant arrangements, the pleading against it is defective. 26 Mr Bannon submitted that this construction of s 45(2)(b)(ii) of the TP Act was supported by several matters. • Secondly, the definition of ' give effect to ' in s 4 of the TP Act also appears to be drafted on the assumption that only a party to the arrangement can do an act in pursuance of or in accordance with a provision of the arrangement. • Thirdly, the authorities indicate that a corporation can give effect to a provision in an arrangement independently of that corporation's motive. It would create an unrealistic burden on corporations (so Mr Bannon argued) if their conduct could give effect to an anti-competitive provision in an arrangement without the corporation being a party to the arrangement or realising that its actions constitute a contravention of the TP Act: Tradestock Pty Ltd v TNT (Management) Pty Ltd (1978) 32 FLR 420, at 432, per Smithers J; Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2004] FCA 1678 , at [294], per Merkel J. Mr Bannon responded that there might be difficulties with such a course. He accepted, however, that the burden faced by AAT in satisfying the Court on a strike out motion was higher than the burden that would apply on the determination of a separate question. 28 It is sometimes appropriate to decide a pure question of law on a strike out motion: Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241. But the authorities do not suggest that a court is bound to do so ( Morgan v Union Shipping (Nz) Ltd [2001] NSWSC 325 , at [9], per Sperling J and authorities cited there). Mr Bannon did not submit otherwise. 29 In the present case, I do not think it appropriate to attempt to resolve the question of law presented by Mr Bannon on behalf of AAT. The contention is arguable, but its correctness is by no means self-evident. In other words, the expression indicates that a corporation may give effect to an arrangement otherwise than by implementing it. The statutory language may suggest, therefore, that a corporation can give effect to a provision of an arrangement even though it is not party to the arrangement. 30 In any event, the question of construction raised by AAT ultimately may be resolved by reference to the particular facts of the case which, of course have not yet been found. AAT is not in the same situation as a third party which has no involvement with an alleged arrangement but which subsequently does something that happens to be connected to the goals sought to be achieved by the parties to the arrangement. The ACCC alleges that the very point of the two of the pleaded arrangements was to allow the Patrick Respondent and the P&O Corporations to utilise AAT as the vehicle for carrying into effect the anti-competitive elements of the arrangement. AAT may well be in quite a different position to a third party that had no prior knowledge of the arrangement and was never intended to have any particular role to play in implementing the anti-competitive provisions of the arrangement. 31 For these reasons, it is not appropriate to resolve the question of law raised by AAT on the strike out application. The question is arguable and should be resolved at the trial. I indicated at the hearing ( Ts 32-33 ) that I considered that this submission was sound. Mr Burnside accepted that the pleading needed to be amended to overcome the deficiency. Issue 3 AAT: An Inconsistency? As has been seen, the Statement of Claim alleges, inter alia , that it was a provision of the arrangement that the parties create AAT as a joint venture company to manage their existing superior automotive terminals and to establish shared motor vehicle and general cargo terminals throughout Australia (para 165.1). The Statement of Claim also alleges that it was a provision of the second arrangement that the parties would not compete for the acquisition of the Glebe Island lease, but would cause AAT to negotiate and finalise an exclusive lease over Glebe Island (para 165.6). AAT is said to have given effect to these provisions by entering into the ' Glebe Island lease ' in December 2002 (paras 220, 291.1.3) and by thereupon supplying automotive terminal services at Glebe Island (para 222). Mr Bannon contended that the Glebe Island lease, which is in evidence, is inconsistent with the concept of a ' shared ' terminal because, under the lease, third party access to the terminal was guaranteed. 34 In oral argument Mr Burnside stated that the allegations in paras 220 and 291.1.3 relate not to the pleading in para 165.1, but to that in para 95.6. Paragraph 95.6 alleges that the first arrangement, made between about June and August 2001, contained a provision that the parties would not compete for the acquisition of the Glebe Island motor vehicle terminal, but would jointly tender for the joint venture company (ultimately AAT) to acquire the lease. This must be read with the allegation that P&O's automotive terminal at Glebe Island, as at January 2001, was a superior automotive terminal than the Patrick terminal at Darling Harbour and the other P&O terminal at White Bay (para 65). Further, by March 2001, Sydney Ports Corporation had informed the P&O Group that it proposed not to renew P&O's lease at Glebe Island beyond the expiration of the lease in October 2002 (para 66) and on March 2001 sought expressions of interest for the lease from P&O Ports and the Patrick Group (para 67). 35 I indicated to the parties that, on the basis explained by Mr Burnside, I did not think that Mr Bannon's argument on this particular issue warranted striking out any part of the Statement of Claim and, in particular, para 220 ( Ts 40-41 ). However, I invited Mr Burnside to clear up in writing any ambiguity of the kind that had prompted AAT to make its submission. Should a request for clarification be made by or on behalf of AAT in relation to the issue dealt with here, I would expect the ACCC to respond appropriately. Mr Bannon developed the submission by reference to the allegations concerning the supply of automotive terminal services in the Port of Sydney. He pointed out that prior to the first arrangement, both the Patrick Group and the P&O Group conducted vertically integrated operations in the Port of Sydney. Each had its own terminal pursuant to a lease from the Port authority. Neither offered to supply terminal services to the other nor to any other stevedore. 37 The Statement of Claim alleges that the first arrangement contained a provision that the parties would establish a joint venture company to manage existing superior automotive terminals for their mutual benefit and to establish shared terminals throughout Australia (para 95.1). It also alleges that the parties would not compete for the acquisition of the Glebe Island terminal (para 95.6, [34] above) and that the joint venture company would take over the existing superior automotive terminals in the major Australian ports and manage them for the mutual benefit of the parties (para 95.7). In particular, the Statement of Claim does not plead the nature of the competitive market that would have existed but for the impugned provisions of the arrangement. 39 Mr Burnside explained the ACCC's case in relation to the alleged arrangement for the Patrick Respondents and the P&O Corporations to bid jointly for the Glebe Island lease. I indicated to Mr Burnside ( Ts 59-63 ) that I understood that the ACCC was putting a case that the arrangement between the Patrick Respondents and the P&O Corporations (or some of them) had the purpose or effect of substantially lessening competition in the terminal acquisition market in Sydney by eliminating competition between them for the acquisition of the Glebe Island lease. However, I also said that I had difficulty in understanding Mr Burnside's explanation as to how the arrangement is alleged to have lessened competition in that market by preventing or inhibiting Toll Holdings Ltd (' Toll '), a potential entrant into the market, from bidding for the Glebe Island lease. Similarly, I had difficulty in understanding how the ACCC puts its case that Toll had been prevented from entering the automotive stevedoring services market in Sydney, given the state of affairs prior to the arrangement (whereby the Patrick Respondents and P&O Corporations, respectively, controlled the relevant terminals) and the absence of any constraint on Toll bidding for leases of terminals when they became available. 40 Mr Burnside ultimately accepted that the pleading in its present form lacks material facts, possibly as the result of omitted cross-references, to support the allegations relating to the effect of the provisions on Toll's potential entry into the Sydney terminal acquisition and automotive stevedoring services markets. Accordingly, he accepted that the Statement of Claim requires amendment to add material facts to deal with the issues to which I have referred. 41 Attention was then specifically directed in argument to the pleading (para 98) that provisions of the first arrangement had the purpose or effect of substantially lessening competition in the terminal services market. As I have noted, the two provisions relied on by the ACCC are those relating to the establishment of the joint venture company (para 95.1, [37] above) and to the joint venture company taking over management of the parties' existing superior automotive terminals (para 95.7, [37] above). The assumption is made notwithstanding that it appears that, prior to the pleaded arrangements, the Patrick Respondents and the P&O Corporations each exclusively occupied their own automotive terminals in the Port of Sydney. In these circumstances, I expressed the opinion that the ACCC should plead additional material facts calculated to demonstrate that the effect or likely effect of the provisions was to substantially lessen competition in the terminal services market. Mr Burnside intimated that the ACCC was willing to take this course. 43 I expressed the same view in relation to para 99 of the Statement of Claim, which pleads that various provisions of the first and second arrangements had the purpose and effect or likely effect of substantially lessening competition in the Sydney stevedoring market. 44 I suggested ( Ts 83-84 ) that, having regard to the views I had expressed, the appropriate course was to strike out paras 97, 98 and 99 of the Statement of Claim, with the ACCC having leave to replead. Mr Burnside proposed an alternative course, namely that the ACCC should have leave to file a Further amended Statement of Claim addressing the issues dealt with in argument, without prejudice to any further applications to strike out the whole or part of the fresh pleading. I consider that to be a sensible course since it allows the ACCC to address any difficulties with the pleading that were flagged in argument but not necessarily finally resolved, or that are exposed by the conclusions I have expressed. Although this argument is related to a contention that I have already addressed, it perhaps raises other issues. 46 Mr Bathurst submitted that the provision pleaded in para 95.6 (that the parties would not compete for the acquisition of the Glebe Island motor vehicle terminal) could not support, of itself, the pleading (para 125) that the provision had the purpose or likely effect of reducing or removing competition between the parties for the acquisition of the Glebe Island lease. Mr Bathurst argued that the allegation (para 126) that the provision had the purpose or likely effect of substantially lessening competition in the Sydney terminal acquisition market therefore could not be sustained. 47 Mr Burnside made it clear that it was not part of the ACCC's case that the joint bid was any different than the bids that otherwise would have been made by the Patrick Respondents and the P&O Corporations bidding against each other. I indicated ( Ts 91-92 ) that, while the ACCC's approach, as explained by Mr Burnside, might face difficulties in due course, I did not think that the potential difficulties justified striking out paras 125 and 126. ' (Emphasis in original). 50 The Patrick Respondents point out that the offending formulae are capable of being satisfied by any one of 31 possible combinations. Moreover, the particulars supplied by the ACCC, so they argue, demonstrate that it simply does not know which of the Patrick Respondents engaged in the pleaded conduct. In some instances, it is difficult to identify the relevant company with confidence, as is often the case with corporate groups where governance is not always conducted with astute attention to corporate divisional lines. In such situations, the applicant is entitled to identify the company that appears to be most properly the subject of the relevant allegation but to plead others in the alternative, bearing in mind that the roles and functions of the various companies are matters within the knowledge of the Patrick Group. On 27 August 2001 Mr Smithwick wrote on letterhead that bore the brand "Patrick the Australian Stevedore" (a trading name owned by the third respondent) and also the name and ABN of Patrick Stevedores Operations Pty Limited (the third respondent) to invite P&O Ports Limited and "ourselves" to "work together in submitting a Tender for Glebe Island Motor Vehicle Terminal". Patrick's and AAT's bids were duly submitted under cover of a letter dated 11 October 2001 signed by Mr Smithwick. That letterhead also bore the brand "Patrick the Australian Stevedore" but with the name and ABN of Patrick Stevedores Holdings Pty Ltd (the second respondent). The letter submitted a separate tender "for Patrick Stevedores Operations No 2 Pty Ltd [the fourth respondent] to lease [premises]". In respect of the AAT submission, the letter stated that the submission was "subject to Patrick Board approval" which was presumably a reference to the first respondent. The letter stated that "senior executives of Patrick" were available to discuss and elaborate on "our offers" (semble, both the Patrick submission and the AAT submission). Mr Smithwick was a senior executive of Patrick but could not say in his s 155 examination which entity employed him. The Patrick tender itself was signed at Appendix D (to confirm financial information provided in the expression of interest) by Mr Wilson "on behalf of Patrick Stevedores", apparently there a reference to the fourth respondent since it was the entity that lodged the expression of interest. Following appendix D, the discussion of the proposed development refers only to "Patrick". An example is the first In Principle Agreement, recorded as being between P&O Ports Limited and "Patrick the Australian Stevedore". As noted above, that is a trading name owned by the third respondent but the next iteration of that document (the second IPA) named "Patrick Corporation Pty Limited" (presumably intended as a reference to the first respondent) and the implementation of the provisions of both arrangements required the involvement of the other Patrick respondents, which were ultimately controlled by the first respondent. In those circumstances, the case the Patrick respondents have to meet is that the arrangements were entered into on behalf of each of them. 52 In my opinion, the matters to which Mr Hutley points do not establish that the Statement of Claim is embarrassing or otherwise fails to plead the case properly. The ACCC has explained the reasons why it is unable to be more specific in identifying the members of the Patrick Group which committed particular acts or entered into certain arrangements. These are matters within the knowledge of the Patrick Respondents. In due course the evidence may reveal the true position. In the meantime there is no unfairness to the Patrick Respondents in pleading the case this way. 53 Nor, in my view, is any difficulty created by the allegation that one of the Patrick Respondents (Patrick) gave effect to the provisions of the alleged arrangement. The ACCC has chosen to confine the allegation to Patrick. There is no inconsistency between that allegation and the earlier allegations. The Patrick Respondents sufficiently understand the case they have to meet on this issue. Insofar as the agreement was implied, it was to be implied ( sic : inferred) from the facts and matters alleged in paras 63 to 91 and 132 to 157. Paragraphs 63 to 91 deal with competition in various markets prior to the first arrangement, while paras 132 to 157 plead events occurring after the making of the first arrangement. 56 Mr Hutley submitted on behalf of the Patrick Respondents that there is no room for the implication of provisions that are said to contravene s 45(2) of the TP Act. He contended that there is a fundamental inconsistency in alleging that a provision of an arrangement or understanding is implied. This is so because, by hypothesis, an implied provision is one to which the parties have not turned their minds, while an arrangement, for the purposes of s45(2), requires the parties to have a meeting of minds. 57 The argument put by Mr Hutley, in my view, to some extent reflects an ambiguity in the pleading created by the inappropriate use of the word ' implied '. I expressed the view at the hearing ( Ts 114-115 ) that the real difficulty with the pleading, so far as this particular complaint is concerned, is that the Statement of Claim leaves certain matters unclear. Or is it alleged that the arrangement was made as the result of other acts, or understandings reached, by the parties? If the latter, what were the acts or understandings? • Is it said that the provisions of the alleged arrangement are to be found entirely within the four corners of the First in Principle Agreement? Or is it alleged that the pleaded provisions have their source in some other transactions or understandings? 58 I indicated my view that these matters need to be clarified in any amended pleading. Mr Burnside responded that the ACCC is content to do so. This paragraph alleges that the Sydney terminal services market was a market in which, but for the pleaded arrangements, P&O Ports supplied or was likely to supply automotive terminal services (para 49.1). 60 The P&O Respondents sought further particulars of the allegation, specifically whether the allegation is that P&O Ports, but for the arrangements, was likely to supply automotive terminal services to anyone other than P&O Ports or an associated corporation. The ACCC's response can fairly be described as vague. I expressed the view ( Ts 127-128 ) that the pleading lacks material facts and is therefore deficient. They submit that the Statement of Claim fails to plead material facts, including the knowledge of the essential elements of the contravention and intentional participation: Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661. Mr Hutley, in his oral argument, pointed out that the complaint is of practical importance since Patrick is now a subsidiary of Toll, but the other four Patrick Respondents are within another corporate group. 62 Mr Hutley illustrated the point by reference to the pleading alleging contraventions by Patrick. They also follow a similar pattern in relation to the second arrangement (paras 262-263). The same form of pleading is repeated for each of those three Patrick Respondents. 64 Mr Hutley, supported by all other respondents, submitted that the standard form pleading leaves it unclear as to what is being alleged against each of the relevant Patrick Respondents. The expression ' in the premises ', so he argued, is of no assistance in identifying the material facts said to establish the requisite knowledge on the part of each of the Patrick Respondents. In effect, they are being asked to guess as to which facts or combinations of facts are being relied upon to establish accessorial liability. 65 None of the Patrick Respondents is an individual. Mr Bathurst, however, argued that the problems identified by Mr Hutley are even more acute so far as Mr Burgess and other individual respondents are concerned. He also pointed out that there is no allegation that Mr Burgess was aware of the precise material facts and circumstances constituting the contraventions of s 45(2): see Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 ; (2002) 118 FCR 236 , at 283 [162], per curiam. Mr Burnside contended that a number of specific allegations are made about the extent of Mr Burgess' knowledge of relevant matters. In response to a question, Mr Burnside stated that the case against Mr Burgess does not depend on which of the P&O Respondents happened to be a party to the pleaded arrangements, or to have given effect to the provisions of the pleaded arrangements. 67 I expressed the view ( Ts 136 ) that if this was the ACCC's case, the Statement of Claim should be amended to make it quite clear. The pleading should explicitly allege that by reason of specific matters known to Mr Burgess, he aided and abetted, or was knowingly concerned in, any contraventions that might be established against either or both of the P&O Respondents. The pleading should also identify unambiguously the matters known to Mr Burgess and the other individual respondents that are said to show that each was aware of the material facts and circumstances constituting the contraventions of s 45(2) of the TP Act. The pleading must identify unambiguously the matters known to each of the Patrick Respondents and the P&O Corporations alleged to have aided and abetted or been knowingly concerned in contraventions by other parties. I would expect the amended pleading to address the matters discussed at the hearing and in this judgment. 70 Although I have accepted some of the contentions advanced by the respondents, it is appropriate to order that the motions be dismissed. Unless any party files written submissions within seven days seeking some other costs order, the costs of the various motions should be costs in the cause. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | motions to strike out statement of claim pleading contravention of s 45(2) of the trade practices act 1974 (cth) whether question of law should be determined on a strike out application whether statement of claim pleads all material facts practice and procedure |
The formal contract was made in January 2005. It is a lump sum contract in excess of US$215 million and is for the development of certain oil and gas fields in the Krishna Godavari basin off the coast of the State of Andhra Pradesh in India. Additionally, onshore facilities were to be constructed at Odalarevu, Near Amlapuram also in Andhra Pradesh. Clough is an Australian company. ONGC is an Indian company. By instruments dated January 2005 ("performance guarantees"), each of the second to fourth Respondents ("Banks") equally between them guaranteed the payment of 10% of the contract price to ONGC. This equated to a little more than US$21.5 million. The Banks are Australian companies, and the guarantees were entered into in Australia, and any demands thereunder are to be received in, and acted upon, in Australia. The Construction Contract and guarantees contain Indian choice of law and forum clauses. ONGC made demands upon the Banks, HSBC Bank Australia Limited (HSBC) in Perth and upon the Commonwealth Bank of Australia (CBA) and BNP Paribas in Sydney under the performance guarantees, on 4 June 2007, which was a Perth public holiday. These proceedings were commenced the following day. The Construction Contract was terminated by ONGC by a facsimile letter to Clough of 4 June 2007. This injunction was extended on 12 June 2007 and on 19 June 2007, following an inter parties hearing, when an application by the Banks to discharge the injunction was dismissed. (b) On 7 June 2007 an ex parte interim injunction was granted against ONGC restraining it from taking further steps to demand or obtain payment, or renewing such claims or demands, from the Banks under the performance guarantees. The injunction was extended on 12 and 19 June 2007. (c) On 7 June 2007 e x parte orders for leave to serve ONGC ex juris were made. The first, it submits, is that the Construction Contact, properly construed, prohibits a demand being made in the prevailing circumstances. The second, alternative, basis is that even if the Construction Contract, by its terms, does not preclude making a demand under the guarantees, nevertheless ONGC has caused or contributed to the circumstances leading to the asserted breach of the Construction Contract by Clough, upon which ONGC relies to make a demand. The third is that alternatively, ONGC's demand constituted unconscionable conduct within the meaning of the unwritten laws of Australia, in contravention of s 51AA of the Trade Practices Act 1974 (Cth) ("TPA"). Finally, it is said, that the demand served by ONGC does not conform with the criteria required of a valid demand on the proper construction of the guarantees. Clough's claims against the Banks concern their intention to pay under the performance guarantees where such payment would constitute the Bank's being, directly or indirectly, knowingly concerned in ONGC's contraventions of the TPA. Injunctive relief is available against the Banks under s 80 of the TPA: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd (No. 2) [2007] FCA 927 at [11] - [14] . Injunctive and other relief would also be available under s 87(1A) of the TPA. The Banks are respondents and potentially liable in their own right. ONGC is not a necessary party to the claim against them. It is not necessary for Clough to join ONGC in order to establish its claims against the Banks : Matheson Engineers Pty Limited v El Raghy [1992] FCA 417 ; (1992) 37 FCR 6 at 9; Australian Competition and Consumer Commission v Albert (2005) 223 ALR 467 at [34]. Of course ONGC, whilst not a necessary party, is amenable as a "proper" party to be joined if in the jurisdiction. A "proper", as distinct from a "necessary" party, is a person who has sufficient connexion to the controversy that he or she might be joined, "but whose absence will not affect the constitution of the action": Edge, in the matter of Eco Panels Australasia Pty Ltd (in liq) [2007] FCA 30 at [12] . As a person who would be a proper party if it were in the jurisdiction, ONGC would be thus amenable to the courts jurisdiction under FCR O 8 r 2, Item 18 (like the former FCR O 8 r 1(g)): Quinlan v Safe International Försäkrings AB [2005] FCA 1362 at [24] , applying Costa Vraca Pty Ltd v Bell Regal Pty Ltd [2003] FCAFC 305. ONGC seeks, by its motion not only to have the injunction granted against it discharged, whether by reason of the fact that service is set aside with consequential discharge or by reason of the fact that the proceedings against it are bound to be referred to arbitration, but also seeks to have the injunctions granted against the Banks discharged. Clough concedes that ONGC, as a third party affected by these orders, is entitled to seek this relief. The application is supported by the affidavits of Simon Lee sworn 20 July 2007, Yelluru Jayarama sworn 21 August 2007 and Dean Grondal sworn 22 August 2007. The orders, including injunctive orders, previously obtained by Clough against ONGC were obtained on an ex parte basis, and supported by affidavit material which was uncontested. ONGC had not entered an appearance at that time. Only ONGC could contradict Clough's case that Clough was not in breach of the Construction Contract, or where it was in breach, that this was occasioned by ONGC's breach. Accordingly, the claim by Clough, that ONGC was in contravention of s 51AA of the TPA, proceeded on the basis of unchallenged fact, namely, that ONGC had called for payment under the performance guarantees when there was no proper foundation for doing so, because Clough was not in breach of the Construction Contract or if it was, then this was as a direct consequence of breaches by ONGC: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd (No. 2) at [7] and [39]. It was not necessary, then, to consider the question of whether a call by ONGC under the performance guarantees could be made merely upon the basis of a bona fide claim of breach or whether it required, by admission or by curial or arbitral determination, a demonstrated actual breach. This was because, whatever the proper construction of cl 3.3.3, on the uncontroverted facts, a prima facie case, or serious issue that s 51AA had been contravened was made out. Accordingly, I expressly left that question open: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd (No. 2) at [45]. For the first time in these proceedings, the question of construction requires to be considered. It is fundamental to the disposition of the Motion. The onus remains on the applicant to satisfy the Court, in light of those additional materials and facts and arguments, that leave should have been granted: Voth v Manildra Flour Mills Proprietary Limited [1990] HCA 55 ; (1990) 171 CLR 538 at 564. To maintain service ex juris , Clough needs to demonstrate a prima facie case for the relief claimed: FCR O 8, r 3(2)(c). The threshold for demonstrating a prima facie case is not high. It is whether on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 at [36] ; Western Australian v Vetter Tritter (1991) 30 FCR 102 at 110; Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd [2007] VSC 288. It requires the demonstration of an "arguable case", bearing in mind that this requirement is to be met at the outset of the action, "without the advantage of discovery and other procedural aids to the making out of a case": Ho v Akai Pty Limited (in liquidation) [2006] FCAFC 159 at [10] , [12], [37], [43]. The task of the Court, at this early stage of the proceedings, does not require evidence to justify a "finding" of the alleged TPA contravention: Bray v F Hoffman-La Roche Ltd at [96]. It is also for Clough to establish a case for the continuation of the injunction. No onus lies on ONGC to discharge the injunctions: Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 at 731. Accordingly, Clough requires to establish that there is a serious issue(s) to be tried. I will firstly deal with the orders sought under paragraph 1 of the Notice of Motion. This involves a consideration of whether Clough has established anew that it has a prima facie case to maintain the grant of service ex juris on ONGC and whether there are any serious issues to be tried to sustain injunctive relief, either pending a trial of issues in this Court, or were the matter to be referred to the Arbitrators in India, by way of a protective interim measure in aid of the arbitration. I will deal with each of these in turn. ONGC, the appropriate contradictor, but not previously before the Court, now raises this as a fundamental issue. It is appropriate, in my view, to seek to resolve the construction issue, despite the interlocutory nature of the motion. The hearing engaged some three days. Full argument was presented on the issue by both sides. There was no suggestion that the evidence before me, bearing on the construction issue, was other than complete. The area of contest is neither beset by difficulty or novelty: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535; Hitchcock v TCN Channel Nine Pty Ltd [2000] Aust Torts Reports p81-550 at [22]-[26]. This irrevocable Performance Bank Guarantee shall be drawn in favour of the Company and shall be valid initially up to a period of Scheduled Completion Date for the Works of the Contract and warranty period plus sixty (60) days. However if the delay is attributable to the Company, Company shall bear the cost of extension of such performance guarantee for such extended period at the normal bank rates as applicable to International Banking procedures. In case Contractor fails to furnish the requisite Bank Guarantee as stipulated above, then the Company shall have the option to terminate the Contract and forfeit the Bid security amount and no compensation for the Works performed shall be payable upon such termination. Upon completion of Works the above said guarantee shall be considered to constitute the Contractor's warranty for the Work done by him or for the Works supplied and their performance as per the specifications and any other conditions against this Contract. The warranty shall be in force for 12 months, from the completion date as provided in Clause 5.10.2 and 5.10.3. The principal issue is whether the words "failing to honour" mean that it is established as a fact that Clough has failed in some respect(s) to honour its contractual commitments or whether they bear a wider meaning which gives ONGC an entitlement to call upon the performance guarantees where it has simply asserted or claimed that Clough has so failed. The construction spectrum at one end posits that the words "failing to honour" are incapable of accommodating any meaning involving an assertion or claimed breach, and that they must, inflexibly, apply to established breaches, and at the other end, that "failing to honour" must always and invariably mean an " asserted or claimed failure to honour". It points to a number of factors in its written submissions as informing the construction process. I set these out below. First, ONGC may withhold approval of progress payments, providing that it states the reasons for withholding payment. Subject to stating reasons for withholding approval of progress payments, if Clough is to recover the disputed money, it must go to arbitration unless ONGC chooses to remove its objection. See cll 3.2.3-3.2.5 and 8.3.5. If, at the end of the arbitration, Clough proves an entitlement to the money, it may recover it, but without interest: cl 1.3.2. These provisions tend against the idea that the performance guarantee is required to protect ONGC in respect of any and all asserted or claimed breaches of contract. Secondly, one consideration that might be brought to bear in deciding whether a claimed or asserted entitlement to payment is intended to be sufficient, is where the claimed or asserted entitlement is made in the context of an independent party having first certified that a certain state of affairs exists. Where the parties have entrusted, by agreement, an independent person with the task of being satisfied and certifying that a certain state of affairs exists, and the contract then provides for the payment of money if that state of affairs exists, a claimed entitlement to payment may be inferred to be sufficient: Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd (1998) 3 VR 812 at 822. It would be unusual, it was said, for an entitlement, particularly for A$25 million, to arise on mere assertion of breach, unconnected with some specific independent certification process, subject to one matter, discussed below. Thirdly, another consideration is that if the contract provides, expressly, for a right to deduct certain moneys, i.e. a right of self-help, it may be inferred that those particular moneys may be payable on an asserted or claimed entitlement: Fletcher v Varnsdorf at 822. There are, in this contract, specific provisions giving ONGC the right to deduct moneys in the period prior to practical completion. They are found in cll 5.9.7.2 and 7.3.9. Notwithstanding the absence of a certification provision, and the onerous terms of cl 5.9.7.2, it may be inferred that the parties intended Clough to pay those amounts on assertion of breach, and for the performance guarantees to be called for that purpose, leaving Clough out of pocket whilst it fought out any dispute about that in an arbitration. Fourthly, in the period after practical completion, a specific provision, similar to cl 5.9.7.2, also requires Clough to pay moneys to ONGC irrespective, it seems, of any dispute as to the validity of ONGC's claim. This is cl 6.1.2. Again, the provision is onerous in that it purports to require Clough to pay costs associated with reinstatement of the works simply upon a complaint of non-conformity by ONGC. Again, that clause gives ONGC a right to deduct moneys, irrespective of the pendency of any unresolved dispute (by arbitration or otherwise), concerning ONGC's claims that the works are non-conforming. Again, the guarantees are likely to have been intended by the parties to operate on the strength of a claimed entitlement in this circumstance. Fifthly, cl 6.3.2 is another provision which gives a right to deduct. In the present circumstances, because there has been no agreed extended date for practical completion, it applies where there is an agreement or arbitral or other determination that ONGC has a right to recover liquidated damages. Sixthly, the magnitude of the guarantees, totalling A$25 million, needs to be considered in the context of a construction which requires that any asserted breach, however trivial, or ephemeral, could see the contractor deprived of A$25 million working capital. That, it is said, would be a peculiar result. Seventhly, bearing in mind the above considerations, cl 3.3.3 operates to allocate risk to Clough in specified circumstances, and otherwise provides ONGC with substantial security by way of recourse to the Banks, in the event that Clough is slow to, or is unable or unwilling, to pay ONGC, where ONGC has established that Clough has failed to honour its commitments under the contract. Clough further submits that to the extent that this is relevant this construction also produces a construction capable of harmonious application with Appendix III. The pro-forma in Appendix III itself, again, conditions a call on "breach", not " asserted or claimed breach". The words in Appendix III relating to payment "notwithstanding any dispute(s) pending before any... Arbitrator" and "without demur... and/or without reference to the Contractor" are intended to apply to the particular circumstances specified in the contract where the parties have required Clough to discharge an obligation, irrespective of any underlying dispute about it. This, for example, would relate to the various contractual provisions involving a right to deduct monies by ONGC. Accordingly, in summary, Clough submits that on a proper construction of the Construction Contract, the performance guarantees are capable of being called on in particular circumstances. Clause 3.3.3 requires to be construed in the context of the document as a whole. This includes the context of Appendix III of Annexure A: see, for example, Re Media, Entertainment and Arts Alliance, Ex parte the Hoyts Corporation Pty Limited [1993] HCA 40 ; (1993) 178 CLR 379 at 386-387. The performance guarantees prescribed by the Construction Contract accordingly promise payment even where disputes, which could include disputes as to whether or not Clough had failed to honour any of its commitments under the Construction Contract, are pending before a Court or arbitrator. This, in my opinion, is a powerful indicator that a mere claimed breach of contract, which is not fraudulently asserted is sufficient to trigger entitlement to call on the performance guarantee. Clough does not assert that ONGC has made a fraudulent claim. This construction is reinforced by the fact that, under the prescribed terms of the guarantees, the Banks are required to pay "without any demur, reservation, contest or protest and/or without any reference to the Contractor". Under the terms of the performance guarantees, each of the Banks was entitled to treat the written demand by ONGC as conclusive and binding as to the amount due and payable, notwithstanding any dispute pending before any Court, Tribunal, Arbitrator or any other authority. Liability under the performance guarantees was absolute and unequivocal. Accordingly, the demands in this case are equivalent to the certificate provided by the National Australia Bank (NAB) to HSBC, certifying in effect that the conditions of the letter of credit had been met: Ideas Plus Investments Ltd v National Australia Bank Ltd (2006) 32 WAR 467 at [14]. The Western Australian Court of Appeal held that the certificate "amounted to no more than an implied representation that it had reasonable grounds for issuing the certificate" at [51]. The reasonable grounds were the bona fide belief by NAB that the conditions were satisfied at [55]. The written demands are also analogous to the requisite statutory declaration in Fletcher Construction v Varnsdorf at p 830 to the effect that the amount claimed represented an amount(s) remaining unpaid to the owner. This was so even where the amount was disputed by the contractor. If it were the case that, on its proper construction, ONGC could not call on the guarantees until there was an admitted or established breach of contract, the time at which an arbitral tribunal or court might determine that matter could well be after the performance guarantees had expired: cf Ideas Plus Investments at [39] per Steytler P. Such a construction does not, in my view, make commercial common sense: McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579 at [22] and [23] per Gleeson CJ. The performance guarantees secured the Contractor's 12 month warranty under the Contract. Assume a major defect was discovered by ONGC late in the Warranty period, say only one month prior to expiry of the performance guarantees, but was not acknowledged by Clough as resulting from any failure by it to honour its commitments under the Construction Contract. On Clough's construction, it would not be open to ONGC to call on the performance guarantees until a Court or Tribunal had found a breach of contract. However, it is most unlikely that any such issue could be determined, especially in the context of a complex construction project, within a one month time frame. By the time it had been determined, in ONGC's favour, the guarantees would have expired, and the intended contractual security would be lost. I consider that a commercial object of the requirement for performance guarantees under the Construction Contract is to allocate the risk of a party being out of pocket pending the resolution of any dispute and that ONGC was entitled to call upon the guarantees even where a genuine dispute existed, as to whether or not Clough was in breach and whether or not damages had been suffered: Fletcher Construction v Varsdorf at p 821 per Charles JA and at p 826 per Callaway JA. That case concerned irrevocable standby letters of credit. Nonetheless it is of assistance, in principle, in approaching the construction of the performance guarantees, which informs the construction of cl 3.3 as a whole and, for present purposes, cl 3.3.3 in particular. Clough was required by cl 3.3.1 to furnish to ONGC within two weeks of signing the Construction Contract an "unconditional and irrevocable" performance bank guarantee for the due performance of the contract in terms of a proforma guarantee set out in an appendix to the Construction Contract. This lends force to ONGC's construction: Fletcher Construction v Varsdorf at p 822 per Charles JA. The supplier in Bachmann did not seek to establish any case of fraud on the purchaser's part but relied only on the contractual qualification upon the purchaser's powers under the general conditions of the underlying contract to demand payment under the letter of credit. It was conceded that the clause referred to constituted a contractual qualification on the purchaser's powers in relation to the security. This is to be contrasted with earlier Australian cases where the initial question was whether the underlying contract, on its proper construction, qualified the security holder's powers to claim under the security. The only point in the appeal as his Honour put it was as to the content of the qualification at [30]. His Honour canvassed a number of cases in which the proper construction of the language contained in the standby letter of credit, "... until the party becomes entitled to exercise a right under the contract ..." had been similarly discussed. Those authorities range from requiring no more than a claimed entitlement which is not specious or fanciful: Hughes Bros Pty Ltd v Telede Pty Ltd (1989) 7 BCL 210 to requiring that the holder of the security establish, whether by litigation or arbitration, an actual entitlement to payment of the moneys: Mitsui Kensetsu Corporation Australia Pty Ltd v State of South Australia (unreported Qld Supreme Court, 9 August 1990 per Byrne J). Ultimately, as a matter of construction of the particular standby letter of credit, his Honour concluded that as between the purchaser and the supplier, the purchaser was entitled to have recourse to the security where according to a bona fide claim made by the purchaser monies were due to it from the supplier which exceeded any monies due from it to the supplier at [53]. In Ideas Plus Investments Steytler P, with whom McLure and Buss JJA agreed, concluded that the NAB was empowered to claim under a letter of credit granted by HSBC so long as it had a bona fide belief that the conditions were satisfied. The certificate by the NAB issued to HSBC certifying in effect that the conditions of the letter of credit had been met was only a representation of such a bona fide belief and perhaps that there were reasonable grounds for such a belief. [55]-[57], [105] See also Fletcher Construction v Varsdorf at p 830. Steytler P with whom McLure JA agreed held that the basis for the payment made by HSBC pursuant to its independent obligation to NAB under the letter of credit was the provision by NAB of a certificate in the required terms. It was, his Honour found, the presentation of that certificate, not the truth of the facts certified, which conditioned HSBC's obligation to pay. The provision of cll 3.2.3-3.2.5 and 8.3.5 do not, in my view, assist the construction contended for by Clough. Those concern the contractual entitlement of ONGC to withhold approval and payment of progress claims. That entitlement provides a form of security to ONGC where there is a dispute because, pending arbitration, it is not required to pay the disputed amounts to Clough. It does not inform the question of the circumstances in which the performance guarantees may be called upon. Nor do I consider that the absence of an independent certification as to the existence of a certain state of affairs to trigger the obligation to make payment advances Clough's argument on construction. That is but one type of mechanism for payment in a contract. Its absence does not assist the construction of this contract. The fact relied upon by Clough that ONGC has the right variously to deduct monies (e.g. cll 5.9.7.2 and 7.3.9) or that Clough is required to pay certain monies, irrespective of the existence of a dispute (e.g. cl 6.1.2) actually serves, in my opinion, to reinforce the view that one of the purposes of the performance guarantees is to allocate the risk to which I have referred: Fletcher Construction v Varsdorf at p 829 per Callaway JA, Batt JA concurring. The entitlement of ONGC, under cl 6.3.2, to payment of contractually ascertained and agreed liquidated damages equal to 3% of the total contract price for each month of delayed completion of the entire Works or a part of these, and to recover these by a call upon the performance guarantees, is also of no assistance to Clough's contentions. The clause is but an example of a particular circumstance when the performance guarantees may be called upon and puts that entitlement beyond doubt. It does not, in my opinion, assist Clough's construction of cl 3.3. Clough submits that ONGC's construction would permit a call on the full amount of the performance guarantees, approximately US$21.5 million even in the case of a trivial or ephemeral breach, and that this would be a peculiar result. As to this, it should be recognised that equity will generally intervene to ameliorate the application of a legal right if it is employed capriciously or unreasonably or harshly, or oppressively such as to be unconscionable: Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13 ; (1973) 130 CLR 575 at 587-588 and 590-591; NC Seddon & MP Ellinghaus, Cheshire & Fifoot's Law of Contract (8 th Aust. ed) (2002), [20.9]. This doctrine, although distinct from, is very similar to, the implied contractual duty of good faith: Walker v ANZ Banking Group Ltd (No 2) (2001) 39 ACSR 557 , [93]-[96], esp. [96]; Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301. Section 51AA of the TPA likewise may afford relevant protection. This however does not mean that the entitlement at law to call on the whole amount under the performance guarantees should be read down from what is otherwise a construction which is in harmony with the contract as a whole and which in its context produces a commercially sensible meaning. Furthermore, to the extent that the calling up of the performance guarantees resulted in an overpayment to ONGC then there would be an entitlement in Clough to an 'accounting' in due course from ONGC: Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 4 All ER 563 at 571. Accordingly, in my opinion, upon the proper construction of cl 3.3.3, ONGC was entitled to call on the performance guarantees where it had a bona fide belief in the genuineness of its claim that Clough had failed to honour commitments under the Construction Contract. Of course, even on Clough's case, ONGC was entitled to call on the performance guarantees in the case of demonstrated breach, not caused by ONGC's breach. I will consider that important question in the context of the following analysis of the claims by Clough that ONGC, in making demands, under the performance guarantees was acting in contravention of s 51AA of the TPA. It follows that I do not consider there to be a prima facie case or a serious issue to be tried as to the construction contended for by Clough. However, there are examples of demonstrated breach as well as merely asserted breach. These are vital components for well-completion. Clough accepts that these have not been delivered although it has largely been paid for them. (b) Clough has failed to undertake certain shallow water works and onshore works separately from the off-shore works. However, it is said by Clough that these breaches of the Construction Contract were caused by ONGC itself being in breach and that it would be unconscionable within the meaning of s 51AA of the TPA in those circumstances, for ONGC to call upon the performance guarantees. In particular, Clough contends that the delay in its providing the 'Christmas Trees' was caused by breach on the part of ONGC relating to the 'DHPTT Cards'. It also asserts that ONGC was in breach in other respects, such as failing to effect well-completion in relation to the deep water work and that ONGC lost the first 'Christmas Tree' and certain tools, all of which contributed to delays of the Project. The failure to undertake shallow water works, likewise, Clough says, was occasioned by breaches on the part of ONGC. It is not possible to resolve these factual questions and whether those asserted breaches were occasioned by ONGC's own breaches. This in turn gives rise to a prima facie case or a serious issue to be tried, whether based on those asserted breaches, ONGC acted unconscionably contrary to s 51AA of the TPA in calling up the performance guarantees: Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158 at 164. However, this does not determine the matter. ONGC contends that Clough is indisputably in breach of its contractual obligations in two further important respects. These concern Clough's obligations to extend the validity of the performance guarantees and to provide documentary proof that relevant insurance cover is being maintained by Clough. ONGC submits that these obligations exist, even assuming that the need for the extensions is the result of breach(es) on its part. I now turn to consider each of these. However if the delay is attributable to the Company, Company shall bear the cost of extension of such performance guarantee for such extended period at the normal bank rates as applicable to International Banking procedures. Performance guarantees play a critical part in international commerce and in international construction contracts, in particular. So much has been recognised by the courts on many occasions: the authorities are collected by Steytler P in Ideas Plus Investments at [32]-[34]. They were, objectively viewed, of critical importance to ONGC under the Construction Contract. This is manifest in two ways. Under cl 3.2.1 of the Construction Contract, no payments become due and payable to Clough until Clough has furnished the necessary performance guarantees and the Certificate of Insurance to ONGC. This would extend to performance guarantees whose validity was required to be extended under cl 3.3.2. Furthermore, as its option, ONGC was entitled, under cl 3.3.3, where Clough failed to furnish the performance guarantee(s) to terminate the Construction Contract. Completion Date of the Works under the Construction Contract was 15 April 2006 (cll 2.2.5 and 6.3.1). The warranty period under the Construction Contract is 12 months from the date of issue of the Certificate of Completion and Acceptance (cl 6.1.1). Any performance guarantee was to be initially valid up to 14 June 2007. This was by virtue of the provisions of cl 3.3.1, which provide for the period of validity to extend from the Completion Date, plus the warranty period and a further 60 days. Each performance guarantee is expressed to be valid until 14 June 2007. In the event that completion is delayed beyond the Scheduled Completion Date, Clough was liable to extend the validity of the performance guarantees accordingly, so as to maintain the same period of validity beyond that date. I will now examine the course of conduct between Clough and ONGC concerning the extension of the Completion Date and in turn the performance guarantees. By correspondence commencing on 20 March 2006, Clough requested from ONGC an extension of time for completion of the work "beyond January 1, 2007". There were further requests made by Clough in correspondence to this effect. By letter from ONGC to Clough dated 15 April 2006, and in response to these requests, ONGC provisionally extended the time for completion of the works to 31 January 2007 without prejudice to its rights to recover liquidated damages, in accordance with the provisions of the Construction Contract. By letter dated 3 June 2006, ONGC required Clough to extend the performance guarantees as required under the Construction Contract. This demand was repeated by letter to Clough from ONGC dated 16 June 2006. On that same date, Clough in a letter to ONGC indicated that overall Project commissioning could only be implemented by 11 April 2007 and that the new Schedule Completion Date should be 11 July 2007. By a letter dated 13 July 2006, Clough referred to its ongoing request for a reasonable extension of time. The minutes of a meeting convened at the request of Clough and held between it and ONGC on 21 July 2006 in New Delhi disclosed that Clough agreed to adopt a "proactive approach to complete the Project expeditiously within the time frame set out i.e. by the end of the working season 2007", which it was common ground, was the end of April 2007. By a letter dated 29 July 2006, ONGC again required Clough to extend the performance guarantees as required under the Construction Contract. This request was repeated in correspondence from ONGC to Clough dated 12 August 2006. In minutes of a meeting held between the parties dated 23 August 2006, it is noted that Clough was to review certain delivery dates critically and to seek ways to improve upon these such that the completion of the Project in April 2007 was not compromised. By a letter from ONGC to Clough dated 4 September 2006, following meetings at a senior level between the two parties, ONGC advised Clough that the time for completion of the Project was extended to 13 April 2007. By correspondence dated 7 October, 2 and 6 November 2006 and 29 March 2007, ONGC required Clough to extend the performance guarantees as required under the Construction Contract. Contract clause 3.3.2 provides for the extension of the PBG "to make it valid for 12 months plus 60 days from the actual date of completion of Works". The date of actual completion of Works is not now known nor can it be known until after the Way Forward has been determined and agreed between the parties. Rather than pre-empt the outcome of these deliberations by extending the validity of the PBG, CEL will wait until an agreement is reached concerning the Way Forward, and to then act accordingly. This latter request was repeated in correspondence from ONGC to Clough dated 14 April 2007. By letter dated 16 April 2007, Clough set out what it described as a 'road map' to meet certain objectives towards the completion of the Works. As part of the proposal, Clough said that it would require the three performance guarantees held by ONGC to be returned but that, in recognition that work would still be required to complete the onshore plant, Clough was willing to provide a performance guarantee to the value of 10% of the remaining work, which was US$2.17 million. By letter dated 1 June 2007, Clough's chief executive wrote to ONGC. I am seeking agreement from my Board to extend the bonds to ensure we have sufficient time to conclude our negotiations. This action is of course subject to your agreement to reach a negotiated exit solution as was the direction from Mr Bose at my last meeting. The performance guarantees were never extended beyond their original expiry date of 14 June 2007. Clough contends that the extension of time for the scheduled completion date of the Works by ONGC to 13 April 2007 was unilateral and was not the subject of mutual agreement between the parties. This is set out in its letter of 20 September 2006 to ONGC. That letter concluded by stating that Clough was currently in the process of developing a revised Project Schedule in consultation with ONGC, and that Clough looked forward to working with ONGC in successfully completing the Project. However, it was Clough who had earlier requested an extension of time by its letter dated 20 March 2006 for a completion of the work beyond 1 January 2007. It was in response to this that ONGC made a provisional extension of time to 31 January 2007 which met Clough's then request. I do not consider that the reservation of rights by ONGC to recover liquidated damages, or its asserted failure to acknowledge its own breach, detracts from the agreement reached between the parties extending the date for Practical Completion of the Project. Furthermore, whatever be the status of ONGC's letter of 4 September 2006 on the question of the date for Practical Completion, at the meeting of 21 July 2006, in New Delhi, to which I have referred, Clough agreed to adopt a proactive approach to complete the Project by, in effect, the end of April 2007. Even if that were read to mean not before the end of April 2007, nonetheless Clough was, in my opinion, obliged to extend the existing performance guarantees within a reasonable time from 21 July 2006, and which would be valid until the end of June 2008, being a period of one year plus 60 days from the end of April 2007. Accordingly, in my opinion, Clough was obliged under cl 3.3.2 of the Construction Contract to extend the validity of the performance guarantees so that they would be valid for 12 months plus 60 days from the date of completion of Works as varied. On the basis of the two variations to which I have referred, Clough, within a reasonable time of the date of each variation, was required to extend the performance guarantees to 31 March 2008 and June 30 2008 respectively. What is a reasonable time is a question of fact. It depends upon the circumstances and its limit is determined by what is fair to both parties: Perri v Coolangatta Investments Pty Ltd [1982] HCA 29 ; (1982) 149 CLR 537 at 567-568. I do not accept Clough's submissions that the date for Practical Completion was at large and therefore that cl 3.3.2 could not be complied with because the duration of the extension was not clear. The obligation under cl 3.3.2 is not so conditioned. As a matter of fact, the performance guarantees were never extended prior to the termination of the Construction Contract. Accordingly, whatever view is taken as to the obligation under cl 3.3.2 to extend the validity of the policies, Clough was in breach of this provision. These were to maintain cover in certain respects from the commencement of the Works until the date of issue of the Certificate of Completion and Acceptance and in certain other respects during the guarantee period. Insurance cover was required amongst other things, for 'Cargo Trains' and 'Contractors All Risks' as well as 'Third Party' (cl 7.3.6). The Contractor shall wherever required produce to the Company the policy(ies) of insurance. . . . This was in effect a request for copies of the policies under cl 7.3.8. ONGC also sought copies of relevant "Certificates of Currency" which, in effect, were the Certificates of Insurance referred to in cl 7.3.8. However, Clough never provided copies of the requested policies of insurance valid for the extended dates for completion of the Works and in turn the extended warranty periods or relevant Certificates of Insurance. It was entirely reasonable, at the time of the call on the performance guarantees, for ONGC to infer from the non-provision of these policies or the Certificate(s) of Insurance to it that Clough had failed to honour its obligation to secure their extension. In any event, Clough was, in this important respect, in breach of its contractual obligations to provide those documents whatever the actual position was as to the currency of the relevant policies. The documents were never produced by Clough. The requirement to provide the certificate(s) of insurance was of considerable significance. The policies were for the benefit not only of Clough but also ONGC. As was the position with the performance guarantees, by cl 3.2.1, no payments became due and payable to Clough under the Construction Contract unless Clough furnished to ONGC the Certificate of Insurance as required by cl 7.3. First, it failed to extend the performance guarantees as required under cl 3.3.2. Secondly, it failed to deliver copies of relevant policies of insurance and the Certificate(s) of Insurance covering the extended Completion date(s) and Warranty Period(s). Whatever may be the position in respect of other breaches, the actual breaches concerning the performance guarantees, the extended policies of insurance and the Certificate of Insurance are in a different category. Clause 3.3.2 imposes an obligation upon Clough to extend the validity of the performance guarantees in the event completion of the Works is delayed beyond the Scheduled Completion Date " for any reasons whatsoever". The only concession, in that respect, to a situation where the delay was caused by ONGC is that it would have to bear the cost associated with obtaining such extension(s). The obligation implicitly contemplates that the delay in completion may have arisen as a result of breach by ONGC. Whatever other consequences might flow contractually or otherwise as a result, Clough remained obligated to extend the validity of the performance guarantees, and in turn to produce to Clough when asked, copies of the relevant policies and Certificate(s) of Insurance covering the extended completion date(s) and warranty period(s). It follows that, in calling up the performance guarantees in respect of those breaches, ONGC was acting according to a legal entitlement under cl 3.3.3 untainted by conduct which could even arguably be characterised as unconscionable in contravention of the TPA. The position is the same in relation to the breach by Clough of cl 7.3.8 concerning the insurance documents. Accordingly, I am not persuaded that there is any prima facie case or serious issues to be tried in respect to the alleged contraventions of s 51AA of the TPA in those respects. This is sufficient to dispose of those questions. It is of no consequence that a prima facie case and serious issues to be tried arose in other respects. The performance guarantees it submits, disclose that a demand for all or less than the full amount of the sums under them is contemplated in each case. Taking the HSBC guarantee as illustrative, the words "any/all monies to the extent of US$7,178,371.86" , as well as "Any such demand ... shall be conclusive and binding, without any proof, on the Bank as regard the amount due and payable ..." were said to make good that proposition. I accept that the performance guarantees each contemplate that less than the full amount guaranteed might be the subject of a demand. However, each also contemplates a demand for the full amount. A demand for the full amount was made in each case predicated on an unequivocal statement that Clough was in breach of the Construction Contract. I do not consider there to be any serious issue or prima facie case as to the invalidity of the demands. It is not necessary to consider the alternative orders sought by ONGC under para [2] of its motion because of the conclusion to which I have come in relation to paragraph [1] of the motion. In those circumstances, there is no basis for the continuation of injunctive orders as against the Banks. There cannot, given my conclusions in relation to ONGC, be any serious issue of statutory accessorial liability as against the Banks. This obviously is not to inform my discretion as to whether to grant injunctive relief. I have found that there is no serious issue to be tried and accordingly, the exercise of my discretion does not arise. It may be, in due course, that the strength of Clough's case will require to be considered in relation to the balance of convenience: Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 ; Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 50 ALR 428 per McLelland J; Ingersoll-Rand (Aust) Ltd v Industrial Rollformers Pty Ltd [2000] NSWSC 177. This would be particularly so in this case, as the refusal of injunctive relief has the practical effect of a final determination of the issues: Kolback Securities Ltd; Cayne v Global Natural Resources plc [1984] 1 All ER 225. For the present however, such a consideration is not necessary. Should it become so, these findings would then arise for reconsideration. In the reasons for judgment in Clough Engineering Limited v Oil and Natural Gas Corporation Ltd [No 2] [2007] FCA 927 at [46] - [66] , I concluded that the balance of convenience strongly favoured the grant of injunctive relief. As I have said, ONGC, although a party, had not then appeared. This, importantly, meant that there was no party to contradict the existence of serious issues to be tried, as contended for by Clough. I formed the view that to have discharged the injunctions could very well lead to irreparable harm to Clough, its shareholders, employees and third parties. I concluded that damages would not be an adequate remedy. [66] The position has now changed. ONGC has appeared, put on evidence, cross-examined and advanced submissions through counsel. Clough's financial circumstances have also changed. The changed position is disclosed by a further affidavit of Mr Simons sworn on 7 September 2007. The expression "G1 contract" as used in this affidavit is a reference to the Construction Contract. (b) The proposed capital raising, which will be voted at the AGM in November 2007, will raise $5.6 million from Murray & Roberts through a share placement, $39.4 million through a renounceable rights issue to all shareholders, ie a total of $45 million. (d) It is a misnomer to suggest that Clough had $82.9 million of cash available to pay the performance guarantees in that, as at that point in time, Clough's current assets were $351.1 million and its current liabilities were $354.9 million. Clough's balance sheet position is far from healthy. (e) Although the recapitalisation will allow Clough to deal with cash flow issues flowing from the BassGas and Construction Contract disputes and provide the necessary support for capital expenditure, Clough has also announced its intention to dispose of non-core assets. It can be readily inferred that this asset disposal is necessary to repay the Banks, as they have required repayment, as is made clear in [6] of Mr Simons' affidavit of 7 September 2007. It also cannot be predicted, with confidence, that this asset disposal program will be successful. Therefore, Clough submits that its financial position is far from secure. It has a large number of creditors to pay, and a shortfall in payments from ONGC. It has been required to repay the Banks and they are unwilling to provide further funding. It is not disputed that Clough has performed around 82% of the work under the contract and has only received around 66% of the contract price. Clough has had to raise short term debt from its shareholder, Murray & Roberts, and has sought to recapitalise. The recapitalisation will be used as to $25 million to repay the short term debt facility. Clough has, as required by the relevant accounting standards, provided for a payment under the performance guarantees but, regardless of that provision, Clough's cash position and its financial position is far from healthy. Also, as to the $160 million loan guarantee facility, it is just that, and this has not given Clough an extra $160 million but rather an ability to raise $160 million on Murray & Robert's guarantee specifically to support the facilities relating to Clough's vessels. $160 million has not been raised and, in the circumstances, is difficult to raise. Mr Simons' evidence given during his cross-examination requires to be understood bearing the above in mind. (b) There is a difference between available debt facility limits and limits for other facilities (including for contingent instruments, foreign exchange facilities, hedging facilities). No cash is available under these latter types of facilities. (c) The fact that Clough had excess capacity with respect to these other facilities (e.g. to secure other performance guarantees) does not mean, and says nothing about, Clough's ability to pay the Banks on the encashment of the subject performance guarantees. (d) Under the relevant accounting standards, Clough was required to make provision for the anticipated loss on the G1 contract, including by reason of the fact that the G1 contract has been terminated and the performance guarantees have been called. When provisioning, it can readily be inferred that an attempt has been made to provide for the potential loss (as required by the accounting standards) offset against potential gains (through mitigation by, for example, selling the equipment the subject of the G1 contract). There are currently proceedings in India relating to equipment the subject of the G1 contract. In those proceedings, ONGC seeks a delivery up of the equipment, and there is an issue about what ONGC is required to pay. If the equipment is required to be delivered without payment or without sufficient payment then it can readily be inferred that Clough's provisioning would not have fully accounted for its actual loss. (e) The loan guarantee facility of up to $160 million is not available to Clough in terms of cash. (f) The suggestion that the provisioning was to pigeonhole or isolate the economic impact of the G1 contract misstates the position by failing to recognise the fact that the accounting standards required such provisioning. (g) The suggestion that credit approval has not been withdrawn fails to have regard to the evidence that the Banks require repayment (see also: [6] of Mr Simons' affidavit of 7 September 2007). (h) The suggestion that Clough had other performance guarantees or bond facilities fails to have regard to the fact that these facilities do not generate new cash but enable performance guarantees or bonds to be provided on the basis that if they are called, Clough has to pay. In paragraph 18 of Mr Simons' affidavit of 7 September 2007, he deposes to the fact that if the performance guarantees were paid, Clough would be prevented from achieving some or all of its objectives, with the consequences described in Mr Simons' 28 May 2007 affidavit. He was not cross-examined on this paragraph. Clough will likely be prevented from achieving at least some of its objectives if it were required to pay the performance guarantees. Clough submits that there is no evidence that ONGC will be affected in any relevant way. Further, as at July 2007, as notified to Clough in September 2007, Atradius, Clough's underwriter supplier's for insurance credit facilities, withdrew credit support on grounds including Clough's dispute with ONGC (and its call on the performance guarantees), and the fact that Clough is now dependent on support from its largest shareholder Murray & Roberts, which support is itself subject to conditions. Finally, Clough submits that its reputation would be affected by a call and payment under the subject performance guarantees and that this is not gainsaid by the assertion that its reputation survived the issues relating to the BassGas dispute and by the assertion that the subject dispute has been publicised. What cannot be known, Clough says, is the extent to which it lost other projects because of negative publicity relating to the BassGas dispute. What also cannot be known is the extent to which Clough's reputation will be further dented if the subject performance guarantees are required to be paid. That is the very reason, submits Clough, why the potential irreparable damage to reputation needs to be avoided --- it cannot easily be a matter of computation at a later time. (b) Clough's submissions in this respect are unsupported by the evidence, and contrary to Clough's written disclosures to the market, including its Annual Report published and filed in the course of the hearing of the proceedings. (c) The Court must accept Clough's publicly disclosed statements and position. Murray & Roberts will provide loan facilities and guarantees for up to US$185 million and in addition the Company has plans to raise $45 million through a rights issue and placement that will require shareholder approval at the upcoming Annual General Meeting. I also take this opportunity to thank our major shareholder Murray & Roberts for their strategic advice and direction during the year. Their financial assistance has of course been invaluable to the Company and will enable Clough to implement our growth strategy . Looking forward, Clough is now moving into a position where the Company has a tremendous opportunity to expand in its key markets . The operational business has been profitable for the past 18 months and the Company will continue to focus on successful project execution . With a recapitalisation approved by the Board, and access to additional funds , the Company will be able to implement a growth strategy that will see us gain access to growing markets that are eminently suited to our core strengths and expertise. With the refinancing package in place and a dedicated talented workforce we are equipped for growth . The balance will be financial from the recapitalisation proceeds. In assessing the level of cash to be raised, we have recognised that the Company needs to reduce working capital loans currently provided by Clough's banking group. Additionally, we have proposed to raise further cash through the sale of assets which are not core to the group's focused strategy. This process and the expected cash to be generated from further Property business disposals will allow the Company to regularise debt levels and provide the necessary cash resources to enable the group to respond to the growing opportunities in the oil and gas market . The Company has also announced its intention to upgrade the Java Constructor vessel and to acquire additional offshore work vessels. Our banking group maintained their support throughout the year and whilst we remain in default of our banking covenants (driven by the provisioning) the banks have welcomed the proposed recapitalisation announcement . Cash generated in the year was neutral, however agreements signed will generate net cash inflow of $31m in the current year of which $6m will pay down specific Property related debt. The Company announced on 12 July 2007 its intention to recapitalise the business. The funding structure has now been finalised and will comprise a fully underwritten renounceable rights issue at 36.8 cents per share to raise $39.4 million and a placement to Murray & Roberts at 36.8 cents per share to raise $5.6 million. The Company has also agreed a $25 million debt facility and a $160 million loan guarantee facility both provided by Murray & Roberts. The recapitalisation will allow the Company to deal with the cash flow issues arising from the BassGas and G1 disputes and provide the necessary support for the capital expenditure programme announced by the Company in February 2007 . Additionally the Company announced its intention to complete the disposal of non-core assets, the details of which are being worked through. The Company announced on 12 July 2007 its intention to recapitalise the business. The funding structure has now been finalised and will comprise a fully underwritten renounceable rights issue at 36.8 cents per share to raise $39.4 million and a placement to Murray & Roberts at 36.8 cents per share to raise $5.6 million . The Company has also agreed a $25 million debt facility and a $160 million loan guarantee facility both provided by Murray & Roberts. The recapitalisation will allow the Company to deal with the cash flow issues arising from the BassGas and G1 disputes and provide the necessary support for the capital expenditure programme announced by the Company in February 2007 . Additionally the Company announced its intention to complete the disposal of non-core assets , the details of which are being worked through. This is inconsistent with a picture of a company in the throes of financial despair. (f) Clough's characterisation of the statement that the subject dispute has been publicised as " assertion " is falsified by Exhibit 3 (extracts from various media reports) as well as by the evidence of Mr Simons under cross-examination, who conceded as much. (h) The Atradius document (Exhibit 6) referred to in paragraph 8 of Clough's submissions is entirely equivocal. Apart from being part of an incomplete negotiation (there were evidently telephone calls as well as other emails), the email contains the statements " We have allocated the material to cover your requirement " and " Please ensure that the client is aware that we are not looking to go back on Clough cover at this point in time ". (i) The significance of the fact that Clough had other bond or performance guarantee facilities was not to suggest that they generated cash, but to counter the original evidence of Mr Simons that raising future performance guarantees would be threatened. (j) Similarly, the reference to the non-withdrawal of credit approvals was to highlight the non-materialisation of the fears and concerns to which Mr Simons originally deposed. There is much force in these particular submissions of ONGC. On the face, of it there is, at least, a difference in emphasis between what Mr Simons, on behalf of Clough, has deposed to, on the question of the financial impact upon Clough should the Banks pay under the performance guarantees, and the position reflected in Clough's Annual Report, parts of which I have set out above. Referring, for illustrative purposes, to Item 7 to the 'Notes to the Consolidated Financial Statement 30 June 2007', it is difficult to reconcile the statement that the "... recapitalisation will allow the Company to deal with the cash flow issues arising from the BassGas and G1 disputes and provide the necessary support for the capital expenditure programme announced by the Company in February 2007", with Mr Simons' written evidence which advances a rather less optimistic view. Nonetheless, there will be consequences and Clough may not be able to achieve all of its stated objectives. I accept that the $160 million loan guarantee facility may be utilised only for Clough's vessel investments program and that payment under the performance guarantees prior to the capital raising at the end of December 2007 will adversely affect cash flow. I also accept that provisions made in Clough's financial statements in relation to the impact or likely impact of this dispute are not certain. They are the best estimates which Clough is able to make. Against that, in cross-examination, Mr Simons conceded that Clough's capital expansion program will be secured by the Murray and Roberts funding and the recapitalisation and that there will be no need to retrench staff. This is a very different position to that which existed at the time that I refused the application of the Banks to discharge the injunction: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [No 2] [2007] FCA 927 at [54] - [63] . There is no evidence to establish specific irreparable damage to Clough. Consequences of the kind that I have referred to are not uncommon in such matters and indeed are often the probable consequences. Certainly, Mr Simons accepted that such consequences, broadly, were in the anticipation of Clough when the performance guarantees were given. As to that I accept the submissions of ONGC which derive their factual foundation from the second affidavit of Mr Simons, his cross-examination and various media reports admitted into evidence. The market knows of Clough's dispute with ONGC, and it has been the subject of public disclosure to the ASX by Clough. Clough's Board has told the market that it considers the claims to be "spurious" and uses public relations to protect its position. ONGC submits that if it is the call on the performance guarantee that impacts on reputation, as Mr Simons claimed, any such impact has already occurred as that call has been publicised through the judgments of the Court and media reports (Exhibit 3). Mr Simons accepted that the market generally understands that all that is required for a performance bond to be called on is a claimed breach of contract and not necessarily an established breach. If maintenance of the injunction mitigates against a perception of ONGC's entitlement to call on the performance guarantees then, Clough submits, the corollary will be an adverse impact on ONGC's reputation. The call and payment of the bonds in the Bass Gas dispute which was well known to the market, has not prevented Clough from securing high value construction contracts including $265 million of new oil and gas contracts in July 2006, many of which have involved the provision of performance guarantees. There is no solid evidence of any loss of business from the calls on the performance bonds in the Bass Gas dispute. The only concrete illustration given in his affidavit by Mr Simons was in relation to Mitsui & Co, but Mitsui's concern was not with the fact that performance guarantees were being called on, but more generally because of Clough's precarious financial position at the time. Clough it appears, according to Mr Simons, has excess capacity of some $5-6 million in its existing debt facilities to provide future performance guarantees. Clough submits that greater damage to Clough's reputation with its financiers will flow from its breach of its various facility agreements by enjoining the Banks notwithstanding Clough's express authorisation to each of them in those agreements to pay without reference to them, and notwithstanding the fact that Clough might dispute entitlement. There is considerable force in that submission. If anything, the maintenance of the injunctions will impair Clough's position. In Mr Simons' second affidavit, he has said that the Banks have each advised him that they will not extend any further facilities to Clough until such time as the injunctions against them are dissolved or otherwise dispensed with. I would in these new circumstances not accord any significant weight, in considering the balance of convenience, to Clough's concerns as to its reputation. I consider, however, that significant weight ought be given to the importance in international commerce of giving effect to instruments such as these performance guarantees: e.g. Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 at 403. For all of the above reasons, the balance of convenience would not, subject to the consideration, should it arise as to the strength of Clough's case, favour a continuation of injunctive relief. Further, the orders granting injunctions against the Banks on 5 June 2007, as extended on 12 and 19 June 2007, should be discharged. I will hear the parties on the question of costs. I certify that the preceding one hundred and twenty-nine (129) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application by first respondent to set aside application and service ex juris of the application application by first respondent to discharge ex parte injunction as well as to discharge inter partes injunctions against respondent banks injunctions to restrain calling upon and payment under performance guarantees whether prima facie case to maintain service ex juris whether serious issues to be tried to maintain injunction against first respondent no prima facie case and no serious issues to be tried primary orders as sought in the motion no serious issue as to accessorial liability of banks injunctions against banks discharged. injunction |
By notice of motion filed on 20 March 2009, the first respondent seeks security for the first respondent's costs of and incidental to the proceeding in the sum of $554,000 . 06. By notice of motion filed on 19 March 2009, the second respondent seeks security for its costs in the sum of $400,764. The first respondent is said to have issued a promissory note on behalf of one of its clients in favour of Monibrook Pty Ltd (Monibrook), a client of the second respondent. The promissory note on its face purports to have been endorsed on behalf of the first respondent by two officers of the first respondent. By endorsing the promissory note, it is said that the first respondent promised that on presentation the promissory note would be accepted and paid, would become liable to compensate the holder of the promissory note if it were dishonoured and would be precluded from denying to the holder of the promissory note that it had been properly endorsed. The first respondent then delivered the promissory note to the second respondent, as agent for Monibrook. The promissory note was assigned by Monibrook to the first applicant. In August 2008, the first applicant attempted to "collect" the promissory note, and it was dishonoured by the first respondent. The applicants allege that the first respondent made various representations, some of which are said to have arisen from the promissory note itself, while others are said to have been conveyed in certain correspondence allegedly sent by the first respondent to the second respondent. These representations are said to be false. In reliance on these representations, the first applicant became the bearer of a worthless promissory note, and the second applicant, also in reliance on these representations firstly, entered into a commercial agreement involving it, the first respondent and Monibrook and secondly, paid an amount of one million dollars to Monibrook. The applicants also allege that the first respondent is liable in negligence. The first applicant seeks an order against the first respondent for payment of the face value of the promissory note, or alternatively, damages. The second applicant is seeking damages against the first respondent. The first respondent's defence is that it is not liable under or in respect of the promissory note. The first respondent denies that the promissory note was ever endorsed by it and alleges that the signatures appearing on the supposed endorsement were not made by the relevant officer of the first respondent. The first respondent denies that it ever sent the promissory note to the second respondent (as agent for Monibrook). It also denies that it ever sent any correspondence to the second respondent as alleged. The first respondent also denies that it is liable in negligence. The second applicant alleges that the second respondent (on each of 10 August 2006, 16 August 2006 and 23 August 2006) represented to the second applicant that the promissory note was validly issued, that the promissory note would be paid on presentation and that the second respondent had confirmed the promissory note on a bank-to-bank basis with the first respondent. The second applicant alleges that in reliance on the second respondent's representations, the second applicant entered into a commercial agreement involving it, the first respondent and Monibrook, and paid an amount of one million dollars to Monibrook. The second applicant claims that the second respondent's representations were made negligently, and in breach of s 51A and s 52 of the Trade Practices Act 1974 (Cth) (TPA). The second applicant claims damages against the second respondent, as well as interest and costs. The second respondent denies that it made the representations referred to earlier. The second respondent denies that it could be liable under s 51A and s 52 of the TPA or in negligence. Section 56 of the Federal Court of Australia Act 1976 (Cth) confers on the Court a broad discretionary power to order security. In Acohs Pty Ltd v Ucorp Pty Ltd & Ors [2006] FCA 1279 ; (2006) 155 FCR 181 at [8] , Jessup J highlighted that s 1335(1) has three elements, each of which requires a particular approach by the Court. require". It is convenient to address the various elements in order. The first element, that of "credible testimony", was considered at some length by von Doussa J in Beach Petroleum NL v Johnson (1992) 7 ACSR 203 , where his Honour explained that the power of the Court under s 1335 arises if credible testimony establishes that there is reason to believe there is "a real chance" that in events which can fairly be described as "reasonably possible" an applicant will be unable to pay the costs if judgment goes against it. The applicant is required to do no more than place on the record credible testimony and the exercise of the court at this stage is in judging the testimony and its quality rather than seeing if a matter has been proved by inference. The company, at this stage, is not being asked to explain or contradict something for the purposes of avoiding an inference being drawn. If there is credible testimony, then the court has jurisdiction to make the order and a company which called no evidence to show it could meet a costs order would run the risk of having an order made against it. In Idoport , Einstein J noted (at [58]) that where the Court is considering an application for security for costs under s 1335 , the Court is required to form an opinion about what the financial position of the applicant will be at the time of judgment. Of necessity, therefore, is the requirement to make a judgment about future events. According to his Honour, such other factors include the outcome of the trial, the costs associated with the trial and the success or otherwise of the applicant's business and investments in the meantime. Once the factual preconditions of s 1335 are met, the Court then has jurisdiction to make an order that security for costs be provided: Acohs Pty Ltd v Ucorp Pty Ltd & Ors at [11]. Once it is accepted that there is reason to believe that the applicant will be unable to pay the respondent's costs, the evidentiary burden shifts to the applicant to satisfy the Court that, taking into account all relevant factors, the Court should exercise its discretion by refusing to order security. Mr Forbes swore his first affidavit on 19 March 2009, and his second on 28 April 2009. Exhibited to Mr Forbes' first affidavit are copies of company extracts obtained from the Australian Securities and Investment Commission (ASIC) in relation to each applicant. The company extract relating to the first applicant shows that the first applicant has three shareholders, each of which is a proprietary company, with a paid up capital of $100. The company extract relating to the second applicant shows that the second applicant has one shareholder, which is a proprietary company, and a paid up capital of $4,580,000. In respect of the second applicant, no share capital has been issued since at least December 2004. The second applicant's company extract shows that the most recent financial report filed with ASIC by the second applicant was its annual financial report for the year ending 31 December 2003. Amongst other things, the second applicant's financial report shows that the second applicant did not generate any income for the year that ended on 31 December 2003, incurred a loss from ordinary activities before related income tax expenses of $1,685,057 and had accumulated losses of $2,289,395. The evidence of Mr Forbes is that he is concerned that the second applicant may not have sufficient assets or income to meet any orders for costs made against it. Mr Forbes' evidence is that as of 18 March 2009, the first respondent has incurred $85,119.25 in costs and disbursements. Mr Forbes has had substantial experience in conducting commercial litigation in superior courts in Australia. Much of the documentary material in relation to this matter is in Mandarin Chinese and will need to be translated into English. A number of witnesses are based in China and do not speak or read English. Mr Forbes also states that he will incur disbursements costs in engaging translators (much of the relevant documentation is in the Chinese language), engaging expert witnesses, travel and accommodation for witnesses who may need to travel to Sydney. As set out above at [24], Mr Forbes estimates that the first respondent will incur approximately $770,970 in costs and disbursements up to, and including, a final hearing. Mr Forbes estimates that if costs are awarded in favour of the first respondent, the first respondent would recover (on a party/party basis) not less than 60% of its professional fees and 85% of its disbursements (including counsel's fees). This amount is itself comprised of $60,957.23 in professional costs and $104,890.00 in disbursements. In support of its application, the second respondent filed an affidavit of Scott Atkins, who is the second respondent's solicitor in this matter. Mr Atkins swore his affidavit on 19 March 2009. Much of Mr Atkins' affidavit contains the same material in relation to the corporate structure, and the officers, directors and shareholders of the first and second applicants. It is unnecessary to repeat it. Similarly, I will not repeat the information in Mr Atkins' affidavit about the filing of annual returns or financial reports with ASIC. I also note that Mr Atkins has conducted property searches in relation to the applicants, with the evidence being that neither is the owner of property in New South Wales. Mr Atkins estimates that the second respondent will incur approximately $552,521 in future costs and disbursements up to, and including, a final hearing (of which $367,721 will be incurred up to the hearing). Mr Atkins' estimate does not include any potential cross-claims that might be filed and not does it factor in any settlement discussions or mediations. Neither Mr Forbes nor Mr Atkins was cross-examined on the contents of their affidavits and I was not invited to conclude that the veracity of what is deposed to in their affidavits is in doubt. The first applicant has three shareholders, with a paid up capital of only $100. Given that there is reason to believe that the first applicant will be unable to pay the respondents' costs, the evidentiary burden shifts to the first applicant to satisfy the Court that, taking into account all relevant factors, the Court should exercise its discretion by refusing to order security. It has not discharged the burden. The situation with the second applicant is not so straightforward. Although the second applicant has paid up capital of $4,580,000, no share capital has been issued since at least December 2004. In my view, the fact that the second applicant has this paid up capital says nothing of substance about its present financial position (on either a cash-flow or assets/liabilities basis). Of more relevance is the fact that the second applicant's financial report for the year ending 31 December 2003 shows that the second applicant incurred a loss that year from ordinary activities of $1,685,057 (before related income tax expenses) and had accumulated losses of $2,289,395. There is, however, evidence that the second applicant has at its disposal the sum of $200,000, which is currently held in a trading account with a major Australian retail bank. At the hearing, the applicants sought to tender a document that was described in the affidavit of Mr Avendra Singh (who is the applicants' solicitor), sworn 29 April 2009, as a "a copy of the financial statement relating to the Second Applicant for the financial year ended 30 June 2008". I rejected the tender of this document relying, in substantial part, on s 135 of the Evidence Act 1995 (Cth). I did so for a number of reasons. Firstly, the applicants only provided the respondents with the affidavit of Mr Singh, to which the "financial statement" was annexed, the day before the hearing of the notices of motion. However, I note that the "financial statement" was given by the applicants to the respondents on 14 April 2009 pursuant to a notice to produce, although the applicants assert that no indication was given at the time that it was going to be relied upon as evidence. It was provided, as evidence, far too late. My second reason concerns the nature of the document itself. The document is described on its face as a "special purpose financial report" for the year ended 30 June 2008. It was prepared for use by directors and members of the second applicant. The report was not audited, and the report itself states that the directors were solely responsible for the information contained in the report. We do not accept responsibility to any other person for the contents of the special purpose financial report. The issue of the admissibility of un-audited financial statements, in the context of security for costs applications, has arisen in a number of cases. In Warren Mitchell Pty Ltd v Australian Maritime Officers Union (1993) 12 ACSR 1 at 5, Lee J accepted the "unaudited accounts prepared by a practising accountant as a sufficiently accurate reflection of the affairs of the corporation". In Juelle Pty Ltd v Buildev Properties Pty Ltd and Or s [2006] NSWSC 302 , Gzell J allowed the tender of a special purpose financial report (that was in essence a summary of the financial information provided by the directors) prepared by the plaintiff's accountant, notwithstanding that the report had not been reviewed, audited or verified by the accountant. They are the statements by the directors of the financial position of [the plaintiff]. The lack of verification, validation, audit and review may bear upon the weight to be given to the evidence but it does not, in my view, exclude the evidence. The present report appears to me to be of very limited probative value if it has not been adopted by the directors, having regard to the fact that the author of the document relied on information from the directors in compiling it. I am satisfied that it appears by credible testimony that there is reason to believe that the second applicant will be unable to pay the costs of the respondents if successful in their defences. Again, the evidentiary burden shifts to the second applicant to satisfy the Court that, taking into account all relevant factors, the Court should exercise its discretion by refusing to order security. It has not discharged the burden. Accordingly, my discretion under s 1335 of the Corporations Act to make an order for the provision of security by the respondents has been enlivened. I now turn to consider how that discretion should be exercised. In essence, the applicants assert that an order for security for costs should not be made for three reasons. Firstly, the applicants say that to require them to provide security for costs would be oppressive and would have the effect of stultifying their ability to pursue their claims in the proceeding. Secondly, the applicants (and particularly the second applicant) assert that they are impecunious as a result of the wrongful conduct of the respondents. Thirdly, the applicants argue that there are public interest considerations that militate against the making of an order for security for costs. The weight of authority is that a party cannot successfully resist an order for the provision of security by simply proving that it cannot fund the litigation itself; it must also prove that it cannot do so even it relies on other sources of funds: Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR 120 at 123 per Meagher JA. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts. The second applicant asserts that the Court should refrain from making an order for the provision of security against it on the basis that the second applicant's putative impecuniosity arose out of the conduct of the respondents. This issue was considered by the Full Court of the Supreme Court of Western Australia in BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339 at 345-346, where Anderson J (with whom Kennedy and Ipp JJ agreed) rejected the notion that the party applying for security should be required to show that their conduct did not contribute to the plainitff's impecuniosity. If the plaintiff wishes to resist an application for security because the defendant's wrongful actions have brought about its lack of means it must surely be for the plaintiff to establish this ... 1 do not mean to say that this is anything but an evidentiary onus. It is enough to say for the purposes of this appeal that if there is no evidence to show that the defendant was to blame for the plaintiff's lack of means, the plaintiff cannot say the application should be refused on that ground. There was no direct evidence before the master of the plaintiff's financial condition at the time the first defendant was engaged to advise it and there is not really any evidence on which to safely base any inferences. The second applicant has not provided any evidence to suggest that its impecuniositiy has arisen out of the conduct of the respondents. It is not sufficient for the second applicant to simply assert, by way of submission, that its impecuniositiy arose out of the conduct of the respondents. I reject the second applicant's submissions on this aspect of the applications for security for costs. The applicants submit that there exist public interest considerations that tell against the making of an order for security for costs. The public interest component of these proceedings, as the applicants would have it, arises from the need to investigate certain banking procedures in China given the role China now occupies in the global economy. In my view this submission should be rejected. I am prepared to accept that as China's economic influence continues to grow, the stability and reliability of the Chinese banking system may become an important issue in global commerce. However, as counsel for the first respondent correctly pointed out, this is not the appropriate forum for the conduct of a wide-ranging examination of Chinese banking practices and safeguards. Any factual findings I make in these proceedings will only be of relevance in deciding the issues that are before me. Such factual findings will say nothing about the Chinese banking system as a whole. In my opinion, the applicants should be ordered to provide security for the respondents' costs of the proceedings. The question that now arises is the quantum of the security that the applicants are to provide. There was a dispute at the hearing of the notices of motion as to whether each of the applicants seeking relief against each of the respondents. However, from my reading of the amended application, filed 16 March 2009, and the amended statement of claim, filed 26 February 2009, it would appear that both applicants are seeking relief against the first respondent, whereas only the second applicant is seeking relief against the second respondent. There was, as I understand it, a suggestion at the hearing of the applications for security that the fact that only one of the respondents is being sued by both applicants may have some bearing on any order for the provision of security that I am inclined to make. The difficulty faced by the applicants is that neither of them cross-examined the respondents' witnesses (Mr Forbes, solicitor for the first respondent, and Mr Atkins, solicitor for the second respondent); nor did the applicants call any evidence that would refute the basis of either Mr Forbes', or Mr Atkins', evidence as to the costs that the first and second respondents would incur in defending the proceedings. Accordingly, there is no reason for me to substitute my own amount for the amounts proffered by the respondents. It is appropriate in this case for the applicant to provide the security requested by the first and second respondents. In making an order for security the Court does not set out to give a complete indemnity to a respondent ( Brundza v Robbie & Co (No 2) [1952] HCA 49 ; (1952) 88 CLR 171 at 175) nor is it to be assumed that the applicant will fail in the proceeding. I only propose to order, at this stage, security in relation to costs concerning the preparation of the matter for trial. I can review the question of security as the trial approaches or at an earlier stage if it is apparent that the security provided for the cost of preparation is not, having regard to the applicable principles, adequate. I propose to order that security in the sum of $250,000 be provided by the applicants in relation to the first respondent, and $200,000 in relation to the second respondent. In my view the quantum of costs I have ordered is reasonable in the circumstances given the factual complexity of the issues involved and the length of time that will need to be devoted to preparing the matter for the hearing. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | security for costs s 1335 corporations act 2001 (cth) and s 56 federal court of australia act 1975 (cth) whether court's discretion has been enlivened under s 1335 of the corporations act exercise of the discretion to award security for costs practice and procedure |
In that Court, the Federal Magistrate concluded that Ms Lawrance had not established any conduct contrary to the Sex Discrimination Act 1975 (Cth) or the Disability Discrimination Act 1992 (Cth) and had not established any basis for the grant of relief under the Human Rights and Equal Opportunity Commission Act 1986 (Cth). 2 Ms Lawrance has filed in this Court a Notice of Appeal seeking to challenge the decision made on 30 November 2007. 3 Now before the Court are three Applications : the first is an Application made by Ms Lawrance seeking to suspend the order as to costs made against her by the Federal Magistrate; the second is an Application made on behalf of the State of New South Wales (the Second Respondent) seeking an order that security for costs be provided and seeking a stay of proceedings until such time as security is provided; and the third is a like Application made on behalf of the remaining respondents. 4 Ms Lawrance appeared unrepresented. 5 It is considered that no order should be made suspending the costs order as made by the Federal Magistrate, that Ms Lawrance should be ordered to provide security for the costs to be incurred by the Respondents to the proceedings in this Court and that a stay of proceedings should be ordered in the event that security is not provided. Those costs have not been paid to date. 7 Also remaining unpaid are costs the subject of an earlier order made on 17 November 2006 by the Federal Magistrate in respect to interlocutory applications. 8 The Notice of Appeal as filed on 12 December 2007 sought an order that the order for costs as made on 30 November 2007 be " suspended, pending the decision of the Federal Court ". When the matter was called on for hearing on 17 March 2008, Ms Lawrance remained undecided as to whether or not she in fact now sought such an order. She was, accordingly, requested to decide whether she wished to make such an Application and, later in the day, an Interim Application was filed seeking an order that the order for costs be " suspended under s 29(1)(b) of the Federal Court of Australia Act ". 9 There was, not unexpectedly, no opposition by the Respondents to the hearing of that Application when the matter resumed on 18 March 2008. 10 An appeal to this Court does not operate as a stay of execution or of proceedings under the judgment appealed: Federal Court Rules 1979 (Cth), O 52, r 17. The " general principle " applied in this Court is that an appeal does not operate as a stay: Bahonko v Sterjov [2007] FCA 1377 at [6] (Appl'd: Bahonko v Sterjov [2007] FCA 1556 at [8] ). But s 29(1)(b) of the Federal Court of Australia Act 1976 (Cth) does confer a discretionary power to make an order suspending the operation of an order previously made. An order, however, is not made " simply for the asking ": Bryant v Commonwealth Bank of Australia [1996] HCA 3 ; (1995) 134 ALR 460 at 463 per Kirby J. 12 In concluding that an order should not be made as sought by Ms Lawrance, reliance has been placed upon a number of considerations. First, there can be no question but that any costs which may be paid by Ms Lawrance would be recoverable from the Respondents to those proceedings in the event that any appeal is allowed and the order as to costs is varied or vacated. Second, the order as made by the Federal Magistrate is an order that would normally be expected to be made given the dismissal by that Court of her application. 13 Also taken into account have been those considerations which have led to the conclusion that security for costs should be provided. That section confers a " broad power ": James v ANZ Banking Group Ltd (1985) 9 FCR 442 at 444 per Toohey J. The general principles relevant to the exercise of the discretion are not in dispute and have been conveniently set out by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 and summarised by Bennett J in Croker v Sydney Institute of TAFE (New South Wales) [2003] FCA 942. 15 Applications for security must be made, as has occurred in the present proceedings, promptly: Crypta Fuels Pty Ltd v Svelte Corporation Pty Ltd (1995) 19 ACSR 68 at 71. 17 In addition, Ms Lawrance indicated that she wished to adduce evidence as to events which had occurred on 15 February 2008. She outlined the nature of the evidence that she sought to adduce. Although such evidence had not been filed in accordance with earlier directions made on 4 February 2008, Ms Lawrance indicated that she was not previously sure as to how she should proceed. 18 Having been provided with an oral outline of the proposed evidence, it was considered that the evidence would be of no relevance to the Applications for security. Indeed a ruling to that effect was given and the hearing of the Motions commenced. Very shortly thereafter, however, that ruling was revisited. Although it was considered that the proposed evidence was in all likelihood irrelevant, it was considered that the more prudent course was to permit Ms Lawrance to file an Affidavit later that day setting forth the proposed further evidence. 19 It was also considered appropriate to require the Respondents to advance their submissions on the first day of a two-day hearing, reserving liberty for them to make further submissions should they see fit once the further evidence had been considered. That course did not foreclose an unrepresented party from being given the opportunity to call all such evidence as she wished to rely upon and for the relevance of that evidence to be considered once it could be seen in affidavit form. The course of requiring the Respondents to advance their submissions also permitted Ms Lawrance to fully know how the case was to be advanced against her before she commenced her submissions. The concurrence of the Respondents to the procedure to be followed, it is considered, extended every procedural fairness to Ms Lawrance. These submissions closely followed an outline of written submissions which had been filed on behalf of the Second Respondent, the State of New South Wales. 21 Once the oral submissions had concluded, the course was followed of adjourning the hearing of the Motions to 18 March 2008 so that Ms Lawrance could file her affidavit and consider overnight such submissions as she then wished to advance on the following day. 22 The foreshadowed Affidavit was in fact filed. Objections to the affidavit, together with two further letters upon which Ms Lawrance wished to rely, were noted but the further materials were admitted into evidence. It is considered that those materials are irrelevant but, even if relevant, would not lead to any different conclusion. The events in February 2008 were of no relevance to the matters before the Federal Magistrate, nor relevant to an appeal from his Honour's decision. 24 The Notice of Appeal as filed sets forth some 27 grounds of appeal. Ms Lawrance was invited on 17 March 2008 to consider whether she wished to pursue all of those grounds or whether she wished to narrow or confine her appeal. On 18 March 2008 she adhered to the grounds set forth. 25 An appellant is of course entitled to raise for resolution such grounds of appeal as may properly emerge from the decision the subject of appeal. For the purposes of the present proceedings, each of those grounds have been separately considered. 26 None of the grounds, however, is considered to have any real prospects of success. 27 Without being exhaustive, those grounds seek to challenge findings of fact, seek to challenge orders as to the non-joinder of parties and seek to challenge rulings as to the exclusion of evidence. Ms Lawrance disputed such a characterisation of her Grounds of Appeal and contended that although some of the grounds sought to ventilate questions of fact, other grounds raised what she described as being " fundamental questions of law ". 28 Some of these grounds, although not all, it should be noted, have been previously considered in this Court. Thus in Lawrance v Commonwealth [2007] FCA 1524 leave to appeal was sought in respect to a refusal to join the Guardianship Tribunal and to challenge rulings as to the admissibility of evidence. Leave to appeal was refused. In any event she has not made out a sufficient case of arguable error with respect to any of the rulings which she desires to challenge if leave to appeal is given. Another was that there was no material to suggest the existence of orders or instruments of the kind which Ms Lawrance sought to have revoked. Nothing has been advanced in support of the application for leave to appeal which satisfactorily addresses the foundation for these rulings or calls their correctness into question. At the hearing before me Ms Lawrance confirmed that the Guardianship Tribunal was not referred to anywhere in the material she put before HREOC in connection with her terminated complaint and she did not know of the existence of any orders by the Guardianship Tribunal relating to her or whether the Guardianship Tribunal had given any consideration at any time to her circumstances. Her desire to seek any relief against the Guardianship Tribunal, or in relation to its orders, must be seen as speculative and clearly outside the scope of her terminated complaint. There is no prospect an appeal in relation to this issue could succeed. He stated that '[t]he applicant's evidence of these matters is therefore irrelevant and inadmissible insofar as she continues to pursue complaints which I had found not to be within jurisdiction'. He indicated that he would have excluded the evidence upon discretionary grounds in any event. [64] No matter of any substance has been advanced in support of the application for leave to appeal so far as those rulings are concerned. That circumstance alone dictates rejection of the application so far as it concerns rulings on evidence. There are other obstacles also. But it is considered that no reason has now been advanced by Ms Lawrance to reach any different conclusion to that reached by Buchanan J. The one reason advanced by Ms Lawrance as to why weight should not be given to the conclusions of Buchanan J was the contention that before his Honour the question as to whether there had been an error in the identification of the ambit of the complaint was not put in issue. This was one of the " fundamental questions of law " which it is contended was resolved erroneously by the Federal Magistrate. The former error, she contended, underlay the Federal Magistrate's rulings ( inter alia ) as to discovery and admissibility of evidence. 30 Such Grounds of Appeal as seek to raise these contentions, it is considered, do not have any real prospects of success. 31 The relevance of identifying the subject matter of the complaint as made to the Commission arises by reason of the fact that s 46PO(1) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) confers an entitlement to make an application to this Court and the fact that s 46PO(3) confines any such application to the same conduct as was the subject of complaint. It may be accepted that a complaint as made to the Commission is not to be construed as though it were in any manner analogous to a pleading. Even approaching the complaint as made to the Commission in as flexible a manner as possible, it is considered that it would be difficult to reach any conclusion other than that reached by the Federal Magistrate. Ms Lawrance clearly and unambiguously identified the persons against whom the complaint was being made and the period of time during which the conduct complained of was said to have occurred. I wish to add a further respondent, the State of New South Wales ... The conduct of which I complain began fairly soon after I filed a Notice of Appeal in NSD 1148 of 2004 in the Federal Court ... These parts of the applicant's affidavits serve no useful function in assisting the Court or respondents to understand the applicant's case, and are embarrassing to the proceeding. I have therefore rejected those parts. In my opinion, it is inadmissible under the relevancy test in s 55. Ms Lawrance did not, at any stage in the proceeding, tender evidence which gave any substance to her allegations that the personal respondents acted, either individually or together, pursuant to a programme, policy, understanding or arrangement which imputed her with mental illness or other impairment amounting to a "disability" under the Disability Discrimination Act 1992 (Cth). Nothing in their individual conduct imputed her with a disability, nor amounted to sexual harassment or discrimination under the Sex Discrimination Act 1975 (Cth). She was not victimised by any of them, nor by their employers nor other government agencies, as a result of her earlier complaints. She was treated no differently than any unimpaired litigant acting for herself or himself in similar circumstances. The conduct of the personal respondents was entirely innocent, and did not amount to any of the breaches of discrimination legislation which are alleged. There was no conduct on their part for which their employers, or the Commonwealth, or the State of NSW, are liable. The definition of 'disability' is that given under section 4(K). The comparator is not correctly identified as "any unimpaired litigant. " The comparator is a person who is not being imputed with a psychiatric impairment or mental illness, and, is female. That is especially the case when reference is made to paragraph [70] of the reasons which, it is considered, removes any doubt as to whether the Federal Magistrate used an " unimpaired litigant " as the comparator. This is because at no time did any person treat her or propose to treat her less favourably than a person without a disability, or imputed disability, would have been treated in circumstances that were the same or not materially different, within s.5. 39 The Grounds of Appeal also seek to put in issue the procedural fairness extended by the Federal Magistrate to Ms Lawrance. The grounds are variously expressed and range from contentions that procedural fairness was denied by reason of the failure to consider evidence or submissions to the manner in which his Honour expressed his reasons for interlocutory applications. It is said that the Federal Magistrate has denied the now Appellant procedural fairness. 40 Grounds of Appeal asserting a denial of procedural fairness, it is considered, have little if any prospects of success. The Federal Magistrate has made rulings on the ambit of the complaint and that ruling was part of his Honour's approach to the evidence to be adduced. Extending the evidence beyond the period of time encompassed by the complaint would clearly expose the Federal Magistrates Court and the Respondents to further time being expended in the pursuit of that which was held to be irrelevant. The " prejudice " in doing so is readily apparent. In this Court, Counsel for the Second Respondent informed the Court without objection that subpoenas were issued to all of the individual Respondents to attend to give evidence. And they did so. 42 All Respondents, for the purposes of the present Motion , conceded that Ms Lawrance was suffering financial hardship and would not be able to provide security. 43 All Respondents nevertheless sought security. 44 It may readily be accepted that poverty is no bar to litigation: James v ANZ Banking Group Ltd (1985) 9 FCR 442 at 445. And where a natural person has been ordered to provide security, there is usually present some factor in addition to impecuniosity, such as lack of prospects of success: Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [32] ---[33]. 45 By reason of her impecuniosity, there is considered to be a real risk that any costs order which may ultimately be made against Ms Lawrance may not be paid. Such has been the fate of the Respondents to date in other proceedings. In exercising the discretion to order that security be provided, it is relevant to take into account any outstanding costs orders which remain unsatisfied: Freeman v National Australia Bank Ltd [2004] FCA 601 at [14] . Ms Lawrance has not paid the costs ordered to be paid by the Federal Magistrate, including not only the orders as to costs in favour of the present Respondents, but also orders as to costs made by the Federal Magistrate against Ms Lawrance in favour of persons not parties to the proceedings before that Court. Those costs orders included, for example, an order that Ms Lawrance pay the costs incurred by the Chief Executive Officer of Phillips Fox in relation to the unsuccessful application for their joinder as parties to the Federal Magistrates Court proceedings. A like order for costs was made against Ms Lawrance in favour of Dr Margaret Pickles in relation to an unsuccessful application for joinder. 46 Any order for security, even in a quantum less than that which is sought, it is recognised, has a real likelihood of stifling the appeal now before this Court: Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates Pty Ltd (1986) 13 FCR 46 at 52---3. 47 Ms Lawrance, however, has already had the opportunity to have her claims litigated and has lost. Although she is entitled to prosecute her appeal in this Court, different considerations apply when security for costs is ordered in respect to an appeal: Tait v Bindal People [2002] FCA 322. S56 provides that security is to be of such amount and given at such time and in such manner and form as the Court or Judge directs. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another". [3] What that passage demonstrates is that there is a difference in principle in relation to the ordering of security for costs in a first instance matter and the ordering, or the consideration of the ordering, of security for costs where one is at the appellate level. The difference is that, at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust. [4] In a sense, it would be giving to a person who has been on the receiving end so to speak of a determination by the courts a free hit at great cost to the other party in the appeal proceedings. That consideration, it seems to me, is also reinforced by the judgment of Gummow J in Wiest v Director of Public Prosecutions and Anor [1988] FCA 568 , unreported 5 September 1988. That case involved appeals against extradition with penal consequences. Such consequences were clearly very relevant considerations, but discretionary reasons moved the Court not to order. Such discretionary considerations, which were particularly noted by Gummow J, included the delay between the filing of the papers and the bringing of the applications for security. His Honour referred to a particular circumstance which is relevant here, and that is that the applicant for security has a judgment in its favour. There was a reference by Gummow J to Bethune v Porteous (1892) 18 VLR 493 , again an old case. 48 Separate consideration has been given to the question as to whether Ms Lawrance's impecuniosity has been occasioned by the conduct complained of. Notwithstanding a contrary submission of Ms Lawrance, it is not considered that the conduct the subject of complaint to the Commission could in any way be said to have occasioned her present financial position. It has been concluded that there is no serious question to be resolved on appeal as to the manner in which the Federal Magistrate has resolved the subject matter of the complaint to the Commission. And it necessarily follows from that conclusion that any such conduct has not occasioned any impecuniosity to Ms Lawrance. Any impecuniosity has pre-dated the conduct complained of. 50 Relevant to any quantification is the anticipated duration of an appeal, the complexity of the issues to be addressed and the extent to which the preparation of written submissions would facilitate the expeditious resolution of the appeal. The fact is that the Notice of Appeal as filed in this Court sets forth some 27 " grounds of appeal ". A review of those grounds only supports a conclusion that the appeal would most probably take two days, if not more. It is, perhaps, inevitable that an unrepresented appellant may take longer to develop arguments and submissions than a party represented by experienced counsel. The hearing of the present Motions seeking security was heard over a two-day period. 51 The more wide-ranging the challenge to a decision on appeal, however, the greater may be the reluctance to deny to those parties who have already vindicated their position at first instance the protection of an order for security. The more confined the grounds which an appellant may wish to pursue, the less persuasive may be the consideration that an appellant is " dragging his opponent from one Court to another " and seeking to re-agitate some, if not all, of the grievances resolved at first instance. 52 The State of New South Wales estimates that costs which will be incurred by the State will be in excess of $12,000 and accordingly seeks security in that amount. It also estimates that it has already incurred costs exceeding $110,000 in responding to various other proceedings commenced by Ms Lawrance. The remaining Respondents have estimated the costs incurred by the Commonwealth in defending the present proceedings is in excess of $75,000 and estimates that its costs in conducting the present appeal will be in excess of $10,000 and likely to amount to approximately $20,000. Those Respondents seek security in the sum of $10,000. 53 There is no reason to question the estimate of costs to be incurred. Indeed, if anything, it is considered that any appeal will take more than two days such that the estimates of costs to be incurred may be conservative. 54 Even though different considerations apply when security is sought in respect to an appeal, it remains a matter of concern that the quantum of any such security should be such as to attempt to accommodate the competing interests of both the Appellant and the Respondents. An accommodation of these competing interests is, it is considered, properly effected if the Commonwealth Respondents (namely the First and Third to Thirteenth Respondents) have their security fixed at $10,000 and the Second Respondent, the State of New South Wales, has its security fixed at $12,000. 55 In ordering that that security be provided and in determining the quantum of security, it is recognised that there is a very real possibility that such orders may preclude the appeal from proceeding. Indeed, Ms Lawrance was asked to indicate a period of time within which she could provide security, should that be the conclusion of the Court. Her response was understood to be that she would have difficulty meeting any order within any period of time. 56 In an attempt to meet Ms Lawrance's financial position, and balancing the interests of the Respondents, it is considered that she should provide 50% of the security ordered within 21 days, with the remaining 50% to be provided 21 days prior to the hearing of her appeal. In splitting the quantum of security in that manner, it may alleviate the real difficulties which she will encounter. 57 It is further considered appropriate to stay the proceedings in the event that the security is not provided. Separate stay orders should be made in an attempt to further alleviate the difficulties confronting Ms Lawrance. By doing so, she is thereby given the flexibility, should she so wish, of proceeding only against the Commonwealth Respondents. The Appellant's Application seeking a stay of the order for costs as made by the Federal Magistrates Court on 30 November 2007 be dismissed. 2. 3. The proceedings as against the First and Third to Thirteenth Respondents be stayed in the event that such security as has been ordered is not provided within the time specified. 4. 5. The proceedings as against the Second Respondent be stayed in the event that such security as has been ordered is not provided within the time specified. 6. The Appellant to pay the costs of the Respondents of and incidental to the hearing of their Notices of Motion and such costs as have been incurred in respect to the hearing of the Appellant's Application for a stay of the orders of the Federal Magistrate. 7. Liberty to any party to apply on 2 days' notice in writing. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | security for costs of an appeal real risk that security may stifle the appeal security ordered practice and procedure |
The investment failed. The repercussions of that failed investment are far-reaching and extend beyond the borrower and providers of security to the financier, Westpac Banking Corporation ("Westpac"), and Westpac's legal advisers, Gadens Lawyers ("Gadens"). 2 Before turning to consider the extent of those repercussions, it is necessary to say something about the conduct of the parties and the role of the Court. In the course of the trial each party sought to level criticisms at the conduct of, and choices made by, the other participants in the events. The task of the Court is not, however, to attempt to apportion moral blame or responsibility. Rather, the role of the Court is to piece together what was said and done and determine where legal liability for that conduct and those choices should fall. 3 Westpac, the Respondent and Cross-Claimant in the first cross-claim in these proceedings, provided finance to Advance to assist with its purchase of Victoria by the Park. Westpac also provided finance to the First Applicant, Middleton Nominees Pty Ltd ("Middleton Nominees"), to assist with payment of the deposit and to provide working capital for other purposes. In addition, Westpac provided the Third Cross-Respondent in the first cross-claim Ms Kirsch (the sole director of Advance), with a business cheque account ("the Kirsch cheque account"). The Advance and Middleton Nominees credit facilities ("the Facilities") were secured, amongst other things, by mortgages and guarantees and indemnities from related entities and individuals. There is no dispute that certain amounts advanced under the Facilities have not been repaid to Westpac. 4 This proceeding was brought by Middleton Nominees and two others (the Second Applicant, Mrs Sonia Kirszbaum and the Third Applicant, Nepalle Pty Ltd) under s 52 of the Trade Practices Act 1974 (Cth) (the "TPA") to challenge Westpac's entitlement to look to them to assist in repayment of the amounts advanced and unpaid. Unsurprisingly, Westpac disputed the Applicants' claims and filed a cross-claim seeking judgment for the amounts owing under the Facilities, judgment for the amount owing under the Kirsch cheque account and judgment for possession of the mortgaged properties provided as security for the Facilities. Westpac also cross-claimed against Gadens, which admitted the advice they provided to Westpac in connection with the Facilities was negligent. Gadens subsequently filed a cross-claim against a Westpac officer (the Cross-Respondent in the second cross-claim, Mr Geoffrey Schmidt) who was involved in discussions with Mrs Kirszbaum and her daughter Ms Kirsch about Westpac's financing of the Advance investment. The Fourth Cross-Respondent in the first cross-claim, Mr Boris Volkov, husband of Ms Kirsch, in turn cross-claimed against Westpac, alleging that Westpac was not entitled to look to him for repayment of amounts owed by Advance. The purchase price was $13,750,000. The purchase was funded by a commercial bill line facility from Westpac to Advance in the amount of $12.1m. Westpac also provided an overdraft to Advance. (These securities may be put to one side. Similarly, the amount of the debts and the securities provided to support those amounts, and the amounts realised by Westpac under securities that have been enforced, are not in dispute. They submit that Westpac is not entitled to recover the outstanding debts or to enforce the various securities to which those outstanding debts relate. Accordingly, it becomes necessary to consider each of the grounds upon which the Applicants and Mr Volkov contend that Westpac is not entitled to those orders. Two points should be made at the outset. First, in final address counsel for the Applicants and Mr Volkov abandoned several other ways of putting the case which, until that point, had been pursued during the trial. Secondly, the chief weight of the arguments for the parties as finally formulated was placed upon what was alleged to have been said in two conversations: (1) a conversation on 24 June 2005 which undoubtedly did take place between Mrs Kirszbaum, Ms Kirsch and Mr Schmidt at Westpac premises in Mt Waverley when documents were signed; and (2) a conversation said to have taken place between Ms Kirsch, Mr Volkov and Mr Schmidt at the home of Ms Kirsch and Mr Volkov before Mr Volkov signed documents. A Business Finance Agreement dated 24 June 2005 between Advance and Westpac ("the Advance BFA") set out the terms of that facility. The Advance BFA provided that the facility was for 6 months, expiring on 31 December 2005. No repayment was made on or before this date. Middleton Nominees gave the Middleton Nominees Guarantee as security for this facility (see [7(2)] above). It was an "all-moneys" guarantee in respect of money now or in the future owed by Advance to Westpac. The guarantee expressly provided that " there is no limit on the amount to be paid under this document ". As noted earlier (par [7(2)] above), security for the guarantee was in the form of a debenture and mortgages over properties owned by Middleton Nominees at 148, 253 and 350 Lygon Street, Carlton, Victoria. The guarantee was in counterparts. Each counterpart was executed by Mrs Kirszbaum and her son, Louis Kirszbaum, the directors of Middleton Nominees. 16 The Applicants contend that the Middleton Nominees Guarantee expired on 31 December 2005 and that, as a result, Middleton Nominees' liability under that guarantee is at an end. For the reasons that follow, I reject that claim. 17 To understand the allegation that the Middleton Nominees Guarantee expired on 31 December 2005, it is necessary to understand the form of the document signed by Mrs Kirszbaum and her son. Each counterpart comprises a four-page document entitled "Guarantee and Indemnity" which was executed by Mrs Kirszbaum and her son. At the back is a further two-page document entitled "Form of Acknowledgment --- Business Guarantor" executed by Mrs Kirzsbaum. Each copy of the Acknowledgment contained a handwritten annotation in black ink written by Ms Kirsch which reads " Expires 12/2005 as per WBC agreement " ("Expiry Term"). Mrs Kirszbaum gave evidence which, at the risk of undue abbreviation, was to the effect that the written annotation " Expires 12/2005 as per WBC agreement " reflected an oral arrangement she and her daughter had struck with Mr Schmidt, a Westpac Bank Officer, on 24 June 2005. 20 For reasons which are developed later (see [26] ff), the evidence of Mrs Kirszbaum and her daughter, Ms Kirsch does not establish that there was a conversation to the effect alleged. And because the evidence of oral communications to the effect recorded in the annotation is rejected, it follows that the agreement of guarantee between Westpac and Middleton Nominees is to be identified as contained in and constituted by the four-page written document entitled "Guarantee and Indemnity". 21 As noted above, the Middleton Nominees Guarantee was a printed form comprising four pages under the heading "Guarantee and Indemnity". It identified the parties and contained the relevant terms. The security was described as being " in respect of money now or in the future owed by" Advance as the recipient of the loan moneys. The "Guaranteed Obligations" were identified as " all liabilities and obligations of [Advance] ... now or in the future" . Attached to the back of the Middleton Nominee's Guarantee was the Form of Acknowledgment. 22 The Form of Acknowledgment attached to that document on which the critical handwritten annotation was made did not form part of the agreement of guarantee and indemnity between Westpac and Middleton Nominees. The Form of Acknowledgment referred to, but did not contain or constitute, an agreement between the parties. It was a document sought by Westpac as a record of statements made by Mrs Kirszbaum which Westpac could use if Mrs Kirszbaum were to later claim that she should not be held to be bound by the agreement because she did not understand it. As the High Court pointed out in Wilson v Anderson [2002] HCA 29 ; (2002) 213 CLR 401. 418 [8] and Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 , 461-62 [22], it is the written terms of an agreement which speak to third parties. This is particularly so in commercial contexts where the agreement is recorded in a deed or other similar document. In the present case, it is the Guarantee and not the Form of Acknowledgment that records the terms of the bargain the parties made. 23 However, even if the Form of Acknowledgment did form part of the Middleton Nominees Guarantee agreement (a conclusion I reject), the agreement did not contain the Expiry Term. For the reasons that are developed later (at [26] ff), I do not accept that Mrs Kirszbaum and Ms Kirsch had (as they swore) a conversation with Mr Schmidt of Westpac, on 24 June 2005, in which it was agreed that the Middleton Nominees Guarantee was for a limited term. Because I reject that evidence, it is not established that Mrs Kirszbaum ever offered or sought a new term limiting the duration of the liability. All I know from the evidence upon which I am prepared to act is that her daughter, Ms Kirsch, amended the Form of Acknowledgment after Mrs Kirszbaum had signed it and before Westpac provided money to Advance. There is nothing revealed by the evidence upon which I am prepared to act that connected Mrs Kirszbaum to this annotation. More particularly, there is nothing to show that Mrs Kirszbaum procured or even consented to the annotation or its contents. 24 To the extent that Mrs Kirszbaum now contends otherwise, her contention is founded entirely upon her having discussed the matter with Mr Schmidt at Westpac. My rejection of her evidence of that conversation necessarily entails rejection of so much of the rest of her evidence as suggested that it was she who demanded the limitation on the term of the guarantee. 25 It is not possible to say whether Mrs Kirszbaum's evidence about the supposed conversation with Mr Schmidt was affected by or even dictated by a misplaced loyalty to her daughter manifesting itself in proffering an innocent explanation for what in truth was her daughter's unilateral act in annotating the Form of Acknowledgment after her mother had signed it. But because I reject Mrs Kirszbaum's evidence about the conversation with Mr Schmidt and because I conclude that her daughter annotated the Form of Acknowledgment after her mother had signed it, it is not demonstrated that Mrs Kirszbaum executed either the Middleton Nominees Guarantee or the Form of Acknowledgment under any misapprehension as to the contents or effect of either document. Much of what transpired on 24 June 2005 is not in dispute. There was a meeting held at the Mt Waverley, South East Business Banking Offices of Westpac on that day. The meeting was attended by Mrs Kirszbaum, Ms Kirsch and Mr Schmidt. At the meeting a number of documents relating to the Facilities were executed by Mrs Kirszbaum and Ms Kirsch. A deal of other evidence was given about the meeting including evidence about particular details of time and other circumstances. It is not necessary to consider those matters in detail. 27 What is in dispute is whether the handwritten annotation to Question 6 on the Form of Acknowledgment (ie addition of the Expiry Term) was made by Ms Kirsch during the 24 June 2005 meeting and, if so, whether it was at the direction of and with the knowledge of Mr Schmidt as agent for Westpac. There is further disagreement about whether, at the end of the meeting, the pile of documents executed by Mrs Kirszbaum was retained by Mr Schmidt or was taken away by Ms Kirsch and returned to Westpac at a later date but before drawdown of the settlement moneys on 4 July 2005. 28 Before considering the different versions of what transpired at the meeting, it is necessary to say something of Mr Schmidt's position in relation to the Facilities and his previous involvement with Mrs Kirszbaum. Since 1995, Mr Schmidt had been the Senior Relationship Manager for the business banking affairs of Mrs Kirszbaum and Middleton Nominees. That role continued until the recovery of debts from Middleton Nominees became Westpac's primary concern in 2006. Mr Schmidt described Mrs Kirszbaum as a shrewd business woman with whom he had irregular personal contact over a number of years. Mr Schmidt recalled meeting her approximately 12 times over a period of 9 years. However, Mr Schmidt was not the bank officer responsible for negotiating the final form of the Advance BFA. Mr Tim Keating, a Senior Business Development Manager in Westpac's Business Acquisition Group, undertook that role following the handover of the Advance business to him in early November 2004. 29 There is no detailed contemporaneous note about what transpired at the 24 June 2005 meeting. The notes that do exist are of limited assistance. Mr Schmidt's work calendar for the week ending 24 June 2005 confirms a meeting between Mr Schmidt and Lola Kirsch on 24 June 2005 described as Docs signing . 30 Mrs Kirszbaum gave evidence that " nothing was written in handwriting and [there were] no crossings out " on the Middleton Nominees Guarantee or the Form of Acknowledgment at the commencement of the meeting at the bank on 24 June 2005 . Though sometimes vague and confused by questions that were put to her in cross-examination (on both 15 May 2007 and 21 November 2007), Mrs Kirszbaum was adamant about how the markings on the Guarantee and Form of Acknowledgment came about. Her evidence was that " every dot and whatever's crossed off [Mr Schmidt] dictated or [Mr Schmidt] did it ". She insisted that all markings on the Guarantee and Form of Acknowledgment were done in Mr Schmidt's presence and at his direction. 31 Ms Kirsch's evidence was consistent: that Mrs Kirszbaum directed her during the meeting at Westpac on 24 June 2005, and in Mr Schmidt's presence, to alter the Guarantee and Form of Acknowledgment in accordance with any instruction given to her by Mr Schmidt. Ms Kirsch gave evidence that, consistent with that direction, she made the annotation Expires 12/2005 as per WBC agreement first in pencil and then in black ink after Mr Schmidt directed her to do so. 32 Like Mrs Kirszbaum, Ms Kirsch was adamant that the security documents were completed with the assistance and under the instructions of the bank's agent, Mr Schmidt. I wrote in the answers, and furthermore, [Mrs Kirszbaum] was arguing [with] him about the expiration of her guarantee, and he dictated to me those words, "Expires 12/2005 as per WBC agreement. " [Mr Schmidt] pointed and [I] wrote it, because [Mrs Kirszbaum] said, "When will my guarantee expire? " because [Mr Schmidt] kept saying, "It's for a short time. 33 Ms Kirsch explained that the language of the annotation was not hers but was dictated by Mr Schmidt and included specialist acronyms and phrases that were unfamiliar to her. She accepted, however, that she understood "WBC" as an acronym for Westpac Banking Corporation and "as per" as " legal type of language ". After the security documents and statutory declarations had been signed, Ms Kirsch gave evidence that the meeting concluded and that all of the documents were left with Mr Schmidt. So far as Ms Kirsch was concerned, "Everything was signed, done, finished ". 34 Mr Schmidt recalled Mrs Kirszbaum and Ms Kirsch arriving at his offices on 24 June 2005 with a " big wad of documents ". He had not reviewed the documents before the meeting and gave evidence that there were no handwritten annotations on the Guarantee or the Form of Acknowledgment at the commencement of the meeting. Mr Schmidt stated that, after the meeting, Mrs Kirszbaum and Ms Kirsch " took the documents away " in order to procure the signature of Louis Kirszbaum. 35 In his evidence, Mr Schmidt rejected any suggestion that he directed Ms Kirsch to alter the Form of Acknowledgment by adding the annotation Expires 12/2005 as per WBC agreement . Mr Schmidt was adamant that the words Expires 12/2005 as per WBC agreement were not written on the Form of Acknowledgment during the meeting in his presence. Further, he was adamant that during the course of the meeting neither the duration of the guarantee nor any proposal to limit its term was discussed. 37 First, there is Mr Schmidt's role and Westpac's internal banking procedures. At the relevant time, Mr Schmidt was a senior relationship manager with Westpac with at least 38 years experience in banking. Having regard to his position and level of authority, it is most unlikely that Mr Schmidt would have unilaterally agreed to limit the duration of the Middleton Nominees Guarantee in the manner contended for by the Applicants. He simply was not authorised to do so and he was not responsible for this aspect of the Facilities. As noted earlier, from early November 2004, it was Mr Keating, Senior Business Development Manager in Westpac's Business Acquisition Group, and not Mr Schmidt, who was the Westpac bank officer responsible for putting together a finance proposal for submission to Westpac's credit area. And even then, neither Mr Schmidt nor Mr Keating was authorised to make unilateral decisions about, or alterations to, the security provided in support of the Facilities. Any variations to credit proposals required a request to be sent to the credit area of Westpac. The requests for approval of such changes were required to be in a prescribed form. 38 Secondly, there is the location of the annotation recording the alleged limitation. If Mr Schmidt, as the agent of Westpac, had agreed to limit the term of the Guarantee, during the course of that meeting, one would expect that the annotation recording the alleged limitation would be effected by annotating the Guarantee, not the Form of Acknowledgment. Even if the Form of Acknowledgment did form part of the contract of Guarantee, those parts of the Guarantee relevant to liability remained unaltered and inconsistent with the annotation. It would be highly unusual for such a critical term to be altered without making any alteration to the primary section of the Guarantee in order to maintain consistency. 39 Thirdly, the annotation was not initialled by Mrs Kirzsbaum. Had the annotation been made at the 24 June 2005 meeting by Ms Kirsch as she alleged (namely, at the direction of Mr Schmidt), one would have expected Mr Schmidt to have directed Mrs Kirszbaum to initial the annotation. 40 Fourthly, the annotation is, at best, vague. If, as the Applicants allege, the annotation was intended to record an agreement struck between the Applicants and Mr Schmidt that the guarantee was to expire on 31 December 2005, then it is surprising that the annotation does not explicitly record that fact and, as noted earlier, record that directly on the Guarantee. 41 Fifthly, the Applicants' suggestion that the phrase Expires 12/2005 as per WBC agreement refers to the finance term specified in the Advance BFA somehow provides support for the Applicants' version of the 24 June 2005 meeting is misguided. The Advance BFA was dated 24 June 2005, the same day as the meeting with Mr Schmidt. It was addressed to Ms Kirsch, the sole director of Advance. Ms Kirsch recalled receiving the document but did not recall when she received it. There was no evidence that Mrs Kirszbaum was shown the document or made aware of its contents. In the circumstances, even if Mrs Kirszbaum was aware of the annotation (which for the reasons expressed earlier I do not accept), it is unlikely that Mrs Kirszbaum was aware of the Advance BFA and the terms of it and would therefore have understood what the annotation conveyed. 42 Sixthly, Mrs Kirszbaum was not a reluctant guarantor. Mr Schmidt gave evidence that when Mrs Kirszbaum attended the meeting with him on 24 June 2005, she offered to provide additional security in the form of her own home to enable her daughter, Ms Kirsch, to proceed to purchase Victoria by the Park without having to use vendor finance for part of the acquisition. Mrs Kirszbaum was not asked any questions about this matter and Mr Schmidt was not cross-examined about it. 43 Seventhly, the allegation that the guarantees expired on 31 December 2005 was not raised until 19 October 2006. On 1 May 2006, Mrs Kirszbaum, Ms Kirsch, a Mr Thomas from Westpac and another Westpac officer met at Westpac's offices. During the course of that meeting, the funding provided by Westpac to Middleton Nominees and Advance was discussed. Mr Thomas' unchallenged evidence was that he told Mrs Kirszbaum that the Advance Facility had expired three months earlier on 31 December 2005, that interest on the Facilities was not being paid and that her Lygon Street Properties which she had provided as security were at risk. Mrs Kirszbaum's appearance at the meeting was important. Not only was she a director of Middleton Nominees but she was also a personal guarantor of Middleton Nominees. During the course of that meeting, neither Mrs Kirszbaum nor Ms Kirsch suggested that the guarantees had expired. In fact, Mrs Kirszbaum was provided with a copy of a further BFA which outlined the terms of additional short term funding to Advance. Westpac served a demand on Advance on 19 May 2006 and a further demand on Middleton Nominees on 25 May 2006. 44 Finally, I consider Ms Kirsch to be an unreliable witness. In addition to being implausible for the reasons stated above, her account of events also cannot be accepted on its own terms. Not only did she admit to forging the signature of others (including her mother, her husband and her brother) in relation to other documents relevant to other aspects of this matter, her evidence was shown on a number of occasions to be wrong. Accordingly, except where her evidence is independently corroborated, I do not accept it. As should now be clear, once the Applicants' account of the 24 June 2005 meeting is rejected as implausible and incredible, their expiry defence to the Middleton Nominees Guarantee fails regardless of whether it is framed as a term of the contract, lack of consensus, unilateral mistake, or subsequent oral modification of the earlier written contract. 46 As noted at [7(3)] above, the security offered by Nepalle under its guarantee comprised an exclusive mortgage over property at 44 Otira Road, Caulfield North ("the Nepalle property"). Following the issue of a demand by Westpac for repayment of the Advance debt on Nepalle in May 2006, the Nepalle property was sold and proceeds of $1,066,887.88 were received by Westpac. The bank applied the proceeds to debts owing by Advance, including debts owing on the Advance overdraft facility . The Applicants contend they are entitled to restitution of that amount on the basis that (1) the Nepalle Guarantee expired at the same time as the Middleton Nominees Guarantee expired, namely 31 December 2005; and (2) Nepalle did not consent to Westpac applying the proceeds of sale in reduction of the Advance indebtedness. I am not satisfied that the Middleton Nominees Guarantee expired on 31 December 2005 whether as alleged or at all. In those circumstances, there is no basis for any argument that the Nepalle Guarantee was impliedly limited to 31 December 2005. There are a number of other reasons for rejecting the contention that the Nepalle Guarantee expired on 31 December 2005. 49 First, at the time of the demand (25 May 2006), it was not contended that the Nepalle Guarantee had expired on 31 December 2005. Had Mrs Kirszbaum been under the impression, wrongly or not, that the guarantees had expired months earlier, one would have expected her to have mentioned it to her solicitors, who then presumably would have at least raised the issue with Westpac rather than simply urging the bank to allow the property sale to settle and apply the proceeds to a non-existing debt. 50 Secondly, Mrs Kirszbaum instructed her solicitor to pay the proceeds of sale to Westpac. During the course of her evidence, Mrs Kirszbaum suggested that she directed Mr Thomas to apply the proceeds to the Middleton Nominees debt. The allegation was never pleaded and Mr Thomas was not cross-examined about it. That is not surprising. At the time of the Nepalle demand, no demand had been made in relation to the Middleton Nominees Facilities. The allegation that the payment was appropriated to the wrong debt is rejected. 51 Finally, in the circumstances, even if the Middleton Nominees Guarantee had expired on 31 December 2005 (which I do not accept), I am not satisfied that an essential term of a security document (the Nepalle Guarantee) should be implied from a second security contract (the Middleton Nominees Guarantee) relating to the same financing transaction but provided by a different entity. It is well established that what was said and done by parties to an agreement is part of the relevant context in which the agreement is construed: Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 , 348-53 (per Mason J) and Royal Botantic Gardens and Domain Trust v South Sydney City Council [2001] FCA 760 ; (2002) 76 ALJR 436 ; see also Chacmol Holdings Pty Ltd v Handberg [2005] FCAFC 40 ; (2005) 215 ALR 748 at [32] (per Tamberlin J) and [68]-[77]; Chitty on Contracts, 27 th ed, Sweet & Maxwell, London, 1994 at [12057]; and McVeigh v National Bank of Australia [2000] FCA 187 at [30] (per Finkelstein J) and at [68] (per Kenny J) and Manks v Whiteley [1912] 1 Ch 735, 754 (per Fletcher-Moulton LJ). 52 I accept that these authorities support the proposition that contemporaneously executed contracts forming part of the same transaction should, as a general rule, be read as a whole and construed by reference to each other: Star City Pty Limited v Commissioner of Taxation [2007] FCA 1701 at [52] . However, it would go well beyond any concept of contractual context to alter the terms of one contemporaneously executed contract by reference to another where, as here: (1) the parties to each contract are not the same; (2) the term in the contract in question is not ambiguous; and (3) the term in the other contract is directly conflicting. This is especially so where the result is to require an essential term, such as the duration of the contract, to be amended from the written terms of one contract to obtain consistency between the two contracts. To do so would disrupt the longstanding rule that parties are bound by the unambiguous terms of their written agreement unless it is affected by fraud, mistake or misrepresentation: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471 , 483-84 [33] and [35]. The terms of the Nepalle Guarantee, including its duration, are not ambiguous. In the absence of such ambiguity, the written document stands on its own as a record of the agreement between the parties to it. 53 In the circumstances, there is no basis upon which the Applicants can contend that Nepalle has a claim of money had and received. Its claim for expiry of the Nepalle Guarantee is without foundation. The payment was made voluntarily. Nepalle made the payment in satisfaction of its obligations under the Nepalle Guarantee. The amount Nepalle paid was received by Westpac in satisfaction of the partial discharge of the debt of a third party, Advance. There is no basis, whether as alleged or at all, which prevented Westpac from applying that voluntary payment in discharge of Advance's debt. 55 On 26 March 2007, Westpac demanded Mr Volkov pay $5,036,782.61 under the Volkov Guarantee. That amount has not been repaid. Westpac claims that it is entitled to take possession of the Lumeah Road property. 56 Mr Volkov contends that he is not bound by the Volkov Guarantee. He seeks relief under s 87 of the TPA. In particular, he seeks orders permanently restraining Westpac from exercising rights under the Volkov Guarantee and the Volkov mortgage and requiring the discharge of the Volkov mortgage on the basis that although Mr Volkov signed the Volkov Guarantee, he executed it in reliance on false and misleading oral representations made to him by Mr Schmidt at a meeting at Mr Volkov's home on 24, 26, 27 or 28 June 2005 ("the Volkov/Schmidt meeting"). 60 Gadens, Westpac's solicitors, prepared these documents and arranged for the documents to be provided to Mr Volkov. The Volkov mortgage (document (4) in [59] above) was sent by Gadens to John Hogan & Associates under cover of a letter dated 21 June 2005. Under cover of a letter dated 28 June 2005, the Volkov mortgage was sent by Gadens to Ms Kirsch for "re-execution" because the mortgage had been returned to Gadens without being executed by Advance. 61 The Volkov Guarantee (document (1) in [59] above) and the Certificate of Independent Legal Advice (document (2) in [59] above), both of which were to be signed by Mr Volkov, were also sent by Gadens to John Hogan & Associates under cover of a letter dated 22 June 2005. Mr Volkov's evidence was that he never saw Mr Hyman and did not know who Mr Hyman was, that he did not complete the "yes" responses in the Form of Acknowledgment that accompanied the Volkov Guarantee and that he is uncertain whether the signature on the Form of Acknowledgment that accompanied the Volkov Guarantee was his own. Ultimately, his evidence was that he was not sure whether it was his signature, but he did not deny it was his signature. On the other hand, his wife (Ms Kirsch) gave evidence that Mr Volkov did sign the guarantee. 63 What is not in dispute is that the Volkov Guarantee and the Certificate of Independent Legal Advice bear signatures that appear to be those of Mr Volkov and a Mr Hyman and a date, 28 June 2005. What is in dispute are the circumstances in which these documents were executed. 64 Mr Schmidt's evidence was that he played no role in the execution of these documents by Mr Volkov, did not attend the Lumeah Road property until after settlement of the Advance transaction and that at no time did he discuss these documents with Mr Volkov. Put simply, Mr Schmidt's evidence was that he was never made aware of any reluctance on the part of Mr Volkov to provide the Volkov Guarantee. As will become apparent, I accept Mr Schmidt's evidence. 65 Mr Volkov's evidence was inconsistent with, and contradicted by, not only the contemporaneous documents but also by the evidence of Ms Kirsch. Each of Mr Volkov and Ms Kirsch made serious allegations about the conduct of both Mr Schmidt and Mr Hyman. I will deal with each in turn. 66 The heart of the allegations in relation to Mr Schmidt lies in an alleged meeting at the Lumeah Road property between Mr Volkov, Ms Kirsch and Mr Schmidt on or about the evening of 24 June 2005. Mr Schmidt's evidence is that the alleged meeting with Mr Volkov concerning the Volkov Guarantee did not occur, that at no time did he discuss the documents identified in [59] with Mr Volkov, and that he was never made aware of any reluctance on the part of Mr Volkov to provide the Volkov Guarantee. 67 As stated, Mr Volkov's evidence regarding the alleged meeting was inconsistent with that of his wife. A certain amount of inconsistency between witness accounts may be expected, at least in matters of detail. But in this case the extent and nature of the inconsistencies are so large as to raise serious issues. Those serious issues include the circumstances in which the meeting was arranged, the knowledge of Mr Volkov prior to the alleged meeting and finally, when the alleged meeting took place and what transpired at it. 68 First, the circumstances in which the meeting was arranged. Mr Volkov's pleading alleged that a meeting was requested by Mr Schmidt during a telephone conversation with Ms Kirsch in the late morning or early afternoon of the day on which the meeting took place. The pleading went on to allege that it was during this telephone call that Ms Kirsch told Mr Schmidt that Mr Volkov was not going to sign the Volkov Guarantee or the Volkov mortgage. The evidence at trial did not support this allegation. Ms Kirsch's evidence was that she told Mr Schmidt of Mr Volkov's concerns regarding the Volkov Guarantee on 24 June 2005 when she and her mother went to meet him at Mt Waverley. Mrs Kirszbaum's evidence did not refer to any such discussion at that meeting. Mr Schmidt denied such a discussion occurred, whether at Mt Waverley or at any other place. 69 Next, Mr Volkov's knowledge prior to the meeting. Ms Kirsch's evidence was that he knew of the Volkov Guarantee and was unwilling to give it and that was why she raised the issue with Mr Schmidt. On the other hand, Mr Volkov's evidence was that although he knew that Mr Schmidt was coming to his home, he had no prior notice that a guarantee was being sought from him prior to the alleged visit. 70 Finally, when the alleged meeting was said to have occurred and what was said to have transpired at it. Ms Kirsch said the meeting took place sometime between 4.30pm and 6.30pm on 24 June 2005 and that Mr Schmidt's visit was primarily to convince Mr Volkov to sign the Volkov Guarantee. The alleged meeting was said to have lasted for one and a half hours, during the course of which, Mr Schmidt's wife telephoned him requesting that he return home for dinner. Ms Kirsch's evidence was that Mr Schmidt ultimately talked Mr Volkov into signing the guarantee although Mr Volkov did not sign the guarantee in front of Mr Schmidt. 71 Mr Volkov gave evidence that Mr Schmidt attended his home on the evening of the alleged Volkov/Schmidt meeting and asked him to "give guarantee on [his] house" . Mr Volkov was adamant that he expressed strong resistance to this proposal and that he was upset by the request to sign the guarantee because it was a legal document and his English was poor. I said why --- why [do] I need this, it's not been discussed ...before. [Mr Schmidt] never says before because I knew when I first discussed with him what --- nobody mention my house because this property --- this Victoria By the Park valuated by --- I think so 20 or something million dollars and there's been enough money. This what we discussed...that I'm very upset and I said I don't think ... I have to sign this and what's he's told ... me, this is just detail, this what bank want and it's not important really, but if you want quick money --- I mean if Lola want quick money you just sign it for short time only and you can trust me, I deal with your mother-in-law for many, many years and she can trust me because she done well with me and for me to think about that[. ] I still don't want to sign and he tell me about history again, about, like, relationship with mother-in-law --- with Sonia Kirszbaum, and I never want to sign ... [and] then I stopped talking with him because I'm really ... upset. 72 Mr Volkov then said that he could not recall whether he signed the Volkov Guarantee at the Volkov / Schmidt meeting or in the presence of Mr Schmidt at some other time. He was unable to identify the handwriting on the Volkov Guarantee, including the signature of guarantor, as his own, and reiterated in his evidence that he would have signed at the direction of Ms Kirsch. Mr Volkov said, " [I]f my wife ask me something, 'sign this', I not think twice ". 73 I accept that at the time of trial, Mr Volkov was extremely distressed by the prospect that Westpac's entitlement to rely on the Volkov Guarantee would have the effect that he would lose his residential property. However, I am not satisfied that any conversation took place between Mr Schmidt and Mr Volkov about the Volkov Guarantee. Moreover, there is no reliable evidential foundation for the alleged representations. Mr Volkov's evidence was confused, failed to corroborate his wife's testimony on almost all significant points, and created the impression that his present distress at the possible outcome of the case clouded his accurate recollection of events as they transpired in mid-2005. Neither am I convinced that the handwritten annotations and signatures on the Volkov Guarantee do not belong to Mr Volkov. Mr Volkov acknowledged that he would have deferred to Ms Kirsch's direction in executing documents without exercising independent judgment about the documents. Ms Kirsch gave evidence that Mr Volkov signed the Volkov Guarantee but not on the evening of the alleged meeting with Mr Schmidt. Her evidence was that Mr Hyman witnessed the documents in his capacity as legal adviser but not in the presence of Mr Volkov. I do not accept the allegations made in relation to Mr Hyman. However, because I was not asked to draw any inference from his absence, I do not draw one or find it necessary to comment on whether it would have been appropriate to do so had a request been made. In the end, I find that the documentary record establishes that events transpired in the way described in those documents and that the evidence of Mr Volkov, given its contradictions with the testimony of Mr Schmidt and Ms Kirsch and its equivocations as to the provenance of the signatures, does nothing to displace or rebut that prima facie documentary evidence. There is no dispute that the provisions of the Code applied to the Volkov Guarantee. This arrangement is reflected in the printed words on the first page of the Volkov Guarantee: " The relevant provisions of the [Code] apply to the [Volkov Guarantee] ". Mr Volkov failed to adduce any evidence to support his allegations other than his own testimony, which I reject for the reasons discussed earlier. I am satisfied on the balance of the probabilities that the documentary evidence that was tendered, which contradicts Mr Volkov's claims on all key points, establishes the sequence of events. The solicitor's certificate was addressed to Westpac and identified Mr Hyman as a " solicitor...not acting for [Westpac] or [Advance] in this transaction" who had been asked to interview Mr Volkov, as guarantor. It appeared to me that [he] did have such understanding. 84 The solicitor's certificate establishes that a copy of the Advance BFA was provided to Mr Volkov and its contents were explained by Mr Hyman to Mr Volkov prior to its execution by Mr Volkov. That is a complete answer to Mr Volkov's claim that he was not provided with a copy of the " relevant credit contract " under cl 28.4(d)(i) of the Code. Mr Volkov had a copy of the Advance BFA as well as the related security documents to be executed by him and had the contents of them explained to him before undertaking any obligation as guarantor. The allegation that the legal advice identified under cl 28.5 was not available or obtained by Mr Volkov is rejected. Mr Volkov has the burden of establishing that he did not receive those documents. Given the difficulties involved in proving a negative, Mr Volkov's denial of receipt of such documents, if credible, might have carried significant, if not conclusive, weight. However, as I have explained, I cannot accept Mr Volkov's account of events as reliable. His case rests on a particular account of when and how the Volkov Guarantee was signed, which I do not accept (see [59]-[74] above). Because Mr Volkov failed to adduce any other evidence to support his cross-claim, it must fail. (d) 1995 Kirszbaum Guarantee Claim. Those securities included including the 1995 Kirszbaum Guarantee. Security for the 1995 Kirszbaum Guarantee was in the form of a mortgage over 255, 257, 344, 346 and 350 Lygon Street, Carlton and 61-65 Kooyong Road, Caulfield ("the Kirszbaum Properties"). 88 Westpac submitted that the 1995 Kirszbaum Guarantee secures all of Middleton Nominees' current liability to Westpac including any liability of Middleton Nominees as guarantor of the Advance debt. The Applicants disputed that the 1995 Kirszbaum Guarantee also secured the Advance debt on the ground that it could not be said that the Advance debt was of the same type or character as the original debt secured by the 1995 Kirszbaum Guarantee or that the Advance transaction documents refer back to the 1995 Kirszbaum Guarantee. In other words, the Applicants contended that it was not the intention of the parties for the Advance debt to be secured by the 1995 Kirszbaum Guarantee and the Kirszbaum Properties. For the following reasons, I reject that submission. First, there is no limit on the amount to be paid under it: cl 3. Secondly, cl 2 is headed "What is Covered by this Guarantee". This is the " Guaranteed Money ". (c) Money which [Middleton Nominees] is or becomes liable to pay [Westpac] under another guarantee or indemnity. The responsibility rested with Mrs Kirszbaum both before and after the guarantee was signed: cl 12. Moreover, Mrs Kirszbaum was liable to pay all Guaranteed Money including under replacement or changed "Arrangements": cl 13. The Applicants did not contend to the contrary. It is a guarantee that covers all moneys that Middleton Nominees " is or becomes liable to pay [Westpac] under another guarantee or indemnity ". Accordingly, the principle that " ambiguous contractual provisions should be construed in favour of the [guarantor]" does not arise: Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15 ; (1987) 162 CLR 549 , 561 and Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28 ; (2004) 217 CLR 424 , 433-437 [17] --- [23]. These general rules of construction were said to be found in the decision of Young J in Estoril Investments Pty Ltd v Westpac Banking Corporation (1993) 6 BPR 13,146, 13,151. Those reasons for decision and the subsequent authorities do not support the Applicants' submission. 93 In fact, what Young J summarised were not rules of construction but " guidelines which illustrate how court often approach dragnet clauses provided that the language permits them to do so" : Estoril Investments , 6 BPR 13,146 at 13,151; see also Smith v Australian and New Zealand Banking Group Ltd [1996] NSW ConvR 55-774. Nine "guidelines" were set out. They are no more than guidelines. What Young J did was to take a number of the guidelines and analyse whether the guidelines represented the position in Australia. The conclusion his Honour reached is best illustrated by looking at the second guideline that " only debts of the same type or character as the original debt are secured by the mortgage" . However, that is a very different thing from saying that there is some general rule that mortgages must be construed as if they were limited to debts of the same type as those for which the mortgage was originally taken out. 95 However, even if the guidelines were to be applied, the Applicants' position is not improved. First, as conceded by the Applicants, the language of the 1995 Kirszbaum Guarantee is unequivocal. Secondly, it cannot be said that the Advance debt is not of the same type as those debts for which the 1995 Kirszbaum Guarantee was given and, thirdly, it cannot be said that Mrs Kirszbaum could not have reasonably contemplated that the 1995 Kirszbaum Guarantee was limited. It was not. 96 In the present case, the 1995 Kirszbaum Guarantee secures all of Middleton Nominees' current liability to Westpac including any liability of Middleton Nominees as guarantor of the Advance commercial bill facility pursuant to the Middleton Nominees Guarantee. Gadens subsequently filed a cross-claim against Mr Schmidt as a result of what was said to have transpired at the meeting on 24 June 2005 at Westpac's offices. The failure of the Applicants' claims (and Mr Volkov's cross-claim) and success of Westpac's cross-claim against the First to Fourth Cross-Respondents means that it is unnecessary to consider any question of apportionment in relation to either of these claims. However, I do not propose to make final orders today. I will instead order the parties to confer and jointly file short minutes of final orders giving effect to these reasons for decision, including orders as to costs, by 4pm on Friday 28 March 2008. If the parties are unable to agree, they are to submit a joint statement by 4pm on Friday 28 March 2008 identifying: (1) the points of agreement; (2) the point(s) of disagreement; and (3) the respective positions of the parties on the point(s) of disagreement, in which case I will list the matter for further directions or argument as necessary. I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | whether two-page "form of acknowledgment" attached to the back of four-page "guarantee and indemnity" constituted part of the contract or a separate document whether essential term of a contract, if unambiguous, may be modified by reference to the conflicting written terms of a contemporaneously-executed contract between different parties but part of the same transaction in order to obtain consistency between the contracts whether all-moneys "dragnet clause" in a guarantee agreement is to be limited by "general principles of contract" where such principles would lead to a construction contrary to the unambiguous and express terms of the clause contracts |
The applicant is a citizen of the People's Republic of China. She arrived in Australia on 7 November 2007 and on 20 December 2007 applied for a protection visa. The application was refused by a delegate of the Minister on 25 February 2008. On 19 March 2008 the applicant applied to the Refugee Review Tribunal ("the RRT") for a review of the delegate's decision. In a decision handed down on 26 August 2008 the RRT affirmed the delegate's decision to refuse to grant a protection visa. On 15 September 2008 the applicant filed an application in the FMCA seeking judicial review of the decision of the RRT. The applicant failed to appear when the matter came before the FMCA on 7 October 2008 and the Federal Magistrate dismissed the application due to the non-appearance of the applicant. On 9 October 2008 the applicant sought to have the orders made on 7 October 2008 set aside but on 13 October 2008 the FMCA found there was no arguable case to justify setting aside the earlier orders and dismissed the application with costs. The judgment of the FMCA on 13 October 2008 gave consideration to the reasons which were given by the applicant for her failure to appear on 7 October 2008. The Federal Magistrate concluded that the applicant's evidence to the FMCA was not truthful and that no weight should be placed on the applicant's affidavit or oral evidence. Despite finding that the applicant had, accordingly, not provided a satisfactory explanation for her failure to attend the hearing on 7 October 2008 the Federal Magistrate went on to consider whether there was an arguable case to be tried and concluded that the applicant was able to demonstrate "no more than a disagreement with the findings and conclusions of the Tribunal". I agree with submissions made on behalf of the Minister that the orders made on 13 October 2008 were interlocutory in nature. Leave was required to appeal against those orders. Moreover, any application for leave to appeal was required to be filed within 21 days (see O 52 r 5 of the Federal Court Rules ). The application for an extension of time to file and serve a notice of appeal was made some eight weeks after the orders in question. Under O 52 r 15 an extension of time in relation to an ordinary appeal, not requiring leave, may be granted "for special reasons". It has been held that no lesser test should be employed when considering an application for an extension of time in which to seek leave to appeal (see Deighton v Telstra Corp Ltd [1997] FCA 1568 and Sharman License Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802 ( "Sharman" ) at [20]). A special reason is one which takes the case out of the ordinary (see Jess v Scott (1986) 12 FCR 187 at 195 and Vu v Minister for Immigration and Citizenship [2008] FCAFC 59). Since the test for the granting of leave to appeal from an interlocutory judgment is that the decision must be attended with sufficient doubt to warrant its being reconsidered by an appellate court, and that substantial injustice would result if leave were to be refused, supposing the decision to have been wrong ( Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 at 398-400), in principle the question on an application for an extension of time is whether this test has sufficient prospects of being satisfied, to warrant granting the extension. In practice, the debate and treatment of the 'arguable error' question on an application for an extension of time, will be no different from what the debate and treatment of it would be on the application for leave to appeal itself. Since an applicant for extension of time within which to appeal as of right must show 'special reasons' (O 52 r 15(2)), nothing less should be required of an applicant for an extension of time within which to apply for leave to appeal ( Deighton v Telstra Corporation Ltd , above). In support of her application for an extension of time the applicant filed an affidavit which suggested, apart from alleging error on the part of the RRT, that the FMCA did not give her a chance to explain her claim. There is no substance in that allegation. Furthermore, despite the fact that directions were made on 17 December 2008 that the applicant file written submissions in support of her application she did not do so. At the hearing of her application I asked the applicant why she had not acted earlier. She said that she had left everything to her migration agent but Ms Rayment who appeared for the Minister told me that no registered migration agent has been notified to the Department as acting for the applicant. In my view special reasons to grant an extension of time have not been established and the application for an extension of time in which to file and serve a notice of appeal is liable to be dismissed upon that basis alone. Moreover, in my view there is no prospect that leave to appeal would be granted. The draft notice of appeal contains the following three grounds: Refugee Review Tribunal had bias against me and did not make fair decision for my application. I clarify all my points at the hearing of the Federal Magistrates Court, but the Judge did not consider my application fairly. The Judge refused my application at the hearing. It is not fair. I am Falun Gong practitioner. I will be persecuted if I return to China. I believe that my application was not considered reasonably by the Judge at the Federal Magistrates Court. I even did not receive my green book. In my view that test is not met in the present case. The grounds of appeal do not identify any jurisdictional error in decision or processes of the RRT. Identification of such an error is the minimum condition to be met to render an appeal to this Court useful. Mere allegations of bias are insufficient. No other assistance was provided by the applicant which might overcome this basic defect in her application. The fact that leave to appeal would not be granted is a further reason not to grant an extension of time to file and serve a notice of appeal. In the circumstances the appropriate order is that the application for an extension of time to file and serve a notice of appeal be dismissed. There is no reason why costs should not follow the result. I will order that the application for an extension of time to file and serve a notice of appeal be dismissed with costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | application for an extension of time in which to seek leave to appeal against an interlocutory judgment necessity for leave to appeal if an extension was granted special reasons not required by federal court rules for an extension of time in which to seek leave to appeal but no lesser test should be used than for ordinary appeals. practice and procedure |
The brief background facts are that on 25 August 2006, the Supreme Court of Queensland ordered that the applicant in the proceedings be wound up and that Matthew Leslie Joiner and Gerald Thomas Collins be appointed as liquidators. The liquidators have considered the proceedings before this Court and have formed the view that it is not in the best interests of the creditors of the applicant company that the proceedings be pursued. Accordingly, the liquidators seek leave to discontinue the proceedings. The proceedings are made up of a large number of parties. 2 The background to the various orders made in the proceedings to date is briefly this. On 14 April 2005, the application was filed naming the first eight respondents. On 15 April 2005, the ninth to 12 th respondents were joined by order of Kiefel J. On 27 May 2005, judgment was entered for the applicant against the fifth respondent. On 30 August 2005, the applicant discontinued the proceedings against the fourth, eighth, 10 th and 11 th respondents. On 6 September 2005, the applicant filed a statement of claim against the first, second, third, ninth and 12 th respondents. 3 On 13 April 2006, the applicant discontinued the proceedings against the first, third and ninth respondents. Although named in the proceedings, the proceedings do not appear to have been pursued against the 6 th and 7 th respondents. Consequently, the proceedings remain on foot only in respect of the second and 12 th respondents. The application is supported by an affidavit of Damien Roger Butler filed 3 May 2007 and an affidavit of Meredith Bennett deposing to service of the application on the second and 12 th respondents. At to the 12 th respondent, the position is that on 27 April 2007, the 12 th respondent was deregistered by the Australian Securities and Investment Commission ('ASIC'). In response to being served with the current application, ASIC indicated that it does not oppose the application nor the orders sought by the application. 4 The applicant has not received any response from the second respondent and the second respondent has not appeared before the Court this morning. The second and 12 th respondents filed a defence in the proceeding on 30 September 2005 and an amended defence on 1 November 2005. I am satisfied, for the purposes of the rule that leave ought to be given to discontinue the proceedings. I am also satisfied that the appropriate order in the circumstances is that there ought to be no order as to costs. The discontinuance of the proceedings by the liquidators is due to their objective assessment of the merits of the proceeding and the step to be taken to best serve the interests of the creditors. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application by liquidators of the applicant for leave to discontinue the proceedings corporations law |
He seeks the imposition of penalties upon the respondent Construction, Forestry, Mining and Energy Union for alleged contravention by it of the Building and Construction Industry Improvement Act 2005 (Cth) ("the Act "). 2 The applicant alleges that the Union breached s 38 of the Act , on 20 October 2005, by engaging in unlawful industrial action at a construction site in Plenty Road, Bundoora, known as the University Hill site. 3 The applicant further alleges that on 21 October and 24 October 2005 the Union breached s 43(1) of the Act by threatening to take action against a construction company, Vaughan Constructions Pty Ltd, with intent to coerce Vaughan to employ a person nominated by the Union as a building employee at the site. 4 The Union denies that it contravened the Act as alleged by the applicant. Mr Corey Fahnle occupied the position as Site Manager for Vaughan. He managed the daily activities on site and organised various sub-contractors. Mr Fahnle gave evidence that on 20 October 2005 there were two subcontractors operating on the site: V&G Concrete Constructions Pty Ltd and Crushtec Australia Pty Ltd. V&G had two employees on site, Fred and Shannon Gilliland. They were preparing and paving concrete footpaths around the sheds on the site. Mr Fahnle said that Crushtec's role was to strip the grass and top soil on the site, place it in a stockpile and prepare the site for earthworks. He said that Crushtec had two workers present on the site on 20 October 2005 at 7.00 am. He said that one was a female, Ms Sally Belcher. She operated a scraper machine which removed top soil from the site. Ms Belcher was employed by Tooradin Garden Supplies which was contracted by Crushtec to perform work for it on the site. It is not clear who else Crushtec had on the site at 7.00 am on 20 October 2005. In an interview given to an ABCC Inspector on 11 April 2006, Mr Steve Dougas said that he and a Mr Rodney O'Keefe from Crushtec came on to the site at 7.00 am on 20 October 2005 and that by that time Ms Belcher had left the site. Mr Dougas told the inspector that Ms Belcher was not on site when he arrived on site. However this is inconsistent with other evidence, including that of Mr Fahnle and Ms Belcher herself. Mr Fahnle said Mr Mark Sievers, an employee of Vaughan was also on the site, performing work on fences and barricades. They were Mr Danny Berardi and Mr Bob Mates. Mr Fahnle said the organisers asked him if Vaughan had a contamination report for the site. He said that Vaughan did not have a site contamination report and did not need one as the site had no history of industrial use. This response was incorrect. Mr Fahnle appeared not to be aware that Vaughan had commissioned and obtained a "Baseline Soil Assessment" report for the site in June 2005, in accordance with its usual practice. 7 Mr Fahnle said that he gave the organisers the names of the workers on site, including Ms Belcher. He also referred to a discussion with them concerning the absence of a pre-commencement meeting before work began on the site. There was also an issue about the lack of a female toilet on site. 8 Under cross-examination Mr Fahnle conceded that he had a dim recollection of events which occurred in 2005. He agreed, with hindsight, that a contamination report should have been prepared for the site because without one he was unable to say, with certainty, that the site was not contaminated. Even during his oral evidence he was not aware of the existence of the June 2005 report and counsel for the applicant did not seek to bring it to his attention. 9 Although Mr Fahnle, in his affidavit in evidence, suggested that the organisers called Ms Belcher from her work, he conceded that he might have called Ms Belcher from her scraper machine after speaking with the organisers. So much is consistent with Ms Belcher's evidence that she was "waved over" by Mr Fahnle "to stop work" and that she had had no prior discussion with the Union representatives before she stopped work. 10 In an interview with an ABCC inspector on 21 February 2006, a transcript of which was tendered as an exhibit, Mr Fred Gilliland said that he commenced work at 7.05 am. He said that he was first aware that there was a problem on site when "Corey [Fahnle] came out and told us we couldn't pour". Mr Gilliland said that Mr Fahnle did not give him a reason but just said "we've got a problem". He said that the only thing he said to Mr Berardi was "g'day how you going?". The inspector asked Mr Gilliland whether he knew "the exact reason as to why works was [sic] stopped". He said "no". He also said that he did not speak to any other sub-contractors on site about what happened. 11 In his interview with the ABCC inspector, Mr Dougas said that "we were asked to go in the shed, in the lunch shed and the Union rep told us not to work, got to stop work until they solved some differences, whatever that was with Vaughans". He did not say who asked him to go into the shed in the first place. He also maintained that Ms Belcher was not there at the time, when the better view of the evidence is that she was at the site at that time. 12 Mr Dougas said that he recalled the organisers mentioning a contamination report which "they didn't have". He said he didn't pay much attention to the other issues because they did not concern him. 13 I listened in the courtroom to the inspector's interview with Mr Dougas. I consider the interviewer's approach to be biased against the respondent and her tone to be avidly anti-Union. Mr Dougas: Yes. Rather than asking him what happened she said, "did the union do that? " He answered, "yes". But later he suggested that the person who stopped him was "the supervisor or whatever". 14 The interview with Mr Dougas is unsatisfactory evidence and inherently unreliable. Insofar as it is relied on to support the proposition that the organisers, and not Mr Fahnle, called the workers from their jobs, it is inconsistent with the evidence of Ms Belcher and Mr Gilliland that Mr Fahnle called them from their jobs before any discussion was held with an organiser. 15 I do not accept the evidence of Mr Fahnle that "Mates and Berardi called in all of the workers on the site and held a meeting in one of the sheds on the site. " That evidence is inconsistent with his admission that he might have called Ms Belcher off the site. I accept her evidence that he did. I also accept Mr Gilliland's statement that Mr Fahnle asked him to stop working. It is improbable that Mr Fahnle took a different approach with Mr Dougas. Mr Fahnle then directed the workers on site to stop work. What occurred immediately thereafter is referred to in uncontradicted affidavit evidence of Mr Fahnle. Mr Mates and Mr Berardi had a meeting with some of the workers on site. This meeting took 10 to 15 minutes. Mr Fahnle returned to the site office while the meeting occurred. When the meeting finished either Mr Mates or Mr Berardi told him that a ban had been placed on the site because of the lack of a female toilet and the absence of a site contamination report. By 9.30 am none of the workers remained on the site, other than Mr Fahnle and Mr Sievers. Crushtec and V&G did not perform any more work on the site on 20 October 2005. 17 During a meeting on the site held at about 8.00 am on 21 October 2005, one of either Mr Mates or Mr Beradi told representatives of Vaughan that the ban on the concreting works would be lifted but that the ban on productive works including the earthworks would continue. In any event, Crushtec employees performed work on the site on the afternoon of 21 October 2005. Crushtec employees completed their scheduled works on 22 October 2005. Insofar as there was a ban on work at the site, it did not apply to concreting work after 8.00 am on 21 October 2005 or to earthworks on site from the afternoon of 21 October 2005. Effectively from the afternoon of 21 October 2005 there were no operative bans on the site. There appeared to be a ban, in name only, with respect to earthworks, as the organisers appear not to have been aware that Crushtec came back on site on the afternoon of 21 October 2005. 18 On 24 October 2005, during a meeting between Mr Noble and union organisers, Mr Mates said that the "bans" would remain in place. In fact, there were no operative bans in effect at that time. The concreting work had been completed and Crushtec had completed their scheduled works by 22 October 2005. 19 The workers did not take industrial action as such. They were called off the job by Mr Fahnle. However, the organisers, on behalf of the Union, imposed a ban on the performance of work on the site after the meeting between the organisers and some of the workers on the morning of 20 October 2005. The bans on the concreting works lasted until 8.00 am the next day. The bans on earthworks lasted until the afternoon of the next day. Bans of that sort constitute "building industrial action" under s 36(1) of the Act : see Cahill v Construction, Forestry, Mining and Energy Union (No 2) [2008] FCA 1292 at [58] , per Kenny J. 20 Counsel for the Union contended that the application was not pleaded so as to encompass any ban but only a ban which would constitute a restriction on the performance of work in accordance with the National Building and Construction Industry Award 2000 . 21 As the organiser's claims included the issue of the safety of working on the site in the absence of a site contamination report, counsel submitted that the bans did not involve a restriction on the performance of work in accordance with the Award. He observed that Mr Fahnle was, in effect, the agent of the employer of the workers in his capacity as site manager. 22 The application seeks a declaration that the Union engaged in unlawful industrial action on the site in breach of s 38 of the Act . Section 37 defines "unlawful industrial action" as action which is industrially motivated, constitutionally connected and is not excluded. 23 The Union did, through the organisers, engage in such industrial action, by imposing bans (albeit limited and short-lived ones). The evidence makes out that aspect of the claim for the reasons set out above. 25 Whether or not para 16 is made out cannot govern whether para 13 is made out. I accept that the allegations in para 13 are proven. Accordingly, the Court finds that on 20 October 2005, the respondent, through its organisers, engaged in unlawful industrial action at the University Hill site, in breach of s 38 of the Act . 27 I am not satisfied that on 21 October 2005, any representative of the Union had any discussion with any representative of Vaughan about employing a person on the site chosen by the Union. The only person to give evidence of such a discussion occurring on 21 October 2005 was Mr Holland. Mr Holland was the project manager for Vaughan at the relevant time. He conceded, under cross-examination, that an application filed in the Australian Industrial Relations Commission ("AIRC") only referred to that topic being raised on 24 October 2005. Mr Noble, Vaughan's construction manager, only referred to such a discussion occurring on 24 October 2005. 28 I am not satisfied that the discussion alleged by Mr Holland to have occurred on 21 October 2005 in fact occurred. Mr Holland was an unimpressive witness. He saw his role as an advocate for the applicant rather than as assisting the Court with properly considered answers. For example, it was not until counsel for the Union mentioned the possibility of a perjury charge by reference to the Crimes Act 1914 (Cth) that Mr Holland was prepared to accept that certain words he attributed to Mr Berardi were not the precise words used by Mr Berardi. 29 Mr Holland was not able to explain the lack of a reference in an AIRC document to any discussion on 21 October 2005 concerning the employment of a shop steward/safety representative suggested by the Union. The proper explanation is that no such discussion occurred. If it had have occurred Mr Noble would have given evidence about it. He did not. Insofar as the application alleges a breach of s 43 of the Act by the Union with regard to any alleged comments made by one of its organisers on 21 October 2005, it is dismissed. A discussion occurred about a range of issues relevant to the Bundoora site, including staffing on the project. 31 Mr Noble conceded that the organisers were concerned about safety on site. He also acknowledged discrepancies between what was contained in his affidavit, constituting his evidence in chief in the proceeding (sworn in May 2008) and a statement given to an ABCC inspector in February 2006 about the events of 24 October 2005. 33 Earlier in his evidence, Mr Noble stated that the claim for the employment on site of a safety representative trusted by the organisers was put so, if accepted, a claim for higher pay on the site on the basis of a "Mixed Metals Agreement" would be dropped. I do not accept that evidence. It is inconsistent with the proper inferences, agreed to by Mr Noble at the conclusion of his cross-examination, to be drawn from the discussion with the organisers. It also defies reality and commonsense to suggest that the organisers would jeopardise safety on site for a few extra dollars an hour in such a dangerous industry. Further, Vaughan did not consider that the claim for payment on the basis of a Mixed Metals Agreement was seriously pursued by the organisers. In his affidavit evidence, Mr Holland said that he did not think Mr Berardi "was being serious with that claim". 34 Section 43 of the Act prohibits a person, amongst other things, from threatening to take action with intent to coerce another person to employ a person as a building employee. No breach of s 43 is established on the facts of this matter. The relevant organisers did not threaten Vaughan. They merely stated that they would need to keep a close eye on safety on the site in the absence of an experienced health and safety representative on the site who they could trust to carry out his or her function properly. If that statement is construed as a threat, there was no intent to coerce, in the sense that there was no negation of choice for Vaughan. It could, and did, simply refuse to comply with the organisers' request. It was free not to employ anyone suggested by the organisers, but with the knowledge that the organisers would be vigilant on health and safety issues on the site in the absence of a health and safety representative they could trust. It was possible that the workers on site would, in any event, independently elect a person in whom the organisers had confidence. Negation of choice can be contrasted with a desire to influence, persuade or induce. The question will be, as Weinberg J said in National Tertiary Education Industry Union at 143, whether "a person is left with a realistic choice as to whether or not to comply". The objective of the organisers in their 24 October 2005 discussion with Mr Noble was to "influence, persuade or induce". Vaughan was left with a realistic choice not to comply and did not comply. 36 Further, "intent to coerce" must carry with it the exertion of pressure which involves conduct that is "unlawful, illegitimate and unconscionable": see Seven Network (Op erations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 456 ; (2001) 109 FCR 378 at [41] per Merkel J. Mr Noble admitted in the concluding portion of his cross-examination that the conduct of the organisers was not of that sort. 37 Counsel for the applicant submitted that, at the 24 October 2005 meeting, the organisers told Mr Noble that, unless Vaughan employed a Union nominated shop steward, the bans on earthworks would remain in place. There are two problems with that submission. First, there were no operative bans on earthworks on the site on 24 October 2005. Second, the cross-examination of Mr Noble revealed that the " only threat" (emphasis added) was that if the Union did not have on site a safety representative/shop steward that it knew and trusted then organisers would need to visit the site to catch Vaughan if it did something wrong. Mr Noble also conceded that the organisers were not threatening to do anything "over and above their powers as union officials". Action "over and above" their powers would include the maintenance of unlawful bans. In any event there was no negation of choice for Vaughan if it did not accede to the demand for a Union nominated safety officer/steward as earthworks and concreting works had been completed by 24 October 2005. No operative or relative bans could have been maintained as a matter of practical reality. This aspect of the application is also without merit. The Court admitted the evidence under s 63 of the Evidence Act 1995 (Cth). The evidence consisted of a recording and transcript of an ABCC inspector's interview of Mr Dougas. Mr Dougas was not available to give evidence "about an asserted fact", that is, the events of 20 October 2005, because he had relied on his privilege against liability to a civil penalty under s 128(1)(b) of the Evidence Act and the Court, under s 128(5) , did not require him to give that evidence. 40 The applicant subpoenaed Mr Dougas to give evidence. He was not available to give evidence about the events of 20 October 2005 because he relied on s 128 of the Evidence Act . The applicant did all he could reasonably do to compel Mr Dougas to give evidence about the events of 20 October 2005, but without success. For that reason I admitted the recording of Mr Dougas' interview and the accompanying transcript into evidence. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | whether union engaged in unlawful industrial action within the meaning of s 38 of the building and construction industry improvement act 2005 (cth) whether union imposed a ban on the performance of work at the construction site whether the bans constituted a restriction on the performance of work in accordance with the relevant award whether union threatened to take action against a construction company with intent to coerce the company to employ a building employee whether there was a threat whether there was intent to coerce no negation of choice therefore no intent to coerce industrial law industrial law |
As this issue was not raised during the hearing at first instance, in the Federal Magistrates Court, there is a preliminary question as to whether the appellant should be granted leave to raise it as a ground of appeal. There is also an issue as to whether the learned Federal Magistrate was correct to dismiss the appellant's application because he had made a previous application with respect to the same decision of the Tribunal, which had been dismissed for non-appearance of the appellant at the hearing, and because his later application was made outside time limits in the High Court Rules. 2 The appellant is a citizen of Sri Lanka. He arrived in Australia on 21 August 1999, accompanied by his wife and their son. On 10 January 2000, all three lodged applications for protection visas pursuant to the Migration Act 1958 (Cth) ("the Migration Act "). By s 36 of the Migration Act , there is a class of visas to be known as protection visas. A qualification for a protection visa is that the person applying for it be a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. The terms "Refugees Convention" and "Refugees Protocol" are defined in s 5(1) of the Migration Act to mean respectively the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and the Protocol relating to the Status of Refugees done at New York on 31 January 1967 respectively. It is convenient to call these two instruments, taken together, the "Convention". The appellant and his wife and son all applied to the Tribunal for review of that decision. You are now invited to come to a hearing of the Tribunal to give oral evidence, and present arguments, in support of your claims. You are also entitled to ask the Tribunal to obtain oral evidence from another person or persons. Accompanying the letter was a form entitled Response To Hearing Invitation. The appellant completed this form and lodged it with the Tribunal on 1 August 2001. In response to the question "Do you need an interpreter? " the appellant ticked the box marked "Yes". He indicated that the language for which an interpreter was required was "Sinhalesi". In response to the question "Do you have any special needs for the hearing? (eg. wheelchair access, male or female interpreter)", the appellant circled the word "male" and wrote beneath "male -- (we do not want mr [name of a particular person])". 5 The Tribunal arranged for an interpreter (not the person whom the appellant had said was not wanted) to be present at the hearing, by sending an Interpreter Booking Request form to an agency called On-Call Interpreters. This form advised the name of the unwanted interpreter and, importantly, contained the words "Please note: If an interpreter accredited at the professional level (NAATI level 3) or above is not available please inform the Tribunal. These were completed, apparently by the agency, on 8 August 2001. The form provided the opportunity for the agency to indicate the appropriate "NAATI Level". The choices were the numbers 5, 4, 3 and 2 and the words "recog" and "none". In the instant case, a tick was inserted under the number 2 and then apparently crossed out and replaced by a tick under "recog". Beside the words "Reason for offered interpreter not being professional level or above" were listed three options: "this language/dialect is not tested at professional level; or very limited availability of professional level interpreters in this language/dialect; or no professional level interpreter available at requested date/time. " In this case, the box beside "this language/dialect is not tested at professional level" was ticked. 7 Early in the Tribunal's hearing, there was a discussion about the fact that the interpreter had done some translations of the appellant's documents, and had thereby had some contact with the appellant. The interpreter asked the Tribunal member whether, in the light of that, it was proper for him to interpret in the Tribunal hearing. The Tribunal member said that he did not think that this was a problem. The Tribunal member then raised with the interpreter the level of the interpreter's qualifications. The interpreter said that he had "NAATI recognition". The Tribunal member asked whether this was at level 3. The interpreter said "Not level 3. " The Tribunal member repeated these words interrogatively, and the interpreter answered, "Yes. " Without further discussion as to the interpreter's qualifications, the Tribunal member embarked on the hearing with the interpreter interpreting. 8 The Tribunal's decision and reasons for decision are dated 19 October 2001 and were handed down on 9 November 2001. The Tribunal affirmed the decision of the delegate of the Minister not to grant protection visas to the appellant, his wife and their son. On 5 December 2001, the appellant applied to this Court, seeking to overturn the Tribunal's decision. His application was remitted to the Federal Magistrates Court. On 11 September 2002, Federal Magistrate Connolly dismissed that application. His Honour's order records that counsel appeared for the Minister, and that there was no appearance for the appellant. In the present appeal, counsel for the Minister made no suggestion that the dismissal was for any reason other than the non-appearance of the appellant. 9 On 8 October 2002, the appellant applied to the High Court of Australia for relief pursuant to s 75(v) of the Constitution in relation to the Tribunal's decision. The High Court remitted the proceeding to this Court on 7 February 2003. On 22 April 2003, Marshall J ordered that the appellant file and serve an amended application, containing proper particulars of the ground relied upon, and remitted the matter to the Federal Magistrates Court. The appellant did not file an amended application, although he did file in the Federal Magistrates Court a statement of contentions, dated 10 June 2003, which does not bear the name of any legal practitioner. That statement of contentions alleges that the Tribunal asked itself the wrong question, and that it failed properly to apply the real chance test and to undertake the required speculation. Otherwise, by the statement of contentions, the appellant attempted to challenge a number of conclusions of fact expressed by the Tribunal in its reasons for decision. On 19 August 2004, the Federal Magistrates Court dismissed the application and ordered that the appellant, his wife and son pay the costs of the Minister, fixed at a particular sum, reserving liberty to apply within 14 days of service of the order with respect to the amount of costs. The appellant then appealed to this Court. His notice of appeal did not raise the question of the standard of interpretation at the Tribunal hearing. That question was not raised until the appeal first came on for hearing on 30 November 2005. On that occasion, the appellant appeared unrepresented, with the assistance of an interpreter. That interpreter, Mr Chandrasiri Ganegoda, advised me that the interpreter who had been present at the Tribunal hearing was not qualified to National Accreditation Authority for Translators and Interpreters ("NAATI") Level 3 or above. Mr Ganegoda advised that, other than himself, there was no NAATI Level 3 Sinhalese interpreter in Victoria. Quite properly, Mr Ganegoda did not wish to comment otherwise on the skills of the interpreter who had been present at the Tribunal hearing. As a consequence of this discussion, I adjourned the hearing of the appeal, ordered that the appellant file affidavit material in support of an application for leave to add as a ground of appeal the proposition that the standard of interpretation at the Tribunal hearing was such as to cause the Tribunal to deny him procedural fairness, and ordered that the appellant pay the costs of the adjournment. I also indicated that I was prepared to certify pursuant to O 80 of the Federal Court Rules for referral of the appellant for legal assistance. Subsequently, affidavit material was filed, including an affidavit of Mr Ganegoda, who had listened to the tape-recording of the Tribunal hearing and had compared what the appellant said with the interpreter's translation. Before the hearing of the appeal was resumed, the Minister also filed an affidavit of Mr Anuruddha Liyanage, who had also listened to the tape-recording of the Tribunal hearing and had made his own analysis of the interpreter's performance. As there was little difference between the findings of Mr Ganegoda and Mr Liyanage, there was no cross-examination of either when the hearing of the appeal resumed. 10 On the resumption of the hearing of the appeal, the appellant was represented by senior and junior counsel, pursuant to the scheme under O 80 of the Federal Court Rules . The appellant served in the Sri Lankan Air Force. He was posted to a place close to Trincomalee, a predominantly Tamil area. On a visit to Trincomalee during a day off, he renewed an acquaintance with an old classmate, a Tamil. Thereafter, he visited his Tamil friend's house and sometimes stayed the night. 12 The appellant also visited his fiancée in Negombo, near Colombo. His Tamil friend organised his business trips so that they could go together in the Tamil friend's car. On occasions, the Tamil friend allowed the appellant to use his car to go to Negombo. On these occasions, the appellant carried parcels to deliver to the Tamil friend's contacts in Colombo, and would return with parcels for the Tamil friend. 13 In October 1992, while the appellant was off duty at his barracks, military police took him to the squadron leader who alleged that he had been helping terrorists by transporting contraband to Colombo. The appellant admitted travelling to Negombo with his Tamil friend on some of the dates when he was alleged to have transported contraband, but denied any involvement in the transport of contraband. He was told that his Tamil friend had been arrested and made a confession implicating the appellant. 14 The appellant was imprisoned and charged formally. An inquiry was fixed for 20 December 1992. He was allowed no visitors. His mother died on 8 December 1992 and the appellant was allowed to attend her funeral under guard. A relative helped him to escape and he hid at the relative's home for two years. When his relative became unhappy with local gossip, in December 1994, he arranged for the appellant to go and work at a small tea estate. The appellant worked there as a supervisor. He went to Negombo in November 1995 and married in a quiet ceremony on 24 January 1996. 15 The appellant then worked as a fisherman, disguising his identity. By July 1998, the Air Force was making inquiries of his wife. He arranged to go with a fisherman to India, where he was introduced to the owner of a textile shop, in which the appellant worked. He met an agent who arranged travel to other countries, and used the agent's services to bring himself and his family to Australia. 16 The appellant provided to the Tribunal a number of documents in support of his claims. He also relied on a report of a psychologist, who found that the appellant was suffering from depression and anxiety. Based on "country information", provided by the Department of Foreign Affairs and Trade, the Tribunal considered it implausible that the appellant would have been considered to have been involved with the LTTE. It also considered that his history of working in various places for long periods after 1992 was not consistent with him being a wanted man at that time. As a result, the Tribunal did not accept that the appellant was detained in custody in 1992 as a result of his association with his Tamil friend. It followed from this that the Tribunal found that the documents on which the appellant had relied had been contrived and manufactured to assist his application for refugee status. The Tribunal also noted that the appellant was able to lead a normal life after 1992 and to marry and have a child. There did not appear to have been much interest in him until well after that date. Because of the passage of time, the Tribunal did not accept that the authorities were still looking for the appellant in 2000 and 2001. The Tribunal considered that, if the appellant had escaped, he would have been detained a long time ago. He had also departed the country on several occasions, and would not have risked this if he were a wanted man. 18 In the light of the "country information", the Tribunal took the view that Sinhalese people are not suspected of supporting the LTTE. Even if it were wrong, and the appellant did commit some offence for which he ended up in custody, the Tribunal did not accept that it would have been because he was considered to support the LTTE. As a result, the Tribunal found that the appellant did not have a well-founded fear of persecution because of any imputed political opinion, or for any other Convention reason. 19 Although the appellant did not put his case on the basis of desertion from the Air Force, the Tribunal considered this possibility. It considered that it was most likely that the appellant would have been caught if he had deserted, and found that there was no suggestion that any action that might be taken in respect of desertion would be taken for any Convention ground. Although accepting that the appellant had the conditions set out in his psychologist's report, the Tribunal did not accept that those conditions stemmed from his alleged arrest and escape, or that they had occurred as a result of any Convention-related matter. First, the application, so far as it sought the remedy of certiorari, was out of time under O 55 r 17(1) of the High Court Rules . The court refused to enlarge that time under O 60 r 6 of the High Court Rules . The court pointed out that the appellant, in the material he placed before the court, provided no grounds for an enlargement of the time limit. The Federal Magistrate discussed authorities from the Full Court of this Court, referring to the possibility that, once the High Court remitted a proceeding to a lower court, the time limits in the High Court Rules were no longer of significance. Her Honour did not seek to resolve the issue. Her Honour pointed out that, although the appellant sought the remedy of prohibition (which was not subject to any time limit under the High Court Rules), he did not seek mandamus, and described the remedies of certiorari and mandamus as "necessary corollaries of prohibition. " Her Honour then said that, in any event, delay in seeking such relief could be considered when exercising any discretion. 21 Second, the Federal Magistrate dismissed the appellant's application on the ground that it was barred by the principles of res judicata, as a result of the dismissal by another Federal Magistrate of the previous proceeding under Pt 8 of the Migration Act . Her Honour pointed out that the appellant raised the same grounds as in the previous proceeding. In addition, the grounds he raised invited the re-agitation of questions of fact, which the Federal Magistrates Court could not do. In her Honour's view, the earlier order dismissing the first proceeding must be seen as finally disposing of the subject of the litigation. The grounds relied on in the proceeding remitted from the High Court were no wider or greater than the grounds available in the earlier proceeding. The same cause of action was relied upon in the two proceedings. The substratum of facts giving rise to both proceedings was the same. The substance of the two proceedings was the same, with the right to relief in each case informed by the same substantive law principles. The parties to the two proceedings did not differ in any material respect. Therefore, the earlier order finally determined the issue of whether the Tribunal was in error, being a constructive failure to exercise jurisdiction or an error of law in the interpretation and application of the Convention. 22 The third ground of dismissal of the proceeding was that, in any event, there was no jurisdictional error in the Tribunal's decision. The Federal Magistrate summarised the reasons given by the Tribunal for dismissing the appellant's claims. Her Honour pointed out that the Tribunal had the advantage of seeing and hearing precisely how the appellant gave his evidence, and made credibility findings adverse to the appellant, with which the court should not interfere readily. The Tribunal was entitled to accept "country information" in preference to the appellant's evidence, and did so. It was a matter for the Tribunal to determine the probity it accorded to various aspects of the evidence before it. The Tribunal was not required to accept uncritically all or any of the allegations of the appellant. The findings it made were open to it on the evidence. There was therefore no arguable jurisdictional error. The decision of the Tribunal was therefore a "privative clause decision", for the purposes of s 474(1) of the Migration Act , and could not be challenged in the court. The grounds relied on by the appellant were not sustainable on a traditional judicial review approach. It sets and maintains standards of translation for written communications and interpretation for oral communications. It is also an accrediting body, providing the only officially accepted credentials for the profession of translating and interpreting in Australia. 24 NAATI currently accredits at four levels for translators and interpreters. These levels are described as: Paraprofessional Translator and Paraprofessional Interpreter; Translator and Interpreter; Advanced Translator and Conference Interpreter; and Advanced Translator (Senior) and Conference Interpreter (Senior). The level of Paraprofessional corresponds with what was called NAATI Level 2 at the time of the Tribunal hearing, and the level of Interpreter corresponds with what was described as NAATI Level 3 at that time. Interpreters convey the full meaning of the information from the source language into the target language in the appropriate style and register. Interpreters at this level are capable of interpreting across a wide range of subjects involving dialogues at specialist consultations. They are also capable of interpreting presentations by the consecutive mode. Their specialisations may include banking, law, health, and social and community services. It may be regarded as the Australian professional standard. Interpreters are capable of interpreting across a wide range of subjects involving dialogues at specialist consultations. They are also capable of interpreting presentations by the consecutive mode. Paraprofessional Interpreters generally undertake the interpretation of non-specialist dialogues. Practitioners at this level are encouraged to proceed to the professional levels of accreditation. He told the Tribunal he had "NAATI Recognition". Prior to March 1983, it was possible for practising translators and interpreters to obtain "Recognition" by NAATI. Since mid-1989, Recognition has been treated as an award in a totally separate category, with no specification of level of proficiency. Recognition is now granted in very exceptional cases only, where rare languages are involved and Recognition would be the only NAATI credential available, or where special circumstances exist. Recognition does not have equal status to accreditation, because NAATI has not had the opportunity to assess the recognised person to a particular standard of performance. It is intended to be an acknowledgement that, at the time it is awarded, the candidate has had recent and regular experience as an interpreter, but no level of experience is specified. Twelve months after a recognised language becomes available for accreditation by testing, all Recognition granted by NAATI in that language is no longer valid. Sinhalese is currently a language available for testing. 30 According to the NAATI Practitioner's Directory for 2005/2006, there are two persons with addresses in Victoria accredited to NAATI Interpreter level in Sinhalese and a further one such person in Western Australia. Mr Ganegoda was one of the Victorian residents and Mr Liyanage the Western Australian resident. In addition, there were four Paraprofessional Interpreters, one based in New South Wales and the other three in Victoria. One of them is the person the appellant specified as the interpreter he did not want in his request to the Tribunal for the provision of an interpreter. 31 The Tribunal has published an Interpreters' Handbook. Among other things, the handbook reveals the Tribunal's policy concerning the use of interpreters. After a detailed analysis of the transcript of the hearing before the Tribunal in that case, and a thorough analysis of the authorities about the role of interpreters in proceedings in the various kinds, Kenny J set aside the decision of the Tribunal. The case is authority for a number of propositions relevant to the present case. At [20], her Honour held that, if not proficient in English, an applicant is effectively unable to exercise his or her right to give evidence without the assistance of an interpreter. The Tribunal is therefore unable to provide an applicant with an opportunity to appear before it to give evidence, unless it provides an interpreter to assist. If an applicant is unable to give evidence in English, the effect of s 425(1) is to require that the Tribunal give a direction pursuant to s 427(7) that communication proceed through an interpreter. At [21], her Honour held that, without an interpreter, the Tribunal is unable to afford an effective opportunity to a non-English speaking applicant to give evidence. As a consequence, the Tribunal lacked jurisdiction to continue the hearing unless it provided an interpreter. If the Tribunal were to proceed, it would fail to observe procedures required by the Migration Act . It was at times incoherent and inexplicably inconsistent with other evidence given. There are a number of exchanges between the interpreter and the Tribunal which evidence confusion on the interpreter's part as to the subject and direction of the Tribunal's inquiry; and it would seem that from time to time difficulties in communication actually led the Tribunal to abandon avenues of relevant inquiry. At [47]-[49], her Honour dealt with the question of findings adverse to the credit of an applicant, concluding that inadequate interpretation might lead to an adverse decision on credit. 39 Perera has been followed in several cases. See particularly WACO v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 171 (2003) 131 FCR 511 at [64] , and the cases cited there. The Full Court accepted that, although s 425(1) of the Migration Act has been amended since Perera , what Kenny J said in Perera remains applicable to the section as amended. 40 It is therefore necessary to make an assessment of the adequacy of the interpretation in the present case. In doing so, I am able to make use of the expertise of Mr Ganegoda and Mr Liyanage. Both have listened to the tape-recording, and read the transcript, of the Tribunal hearing. They have identified a number of errors of interpretation. To a large extent, there is agreement between Mr Ganegoda and Mr Liyanage, although there are instances in which they differ about the precise translation that would be correct. Counsel for the appellant were content to rely on the evidence of Mr Liyanage in cases where the two differed. It is necessary to refer to a number of the instances of incorrect interpretation by the interpreter at the Tribunal hearing. In doing so, I have relied on the evidence of Mr Liyanage, except where I have drawn attention specifically to the evidence of Mr Ganegoda. 41 When the appellant was describing his re-acquaintance with his Tamil friend, he said of the Tamil friend what Mr Liyanage translated as "In 1985 when racial troubles started he gave up residing in Anuradhapura and went to Trincomalee. " Mr Ganegoda translated "racial troubles" as "racial riots", which Mr Liyanage thought was too strong a phrase. The interpreter at the Tribunal hearing translated this answer as "In 1985 when this − in 1995 when the row between the communists and the Sinhalese started, he left Anuradhapura and went to, went to Trincomalee. "(Emphasis added. ) The confusion over the year may have caused the Tribunal to be confused about what evidence the appellant was giving. Even worse, the interpreter's gratuitous reference to communists was likely to have caused the Tribunal to regard the appellant's evidence as containing an expression of extreme views, that did not match the reality of the situation in Sri Lanka. 42 At one point, the Tribunal member asked the appellant "How often did [the Tamil friend] take you to Colombo? " The appellant's answer was "During that period I have made about 10 trips with [the Tamil friend]. " The interpreter translated this as "Every time [the Tamil friend] does not accompany me, but then he used to use a vehicle with his own driver. " This caused the Tribunal member to ask "So he didn't always go, but he had a driver who went with you? " The appellant replied that the Tamil friend was a businessman in Trincomalee and did several trips a week to Colombo. The interpreter translated this as several trips a month. Not only was the interpreter's mistranslation of the appellant's answer to the first of these questions unresponsive to the question, it led to an erroneous finding of fact, expressed in the Tribunal's reasons for decision as "[the Tamil friend] did not always go but often it was the applicant and [the Tamil friend's] driver. According to Mr Liyanage, the appellant answered "In 1994. I felt it was risky to stay there and I left in 1994. " Mr Ganegoda's translation was "In 1994 and I felt the situation was bad there around 1994 and I left in 1994. " The interpreter at the Tribunal hearing simply interpreted the answer as "In 1994. " The interpreter thereby omitted most of the appellant's response to a question from the Tribunal. The complete response may have been important. When the Tribunal member pressed the appellant about a five-year period after 1992, when he had no problems from the Air Force, the appellant answered "they have come to my place and other places and troubled them and searched for me and told them to ask me to produce myself to Police. " The interpreter at the Tribunal hearing mistranslated and embellished this answer substantially. I hear these things and then they have been pressing them to tell them where I live and that type of thing was going on but I was - I managed to escape. Everything going to North pass through Vavuniya. Border is in Vavuniya. They thought that if I am connected to LTTE, I will get to North with the LTTE. That is why they have informed Vavuniya Police. Vavuniya is the checking pointend checking point. So anything as to going to the North has to go through Omantai. So since they suspected that I have planted...through they did their - they knew that they were thinking that I have gone to North to...So that is why the Vavuniya area, the zone, they issued that letter. The appellant responded "From 1995 onwards letters were sent to my home (warning) through the Grama Sevaka (Village Headman). I produced only the last one. " The interpreter's translation was "From 1995 onwards they have been coming to my house, my parents' house, and through the village headman and they have been inquiring about it and finally - I do not assist, finally they issued this letter in 1999. " The omission from this answer of the important information that there had been a series of letters could easily have contributed to the Tribunal's finding that documents purporting to describe the appellant as a wanted man had been contrived and manufactured to assist his application for refugee status. What was troubling the Tribunal member was the time gap between the appellant's escape from custody and the letter in question. The appellant's explanation of this time gap was not relayed to the Tribunal by the interpreter. 46 The Tribunal expressed the view that it was unlikely that someone issuing an arrest order, following the appellant's escape from custody, would make mention of his participation in his mother's funeral. The appellant answered "Yes, when you put something like that, it is easy to identify the man. Even those in the village who are against can identify the person. " The interpreter's translation was "I believe they do that because when a notice goes like that from the police, even our − whether relations or - that are people who are enemies, they will be able to help the police to find the person. " Again, the appellant's explanation of a point that was troubling the Tribunal became lost in the interpreter's translation. The important point, that a description of what the appellant was doing when he escaped would help to identify him, was not put clearly, if it was put at all. 47 The Tribunal then also expressed the view that an order for arrest following escape would have been done as soon as the escape occurred, in 1992. The appellant answered "Also at the time of my escape and within six months such things have come to my home through the Gramasevaka (village headman). " The interpreter translated this as "Within six months of my escape also there had been some notices like that. " Again, the crucial part of the answer "at the time of my escape" was not translated, leaving the Tribunal with the impression that nothing had been done immediately after the escape, as the Tribunal member would have expected. In its reasons for decision, dealing with the appellant's claim of having escaped from custody in 1992, the Tribunal said "There does not appear to have been much interest in him until well after this date...The Tribunal would have expected this to have occurred shortly after 1992 and not after such a lengthy delay. " If the Tribunal had had the benefit of the appellant's complete answer, it might not have made this finding. 48 It is apparent from this analysis of the flaws in the interpreting at the Tribunal hearing that the appellant was not able to give the evidence that he wanted to give in its entirety. His account of the number of trips that he made with his Tamil friend was not given. Nor was his attempt to emphasise that he had left Malate in 1994 because he felt that he was at risk. His explanations in relation to documents that he had tendered were also not put before the Tribunal. Further, things that the appellant had not said were presented to the Tribunal as if he had said them. It would have appeared to the Tribunal that the appellant was describing the LTTE as communists. The Tribunal would have been left with a misleading impression of the appellant's account of the authorities coming to his place. The Tribunal member may well have wondered what the reference to Omantai was. The Tribunal would also have been left with the impression that the 1999 letter was the only one issued, whereas the appellant had said that letters were sent from 1992 onwards. 49 As I have said, some of these errors can be traced directly to findings in the Tribunal's reasons for decision. The Tribunal's finding about the appellant going to Colombo with the Tamil friend's driver, but not the Tamil friend, was based on what the interpreter had volunteered. The Tribunal's finding that there was a delay that it would not have expected between the appellant's escape from custody and the taking of action by the authorities was based on the failure to translate the appellant's evidence that letters were issued at the time of his escape. 50 It is also important to bear in mind that the appellant failed to satisfy the Tribunal that he had a well-founded fear of persecution for a Convention reason because the Tribunal did not believe his claims. It is true that the Tribunal set out in its reasons for decision a chain of reasoning on which it said it disbelieved the appellant, but it is impossible to say that the Tribunal excluded from consideration its impression of the appellant as a witness. Even if the Tribunal did not fall into the trap of attempting to judge the appellant's credibility from his demeanour, without regard to possible cultural differences and to the inherent difficulty of determining whether someone is lying, there was plenty in the content of the appellant's evidence, as it was presented to the Tribunal through the interpreter, that must have caused the Tribunal to doubt that the appellant was being truthful. The reference to communists may well have caused the Tribunal to think that the appellant was overstating his case, because he was otherwise being untruthful. The failure to translate all of the appellant's answers in relation to the documents was almost certainly a factor in the Tribunal's findings that the documents were contrived and manufactured. The apparent unresponsiveness of the answers, as translated by the interpreter, gave rise to the risk that the Tribunal would perceive that the appellant was being evasive. 51 In all of these ways, the interpreter's errors were of significance, or at least of potential significance, to the outcome of the case. The errors deprived the appellant of a fair opportunity to succeed. They therefore amounted to a denial of procedural fairness. To the extent to which the appellant was not able to put before the Tribunal the evidence that he wanted to, because elements of his answers were omitted from the interpreter's translation of them, he was deprived of the opportunity to give evidence to the Tribunal. Section 425(1) of the Migration Act obliged the Tribunal to invite the appellant to appear before it to give evidence relating to the issues arising in relation to the decision of the Minister's delegate. It is now well-established that this obligation is much more than a formality. Even though the invitation be issued, if an applicant is not afforded a real opportunity to give evidence, so that the promise of the invitation has not been fulfilled, then the Tribunal will have failed to comply with its obligation under s 425(1). See Minister for Immigration & Multicultural & Indigenous Affairs v SCAR [2003] FCAFC 126 (2003) 128 FCR 553 at [33] - [41] . See also SZBEL v Minister for Immigration & Multicultural & Indigenous Affairs [2006] HCA 63 (2006) 231 ALR 592 at [33] . 52 It is beyond doubt that both a denial of procedural fairness and a failure to comply with the Tribunal's essential statutory obligation in s 425(1) of the Migration Act constitute jurisdictional error. Jurisdictional error means that the Tribunal's decision is not a "decision" for the purposes of the definition of "privative clause decision" under s 474 of the Migration Act , because the decision is not made under the Migration Act . The provisions of the Migration Act that would deprive the Federal Magistrates Court, and this Court, of jurisdiction to deal with the Tribunal's decision, if it were a privative clause decision, are therefore inapplicable. See Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 (2003) 211 CLR 476. Because the Tribunal's hearing took place before the amendment to the Migration Act that inserted s 422B , it is unnecessary to discuss what, if any, impact that provision would now have. 53 Because of jurisdictional error, constituted by the denial of procedural fairness and the failure to comply with s 425(1) of the Migration Act , the appellant was entitled to have the Tribunal's decision set aside, and to have the matter of the review of the decision of the delegate of the Minister to refuse him a protection visa remitted to the Tribunal, so that it could fulfil its statutory obligation by providing the appellant with a proper hearing. Because of events which have occurred in the meantime, the appellant has a number of obstacles to surmount before it can be accepted that he can now avail himself of that entitlement. In the Federal Magistrates Court, the appellant did not present the deficiencies in the performance of the interpreter as a ground on which that court might overturn the Tribunal's decision. Nor was that ground in the notice of appeal to this Court. It is therefore necessary to decide whether the appellant should have leave to amend the notice of appeal by adding a ground not taken in the court below. If such leave is granted, there can be no question that the Federal Magistrate's conclusion that there was no jurisdictional error on the part of the Tribunal is incorrect, on the material now before the Court. That conclusion would not be sufficient to warrant the appeal being allowed if there were no error in the Federal Magistrate's apparent conclusion that the appellant's proceeding in the High Court was out of time, and that no enlargement of time should be granted, and her Honour's conclusion that the proceeding was barred in any event by the principles of res judicata. 56 Although substantial time has elapsed between the Tribunal hearing and the raising of the issue as to interpretation by the appellant, there is a powerful case for granting leave to rely on the proposed new grounds. The appellant required the services of an interpreter to present his case. This suggests that, at the time, he did not believe that he had the competence in English necessary to enable him to give evidence and present his arguments to the Tribunal by himself. A person who requires the services of an interpreter in order to give evidence can hardly be expected to know that the interpreter has failed to translate the evidence accurately. It would be harsh to deny the appellant the right to rely on the interpreter's errors simply because of the lapse of time. Further, in filing his application in the High Court, the appellant did not have the benefit of legal representation. Nor did he have legal representation at any stage until after the appeal first came on for hearing, at which time he was able to procure the services of pro bono counsel, pursuant to the Court's scheme under O 80 of the Federal Court Rules . By contrast, the Minister is unable to point to any prejudice, particularly any prejudice that could not be compensated by the order for costs of the adjournment of the appeal already made. 57 On this basis, I should exercise my discretion in favour of the appellant and allow him to amend the notice of appeal and to rely on the further evidence, in the exercise of the discretion conferred on the Court by s 27 of the Federal Court of Australia Act 1976 (Cth). On this basis, the Federal Magistrate was wrong to hold that she had to consider whether to exercise the High Court's power to grant an enlargement of time. For the reasons that I gave in Applicants M16 , I am still of the view that Dowsett and Lander JJ were correct. The Federal Magistrate was therefore in error to the extent to which she dismissed the appellant's proceeding on the basis that it was out of time, and that her Honour would not grant an enlargement of the time. Her Honour's reason for dismissing the application on this basis was that the earlier dismissal gave rise to a res judicata estoppel. The doctrine of res judicata bars a right or cause of action, raised in an earlier proceeding on which judgment has been given, so that the right or cause of action merges into the judgment and cannot be litigated again. See Blair v Curran [1939] HCA 23 ; (1939) 62 CLR 464 at 532 per Dixon J. Related defences are issue estoppel, a defence to an attempt to litigate again an issue already actually decided, and Anshun estoppel, based on Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 ; (1981) 147 CLR 589, applicable where there is neither strict identity of cause of action, so that res judicata is not available, nor the actual determination of an issue, so that issue estoppel is not available, but a party seeks to litigate an issue that could and should have been raised in a previous proceeding. 60 The judgment below in the present case did not deal with issue estoppel, nor with Anshun estoppel, and there is no notice of contention suggesting that the judgment should have been upheld on either basis. It is therefore only necessary to look at the question whether the Federal Magistrate was in error in dismissing the application because it was res judicata. For this purpose, the two crucial issues are the identity of the cause of action and the nature of the judgment required in order to give rise to a res judicata estoppel. 61 In the present case, plainly the actual cause of action on which the appellant's case is now based was not itself raised in the earlier proceeding. It has been raised for the first time in this appeal. The Federal Magistrate found that the proceeding before her raised the same grounds as in the previous proceeding. The grounds expressed in the draft order nisi, filed in the High Court prior to the remitter of the proceeding, are expressed in the widest possible terms. It would be no surprise to find that they were similar to, or identical with, the grounds in the earlier proceeding. They are unparticularised in any relevant sense, and are certainly broad enough to have included both a failure to comply with the Tribunal's obligation under s 425(1) of the Migration Act , and a denial of procedural fairness, because of inadequate interpretation of what the appellant said at the hearing. 62 The question, therefore, is whether a judgment given in default of appearance, without a hearing on the merits, is a final judgment of the kind giving rise to res judicata estoppel. This question was the subject of detailed consideration in Applicant A184 of 2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1076 (2004) 210 ALR 543 at [97] - [114] . After a thorough examination of the relevant authorities, Lander J decided not to dismiss the application for leave to appeal that was before him on the res judicata ground, based on an earlier order of the Court dismissing an earlier application because of the failure of the applicant to appear when the matter was listed for trial. In the absence of evidence as to why the applicant had failed to appear at the earlier hearing, his Honour was not prepared to determine that the earlier order would support a claim of res judicata. It is clear from the reasoning in that case that, even though a consent judgment, or a judgment given against a respondent who fails to defend the proceeding, might be considered to be examples of final judgment giving rise to res judicata estoppel, a judgment given against an applicant in default of appearance, when the default is unexplained, is not to be regarded as a final judgment. Indeed, such a judgment would be regarded as an interlocutory judgment, from which leave to appeal would be required, and which could be set aside by the court giving it, upon application supported by material explaining the reason for the absence of the applicant. 63 In the present case, there has been no attempt to explore, and there is no evidence about, the reason for the appellant's failure to appear when his earlier case was called on for trial in the Federal Magistrates Court. The terms of order made on that occasion suggest that the proceeding was dismissed purely because the appellant had failed to appear, and without a determination of the merits. The order is therefore to be regarded as an interlocutory order, and not as a judgment finally determining the causes of action raised by the appellant in that proceeding. The earlier proceeding therefore constitutes no bar to the appellant proceeding in the present case, even if the cause of action on which he now desires to proceed is identical with the cause of action in the earlier proceeding. The Federal Magistrate therefore erred in dismissing the appellant's application on the basis that it was precluded by res judicata estoppel. With the exception of the order for costs, the orders of the Federal Magistrates Court, made on 27 August 2004, must be set aside. There should be substituted for those orders, orders giving the appellant the relief to which he was entitled, namely a writ of certiorari, directed to the Tribunal, removing its decision into the Court, for the purpose of quashing the decision, an order that the decision be quashed, and a writ of mandamus, directed to the second respondent, requiring it to hear and determine the application of the appellant, his wife and their son, for protection visas according to law. Counsel for the appellant conceded that, because the judgment of the Federal Magistrates Court is being overturned on a ground not raised in that court, the appellant could not invite this Court to set aside the order made at first instance, requiring the appellant to pay the Minister's costs, fixed at $6,500. 65 The orders I make must, of course, include the grant of leave to amend the notice of appeal by adding the grounds to which I have referred in [54], and by granting leave to the appellant to rely on the evidence in the affidavits of Mr Ganegoda and Mr Liyanage and the exhibits to those affidavits. 66 The question of the costs of the appeal also arises. When the hearing of the appeal was adjourned to enable the appellant to apply for leave to amend the notice of appeal, the appellant was ordered to pay the Minister's costs of the adjournment. That order will stand, and is sufficient compensation to the Minister for the fact that the appeal has succeeded on grounds not raised in the court below. Although counsel for the appellant are representing him as volunteers, pursuant to the scheme for legal referral found in O 80 of the Federal Court Rules , this does not preclude an order for the costs of the appeal in the appellant's favour. Order 80 r 9(2) provides that, if an order for costs is made in favour of a litigant assisted under the scheme, the legal practitioner who has provided the legal assistance is entitled to recover the amount of fees and disbursements that another party is required to pay under the order. There is therefore no reason not to apply the usual order, that costs follow the event. The first respondent will be ordered to pay the appellant's costs of the appeal. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | visa protection visa procedural fairness use of interpreter in tribunal hearing whether interpretation of inadequate standard whether inadequacies in interpretation deprived appellant of fair opportunity to succeed whether denial of procedural fairness whether failure to comply with tribunal's statutory obligation to invite appellant to appear before it to give evidence res judicata estoppel previous proceedings in respect of same decision of tribunal whether judgment given in default of appearance without hearing on merits finally determines cause of action whether judgment given in default of appearance time limitations proceeding remitted from high court whether time limits in high court rules applicable in federal magistrates court grounds evidence whether appellant should have leave to add grounds of appeal not argued below grounds concerned inadequacy of interpretation at tribunal hearing appellant previously without legal representation whether appellant should be allowed to adduce further evidence on appeal evidence of inadequacy of interpretation at tribunal hearing migration estoppel courts and judges appeals |
In the substantive judgment, the Court held that Mr Fry, a delegate of the respondent Union, breached ss 298SC and 170NC of the Workplace Relations Act 1996 (Cth) ("the WR Act "). It also found the Union vicariously liable for Mr Fry's breaches. This judgment should be read together with the substantive judgment. It deals with the issue of what penalties, if any, should be imposed on Mr Fry and the Union. He was engaged on the construction side of the project. He was also a CFMEU shop steward. It was custom and practice on the construction side of the site for employees to be members of the CFMEU. The position of Mr Anton was unusual because he was a self-employed building contractor engaged to perform odd jobs around the Hamilton site. Mr Fry's role as shop steward included the enrolment of non-members on the construction side of the site into the CFMEU. He enrolled Mr Anton but 'gilded the lily' in encouraging him to do so by saying that he had an obligation to join the CFMEU. No doubt, as a CFMEU shop steward, and with everyone else on the construction side of the site almost certainly being in the CFMEU, Mr Fry considered that Mr Anton should be in the CFMEU. That does not excuse the breach of s 298SC of the WR Act committed by Mr Fry, but it does explain it and put it in context. 3 Mr Fry is fifty-nine years old. He has no history of prior contravention of any provision of the WR Act or the more onerous Building and Construction Industry Improvement Act 2005 (Cth) ("the BCII Act "), which places special obligations and requirements on building and construction workers which do not apply to other sections of the workforce. Mr Fry lives in Hamilton in rural Victoria. He is employed as a scaffolder doing work around the Western District of Victoria. He is not a wealthy man. He has given evidence that he "will not at any time in the future make a false statement to anyone regarding their obligation to be a member of the CFMEU". 4 In the circumstances, I see no point in imposing any penalty on Mr Fry for his breach of s 298SC of the WR Act . I am confident Mr Fry will be true to his word and not commit any further breach. This proceeding has, no doubt, been of educative value for him. However, in the circumstances, it is appropriate to record by declaration that he breached s 298SC of the WR Act as found in the substantive judgment. 5 The CFMEU has vicarious liability for Mr Fry's breach of s 298SC of the WR Act . 6 Having regard to all the above circumstances, as well as the importance of complying with the Act, I consider that it is sufficient to record by way of declaration that the CFMEU has breached s 298SC of the WR Act . This order will act as an encouragement for the CFMEU to educate its shop stewards so that they do not involve it in further vicarious breaches of this provision. Also given the unusual circumstances in which the breach occurred, I consider that no useful purpose would be gained by imposing a monetary penalty on the CFMEU for this breach. The breach arose because Mr Fry told Mr Anton that he had to have an enterprise bargaining agreement to work on the construction side of the site. By Mr Anton entering into an enterprise bargaining agreement he was able to charge out his services on site at a higher rate than he previously did. By strange coincidence Mr Anton benefited from the unlawful behaviour directed at him by Mr Fry. Mr Anton did not want an enterprise agreement but faced the prospect of not being able to work on the construction side of the site without one. The negation of his choice was unlawful and deserves admonition. However, Mr Anton was 'a strange beast' on the site, being a self-employed contractor. It appears to me that Mr Fry did not quite know how Mr Anton fitted into the industrial regulation of the site. 8 I see no point in imposing a penalty on Mr Fry for his breach of s 170NC of the WR Act . He clearly misunderstood Mr Anton's status. He did not have the industrial skills to discern that Mr Anton was not an employer and/or that he did not require an enterprise bargaining agreement. He has given evidence that he will not repeat this breach by "coerc[ing] any person to make agreement with the CFMEU". However, a declaration should be made recording Mr Fry's breach of s 170NC of the WR Act . 9 The CFMEU is vicariously liable for Mr Fry's breach of s 170NC of the WR Act . It has previously contravened that provision through vicarious liability for a breach by an officer in a branch other than Victoria. It is significant, in this matter, that when senior officers of the CFMEU came to the Hamilton site they sought to ensure that the issues between Mr Anton and other workers on the site were resolved. However, on the issue of general deterrence, it is important that the Court recognises that a fundamental aspect of the right to engage in bargaining free from coercion has been breached. It is therefore appropriate in this case that the Court impose a monetary penalty, albeit on the lower side of the scale of that available. 10 In the circumstances the Court will impose a penalty of $4,000 on the CFMEU for its vicarious breach of s 170NC of the WR Act . In fixing that penalty I have also had regard to the fact that the CFMEU breached the freedom of association provisions of the WR Act on a number of occasions prior to events which led to the current breach of s 170NC of the WR Act , an allied provision to the freedom of association provisions in the Act. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall . | breach of ss 170nc and 298sc of the workplace relations act 1996 (cth) by union shop steward and union union vicariously liable for breaches by shop steward whether penalties appropriate level of penalties industrial law |
2 The applicant applied for a General (residence) visa on 23 June 1998. On 8 February 2000, the application was refused on character grounds pursuant to s 501 of the Migration Act 1958 ('the Act'). The applicant sought review of the decision in the Administrative Appeals Tribunal ('AAT'), however this application was refused on 14 April 2000 by Deputy President McMahon. An appeal to the Federal Court was upheld by Moore J and the application for review was referred back to a differently constituted Tribunal. Upon rehearing the matter on 18 April 2002, the AAT remitted the matter back to the respondent for further consideration. 3 A further notice of intention to refuse the application on character grounds was issued to the applicant on 24 June 2003 and the applicant was invited to provide further information in response for the Minister's consideration. The applicant's migration agent provided various documents on his behalf, including documents which confirmed that the applicant was currently in a relationship with Constantine Nikolopoulous, an Australian citizen and had ceased his relationship with Barbara Tenney. The applicant was notified of the Minister's decision to refuse the application on 7 October 2004. The application was refused on the basis that the applicant failed to satisfy the criteria contained in subclass 820 as he had not lived in a marital relationship with the nominating spouse since April 2002, nor had any contact with the nominator since that time. The applicant was arrested and subsequently detained in immigration detention on 14 December 2004. The Defendant failed to accord the Plaintiff procedural fairness by its failure to have regard to relevant documents and its failure to provide reasonable opportunity to respond to adverse material. The Plaintiff is and was at all times entitled to a spouse visa in Australia having fulfilled the criteria contained in the Migration Act since he was married to an Australian citizen and had a child who was born in Australia and is also an Australian citizen. The marital relationship was genuine and continuing to the exclusion of others at the relevant time. The marital relationship subsequently broke down and in February 2003 the Plaintiff entered into a de facto relationship with an Australian citizen and that relationship is still genuine and continuing to the exclusion of others. The Plaintiff is currently held in detention and unable to pursue his rights to access and custody of his only child Joshua Dean Tenney, an Australian citizen. The proceedings were remitted by McHugh J to the Federal Court on 19 August 2005 by consent. 5 As I earlier foreshadowed, the Minister refused the application on the basis that the applicant failed to satisfy the requirements of subclass 820 of the Migration Regulations . The only exceptions to this are set out in criterion 820.221(2) and (3) and relate to situations where the nominating spouse has died or where there has been a breakdown in the relationship due to domestic violence when the nominating spouse is the aggressor. Both these situations clearly have no application in the present case. 7 The applicant asserted in his written submissions that the Minister made her decision on the basis of two statutory declarations that the applicant had provided in order to advise the Department of Immigration and Multicultural and Indigenous Affairs ('the Department') of his change in circumstances. From those two declarations, it was apparent that the applicant and Ms Tenney were no longer in a relationship. The applicant's statutory declaration dated 6 August 2003 included the following statement: 'I am separated from my wife Barbara Teeney (sic) whom I married on 30.5.1998'. Furthermore, the statutory declaration of Ms Nikolopoulous dated 6 August 2003 included the following statement: 'I have been in a romantic relationship with Ishmael since February 2003'. The applicant contended that he 'made the admissions both voluntarily and of his own free will'. The applicant asserted moreover that 'he cannot find anywhere either within the Migration Act and or the relevant Regulations of any relevant procedure to advise of a change of circumstance such as a change in nominator as is the case in this case' and further asserted that in providing the two statutory declarations, 'the Applicants (sic) then Attorneys were under an assumption that they were following correct procedure' to notify the Minister of the applicant's changed circumstances. However, as the Minister's counsel correctly submitted, the suggestion that the Department could merely substitute one nominating spouse for another is one which is untenable when viewed in the context of the legislative framework. As stated above, the nominating spouse at the time of the application must be the same person at the time of the decision-making. 9 The applicant alternatively submitted that he could have been allowed to withdraw his original application and lodge an amended application taking into account the new circumstances that were provided within the statutory declarations. The Minister accepted that this course was in fact open to the applicant; however if the applicant had wished to apply for a visa having Ms Nikolopoulous as a nominating spouse, he should have withdrawn his application prior to any decision being made. Moreover the Minister pointed out that the applicant was represented at the material times by experienced migration advisors, who at no time suggested that the applicant was seeking or proposing to withdraw his application. The respondent additionally submitted that the suggestion by the applicant that the Department was 'duty bound to inform the Applicant of the correct method he should abide by', and further that the Department should have invited him to withdraw the application, was not supported by legal principle and was inconsistent with the Minister's duty expressed in s.47 of the Act ' to consider a valid application for a visa'. There is clear substance in that submission. 10 Moreover there is no merit in the applicant's further contention that 'there is absolutely no evidence that the Department gave any consideration to the applicants change of circumstance and this was despite that the (sic) Applicants new nominator offered herself to the Department for any interview'. Likewise, the applicant gains no present assistance from the references made to case law concerning jurisdictional error. 11 The applicant further submitted that 'there is no reference either within the Migration Act and or the regulations where it submits that the Applicant would need to demonstrate a commencement of some form of proceeding in the Family Law Court which anyway was going to be impossible to commence having regard (sic) that the Applicant had no knowledge of where his son was'. He contended that 'the delegate to the Minister... [acted] outside of jurisdiction, and failed to properly consider the material before her'. However, the references to the dependent child of the applicant and the nominator within the decision record of the Department were made in regard to the requirements of subclause 820.221(3) of the regulations. 12 The applicant additionally seeks to rely on the International Convention on the Rights of the Child. However as Mason CJ and Deane J stated in Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20 ; (1995) 183 CLR 273, since the Convention has not been incorporated into Australian municipal law, it cannot operate as a direct source of individual rights and obligations. Nonetheless, where the provisions of the Convention are relevant to the exercise of a statutory discretion, a legitimate expectation exists that the decision-maker will act in accordance with the Convention in exercising that discretion. However as discussed above, the decision in the present case was ultimately based upon the issue as to whether the applicant satisfied certain statutory criteria as opposed to discretionary considerations, and as such the applicant could not seek to rely upon the Convention. 13 The appeal has no viable foundation must be dismissed with costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | no general principle arising migration |
By notice of motion dated 23 June 2009, the second to eleventh respondents, who are variously directors or shareholders of the company seek to strike out these and related paragraphs of the substituted statement of claim. A declaration that the second, third, fourth, fifth and sixth respondents as directors have breached their common law fiduciary duties as officers of the company by: - failing to exercise reasonable care and diligence; - failing to exercise their powers and discharge their duties in good faith and in the best interests of the company and for a proper purpose; - improperly using their position to gain an advantage for themselves or someone else or to cause detriment to the company; - using information obtained because they were officers of the company to gain an advantage for themselves or someone else or to cause detriment to the company. Restraining the company from issuing or allotting any further shares in the company without first giving the applicants 28 days prior notice and a pro-rata opportunity to take up shares on the same terms and a related relief. An injunction restraining all the respondents other than the company from being involved in any such further issues of shares, which do not comply with the restrictions in any such affidavit. An injunction restraining the company from issuing or allotting any further shares in the company stapled to arrangements whereby any loan is to be made to the company or any existing loan is to be extended without first giving the applicants 28 days prior notice and without the approval of a separate class meeting of members being those members who do not have any money lent to the company. An injunction restraining all respondents, other than the company, from being involved in such arrangements which do not comply with these restrictions. Alternatively, a mandatory injunction requiring the shareholder respondents to purchase the applicant's shares in the company. Further alternative forms of mandatory injunction requiring the respondent directors, or the respondent shareholders, or the company to deal with the applicants' shares in various ways. If the applicants remain shareholders alternative forms of relief including that the company commence proceedings against the respondent directors for recovery of sums lost to/detriment caused to the company by reason of breaches of the CA by those respondents. Other alternative forms of relief designed to secure the interests of the applicants, should they remain shareholders in the company. Alternatively, if no other order is considered appropriate by the Court, an order that the company be wound up. There is no controversy here that the company is a public company for the purposes of the CA. The respondents support the company's submissions. The company notes that the applicants allege that payment by the company of the respondent directors' costs of defending these proceedings is impermissible on the sole ground that it is contrary to s 212(2) of the CA. Thus, it is alleged that payment of these legal costs is an "other related party transaction". The company says the only relief apparently sought in relation to this allegation is that in [B](c) of the substituted application by which the applicants seek as interlocutory relief that the company be restrained from paying the costs or otherwise financially assisting the respondents until further order or trial. The company points out that the question is obviously of great importance to it, in that it constitutes an allegation of "continuing impermissible related party, oppressive and unfair transactions" and is apparently directed to terminating any payments to the respondent directors pursuant to pre-existing indemnities. The company says it does not wish to engage in any related party transactions in breach of the CA or to engage in oppressive or unfair conduct; but it also wishes to meet its obligations pursuant to pre-existing indemnity obligations to the respondent directors. The company says that while the only relief associated with this claim is interlocutory relief, no steps have been taken to seek such relief. The company further says that to the extent that [54] may be directed to final relief, then the directors' costs will be largely spent by the time of the trial and little or no relief will lie and the pleading is otiose and unnecessary. The company contends that the pleading discloses no cause of action. The company contends that s 212 is a permissive exception to the provision of benefits to related parties --- that is an exception to s 208 of the CA. The company draws attention to s 212(2). This subsection does not apply to a liability for legal costs. Paragraph (c) does not apply to costs incurred in responding to actions taken by ASIC or a liquidator as part of an investigation before commencing proceedings for the court order. The company says that the consequence of the foregoing is that the limitation on the indemnity, as to legal costs, does not arise unless and until there is a final outcome to the proceedings, including appeals, and that any indemnity otherwise paid was inconsistent with s 199A; see s 199A(4). Consequently, there is no bar to the payment of legal costs arising under s 199A in advance of the determination of the proceedings. The company says this is confirmed by s 212(2)(c)(ii) of the CA. The Act therefore permits indemnity for legal costs before and until the outcome of the relevant proceedings is known. The company says there is also no plea in the statement of claim as to why, whether pursuant to s 212 or otherwise, the payment of the respondent directors' legal costs is impermissible. The applicants respond to this by noting that the admission made by the company for the purposes of the strike out application, concerning the funding of the directors through the contractual indemnity requirements made between them, is the first concession that has ever been made by the company in this regard. Consequently, the applicants say that following further discovery they may still choose to bring an application for interlocutory relief. Secondly, the applicants say that the relief sought in claim A(a) of the substituted application --- a payback order --- might also be relied upon. In the course of oral submissions it became clear that while the company acknowledged that some of the relevant respondents against whom this cause of action is initiated may be considered a "related party" as that term is understood in s 228 of the CA, the allegation was not necessarily accepted in all cases. The issue also was raised that if a relevant respondent is a "related party" then the company may not need member approval by reason of the application of s 213 (because relevant financial benefits fall under $5,000, the prescribed amount, in a given financial year) or s 212(2) (because in the end, the benefit given "would be reasonable in the circumstances" of the company). Ultimately, it became clear that counsel for the company was not arguing that there could not be a relevant plea in these proceedings that s 208 of the CA had been or was being breached by the payment by the company directors' expenses under the contract of indemnity between the company and those directors as a related party. Rather the question was a pleading issue, namely, if that were the issue, whether the applicants or a relevant respondent has the onus to plead the application of one or other of the exceptions to the requirement for member approval. On this point, following hearing of the strike out application, the Court invited further written submissions as to who bore the relevant onus for pleading purposes. Counsel for the company, in his further written submissions submits that [54] of the substituted statement of claim should be struck out because it does not plead (nor does the statement of claim elsewhere plead) any material facts capable of supporting the allegation of the contravention of s 208 of the CA. The company in essence contends that because s 212 comprehends that when read with s 199A a company may make payments under an indemnity during the course of proceedings and recover these if the underlying liability is held to be of a type that may not be identified, then it behoves the applicant to negative that any payment is not "reasonable" and so does not attract the approval of the exception that s 212(2) provides for. Counsel for the company submit that the question of who should plead the exception is hypothetical in any event, because the applicants have in fact pleaded the general inapplicability of the exceptions in [15], [38], [55] and [59e]. In this, the submission of the company is correct. Those paragraphs of the substituted statement of claim plead the giving of various financial benefits by the company without approval of the members and without the financial benefit falling under the exceptions set out in ss 210 --- 216, "being contrary to s 208". It is apparent, therefore that only in respect of [54] of the statement of claim, which raises the question of payment of legal costs, has the issue been pleaded differently. Indeed, when one considers the way [54] has in fact been pleaded, unlike those other provisions relating to the giving of financial benefits, [54] makes no express plea concerning the payments being contrary to s 208 --- the provision of the CA that requires member approval. Rather, [54] alleges that the payment of costs of defending the action are "contrary to s 212(2) of the CA". Given the terms of s 212(2) it is difficult to understand in what respect it is said that such payment of costs is "contrary to" that section. Perhaps, it means to plead that the payment of such costs is "not reasonable". I suspect that is the way the applicants intend the pleading to be read. In general terms, I think it is appropriate that the applicants, if they wish to plead that the giving of financial benefit is contrary to s 208 in respect of the payment of legal costs, that they make their plea express and plead out, if it be the view of the applicants, the non-application of any exceptions such as s 212 and s 213. If it is, the onus rests on the party alleging the breach of the obligation. If, however, the qualification, exception or proviso provides an excuse for justification for not complying with the obligation, the onus of proof lies on the party alleging that he falls within the qualification, excuse or proviso [citation omitted]. Whatever form the statute takes, the question has to be determined as one of substance [citation omitted]. The conditions are all contained within the body of s 208 and so, if these conditions are not negatived, there is no contravention of s 208. The company therefore contends that s 208 falls within the first limb of the test in Avel and requires the applicants to plead material facts why the exception is inapplicable. This approach to the pleading of the cause of action that relies on s 208 is supported by authority: Westchester Pty Ltd v Triton Resources Ltd [2001] WASC 57 at [9] --- [12]; Randall v Aristocrat Leisure Ltd [2004] NSWSC 411 at [567] . I note, however that in Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1 ; (2007) 207 FLR 245 , Habersberger J took a different view holding that s 208 fell within the second limb of the test of McHugh J in Avel and that the onus of proving an exception fell upon the person denying the contravention. Counsel for the company submits with respect that this view does not apply the principle enabled, nor does it apply the principles in the preceding High Court authority upon which McHugh J relied in Avel . In Vines v Djordjevitch [1955] HCA 19 ; (1955) 91 CLR 512 ( Vines ), the High Court (Dixon CJ, McTiernan, Webb, Fullagar and Kitto JJ) held there were two principles to be observed. When an enactment is stating the grounds of some liability that it is imposing or the conditions giving rise to some right that it is creating, it is possible that in defining the elements forming the title to the right or the basis of the liability the provision may rely upon qualifications exceptions or provisos and it may employ negative as well as positive expressions. Yet it may be sufficiently clear that the whole amounts to a statement of the complete factual situation which must be found to exist before anybody obtains a right or incurs a liability under the provision. In other words it may embody the principle which the legislature seeks to apply generally. It is not true to say that there has been a contravention of s 208 if an exception applies --- the section itself creates a prohibition only when all the exceptions, including member approval, are not satisfied. Counsel for the company further submits that the exceptions may constitute a large, if not the better part of dealings with the related parties, comprising as they do: Counsel submits it will usually be apparent which exception is applicable. So it was in the present case, that in relation to the alleged unapproved giving of financial benefits pleaded in [15], [38], [55], [59(e)] of the substituted statement of claim, the plea was that the exceptions provided for in "sections 210 to 216" did not apply and so the payment was contrary to s 208 of the CA. In my view, these submissions should be accepted. On the proper construction of s 208 I consider that the section imposes consequences for a public company only if certain exceptions (being a meeting of members or any of the matters in s 211 to s 216) are not satisfied. Thus, it falls within the "exception" limb, not the "proviso" limb of the dichotomy explained in Vines and Avel . The obligation to negative the exemption therefore falls upon the applicants. In these circumstances, I consider that [54] of the substituted statement of claim should be struck out, because as currently pleaded, it is ambiguous and therefore embarrassing. It is not plainly pleaded that certain benefits have been given in a manner not provided for by s 208. The current reference to those benefits being "contrary to s 212(2) of the Corporations Act " amplifies the ambiguity. I would, however, give leave to replead in that regard. Paragraphs 70 and [71] of the substituted statement of claim plead: The Tenth Respondents were involved in the contravention (within the meaning of section 79) of section 208 of the Corporations Act and of sections 181(1) , 182 (1), 183 (1) of the Corporations Act and have therefore contravened sections 209(2) and sections 181(2) , 182 (2), 183 (2) of the Corporations Act respectively in relation to the share issues to them pursuant to the First Information Memorandum because they have been by act directly or indirectly a party to the contravention. Paragraphs 72 and [73] of the substituted statement of claim plead identical terms to [70] but against the seventh and/or eighth respondent. Paragraph 73 makes an identical plea to [71], but in respect of the eighth and/or ninth respondent. Paragraph 74 makes an identical plea to [70], but in respect of the eleventh respondent. Paragraph 75 makes an identical plea to [71], but in respect of the eleventh respondent. The company points out that it is well understood that an indispensable requirement for establishing involvement in a contravention is knowledge of the elements of the contravention: Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 ( Yorke ); and s 79 of the CA. The applicants accept this is so. Counsel for the company points out as well that s 79 of the CA mirrors s 75B of the Trade Practices Act 1974 (Cth) considered by the High Court in Yorke . In Yorke , the High Court held that s 75B in speaking of aiding, abetting, counselling or procuring makes use of an existing concept drawn from the criminal law, and unless the context required otherwise, there is every reason to suppose that it was intended to carry with it the settled meaning which it already bore. Consequently to form the requisite intent, a party must have knowledge of the essential matters which go to make up the offence: Yorke at 668, per Mason CJ, Wilson, Deane and Dawson JJ. Accordingly, in order to have aided and abetted or counselled or procured a contravention of the statutory provision, the respondent must have intentionally participated in that offence and to have done so must have knowledge of the essential matters which went to make up the offence on the occasion in question: Yorke at 667. The company therefore argues that a party can only be brought within s 79 of the CA if he, she or it intentionally aided, abetted, counselled or procured a contravention by the company. In this regard, counsel submits there is no reason to distinguish s 75B of the Trade Practices Act 1974 from s 79 of the CA: see in this regard, Asic v Adler [2002] NSWSC 510 ; (2002) 42 ACSR 74 , adopted in Forge v ASIC [2004] NSWCA 448 ; (2004) 213 ALR 574 at [202] ; affirmed [2006] HCA 44 ; (2006) 228 CLR 45. Counsel for the company submits that the statement of claim here pleads no material facts relevant to any such knowledge. All that is pleaded is the obscure phrase that the tenth respondents (and other relevant respondents) "have been by act directly or indirectly a party to the contravention" (in [70] and other identical provisions in respect of the other respondents). Counsel says that if that phrase has any meaning at all it does not address knowledge. So far as particulars are concerned, [12] --- [17] of the substituted statement of claim did not assist. Some of those paragraphs do not concern the tenth respondents at all (for example [12]). None of the paragraphs plead any knowledge at all of the tenth respondent so far as [70] is concerned. As to the other provisions of the CA referred to in [70] are concerned, s 181 and s 182 cast duties on officers and s 83 casts a duty upon an officer as a former officer. Counsel for the company says no material facts have been pleaded to enliven or make actionable any of these duties. The company raises the same claims of deficiency in respect of the other impugned paragraphs. In relation to [72] and [73], counsel for the company says the only conceivably relevant allegation is that the seventh and eighth respondents are "controlled by" the third respondent, who is himself a director of the first respondent. However, material facts to support the allegations of control are not pleaded. At all material times, the seventh and eighth respondents had five officers and two shareholders, only one of which (of each) was the third and ninth respondents. No material facts are pleaded to support "control" of the seventh and eighth respondents by the third and ninth respondents, still less material facts to show knowing involvement. In relation to [74] and [75], counsel for the company says the only conceivably relevant allegation is that the eleventh respondent is "controlled by" a director of the first respondent, himself a respondent. The material facts to support that allegation of control are not pleaded. At all material times, the eleventh respondent had three officers and two shareholders, only one of which (of each) was the fourth respondent. No material facts have been pleaded to support "control" of the eleventh respondent by the fourth respondent, still less than material facts to show knowing involvement. There is no allegation of knowledge or conduct that is offensive in respect of the tenth respondents themselves in this particular plea. So far as the plea in various paragraphs that one person or entity "is controlled by" another and the extent to which this might convey a plea of knowledge of certain activities, counsel for the company submits firstly that there is no plea of knowledge, secondly, that a plea of control does not explain how control occurs and conveys knowledge. Counsel for the applicants submits that the taking up of the offer by the tenth respondent referred to in [70] of the statement of claim, was preceded by the receipt of the information memorandum that is pleaded in [15], as it contains certain information. Critically, from the applicants' perspective, the information was that only certain eligible existing shareholders could take up the offer. Counsel for the applicants said that, in those circumstances, knowledge can be attributed to the relevant respondents. When pressed in the course of oral argument by the Court that the submission seemed to be that the relevant respondents had constructive, not actual knowledge (or inferred actual knowledge), counsel submitted that the respondents should be taken to have read the information memorandum and have lodged the application which stated only existing shareholders could take up the offer. It was therefore only a "short step to say they must be presumed to know if they were not existing shareholders of the first respondent". In my view, and having had recourse to the authorities, this requires the Crown to establish that the person involved in the venture was aware of its misleading or deceptive character or objective. It does not require proof that the actor be aware of all the mechanical details of the venture or the identity of all participants. If he or she is aware of the general nature of the transaction, that the part played by him or her whether by positive act or omission will assist the misleading or deception then, in my view the requirement of being knowingly concerned in is satisfied. Counsel contended, therefore, there is a foundation for knowledge because they were participating in a share offer to which they knew they were not entitled. That is enough for the Court to draw an inference of knowledge. Counsel refined that submission to say that the respondents, by not inquiring why they were entitled to take up a share issue, when they were not eligible participants, became "knowingly concerned" in the conduct of the relevant director by failing to make further inquiry. In response, counsel for the company drew attention to the information memorandum of 8 January 2008. He did this for the point of emphasising that if that were the evidence upon which the plea and submissions made by counsel for the applicants were to be assessed, the applicants' submission would be difficult to uphold. This was because of apparently conflicting statements, the first being "an opportunity exists for three existing shareholders of Watershed to take up a parcel of securities", whereas the further statement was that "the Information Memorandum confirms a personal offer that has been made to and may only be accepted by the person to whom it is made, and has been made only to persons who are likely to be interested in the offer having regard to previous contact, or some professional or other connection or statements made by that person indicating that they are interested in offers of this kind". Counsel submitted that if that were the evidentiary base for this plea and others concerning breach of good faith by directors, then the document is utterly equivocal as to whether or not it was limited to shareholders. In my view, the argument concerning the strike out application in respect of [70] --- [75] of the substituted statement of claim in respect of the "knowing involvement" of certain respondents in the alleged contravention, only serves to highlight the difficulty a court would have at trial, and so the parties presently in responding to the pleading, as to the basis upon which the applicants claim the relevant respondents should be found to have actual knowledge by inference. I would strike out the paragraphs with leave to replead so that it is made quite plain, as soon as possible, exactly how the applicants frame their claim of actual knowledge of breach of relevant provisions, by inference. At this stage I am not prepared to rule that such a claim cannot be properly pleaded, although a further attempt at pleading such a case might well establish particularly to the applicants, that such a claim cannot be pleaded on the material facts currently alleged in this pleading. Paragraphs 78 and [80] plead as follows: Further or alternatively, by attempting the issue, approving the offers or causing the offers to be made, the Respondent Directors were attempting or conspiring to contravene section 209(2) of the Corporations Act within the meaning of section 1324(1) paragraph (b) or (f). (b) Each attempted offer stated that each director with a shareholder loan had already agreed to accept the offer. (c) In anticipation of the Information Memorandum on 24 December 2008 being issued, by letters dated 23 December 2003 to the Company, each of the Second, Third and Fourth Respondents and the wife of the Second Respondent confirmed that they or entities they had a controlling interest in would take up certain parcels of loans and shares in the Company. Counsel for the company (supported by the other respondents) submits that it is a requirement of the plea of conspiracy that the overt acts of conspiracy be set forth as material facts with clarity and precision. There is having respect little doubt about that: Adsteam Building Industries Pty Ltd v Queensland Cement and Lime Co Ltd (No 4) [1985] 1 Qd R 127 at 134. The applicants accept this is so. The respondents say that the plea is deficient in that a plea of conspiracy requires the following: The company says the first limb is deficient because directors requiring a company to take a particular course is not of itself a conspiracy. No relevant agreement is pleaded. No overt acts of conspiracy are pleaded. No other matters are pleaded in support of conspiracy. Counsel for the company submits that, to the extent that [78] alleges that the conspiracy was between the company and the respondent directors is unsound, because no conspiracy arises where the directors procure the actions of the company: O'Brian v Dawson (1941) 41 SR(NSW) 295 at 307 --- 308. Counsel submits the duty under s 209(2) of the CA is cast upon the company, not upon the directors. It is not possible to allege a second breach by the directors merely by pleading that they directed the company to take a particular course. In particular, it is not a conspiracy between the first respondent company and the respondent directors. The company submits the second limb is absent because there is no plea of intent to injure at all. Further, the third limb is absent because no acts pursuant to any agreement or in pursuit of any intent are pleaded. In the absence of any limb, but particularly in the absence of three out of four limbs, no clear conspiracy can be maintained. In O'Brian v Dawson , Jordan CJ considered that it was artificial to speak of directors procuring a company to break its contract in the sense the word is used in Lumley v Gye [1853] EngR 15 ; (1853) 118 ER 749. Chief Justice Jordan emphasised that an incorporated company is incapable of acting except through agents. It is not capable of exercising volition independently. The Chief Justice also made reference to Said v Butt (1920) 3 KB 497 which held that a servant who causes a breach of his master's contract, has not himself engaged in a conspiracy, he is acting on behalf of the principal. In Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980 ; (2000) 177 ALR 231 at 263, Finkelstein J considered it would be wrong not to apply Said v Butt which he considered represents the law of Australia and also appeared to him to be "good law". I accept that, under the law of Australia, it is not possible to find a conspiracy by directors whereby a resolution causes a company to take a course of action. However, if they independently take steps to procure or do breaches outside their duty as directors, that might be a ground for finding conspiracy. But the mere fact that directors gather together in committee and vote on a resolution is not a ground for conspiracy: see also Sheiman Ultrasonic Research Foundation Pty Ltd v Novapharm Research (Australia) Pty Ltd at [10] --- [14]. ... [Then they] sought another report from BDO Kendalls dated 25 May 2007 based on different instructions. ...[They] then passed a resolution on 26 May 2007 to give a financial benefit of 2,106 shares in the Company to the Second, Third and Fourth Respondent Directors based on the BDO Kendalls' report of 25 May 2007 that was not on arm's length terms. ... [Later they] cancelled that attempted share issue after the Second Applicant informed BDO Kendalls which withdrew approval for the use of their report as a basis for arm's length terms. ... [They] sought another report from BDO Kendalls and when this report in draft form was issued with a recommendation that shares be issued on arm's length terms [that] this should be 64 shares, terminated the appointment of BDO Kendalls and the Second, Third and Fourth Respondents determined not to accept the share issue as consideration for their loans. That, by necessary inference, could injure those parties who are not participating in the share issue, which is the essential claim being made in these proceedings. The applicants say it is not a difficult inference to draw, and has been pleaded in the sense of a diminution in the value of the shares that were being issued that were held by non-participating shareholders. Counsel for the applicants appeared to accept in argument that if in pleading their defence, individual respondent directors plead that they were acting in pursuance of their authority as directors, "then that may well be an end to the resolution that was passed on 26 May 2007, comprising the necessary agreement, for the purposes of that limb of the conspiracy cause of action". Counsel submitted that was a matter for defence and a matter to be pleaded. In other words, the applicants say that they are entitled to plead that the resolution constitutes an agreement that can be relied on for the purpose of satisfying the various elements of a plea of conspiracy, and that it remains for a respondent to plead that the resolution was in pursuance of the conduct of the respondent as a director of the company. The respondents expressed concern as to exactly what the applicants' plea is at this point. Counsel for the company accepts that if the respondent directors concerned were not acting pursuant to any directorial authority, but simply at large, then they may be able to plead a conspiracy between the directors, but it would be difficult to see why the company would then be liable --- because the directors were not purporting to act for them. But more importantly, counsel submits that it is incumbent upon the applicants to plead out the essential elements of a conspiracy. It is not appropriate for an applicant to plead that there is a possibility that the relevant respondents were not acting as directors, leaving it to those respondents to deny the possibility. In my view, the pleading of conspiracy in [78] and [80] of the substituted statement of claim currently do not disclose a cause of action and it is necessary for the applicants to plead the material facts to meet each element of such a claim. It seems to me that the essential elements of conspiracy have not been pleaded out. It is accepted that a pleading may generally contain relevant statements of all material facts and other allegations upon which one can properly discern the necessary elements of a cause of action. In this case, the nature of the submissions put and the oral argument about whether or not those elements may be said to have been pleaded in this case, only goes to show that they have not satisfactorily been pleaded. Whether or not it is open to the applicants properly to plead out a case of conspiracy on the basis of the resolution of 26 May 2007, may be doubted. Counsel for the applicants recognises that the applicants are faced with a difficult task in this regard. Current authority in Australia suggests that a resolution of directors of the company that cause a company to take certain actions cannot be construed as a conspiracy. They are simply the persons through whom the company acts. Unless those actions are capable of being characterised as other than actions taken by the respondent directors in pursuit of their conduct as directors, then a claim of conspiracy cannot be satisfactorily pleaded. In the circumstances, I would strike out those paragraphs of the substituted statement of claim in relation to conspiracy. I would, however, grant leave to replead in relation to the conspiracy cause of action, although I currently doubt that it will be possible to satisfactorily do so. In general terms, the respondents complain that the allegations contained within the particulars concerning the issue of shares at a discount, financial and business mismanagement, improper use of company assets, remuneration decisions, allotment of shares, while all very serious, lack specificity and are incomprehensible "as a matter of grammar and syntax" and/or fail to explain what the components of the allegations are. The respondents, in essence, complain that the allegations of oppression are not sufficiently clearly pleaded. It is very important that they should be, because they may also in totality amount to oppression at law. Counsel for the applicants concedes that two of the particulars of oppression, in [81](f) and [81](j) need to be withdrawn and repleaded. In my view, one may generally comment in respect of the oppression pleading in [81] that if this proceeding were simply an oppression proceeding on its own, the particulars of oppression would inevitably be pleaded in more detail and with more specificity. As pleaded, presently, [81] requires some careful analysis to link the particulars to the primary plea that the conduct complained of is contrary to the interests of the members as a whole and oppressive to them. While I think it is fair to say, as the counsel for the applicant submits, that it is necessary to read each of the particulars in the context of the whole and it is artificial to take each subparagraph and analyse it deeply, more work is still required in the presentation of those particulars to ensure that the particulars are properly linked and sheeted back to the primary oppression plea made. Counsel for the applicants made the point in oral submissions that when witness statements are eventually filed for the purposes of a trial in this proceeding, more detail will be given to the instances of oppression identified in the particulars. One understands that pleadings constitute statements of material facts upon which a claim is based and are not intended to include the evidence. But it remains important in an oppression plea to set out the material facts upon which the oppression is said to arise. Presently that has been done through the provision of "particulars". It seems to me that those particulars have been written with a degree of generality that, at least to some extent seems to repeat other causes of actions, breach of duty, and so on, which could undoubtedly be improved with further consideration and redrafting. As this matter is a keenly fought piece of commercial litigation, I think it is important that the oppression plea be refined by reference to all the material facts as much as it possibly can be at this point, particularly as it does include allegations that parties have acted improperly and have preferred their interests to those of the company or other shareholders and the like. In these circumstances, I would strike out [81] of the substituted statement of claim but grant leave to replead the paragraph. The respondents should also be entitled to their costs of this application. The following orders will be made: Paragraphs [54], [70], [71], [72], [73], [74], [75], [78], [80] and [81] of the substituted statement of claim are struck out with liberty to the applicants to replead. The applicants pay the costs of the respondents' applications of 23 June 2009 and 24 June 2009, to be taxed if not agreed. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | application to strike out paragraphs of substituted statement of claim whether paragraphs failed to disclose a cause of action application granted with liberty to the applicants to replead. corporations |
Also covered by that application were his wife and their son. The application was initially refused by a delegate of the Minister for Immigration and Citizenship (the Minister), the active Respondent in the present appeal. In turn, that refusal decision was affirmed by the Migration Review Tribunal (the Tribunal). The Tribunal's decision was quashed on judicial review by the Federal Magistrates Court. The matter was then remitted to the Tribunal for hearing afresh. On the second hearing of the application for the review by the Tribunal of the refusal decision, the Tribunal again decided to affirm the refusal of the visa application. In turn, the Appellant again sought the judicial review of that decision by the Federal Magistrates Court. On this occasion, that court decided to dismiss the judicial review application. Following the grant of extension of time within which to appeal, it is from that decision that the Appellant appeals to this Court. There are two grounds of appeal: That the learned Federal Magistrate erred in finding that the decision of the Second Respondent, made on 11 July 2009, affirming the decision of the First Respondent delegate to refuse to grant the appellant a Business Skills (Permanent) Visa was not affected by jurisdictional error. It did so because the Tribunal treated the Appellant's first two businesses discretely. By s 65 of the Act, if, after considering a valid visa application, the Minister is satisfied, materially, that the criteria for that class of visa as prescribed either by the Act or the Regulations have been satisfied, the Minister is to grant that visa. If not so satisfied, the Minister is obliged by s 65 of the Act to refuse to grant the visa. The Minister is permitted to delegate the performance of this function. Section 41 of the Act permits the making of regulations which provide that visas, or visas of a specified class, are subject to specified conditions. Section 31(3) of the Act permits the making of regulations which prescribe criteria for a visa. Section 504 of the Act empowers the Governor-General to make such regulations. Materially, the effect of reg 2.03 of the Regulations is that, for the purposes of s 31(3) of the Act, one looks to Sch 2 to the Regulations for the prescribed criteria of the grant to a person of a visa of a particular class. Within Sch 2 to the Regulations, those criteria presently pertinent for the grant of a Business Skills (Permanent) Visa are found within sub-class 845. Note 2 As to beneficial ownership of an asset or ownership interest, see regulation 1.11A. Note 3 There are no interpretation provisions specific to this Part. The other members of the family unit who are applicants for a visa of this subclass need satisfy only the secondary criteria. On the one hand, GNI, when trading as GNI Finance Corporation, was said to carry on a business of finance origination. On the other hand, and separately specified on the application form, GNI was said to conduct a business involving the export of meat, offal and coffee. By the time the Tribunal came to review afresh the refusal decision, the Appellant had caused a company by the name of United Link Corporation Pty Ltd (United) to be registered. The Tribunal found that this occurred on 11 April 2005. It seems that United commenced business forthwith upon its registration. Its business concerned computers. That business was promoted before the Tribunal on the rehearing as a "main business". On the rehearing before the Tribunal, the Appellant's representative advanced a submission that the true position in law was that one business had been nominated by the Appellant at the time when the visa application was made. From this it followed, so it was submitted, that the business nomination limit in para (2) of the definition of "main business" had not been reached at the time the application was made. It followed, it was submitted, that it was possible to nominate and to rely upon United's business as a "main business" for the purposes of meeting the specified visa criteria. It was put to the Tribunal that, for the purposes of the Regulations, a legal entity could not operate more than one business. Hence, so the submission went, as GNI Finance Corporation was nothing more than a name under which GNI carried on business, rather than the name of a separate legal entity, there was but one business which could be carried on by GNI. There was no alternative case advanced for the Appellant before the Tribunal on the rehearing that one or the other of the businesses nominated on the visa application form could not be a "main business" because it was not a "qualifying business". In the Federal Magistrates Court, the Appellant's contention was that it was not lawfully possible for the Tribunal to have concluded that the meaning of the word "business" in the definition of "main business" was such that, even though several types of enterprise might be discernable in its operations, there could in law only be one "business" carried on by that legal entity. In disposing of that contention, the learned Federal Magistrate noted that in Nassif v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 481 ; (2003) 129 FCR 448 Branson J, having observed that the word "business" was not defined for the purposes of the Regulations, derived assistance as to its meaning as found in standard dictionaries. In that case her Honour concluded that it was not a characteristic of the meaning of the word "business" that a business could only be carried on by one legal entity. The learned Federal Magistrate considered that the converse of this also followed from the word's ordinary meaning, ie that a single legal entity could also carry on more than one "business" (reasons for judgment, para 41). Having reached that conclusion, his Honour then found that it was open to the Tribunal, as a matter of fact, to conclude that GNI operated two businesses. It seems from the learned Federal Magistrate's reasons for judgment that, in the course of oral submissions, the Appellant also advanced a case, which was not revealed by the grounds of judicial review that it had specified, that the Tribunal had erred by failing to consider whether each of the "main businesses" was a "qualifying business". The learned Federal Magistrate noted (reasons for judgment, para 51) that neither party had put before the Tribunal matters relevant to establishing a "qualifying business" which was a subject "taken as said". His Honour then opined (reasons for judgment, para 52), by reference to Saffron v Societe Miniere Cafrika [1958] HCA 50 ; (1958) 100 CLR 231 ( Saffron's Case ), "The matter never having been put in issue before this time cannot now be raised". On the appeal to this Court, the Appellant's submission was that the Tribunal had erred because it did not properly turn its mind to the question of whether the two businesses specified on the visa application form were "qualifying businesses" as defined by reg 1.03 of the Regulations. It was submitted that only by so doing could the Tribunal properly have determined that those businesses were separate "main businesses" for the purposes of reg 1.1(2) of the Regulations. From this it was said to follow that the rejection of United's business as a "main business" was erroneous because it did not violate the regulatory prohibition against the nomination of more than two "main businesses". In turn, the learned Federal Magistrate was said to have fallen into error by failing to hold that the identified alleged error on the part of the Tribunal was jurisdictional. The learned Federal Magistrate was also submitted erroneously to have concluded that, because the question of whether the originally specified main businesses were qualifying businesses had not been raised before the Tribunal, it could not be raised as a jurisdictional error ground before the Federal Magistrates Court. The Appellant submitted that "the failure of the Tribunal to even turn its mind to the question of whether the main businesses nominated on the visa application form were 'qualifying businesses', was a fundamental failure to understand the task before it". For his part, the Minister submitted that the Tribunal's findings that the two originally nominated businesses were the Appellant's main businesses should be regarded as subsuming a finding by the Tribunal that they were "qualifying businesses". The Minister further submitted that, in the circumstances, the Tribunal was entitled to act upon the Appellant's nomination on his visa application form of two "main businesses". I doubt, with respect, whether the Appellant's "qualifying business" argument, having regard to the pleadings, arises given the way in which the first appeal ground is cast. The point was though one fully explored in the Appellant's written and oral submissions and one with which the Minister fully engaged in submissions in response. The following features of the Appellant's case before the Tribunal on the rehearing bear emphasis by repetition. His case there proceeded upon the acceptance by the Tribunal of the legal premise that it was not possible for one legal entity (GNI) to carry on two discrete businesses. It was never put to the Tribunal that, were this legal premise to be found unmeritorious, one or the other of the nominated businesses could not in any event be a "main business" because it was not a "qualifying business" for the purposes of the Regulations. That was not the subject of any legal or factual controversy. The Tribunal's reasons display an appreciation (para 12 and para 34) of a need for the nominated main business or businesses each to be a "qualifying business". There was nothing in the way in which the businesses were described on the visa application form or in other material or submissions before the Tribunal to raise an interrogative note about whether the Appellant's own nomination of the two main businesses on the application form was flawed because one or the other or each were not and could never be "qualifying businesses". In Repatriation Commission v Warren (2008) 167 FCR 511 ( Warren's Case), Lindgren and Bennett JJ (with whom in this regard I agreed) comprehensively summarised the effect of earlier authorities bearing upon the question as to whether an External Merits Review Tribunal commits legal error by not considering an issue even if it is not raised or the subject of challenge by the parties to the review proceeding before it. Their Honours stated (para 78): The following principles, which we take to be established, must be understood against the background that the tribunal under consideration, like the Tribunal here, is required to "review" a primary decision, is given all the powers and discretions that were conferred on the original decision-maker, is not bound by the rules of evidence, is required to proceed with little formality and technicality, and is, of course, bound to apply the provisions of the relevant statute, even if there is no challenge by the parties: The general rule that a litigant is bound by, and accordingly is entitled to act on, admissions and concessions does not automatically apply, although cases concerned with the exercise of judicial power may be of assistance ( Kuswardana at 194 per Bowen CJ). A party to the proceeding is not necessarily precluded from arguing on "appeal" matters that were conceded before the tribunal. Whether the party is so precluded depends on the nature of the matter conceded, its conduct of its case, whether the concession represented an agreement by the parties as to the facts to be decided and other relevant circumstances ( Kuswardana at 195 per Bowen CJ and at 199 per Fox J). Where a concession is made, there must be some difficulty in finding an "error of law" when the contrary of the concession is raised for the first time in this Court ( Federal Commissioner of Taxation v Raptis (1989) 20 ATR 1262 at 1267 per Gummow J). A tribunal does not err in law in failing to regard as material a fact which counsel failed in submissions to contend was material ( Federal Commissioner of Taxation v Perkins (1993) 26 ATR 8 at 10 per Davies J). There is a difference between factual matters not canvassed before the tribunal and a new issue relating to the validity of a regulation ( Tefonu Pty Ltd v Insurance and Superannuation Commissioner [1993] FCA 412 ; (1993) 44 FCR 361 at 367 per Beazley J). Even though the parties may be ' able, in practical terms, to narrow the issues by concession ... even a concession does not permit the [t]ribunal to avoid its duty as an administrative decision-maker to make the correct or preferable decision ... on all relevant aspects of the matter before it ' ( Peacock v Repatriation Commission (2007) 161 FCR 256 at [23]); A concession ' does, however, permit the decision-maker to reach the correct or preferable decision by reference to the concession as well as to its findings on disputed questions ' ( Peacock at[23]; and see Comcare v Fiedler [2001] FCA 1810 ; (2001) 115 FCR 328 at 337 --- 338). A finding by the Tribunal that each of the businesses nominated on the visa application form by the Appellant as a "main business" was indeed a "main business" necessarily, in the circumstances, carried with it a finding, a "satisfaction", that each business, factually, met the definition of "qualifying business". The Appellant contended that the reference by the learned Magistrate to Saffron 's Case was inapt. With respect, I agree. Unlike the circumstances of Saffron's Case, the proceeding before the Federal Magistrates Court was in no sense an appeal by way of rehearing where a particular point had not been taken in a court below. Rather, it was a judicial review proceeding in respect of the Tribunal's decision. Further, having regarding to s 65 of the Act, it was a judicial review proceeding in respect of an ultimate conclusion by the Tribunal, sitting in place of the ministerial delegate, that it was not "satisfied" that the relevant criteria for the grant of the visa sought were met. Such "satisfaction" based decisions are not unexaminable on judicial review, as the High Court noted in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 275-276 by reference with approval to remarks on that subject made by Gibbs J (as his Honour then was) in Buck v Bavone [1976] HCA 24 ; (1975) 135 CLR 110 at 118-119. Thus, as highlighted in the summary given in Warren's Case, the fact that a party to a proceeding before a merits review tribunal has not raised a particular issue either of fact or law will not of itself render that administrative decision immune from challenge on judicial review on the basis, for example, that a particular fact which was required by statute to be found was not found. If a required jurisdictional fact were not found by an administrative tribunal it would be nothing to the point that the tribunal had not been asked to find it. It is just that in this case the Tribunal has, at the necessary level of factual detail in the circumstances, been satisfied that there were two "main businesses" originally nominated. It was not required, in circumstances where the parties conducted their cases on the basis that it was a given, separately to consider the subsidiary question as to whether, as a matter of fact, those "main businesses" were "qualifying". The Appellant accepted that identification of this particular error on the part of the learned Federal Magistrate did not mean that the first ground of appeal must necessarily succeed. The Appellant also advanced the argument that the Tribunal's conclusion that, at the time of the application, GNI operated, as nominated, two "main businesses", was erroneous, because those businesses "are in fact the same business". There was no error in the way in which the learned Federal Magistrate approached the meaning of the word "business" and its reach. As did Branson J in Nassif (at 454-455), I gain assistance as to the meaning the word from standard dictionaries. The word undoubtedly has chameleon like qualities, taking its meaning from the context in which it is used. In both the Oxford and the Macquarie Dictionaries the meaning of the word "business", when used in a commercial sense, is "enterprise". That is the sense in which it is used in the terms "main business" and "qualifying business" in the Regulations. That this is so is reinforced by its being treated, in the definition of "qualifying business", as a synonym for "enterprise". So construed, there is nothing about the meaning of the word "business" as used in the context of the Regulations which carries with it the necessary corollary that a legal entity can only ever, on its true meaning, have or conduct but one "business". Such a construction of the word "business" accords with common experience. It is by no means unusual for a legal entity to cease one particular field of commercial endeavour by the disposal of what is aptly termed a "business" without ceasing altogether to trade. Given this meaning of the word, whether or not GNI had one or two "main businesses" was nothing more than a question of fact and one for the Tribunal alone. The learned Federal Magistrate well appreciated this (reasons for judgement, para 44). It is certainly not one this Court on subsequent appeal. However approached, ground 1 of the appeal must fail. The dismissal of the first ground of appeal and the business nomination limit found in the definition of "main business" in reg 1.11 have the necessary consequence that there was no error in the Tribunal's concluding that it was not able to consider United's business for the purposes of deciding whether it was satisfied that the Appellant met the visa criteria. This consequence was accepted by the parties and, in the court below, by the learned Federal Magistrate (reasons for judgement, para 54). The point was though fully argued. I conceive that it is appropriate to address it in the event that the conclusion which I have reached in respect of the first appeal ground is in error. The learned Federal Magistrate dealt with the point on a similar basis. The central point raised is, what is the true meaning and effect of the words "continues to" as they appear thus in cl 845.221: "the applicant continues to satisfy the criteria in clauses 845.213 to 845.218"? For these reasons the Tribunal finds that United is not a main business as it does not meet the definition of main business as the visa applicant did not have an ownership interest in United for at least 18 months immediately preceding the making of the visa application. Therefore the applicant does not have an ownership interest in one or more established main businesses , at the time of this decision, and the Tribunal finds accordingly. Further, the visa applicant is not involved in the management of a business or makes decisions affecting that business as the owner of an interest in a main business or main businesses in Australia, at the time of this decision, and the Tribunal finds accordingly. In the result, the learned Federal Magistrate considered that contextual similarities as between the words as used in cl 845 and as used in the provisions considered in Rao's Case favoured following the construction of "continues to" adopted in that case rather than, as the Appellant had submitted, that given to those same words by the Full Court in Xiang's Case Put succinctly, the differing positions are these. The Appellant's submission, said to be supported by Xiang's Case, was that there was nothing in the language of either cl 845.213 or cl 845.221 which required that, in the interval between date of application and date of decision, a visa applicant have an interest in a particular business or indeed any business. The Appellant noted in submissions, as is the case, that the learned Federal Magistrate had made reference to the word "continuous" in his reasons for judgement (para 67 and para 81) in a context which suggested a belief by him that this word appeared in cl 845,221, which is not the case. This error, it was submitted, may have influenced his Honour's interpretative preference. It was further part of the Appellant's submission that the words "of that kind" in cl 845.213 (b) indicated that the "main business" at the time of decision need not be one and the same as that at the time of application. The Minister's submission, said to be supported by Rao's Case, was that a visa applicant had to maintain a direct and continuous involvement in the main business (or businesses) nominated at the time of application and throughout the interval up to and including the date of decision; Xiang's Case was said to be distinguishable. According to the tribunal it means that a visa applicant must do more than establish that he or she is a special need relative at the time of application and at the time of decision. It also requires the applicant to satisfy this definition throughout the entire intervening period, or at least for a substantial part of that period. According to the tribunal "[t]o hold otherwise would deny any use or purpose to the inclusion of the word 'continues' in the regulations". Although not the subject of complaint, it should be noted that the tribunal said that unless an applicant was a special need relative during the period between the time of the application and the time of decision, the applicant would not satisfy subcl 806.213 of the Regulations. Even if the tribunal were correct in its construction (which it is not, for reasons soon to be explained), it was wrong to hold that this would result in a failure to satisfy subcl 806.213. It could only lead the tribunal to the conclusion that the visa applicant had failed to satisfy subcl 806.221, namely the criteria at the time of decision, and not that she had failed to do so at the time of the application. Its meaning must be gathered from the context. The context is that a visa applicant must be a "special need relative" both at the time of application, and at the time of decision, to satisfy that criteria. It will be remembered that a special need relative is defined as a relative who is willing and able to provide the requisite assistance to an Australian or New Zealand citizen or resident. The first point to note is that the word to be construed is the verb "continues" and not the adjective "continuing". Second, it is plain that the word "continues" is not concerned with any activity on the part of the visa applicant, but rather with the applicant's status; a status which has a temporal condition. Relevantly, the question is whether the applicant was (at the time of application) and still is (at the time of decision) a "special need relative". That is to say, the applicant "continues" that status if the applicant still is a "special need relative" at a particular time; that time being when the decision is made. Possibly the draftsman assumed that a person who was a "special need relative" at the time of the application and continues to satisfy that condition on the day of decision would be a "special need relative" throughout the intervening period. But, whatever may be the assumption, there is no legal requirement that this be so. This conclusion is probably inconsistent with the decision in Rao v Minister for Immigration and Multicultural Affairs [2001] FCA 1755.There on a slightly differently worded regulation Allsop J decided that the word "continues" was not intended to limit the enquiry whether the visa applicant in that case had satisfied the relevant criteria at the time of the decision. On the other hand, the judgment in that case may be supported because the word "continues" was used in a different context. This issue need not be resolved. The "slightly differently worded regulation" considered by Allsop J in Rao's Case was that part of the Regulations which governed eligibility for the Student (Temporary) (Class TU Subclass 560) visa sought by the visa applicant in that case. One condition to which that applicant's existing visa was subject was condition 8105, which prescribed that the holder must not engage in work in Australia (other than in relation to her course of study or training) for more than 20 hours per week during any week when the institution at which the holder was studying was in session. Within Subclass 560, cl 560.21 set out the criteria to be satisfied at the time of application. Subclause 560.22 set out the criteria to be satisfied at the time of decision. The learned Federal Magistrate was keenly aware of the authority of a decision of a Full Court of this Court, if in point, as the following passage reveals. In my view for reasons which follow the context in which the word "continues" appears in clause 845.221 is not similar to the context to which the word appeared in clause 806.221. Noting this, and reading the reasons as a whole, I am not persuaded that the erroneous references to "continuous" were material to his Honour's interpretative conclusion. What was material was the learned Federal Magistrate's apprehension that it had been recognised in Xiang's Case that the meaning to give to the word "continues" may depend on whether it was used in relation to a status or an activity. It was because his Honour considered that it was used in the latter context that he concluded that, in this regard, there had been no error made by the Tribunal. The requirement for a duality of satisfaction by a visa applicant of particular criteria at both the time of application and the time of decision is not unique to cl 845, nor even to those considered in Xiang's Case and Rao's Case. It is a feature which permeates the Regulations. It is a further permeating feature that the verb "continues" is employed so as to require satisfaction on the part of the administrative decision maker at the time of decision that a visa applicant "continues to" satisfy nominated criteria which were first required to be satisfied at the time of application. Against this background, it is highly unlikely, in my opinion, that it was intended by the Governor-General-in-Council when making and amending the Regulations that the meaning, as opposed to the effect in context, of "continues to" would vary throughout those regulations. Though, pursuant to s 25(1A) of the Federal Court of Australia Act 1976 (Cth), I am presently exercising the appellate jurisdiction of the Court, I consider that I am bound by any decision given in the appellate jurisdiction by a Full Court of this Court which is in point: NAKG of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 1600 at [48] per Jacobson J; S ZBPQ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 568 at [5] per Hely J. Xiang's Case is in point to the extent that the Full Court has counselled that "continues" is a word the effect of which depends on the context in which it is used. It must not, as the Full Court stated in the passage quoted above, be read in isolation. The Full Court noted usages of the word in respect of both an activity and a status. As it happened, it was in the latter context that it was used in Xiang's Case to the end that there it did not carry with it any requirement that the status be held in the interval between application date and decision date by the visa applicant. In Rao's Case, as the Full Court noted, the word "continues" was used in a different context. In those parts of the Regulations considered in Xiang's Case and in Rao's Case, as well as in the present case, "continues" is used as a transitive verb. So used, the sense of the word is "to carry on, keep up, maintain, go on with, persist in (an action, usage, etc.) (Oxford Dictionary, 2 nd Ed, 1989) or "to go forwards or onwards in any course or action; keep on" (Macquarie Dictionary, Online Edition). When used for the purposes of cl 845.221 in conjunction with "a status which has a temporal condition", it requires nothing more than that that status is possessed at the time when the assessment falls to be made, relevantly, at the time when the administrative decision in respect of the visa application is made. If a visa criterion contains a temporal limitation in relation to possession of a particular status at the time of application, a visa applicant who then has that status and who also has that status at the time when the decision in respect of that application is made, necessarily "continues" to have that status. Furthermore, the visa applicant will "continue" to have that status at the time of decision irrespective of whatever his or her status may be in the period which elapses after the date of application and before the date of decision. On the other hand, in respect of an activity based criterion carrying with it no temporal limitation, satisfaction at the time of decision that the visa applicant "continues to" meet that criterion will necessarily require scrutiny of whether that activity was maintained in the interval. The point may illustrated by reference to the operation of cl 845.221 with respect to the "continues to satisfy" criteria referred to in that clause. The criterion in cl 845.212 is status based and also temporally focussed by reference to the time of application. If that criterion is met at the time of application, it will "continue" to be met at the time of decision. I shall pass over cl 845.213 for the moment because it requires more detailed analysis in light of the circumstances of this case and the submissions made on the appeal. Subclauses 845.214 and 845.215 are status based by reference to assets and, in part, temporarily limited by reference to the period ending immediately before the application is made. Insofar as they are not temporally limited in that way, asking whether the visa applicant "continues to" meet them involves in any event no inquiry as to the position obtaining during the period which has elapsed since the time of application, only what is the position at the time of decision. Subclause 845.216 entails a status ("as the owner of an interest") but a status possessed while engaging in activity. However, there is a temporal limitation in respect of that activity, "In the 12 months immediately preceding the making of the application". In light of that limitation, if there is satisfaction that the visa applicant met this criterion at the time of the application, there must necessarily at the time of decision be satisfaction that the applicant "continues to satisfy" this criterion. Subclauses 845.217 and 845.218 are different. Each of them is activity focussed; "overall had a successful business career" and "has a history of involvement". Deciding whether a visa applicant "continues to satisfy" these criteria will necessarily involve examining what that applicant has been doing in whatever interval has elapsed between the time of application and the time of decision. The conclusion one reaches as to the position which obtained at the time of application in respect of these criteria may differ from that reached at the time of decision because of what has occurred in the interval. I apprehend that each of these conclusions as to the meaning and effect of "continues to" is consistent with the Full Court's observations in Xiang's Case. These are Delphic qualities attending ascertaining the effect of cl 845.221 in relation to continued satisfaction of cl 845.213, even with the benefit of the guidance offered in Xiang's Case. As a matter of first impression, cl 845.213 appears to be status based in the sense that it looks to the possession of an "ownership interest" in a "main business" or businesses. Subclause 845.213(a) carries a temporal limitation which looks to the 18 months immediately preceding the application. There is though a further and cumulative temporal limitation itself utilising the transitive verb "continues" found in cl 845.213(b). The evident concern of the further temporal limitation in cl 845.213(b) is that the "ownership interest" in one or more "main businesses" over the period of 18 months immediately preceding the application must be maintained, "continue", throughout whatever period elapses thereafter until the application is made. In other words, the intention, reflected in the language of cl 845.213(b), is that there should be no gap in the holding of an "ownership interest". Further, the continued interest must be one "of that kind". In context, the reference in cl 845.213(b) to "of that kind" is, in my opinion, to be read as a reference to the "main business" or businesses referred to in cl 845.213(a). The use of "kind" in drafting might in other contexts admit of a more generic coverage. The embrace of the word has given rise in other contexts to sharp divisions of judicial opinion, see, for example, Bird v The Commonwealth [1988] HCA 23 ; (1988) 165 CLR 1. Here though, "kind" is governed not by an indefinite but by a very specific definite article, "that". It is also necessary to recall that "main business" is itself a defined term. One feature of that definition, to which I have already referred, is a limit on the number of businesses which may be nominated as a "main business". There is no obvious reason for such subversion in respect of this particular visa subclass. On the other hand, construing "of that kind" as a reference to the "main business" or businesses referred to in cl 845.213(a) sits comfortably with a subclass the intent of which seems to be to provide a basis for the granting of a visa to those (and to the family of those) who have made a significant and continuing investment in and managerial involvement with at least one and not more than two nominated main businesses in Australia. Another feature of para (1)(b) of the definition of "main business" in reg 1.11 of the Regulations is that it is activity related. Furthermore, the language employed in respect of the activity is "maintains or has maintained continuous involvement". Necessarily, the determining of whether at the time of decision the requirements of this paragraph are met requires an assessment of an activity over a continuum. What has the visa applicant been doing in relation to the "main business" or businesses since the date of application? Further, the requirements specified in the paragraphs of the definition are cumulative. Even though the other criteria in the definition of "main business" in reg 1.11 of the Regulations are status based with the consequence in respect of satisfaction as at date of decision described in Liang's Case, the criterion in para 1(b) is not. To satisfy that criterion as at the date of decision, the visa applicant must do more than just be engaging in that activity at that time. It follows that, because not all paragraphs in the definition of "main business" in reg 1.11 of the Regulations are activity related, I am not in complete agreement with the learned Federal Magistrate's observation in respect of so much of the Tribunal proceeding that related to United (reasons for judgment, para 84) that, "the issue was not the visa applicant's status but rather his activity". However that may be, the learned Federal Magistrate upheld (reasons for judgment, para 85), as not attended by legal error, the Tribunal's conclusion (reasons, para 34) that the Appellant did not have an interest in a main business at the time of the decision. Having regard to the activity related aspect of "main business" and when United was established, this conclusion flowed inevitably from what I regard as the correct meaning and application of cl 845.221, read with cl 845.213. Further, and again as found by the Tribunal (ibid) the Appellant did not have (and could never have had) an ownership interest in United in the 18 months preceding the date of the visa application. Thus, were it necessary to decide the appeal by reference to ground 2, I should dismiss it, albeit for reasons which differ somewhat from those of the learned Federal Magistrate. It is difficult in the circumstances not to feel some sympathy for the Appellant with the outcome. In the period of time that it ultimately took to decide his application, business events were not static. Had the application been decided when each of GNI's businesses was operating, the fate of the application may well have been different. Equally though, as the process elongated it was a matter for the Appellant as to whether or not GNI continued to operate the two nominated "main businesses". If it did not, then the provisions of the Regulations governing this subclass were unforgiving. For these reasons the appeal must be dismissed, with costs. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | judicial review of decision of migration review tribunal refusing grant of business skills visa for breach of business operation limitation condition prescribed by regulation attaching to visa held business skills visa finding that applicant had not complied substantially with visa condition visa refused because appellant conducted more than two "main businesses" meaning of "main business" meaning of "business" visa also refused because appellant did not continue to meet visa criteria between application and final decision appellant did not have an ownership interest in a main business at the time of the tribunal's decision meaning of "continues" appeal dismissed "main business" "business" "continues" migration words and phrases |
Depending on the grade, the product can be used to make anything from films and plastic bags to pipes, containers, telephones and other house wares to tanks and drums. It is used in a variety of extrusion and other moulding applications. There is one Australian manufacturer of the product, Qenos Pty Limited, and a number of other exporters from overseas which sell the product in the Australian market. On 3 December 2003, the Minister imposed anti-dumping duties on imports into Australia of the product from Korea (except for one manufacturer there) and from Thailand pursuant to a declaration made under s 269TG(2) of the Customs Act 1901 (Cth). Earlier, in 2000, anti-dumping duties and other measures had been taken in respect of importations of the product from Indonesia. A review of the anti-dumping measures applying to Indonesia, Korea and Thailand began in late 2004 concluding in September 2005 when the variable factors used to assess the incidence of anti-dumping duty for imports of the product from each of those countries were altered. In July 2005, a continuation enquiry under Div 6 of Pt XVB of the Customs Act resulted in anti-dumping measures being continued in respect of Indonesia for a further five year period. On 12 November 2007, Qenos lodged an application under s 269ZA of the Act for a review of the anti-dumping measures in respect of the product imported into Australia from Indonesia, Korea and Thailand. The Chief Executive Officer of Customs, the second respondent, defined as the " CEO " in the Act, advertised his decision to conduct a review in early December 2007. The CEO published a statement of essential facts in accordance with s 269ZD of the Act on 25 March 2008. Interested parties had to make submissions in response to the statement of essential facts by mid April 2008 under the strict timetable laid down in the Act under s 269ZDA(1). On 6 May 2008 the CEO gave the Minister Trade Measures Report 134 containing his recommendations. That report recommended changes to the variable factors for the assessment of anti-dumping duties which had the effect of raising the previously assessed duty on Siam from nil to a more substantive figure. On 23 June 2008, the Minister accepted the CEO's recommendations by making a declaration pursuant to s 269ZDB(1) and, on 3 July 2008 his declaration was published. The Minister's declaration stated that his reasons were those in Report 134. Siam complained that the decision of the CEO to make the recommendations and the decision of the Minister to accept them were not authorised by the Act. Siam raised three issues in this application: Did the Minister and CEO misconstrue the provisions of Div 5 of Pt XVB of the Act in the review by failing to apply the test in s 269TG(2)(b) , and so did not inquire whether material injury to Qenos had been or was being caused or threatened by the export to Australia of the product by Siam from Thailand? Was each of the CEO and the Minister authorised to calculate a non-injurious price, within the meaning of s 269TACA(a) and s 8(5A) of the Customs Tariff (Anti-Dumping) Act 1975 (Cth) ( the Dumping Duty Act ) simply by following Customs' ordinary policy of identifying an industry selling price at a time unaffected by dumping, without identifying the injury or threat to the Australian industry (here Qenos) which that price would prevent. Were the decisions of the CEO, to recommend, and of the Minister, to declare that the anti-dumping measures remain in force with variations made without evidence or other material before either of them that any injury to the Australian industry had been caused by Siam's exports of the product to Australia? It is necessary to summarise some of those provisions for the purposes of explaining enough of the statutory background to enable the issues in these proceedings to be understood. Following the enactment of the Customs Legislation (World Trade Organisation Amendments) Act 1994 (Cth) and the Customs Legislation (Anti-Dumping Amendments) Act 1998 (Cth) the purpose of Pt XVB was to give effect to the obligations Australia had assumed under agreements negotiated in the Uruguay Round of the General Agreement on Tariffs and Trade. Australia is a State party to the Agreement on Implementation of Article IV of the General Agreement on Tariffs and Trade 1994 ( the implementation agreement ). The explanatory memorandum circulated by the Minister for Customs and Consumer Affairs for the 1998 Bill, stated that the, then, present system and the proposed amendments were premised upon conformity with Australia's obligations under the World Trade Organisation Agreements. Relevantly, Pt XVB contemplated that there will be three significant decisions made at various stages under its provisions. The first such decision will be whether to impose an anti-dumping measure or not. If imposed, the measure remains in force for five years unless revoked earlier. A particular process is set out for the Minister to arrive at that decision which I will describe later. The second significant decision is whether the initial anti-dumping measure should be changed in consequence of a review during its five year life. The third significant decision is whether, towards the end of the five year period, there should be a continuation of anti-dumping measures for a further period of five years. Because the Parliament has enacted Pt XVB to deal with the subject matter of the implementation agreement, the legislation must be interpreted and applied, so far as its language permits, so that it is in conformity, and not in conflict, with Australia's international obligations. Where the language of a statute is ambiguous, the Court should favour a construction consistent with the international instrument and the obligations which it imposes over another possible construction of that legislation. The meaning of obligations in an international instrument, such as the implementation agreement, must be ascertained by giving primacy to the text of the instrument as well as considering its context, objects and purposes. And, an international instrument is interpreted in a more liberal manner than ordinarily when a court construes exclusively domestic legislation: Pilkington (Australia) Ltd v Minister for Justice and Customs [2002] FCAFC 423 ; (2002) 127 FCR 92 at 100 [25] - [26] per Mansfield, Conti and Allsop JJ. International treaties should be interpreted uniformly by States party: LK v Director General, Department of Community Services (2009) 253 ALR 202 at 213 [36] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ. The starting point for the process of construction of the Act, is found in the words that the Parliament has chosen. The terms of the implementation agreement, or other international convention, are an aid to construction of domestic legislation enacted by the Parliament: see Chiropedic Bedding Pty Ltd v Radburg Pty Ltd [2008] FCAFC 142 ; (2008) 170 FCR 560 at 568-570 [32] - [41] per French, Rares and Besanko JJ. Here, Siam sold to Dow Chemical (Australia) Limited at arms length. Section 269TAB(1) provided that the export price excluded any part of the price representing a charge in respect of the transport of the goods after exportation or in respect of any other matter arising after exportation. The " normal value of the goods " was defined in s 269TAC(1) as the price paid or payable for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions made by the exporter. The CEO was able to ascertain the normal value of the product sold by Siam in Thailand. Thus, where the Minister is satisfied under s 269TG(2)(a) that a price broadly equivalent to the f.o.b. (free on board) price for the goods exported to Australia is less than the price for which the same goods would have been sold in Thailand, the sale to Australia is regarded as being at a "dumped" price. Here, there is no dispute that the CEO and the Minister were entitled to be satisfied that Siam exported the product to Australia at a dumped price. The second condition in s 269TG(2)(b) required that the dumped price be causative of "material injury to an Australian industry producing like goods" in the sense that such an injury had either been occasioned, was currently caused or was being threatened. Here, the relevant Australian industry was Qenos, the only Australian manufacturer. The concept of " material injury " under Div 3 was dealt within s 269TAE. That provided that for the purposes of s 269TG in determining whether material injury has been, is being caused or is threatened because of any circumstance in relation to the exportation of goods to Australia from the country of export, the Minister "may, without limiting the generality of that section but subject to subsections (2A), (2B) and (2C), have regard to" a range of factors including: Next, s 269TAE(2A) provided that in making a determination in relation to the exportation of goods to Australia "the Minister must consider whether any injury to an industry ... is being caused or threatened by a factor other than the exportation of those goods" and any such injury or hindrance must not be attributed to the exportation of those goods. The section then listed a number of examples of the factors which the Minister must not attribute to the dumping, including the volume and prices of imported like goods that are not being dumped, contractions in demand or changes in patterns of consumption, restrictive trade practices of, and competition between, foreign and Australian producers of like goods, developments in technology, export performance and productivity of the Australian industry. This list of factors was not intended to be exhaustive or a set of factors necessarily to be taken into account. The critical question, for the purposes of s 269TAE(2A), for the Minister to consider was whether the injury was being caused or threatened by a factor other than the exportation of the dumped goods. In that situation, s 269TAE(2B) required the Minister to take account only of such changes in circumstances as would make that injury both foreseeable and imminent unless anti-dumping measures were imposed. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent . (One example, though not an exclusive one, is that there is convincing reason to believe that there will be, in the near future, substantially increased importation of the product at dumped prices. The Dumping Duty Act provided that the Customs Act was incorporated and must be read as one with it (s 6). Significantly, s 8(2)(a) expressly provided that dumping duty "is imposed, and ... must be collected and paid, on goods ... to which this section applies by virtue of a notice under subsection 269TG(1) or (2) of the Customs Act ". Dumping duty payable on goods the subject of a notice under s 269TG(2) of the Customs Act was fixed by ss 8(2) and 8(6)(a) of the Dumping Duty Act as the difference between the amounts that the Minister ascertained to be the export price and the normal value of those particular goods. Interim dumping duty was levied by ss 8(3) and (4) of the Dumping Duty Act pending final assessment of the dumping duty payable, as the difference between the export price and normal value of the goods as ascertained or last ascertained by the Minister for the purpose of the notice. Prices and values were ascertained for the purpose of a notice in accordance with the provisions of Div 5 of Pt XVB of the Customs Act . Those provisions also permitted review of the operation of a notice during its currency. The Minister had to direct, by a signed notice, that the amount of interim dumping duty be ascertained as a proportion of the export price of the particular goods or goods of that kind as ascertained or last ascertained by the Minister for the purpose of the dumping duty notice, whichever is the greater: s 8(5) of the Dumping Duty Act. And, s 8(5A) provided that the Minister must, if the non-injurious price of goods of the kind ascertained, or last ascertained, by him or her for the purpose of the notice was less than the normal value of the goods of that kind, have regard to the desirability of fixing a lesser amount of duty so that the sum of the export price of the goods of the kind as ascertained or last ascertained and that lesser duty did not exceed the non-injurious price. In other words, the mechanism for fixing an interim duty of this kind required the Minister to ascertain what would be the non-injurious price and to have regard to the desirability of imposing a duty which did not exceed it. The standard in s 269TACA(a) is an objective one. So, the Minister must first identify the material injury to the Australian industry producing the like goods that has been, is being caused or threatened by the dumping. Next, the Minister must determine a price at which the dumped goods are to be sold that will prevent the actual or threatened injury to the Australian industry. This reflects the important provisions of Art 3.1 of the implementation agreement. However, s 269TG(3A) permits the Minister to retain the confidentiality of commercial and valuable information as to those prices by not making them part of a public notice (see Siam Polyethylene Co Ltd v Minister for Home Affairs (No 3) [2009] FCA 839]. Nonetheless, the scheme of s 269TG(3A) is clear: it requires the Minister to ascertain the normal value, export price and non-injurious price for the purposes of the declaration and the consequent imposition of anti-dumping duties under the Dumping Duty Act . Where a notice under s 269TG(2) has been published by the Minister, the notice expires five years after the day of publication unless it is revoked before the end of that period: s 269TM(1). An affected party may lodge an application pursuant to s 269ZA(1) requesting the CEO to initiate a review of anti-dumping measures that have been taken in respect of goods where the affected party considers that it may be appropriate to review those measures as they affect either a particular exporter of the goods or exporters generally. However, s 269ZA(1) required the applicant for a review to identify at least one of two bases for the review. These were, first, that there had been a change of one or more variable factors relevant to that importer or manufacturer or the current situation is such that if there were no anti-dumping measures then in place, the Minister would not be entitled (at the time of the request) to take such measures. Thus, an importer or affected Australian manufacturer can apply for a review. However, an application for review cannot be made until 12 months after the publication of the notice or 12 months after the last review (s 269ZA(2)). Next, s 269ZB prescribed the content of an application for review which must be in an approved form (s 269ZB(1)). Where the application for a review is based on a change in variable factors, the applicant must provide a statement of its opinion concerning the relevant variable factors that have changed, the amount by which each factor has changed and the information that establishes that amount (s 269ZB(2)(c)). Where the application for a review is based on any other circumstances that in the view of the applicant would prevent the Minister, in the absence of anti-dumping measures, from taking such measures, the applicant must provide a statement of those other circumstances (s 269ZB(2)(d)). The CEO must examine the application for review within 20 days after Customs receives it (s 269ZC(1)) and must, either, reject the application, if not satisfied of the matters referred to in s 269ZC(2), or commence the review. Then s 269ZC(7) set out a timetable that required, in effect, that a report will be made to the Minister within either 110 or 155 days. Once a notice of review has been published, the CEO must place on the public record a statement of facts upon which the CEO proposes to base a recommendation to the Minister in relation to the review of those measures, which was called a " statement of essential facts " (s 269ZD(1)). In formulating the statement of essential facts s 269ZD(2) required the CEO to have regard to the application or request and any submissions relating generally to the review received by Customs within 40 days after the publication of the public notice, and may have regard to any other matters that the CEO considered relevant. The CEO was required, in deciding on the recommendations to be made to the Minister in the report, to have regard to the application or request for review, any submission relating generally to the review to which the CEO has had regard for the purpose of formulating the statement of essential facts, the statement itself, and any submission made in response to that statement received by Customs, within 20 days after it had been placed on the public record, together with any other matter that the CEO considered to be relevant pursuant to s 269ZDA(3). In addition, the CEO is required by s 269TE(2) to determine any such recommendation in the same manner, and having regard to the same considerations, as if he or she were the Minister. The report to the Minister must include a statement of the CEO's reasons for any recommendation contained in it, set out the material findings of fact upon which the recommendation was based and provide particulars of the evidence relied on to support those findings (s 269ZDA(5)). The choices offered to the Minister reflected the three classes of recommendation which the CEO had to provide to him or her in the report under s 269ZDA(1)(a). The critical question for present purposes is whether the criteria specified in Div 3 of Pt XVB of the Act for the initial imposition of anti-dumping measures affected or controlled the considerations arising in a review under Div 5 of Pt XVB. It is apparent that the statutory language providing for the initial decision is different to that for a review. A declaration made by the Minister under s 269ZDB(1)(a) has consequences for the purposes of the Customs Act and the Dumping Duty Act . The declaration can either leave the notice issued earlier under s 269TG(2) unaltered, or revoke it, either generally or with respect to a particular exporter or exporters or to particular kinds of goods. That is, under the first two alternatives in s 269ZDB(1)(a), the Minister's declaration will operate on the existing notice by leaving it in place or wholly or partly revoking it. The third alternative deems an existing notice prospectively to have a different effect as provided for in the Minister's declaration. Critically, the outcome of the declaration is always determined by reference to the notice in force pursuant to s 269TG(2). In arriving at his or her decision to make a declaration under s 269ZDB(1) the Minister considers the report of the CEO "...and any other information that the Minister considers relevant". The word "information" is not defined or otherwise supplemented in the Act. Obviously, the Minister will have before him or her the original dumping duty notice, because that is the instrument which the Minister's declaration will affect in one of the three manners allowed by the section. Because s 269ZDB(1)(a)(iii) gives the Minister power to change the operation of the original notice so that, from the date specified in the declaration it will have effect "as if" the Minister had fixed the relevant different variable factors in respect of an exporter or exporters generally, he must have rejected the other two alternatives (being to leave the earlier notice unaltered or to revoke it wholly or partly). Thus, the Minister's function was to make a declaration after considering the CEO's report and any other information he or she considers relevant. That is in contrast to the function of the CEO under s 269ZDA(3) who must make any recommendations having regard to, first, the four specified factors in s 269ZDA(3)(a) but, secondly, pursuant to s 269TE(2), the considerations to which the Minister would be required to have regard and to determine the matter in like manner as if the CEO were the Minister. During the review period the rate of duty for imports of the product from Thailand was free, in contrast to the 5% duty on imports from Indonesia and Korea. In February 2008, Customs visited Siam in Thailand and obtained information which it used to verify its findings. Report 134 found: Customs also visited a number of other exporters of the product affected by the review and analysed various items of confidential information it obtained from them and Qenos as to their businesses as well as their costs and prices. Customs then prepared confidential appendices to Report 134. I have given separate reasons for confidentiality orders that I made during the hearing in respect of this class of information: Siam Polyethylene Co Ltd v Minister of State for Home Affairs (No 3) [2009] FCA 389. Customs found that all relevant information it had considered during the review indicated that prices and costs had increased since the last review. The evidence in the confidential evidence indicated that those increases were significant and substantial. Report 134 then discussed the issues arising for the Minister in considering whether, under s 8(5A) of the Dumping Duty Act , it might be desirable to fix a lesser amount of duty so that the export price and the lesser amount of duty together did not exceed the non-injurious price. It described Customs' practice in this regard as first establishing an unsuppressed selling price. In order to calculate the unsuppressed selling price for Report 134, Customs used the industry's selling price at a time unaffected by dumping. However, this was a different methodology to that used in the original determination and earlier reviews. The earlier method used a constructed industry price based on the industry's cost to make and sell the product plus a rate of profit achieved on sales of a similar product, also ethylene based. · the Australian industry has a larger market share than imports. · imports from exporters subject to measures is significant. · imports from exporters not subject to measures is also significant. · the review shows the majority of the exports from exporters subject to measures were at dumped prices. Sales volumes and profitability improved. Qenos appears to have been able to adjust its prices to cover any increases in raw material cost. Qenos' strong performance occurred in a market where some dumping was observed, but where the volume of dumped goods was small relative to total imports and the Australian ... market [for the product] as a whole. In examining the market Customs considered that the dumped goods had a limited effect on Australian industry's selling prices in the review period . Therefore Customs has calculated a [unsuppressed selling price] based on the industry's selling price. However, s 269TACA(a) provided that the non-injurious price of goods the subject of a notice under s 269TG(2) exported to Australia is the minimum price necessary to prevent the injury or recurrence of the injury referred to in s 269TG(2)(b). Report 134 explained that the unsuppressed selling price Customs had ascertained represented the selling price of the Australian industry comparable to "the into store price of end users in the Australian market". The report said that it had calculated the non-injurious price at the f.o.b. level for the country of export by deducting from the unsuppressed selling price "post FOB exportation costs including overseas freight and importer costs and, where appropriate, profit". Customs found that there had been an upward movement in the non-injurious price and provided confidential calculations as to how that had been ascertained. Customs received submissions in the review from Dow, made on its own behalf and for Siam, as well as submissions from Qenos. Dow objected to the current measures and, observed that the export pricing of Siam continued to be considerably higher than the threshold established by the previous review. Dow contended that Siam's exports of the product were never priced at levels that were likely to cause material injury to the Australian industry. It also argued that any such injury could not be attributed to importations from Siam and that the measures against importations of the product from Siam were not appropriate and should be revoked. The CEO considered those submissions and Qenos' for the purposes of preparing the statement of essential facts. However, the Report noted that the initial submissions by Dow and Siam were received on 17 January 2008, the last day of the 45 day period after the initiation of the review, and this had limited Custom's ability to undertake an extensive examination of "... issues relevant to whether the measures, as they relate to [Siam] should be revoked". And although Report 134 also contained some comments by Customs that Dow's submission in response to the statement of essential facts had been received five days later than it ought to have been, the parties did not suggest that this had any bearing on the outcome of these proceedings. Indeed, Report 134 stated that the CEO had had regard to all submissions received. The Report noted that in assessing whether measures should be revoked, Customs normally considered a range of factors to form a view on whether the dumping and injury would be likely to occur in the event of revocation. The Report observed that the absence of dumping, or export pricing above the level of the non-injurious price, would be relevant factors but, of themselves, would not be persuasive that dumping and injury would not recur if the measures were revoked. The Report found that Siam had exported the product to Australia at dumped prices during the period of review. But, the CEO eschewed making a finding in the Report on the 17 January 2008 submission by Dow and Siam that those prices were at levels that had not caused injury to the Australian industry. Based on the available evidence, Customs was not satisfied that circumstances exist to recommend that measure should be revoked as they relate to [Siam]". On 25 March 2008, the statement of essential facts was placed on the public record and Customs subsequently received submissions from Qenos and a joint submission from Dow and from Siam. The CEO assessed those submissions in Report 134 (set out in confidential Appendix 6). The CEO recommended that the Minister sign a public notice declaring for the purposes of the Act and the Dumping Duty Act , in accordance with s 269ZDB(1)(a)(iii), that from the date of publication of the notice dumping duty was taken to have effect in relation to exporters generally as if the different variable factors had been fixed in respect of each exporter relevant to the determination of the duty in accordance with a confidential appendix. There were specific recommendations in respect of variable factors for Siam. The CEO's reasons for that conclusion were contained in Report 134 in its assessment of the submissions made after the statement of essential facts had been placed on the public record. These said that Customs' investigations "... have not revealed any information to suggest that the anti-dumping measures should be revoked in relation to a particular exporter or revoked generally". In the statement of essential facts, Customs had noted that the Australian industry had performed strongly in the review period when anti-dumping measures were at outdated levels and possibly not affording any great degree of protection from dumping. It stated that it considered dumped imports during the review period had had a limited effect on the Australian industry selling prices and, therefore, those prices were suitable for establishing an unsuppressed selling price. However, the CEO rejected Dow's and Siam's submissions that these factors showed that there was no material injury to Qenos. They had argued that during the four years since the initial anti-dumping measures had been made, the rate of duty imposed on exports to Australia by Siam had been nil. And, they submitted that the imports from Siam were unlikely to cause material injury to Qenos because in that four year period Siam's pricing had never been found to be injurious. In Customs' view, the matter of which it must be satisfied to recommend that the measures be revoked is not whether one or more of the elements for imposing dumping measures (dumping, causal link and material injury) is not present in the review period. Anti-dumping measures often cause exporters to modify their behaviour and are designed to discourage dumping or remedy material injury caused by dumping. Customs interprets the test for revocation as whether, in the hypothetical situation of measures not being in place, there would now be grounds to impose the measures. In other words, if the measures were removed, is it likely that the exporter or exporters would dump goods and cause material injury to the Australian industry. In examining this likelihood of recurring dumping and injury, the recent strong performance by the Australian industry is a relevant consideration. However, Customs also notes that the review found that exports by [Siam] were dumped. On the available evidence Customs could not be satisfied that dumping would not cause material injury if the measures were revoked. On 23 June 2009, the Minister signed the declaration under s 269ZDB(1) of the Act. The Minister declared that he had considered Report 134 and "... accepted the recommendations and reasons for the recommendations, including all material findings of fact or law set out in the Report". I am satisfied that Customs has applied the correct test in reaching this conclusion. It argued that this reading was supported by the explanatory memorandum for the 1998 Bill dealing with what became s 269ZDA. Siam argued that the effect of ss 269ZA(1)(b)(ii) and 269ZC(2)(b)(ii) was to require the CEO and Minister to consider on a review, whether if the anti-dumping measures to which the application related had not been taken (i.e. the original imposition of dumping duty in December 2003) the Minister would not (now) be entitled to take such measures. It also argued that s 269TAE(2B) was relevant for the purpose of determining whether at the time of the Minister making a declaration under s 269ZDB(1) material injury might be "threatened". Siam argued that s 269TAE(2B) provided guidance for determining whether material injury might be threatened in the sense that the threatened injury had to be considered against such changes in circumstances as would make the injury "foreseeable and imminent" unless dumping measures were imposed. Siam argued that such a construction was reflective of the intention of Art 3.7 of the implementation agreement that "... a determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility" (s 269ZA). Siam argued that the explanatory memorandum reinforced the language of s 269ZA(1)(b). In particular, the explanatory memorandum said that one basis upon which a review could be sought was that "the Minister now could not take anti-dumping measures against the goods currently the subject of measures (because the grounds that need to be present for the imposition of measures no longer exist)" (emphasis in original). In the overview of Pt XVB in s 269SM(5), the Parliament explained that the ability to seek a review under Div 5 was "on the basis of changed circumstances". Siam argued that the passage emphasised above showed that the CEO, and the Minister, had applied an incorrect test or applied the test incorrectly for the purposes of the conduct of the review. It argued that the emphasised passages revealed that the CEO's approach had been to require a negation of material injury being caused by dumping, if the anti-dumping measures were revoked. Siam contended that the question of whether there should be anti-dumping measures was that posed by s 269TG(2). Siam argued that the test on a review under Div 5 of Pt XVB was that the Minister had to be satisfied positively that, in the absence of anti-dumping measures, there was dumping and that the dumping had caused or was causing or was threatening to cause material injury to the Australian industry. This, Siam argued, required a positive finding of satisfaction that the dumping had the causative effect set out in the legislation. The respondents argued that no provision of the Act required such a test. They argued that the Minister was allowed to make a decision consistent with the test in Art 11 of the implementation agreement, namely whether the injury would be likely to continue or recur if the duty were removed or varied. The respondents argued that once dumping duty has been imposed, the criteria in s 269TAE(2B) could not operate in answering the question posed in s 269TG(2) about the threat of future material injury. They contended that s 269TAE(2B) could not apply where there is an existing measure in place, and that this assisted in construing how the test relevant for Div 5 of Pt XVB operated. They argued that Arts 11.2 and 11.3 of the implementation agreement supported their construction that the question in a review under Div 5 of Pt XVB is whether the Minister was satisfied that the dumping duty was no longer warranted. The respondents argued that the Appellate Body of the World Trade Organisation had rejected Siam's construction of the relevant test on a review as requiring the Minister to be satisfied positively that, in the absence of measures, there would be dumping and that the dumping was causing or had caused material injury or that such injury was threatened in United States --- Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina (AB-2004-4) at [271]-[285]. The respondents argued that read fairly, the wrong test had not been applied and that, in terms, Customs had applied the correct test in its statement (quoted above). In other words, if the measures were removed, is it likely that the exporter or exporters would cause material injury to the Australian industry? The respondents argued that the confidential sections of Report 134 showed the analysis which the CEO had undertaken demonstrated that there was in fact a difference between the ascertained export price and the non-injurious price in respect of Siam's exports of products into Australia. And, the respondents argued that this exercise showed that, in light of those findings Siam exported at below the non-injurious price as a result of which one could infer there was sufficient causation to warrant the imposition of anti-dumping measures. That is because the non-injurious price under s 269TACA is the minimum price necessary to prevent the injury or a recurrence of the injury referred to in s 269TG(2)(b). Thus, the respondents argued that the methodology and reasoning supporting it in Report 134 for the fixing of a non-injurious price and applied to the confidential analysis demonstrated that there was injury. By making the adjustments to the variable factors in the Minister's declaration under s 269ZDB(1)(a)(iii) the respondents argued that one could infer that injury had been both identified and addressed. Article 11 of the implementation agreement dealt with the duration and review of the anti-dumping duties. 11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review . (A determination of final liability for payment of anti-dumping duties, as provided for in paragraph 3 of Article 9, does not by itself constitute a review within the meaning of this Article. ) Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both . If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury . (When the amount of the anti-dumping duty is assessed on a retrospective basis, a finding in the most recent assessment proceeding under subparagraph 3.1 of Article 9 that no duty is to be levied shall not by itself require the authorities to terminate the definitive duty. ) The duty may remain in force pending the outcome of such a review. 11.4 The provisions of Article 6 regarding evidence and procedure shall apply to any review carried out under this Article. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review. The WTO Appellate Body concluded that in a sunset review Art 11.3 did not require that injury and likelihood of injury be determined again in accordance with Art 3. It found that for the purpose of determining that there was a likelihood of injury on a review, a decision-maker did not have to undertake all of the analyses required by Art 3 in order for the decision-maker to have a "sufficient factual basis" to arrive at a "reasoned conclusion" permitting a decision to continue measures at the end of the five year period: Oil Country Tubular Goods (AB-2004-4) at [280]-[283]. Certain of the analyses mandated by Article 3 and necessarily relevant in an original investigation may prove to be probative, or possibly even required, in order for an investigating authority in a sunset review to arrive at a "reasoned conclusion". In this respect, we are of the view that the fundamental requirement of Article 3.1 that an injury determination be based on "positive evidence" and an "objective examination" would be equally relevant to likelihood determinations under Article 11.3 . It seems to us that factors such as the volume, price effects, and the impact on the domestic industry of dumped imports, taking into account the conditions of competition, may be relevant to varying degrees in a given likelihood-of-injury determination. An investigating authority may also, in its own judgement, consider other factors contained in Article 3 when making a likelihood-of-injury determination. But the necessity of conducting such an analysis in a given case results from the requirement imposed by Article 11.3 ---not Article 3---that a likelihood-of-injury determination rest on a "sufficient factual basis" that allows the agency to draw "reasoned and adequate conclusions". But where a convention deliberately leaves a term undefined in a context that reflects the intention of the States party to treat its application as a question of pure fact, the use of that term in domestic legislation will not require the domestic court to apply decisions involving that term in other jurisdictions as determinations of law rather than fact: LK v Director General 253 ALR at 213 [36] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ. Thus, decisions of the WTO Appellate Body and a panel of the WTO Dispute Settlement Body, on the construction of the implementation agreement cannot be determinative of the construction of the Act and the Dumping Duty Act . The latter have been framed with the intention to give effect to the implementation agreement in a particular manner crafted by the Parliament in its own words. The task of the Court is to construe the words of the statutes, but nonetheless to have regard to the context provided by the implementation agreement and decisions of other jurisdictions, where relevant, that may shed light on the intention of the Parliament: see too Chiropedic Bedding (2008) 170 FCR at 568-569 [32]-[36] per French, Rares and Besanko JJ. I am of opinion that although decisions of the WTO Appellate Body are not binding on Australian courts, ordinarily, they should be given substantial weight in selecting the appropriate construction to be given to the provisions of Pt XVB where the language chosen by the Parliament permits. The WTO Appellate Body is the international tribunal charged with construing and applying the implementation agreement so as to give effect to the obligations of States party. International trade should be confident to operate in a legal framework that arrives at consistent outcomes in nations that have agreed to give effect to international conventions to regulate their domestic treatment of particular activities, such as dumping. The domestic courts of individual States party will best be guided to constructions of their local legislation that achieve the object of certainty sought in their nation's ratification of an international convention by respecting, so far as the governing domestic statute allows, decisions of the international body established to resolve disputes under that convention. Moreover, the WTO Appellate Body's above decision is cogently reasoned and persuasive. A panel of the Dispute Settlement Body of the World Trade Organisation is the initial body to determine disputes between States party under the implementation agreement: see Art 17.5. I consider that decisions of a panel (that have not been reversed or doubted by the WTO Appellate Body), ordinarily, should also be given substantial weight in arriving at a construction of Pt XVB for the same reasons. The WTO Appellate Body decided that it is necessary for a decision-maker, on a review under Art 11.3 of the implementation agreement, to make a determination concerning injury (i.e. whether injury is being, has been or is threatened to be caused) based on positive evidence and on an objective examination of the same nature as Art 3.1 required: Oil Country Tubular Goods (AB-2004-4) at [284] see too at [177]-[181] and the WTO Appellate Body decision in United States --- Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (AB-2003-5) at [110]-[113]. Although those decisions concerned a sunset review, they were based on a consideration of Art 11 as a whole, that being the article governing all reviews. Divisions 5 and 6A of Pt XVB the Act express the Parliament's manner of giving effect to the review processes contemplated by Art 11 of the implementation agreement. Of course, the nature of the inquiry on a sunset review under s 269ZHB(1) in Div 6A can be affected by the more extensive time frame of at least nine months in which it may occur as compared with the more limited period of 110 or 155 days for a review under s 269ZC(7)(c) Div 5 of Pt XVB. A WTO panel determined that the mere fact that no present dumping is occurring at the time of a review under Art 11.2 does not entail the consequence that anti-dumping measures must be revoked: United States --- Anti-Dumping Duty on Dynamic Random Access Memory Semi Conductors (DRAMS) of one Megabit or above from Korea (Report of the Panel 99-0256) at [6.24], [6.32]-[6.33]. The panel pointed out that Art 11.2 envisaged the local decision-maker enquiring "... whether the injury would be likely to continue or recur if the duty were removed or varied" (panel's emphasis). If, in the context of a review of such a causal link, the only injury under examination is injury that may recur following revocation ( i.e. , future rather than present injury), an investigating authority must necessarily be examining whether that future injury would be caused by dumping with a commensurately prospective timeframe. The Dumping Duty Act , likewise, imposed a duty, once a notice had been published under s 269TG(2), equal to the difference between the normal value of the dumped goods and their export price. Evidently, the purpose of that rate of duty was to increase the price in Australia of the imported goods to a level where that importation did not injure or threaten to injure the Australian industry. And ss 269SM(5), 269ZA(1), 269ZC(1) and (2) provided that Div 5 of Pt XVB gave a right to review that was conditioned on a demonstration by an applicant for review that there appeared to be reasonable grounds for asserting a change in circumstances that was material enough, if made out, to warrant a change (including revocation) of an existing notice. The filter provided in ss 269ZA(1)(b) and 269ZC(1) and (2) was that an applicant for review must, first, put forward a case for a review satisfying the statutory criteria and, secondly, the CEO must consider whether there are currently reasonable grounds for the assertion of changes to a relevant variable factor or that, had the existing anti-dumping measures not been taken, the Minister would not be entitled to take such measures. The level of satisfaction of the CEO, at this point, was directed to there being sufficient in the application to justify investigation. A material purpose of Pt XVB was the imposition of appropriate and adapted measures to create a liability to dumping duty on imports into Australia of goods at a price which, without that dumping duty, would injure or threaten to injure Australian industry (see s 269SM(1)). A review under Div 5 of Pt XVB contemplated an inquisitorial process, in respect of the application, once the assertion of the change by the applicant had been seen to have reasonable grounds. The scheme of Div 5 involved the CEO publishing in a newspaper, throughout the States and Territories, notice of the intention to conduct a review of the relevant measures, identifying the kind of goods and the measures to which the review related. That notice did not need to identify any particular outcome (s 269ZC(4)-(7)). That is because Div 5 contemplated that, before the CEO made a recommendation under s 269ZDA, he or she will have received input in the form of submissions from parties who responded to the publication of a notice of the proposal to conduct the review. The subject matter of the review under Div 5 is the measure to which the review related, not a particular course of action. Any interested party can lodge submissions with the CEO within the time frames provided in s 269ZC(7). After that the CEO must publish a statement of essential facts. And, in the course of formulating that statement the CEO must have regard to the application or request and any submissions received within the time frame of 40 days after publication of the notice of the review. It is only after this procedure that the CEO is required to give the Minister a report containing recommendations under s 269ZDA(1)(a). Against that background, s 269ZDA(3) required the CEO to have regard to four matters specified, namely the application or request for review, any submission to which the CEO had regard in formulating the statement of essential facts, that statement and any submission made in response to that statement within the time frame provided of 20 days after it was placed on the public record. But, the CEO also can consider any additional matter which he or she thinks relevant to the review (s 269ZDA(3)(b)). Since both s 269ZD(2)(a)(i) and s 269ZDA(3)(a)(i) required the CEO to have regard to the application for the review, he or she must consider the basis for the review asserted by the applicant pursuant to s 269ZB(2)(c) and (d). Those bases were, relevantly, a change in circumstances being either of one or more variable factors or other circumstances that, in the absence of the anti-dumping measures, would have the consequence that the Minister could not publish at that time a notice under s 269TG(2). Additionally, the submissions to which the CEO must have regard for the purpose of formulating the statement of essential facts under s 269ZD(2)(a)(ii) and, later, the recommendations to the Minister under s 269ZDA(3)(a)(ii) and (iv) can be expected to elaborate on the issues raised in the grounds of review. And so, in developing the content of the statement of essential facts and, subsequently, the report, the CEO will identify those facts on which he or she proposes to base a recommendation to the Minister in relation to the review of the relevant measures. The outcome of the review is that the Minister must take one or a combination of the three steps required in s 269ZDB(1)(a). In arriving at his or her decision under s 269ZDB(1)(a), the Minister must exercise a discretion to declare one or a combination of those three outcomes, by publishing a notice "for the purposes of this Act and the Dumping Duty Act ". To do so, the Minister must consider the report of the CEO and "any other information that the Minister considers relevant". The discretion is not entirely at large. The Minister's declaration must be made for the purposes of the two Acts and on the basis of relevant information. The purposes of the two Acts involve the imposition and retention of anti-dumping measures in respect of goods whose importation into Australia involved, relevantly, dumping of those goods that injured or threatened to injure Australian industry (ss 269SM(1), 269TG(2)). When the declaration is made under s 269ZDB(1), the Minister must consider, or have regard to, the most up to date information available. The Act requires the Minister to form a judgment about the current circumstances and future consequences of the importation of the relevant goods. This is so for the following reasons. First, the review is intended to consider the impact of changed circumstances in a market affected by the operation of a notice under s 269TG(2) (whether in its original or a varied form) (s 269SM(5)). That requires consideration of the current circumstances that formed the basis for the review identified by ss 269ZA(1)(b) and 269ZC(2)(b), namely a change in a variable factor or the current absence of justification for the Minister to take any relevant anti-dumping measure. Secondly, it is a general principle that an administrative decision-maker is required to make his or her decision on the most current material available to the decision-maker: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 44-45 per Mason J (with whom Gibbs CJ at 30 and Dawson J at 71 agreed on this issue); SZJTQ v Minister for Immigration and Citizenship (2008) 172 FCR 563 at 571-572 [27]-[32] where I discussed this principle. Each of the prices had increased significantly in the preceding 20 months since the conclusion of the last review. This had the consequence that the prices calculated using the variable factors set in September 2005 bore no relation to, and their application to the export prices did not catch, any importation into Australia at the current market prices as at November 2007. Thus, the whole range of the three possible recommendations was open to the Minister's consideration. It was not a situation that required the option of revocation to be positively advanced. The actual importation prices were at substantially higher levels than any of the hypothetical prices, including the non-injurious price, set in the September 2005 review. The statutory scheme for a review does not assume that, based on what had gone before, dumping as well as material injury or the threat of material injury caused, or likely to be caused, by it are still occurring. Rather the review, once commenced, must be conducted by the CEO so as to prepare a report that enables the Minister to make a declaration that will serve the purposes of the Act, in particular Pt XVB, and the Dumping Duty Act . Here, in Report 134, the CEO found that Siam was dumping. Equally the CEO was conscious that he could not find any discernable material injury or threat of material injury caused or likely to be caused by the dumping. Reading the whole of the reasons in the Report as fairly and generously as I can in favour of the administrative decision-maker ( Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ), I am nonetheless driven to conclude that these last quoted words encapsulated the CEO's, and the Minister's, approach to, or the test that was applied in, making the determination under s 269ZDB(1)(a). That is, the Minister did not make a positive decision that if the measures were revoked the dumping found, first, would occur in circumstances where Qenos would, or would be likely, to suffer any material injury or, secondly, that the dumping would, or would be likely, to cause that material injury. Here, all the prices for the product had increased so that the previous calculations and bases upon which anti-dumping duty had been fixed had no relevance to the current trading of the product in Australia. In addition, Report 134 found Qenos' business relating to the product had performed strongly in the review period and the volume of dumped goods was small relative to total imports and the Australian market as a whole. The CEO had concluded that all the dumped goods (of which Siam's were only a part) "... had a limited effect on Australian industry selling prices in the review period". This must be read in light of the express admission in the respondents' defence that there was no evidence or other material before either of them of any injury to Qenos caused by Siam's eports. Central to the purposes of the Act and the Dumping Duty Act was the present and likely future impact on the Australian industry of importation of the relevant goods at the time of the review. Here, there was no suggestion that Siam's dumping had caused any injury to Qenos in the review period. One question for the Minister to consider was whether he was satisfied that importation of the dumped product by Siam had caused, was then causing or threatening to cause material injury to the Australian industry as s 269TG(2)(b) required. The Minister (and the CEO in preparing the report under s 269ZDA(1)) had first, to take into account the criteria in s 269TG(2) and, secondly, to give weight to his or her conclusions on those criteria, as fundamental elements in making a declaration under s 269ZDB(1). In that way, the initial justification for the s 269TG(2) declaration would be revisited by the Minister having regard to the up-to-date information ascertained in the review process under Div 5 of Pt XVB and the purposes of the Act and the Dumping Duty Act would be addressed appropriately by him in making the relevant choice in a declaration under s 269ZDB(1)(a): R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32 ; (1979) 180 CLR 322 at 329 per Mason J (with whom Gibbs J agreed); Telstra Corporation Ltd v Australian Competition and Consumer Commission (2008) 107 ALD 474 at 501-503 [103]-[112] where I discussed the principles. The actual situation at the time of the review has to be examined to determine what declaration should be made. That does not mean that the CEO or the Minister must ignore the past. Indeed, s 269TG(2) expressly refers to a past event of dumping having already caused material injury to an Australian industry as one criterion on which the Minister may issue a notice with prospective effect. In that situation s 269TG(2) does not require there to be an existing or continuing injury to enliven the power. Past conduct can often be a guide to future conduct. Dumping may be suspended as a pre-emptive strategy because of the possibility that anti-dumping measures could be implemented in an attempt to allow the importer to argue that the field is clear and thus, the measures are unnecessary. Equally, I am of opinion that the purpose of the implementation agreement and of Pt XVB is not to authorise anti-dumping measures merely because of past activities by exporters to Australia that, of themselves, are not of sufficient cogency to justify interference in the policy of freedom of international trade. The decision to use or continue the use of anti-dumping measures must be justified. The Act (in s 269TM(1)) and the implementation agreement contemplate that anti-dumping measures can remain in place for five years (and can be extended beyond that). Past events can provide a justification for the decision to issue a notice under s 269TG(2) and, sometimes, to maintain it after a review under Div 5 of Pt XVB. But the decision to rely solely on past dumping having caused material injury in the absence of any present or threatened similar conduct, will require a reasoned justification based on the processes of positive evidence and objective examination that Arts 3.1, 3.5-3.8 of the implementation agreement contemplate, within the scope of Pt XVB of the Act. Here, in the period preceding the review, the actual situation in terms of prices and imports had changed so radically that none of the previous variable factors had any real relation to the market the subject of the review. It could not be appropriate to approach the process of review using a presupposition that revocation of the existing, and thus, irrelevant measures required justification. That is not what a review under Div 5 of Pt XVB of the Act entails. The Act required the CEO to prepare a report and make recommendations using a structured process, once he or she has accepted that there was a reasonable basis to undertake a review. Once initiated, the review is concerned to examine what recommendation should be made to the Minister, and ultimately what determination he or she makes, based on the current circumstances of the industry. It is significant that the decision-maker here was the Minister. The statutory scheme seeks to give effect to Australia's international obligations. In authorising the Minister to consider any other information that he or she considers relevant, in addition to requiring the Minister to consider the report of the CEO, the Parliament intended in s 269ZDB(1)(a) to confer a broad discretion on the Minister. In the exercise of a ministerial discretion due allowance may have to be given to a Minister of the Crown to take into account broader policy considerations that may be relevant, as Mason J explained in his classic judgment in Peko Wallsend 162 CLR at 42. The subject matter, scope and purpose of the statutory power provide a context in which to assess the duties it imposes on the decision-maker in any particular situation: cf Foster v Minister for Customs [2000] HCA 38 ; (2000) 200 CLR 442 at 452 [22] - [23] per Gleeson CJ and McHugh J, Gaudron and Hayne JJ agreeing with their Honours at 454 [32]; Telstra 107 ALD at 503 [112] per myself. Yet, under s 269ZDB(1)(a) the Minister's discretion as to what information, in addition to the report of the CEO, is relevant to making a declaration, is not absolute. First, in the chapeau to s 269ZDB(1) the Parliament reinforced that the declaration is "for the purposes of this Act and the Dumping Duty Act ". Secondly, s 269ZDA(3) prescribes criteria that the CEO must consider in preparing his or her report to the Minister under s 269ZDA(5). While s 269ZDA(3)(b) is in similarly broad terms to s 269ZDB(1) in permitting the CEO to have regard to any other matter that he or she considers to be relevant to the review, the CEO's consideration cannot be at large. There must be a reasonable connection between what information the Minister (under s 269ZDB(1)), or matter the CEO (under s 269ZDA(3)(b)), considers relevant and the function each performs in the statutory process. Each must act in good faith and cannot be capricious or arbitrary in considering information or a matter to be relevant. It may be difficult to show, the more so in the case of the Minister, that the discretion miscarried where the selection of what the Minister or CEO considered to be relevant was or involved a matter of policy or opinion: cf Buck v Bavone [1976] HCA 24 ; (1976) 135 CLR 110 at 118-119 per Gibbs J; Wu Shan Liang 185 CLR at 275-276 per Brennan CJ, Toohey, McHugh and Gummow JJ. Division 5 of Pt XVB contemplates that the contents of the report of the CEO will have been prepared following an ordered process to address the statutory criteria to which I have referred. Those contents are, however, information not directions as to the exercise of his or her discretion that the Minister must consider before making a declaration. By structuring the process for preparation of the report of the CEO, the Parliament intended that the Minister should not overlook critical considerations in exercising his or her discretion to make a particular declaration under s 269ZDB(1)(a): cf Peko Wallsend 162 CLR at 44 per Mason J. And, the Minister was directed, in terms by the subsection, that the declaration was for the purposes of the two Acts. Because s 269ZDB(1) gave the Minister the power to declare that a notice already issued under s 269TG(2) will operate differently in the future (including by being revoked wholly or partly) the statutory criteria which the Minister must take into account are those in s 269TG(2) itself which would warrant, at the time of decision under s 269ZDB(1), the making of a notice under review in its original form or in an amended or unamended form at the time of the review. This is reinforced by the terms of s 269ZDB(1)(a)(iii) since that paragraph refers to the new (i.e. different) variable factors that the declaration fixes. Importantly, s 269T(4E)(a) provided that in the case of an existing notice, for the purposes of a review under Div 5 of Pt XVB a reference to variable factors relevant to the review was a reference "... to the normal value, export price and non-injurious price of goods of that kind as ascertained, or last ascertained, by the Minister for the purpose of the notice". The character of a decision-maker's consideration of the appropriateness of anti-dumping measures after they have been first imposed is necessarily different to its character before any measure is in place. Once the measure has been determined, its existence may affect the operation of the market and the behaviour of participants in the market, including the exporter or exporters to Australia of the goods the subject of the measures. The stage at which consideration is given requires the decision-maker to have regard to the contemporaneous actual market and other circumstances so as to decide, first, whether dumping exists, and if so, secondly, whether that dumping has caused, is causing or is threatening to cause material injury to the Australian industry. In addition, when anti-dumping measures are in place, the decision-maker must also consider the effect of those measures and the consequences of their removal or amendment. But the fundamental issue for the decision-maker is to determine whether, and if so what, anti-dumping measures are appropriate and adapted to serve the purposes of the Act at each time a decision must be made. Each stage will involve the decision-maker in evaluating actual market conditions and hypothesising about the effect of a proposed or existing anti-dumping measure having regard to the purposes of the Act. Those purposes recognise the necessity for, and the utility, of anti-dumping measures to secure the end to which Pt XVB is directed, namely, the protection of the Australian industry from unfair competition from dumped exports to Australia. The choices given to the Minister in s 269ZDB(1)(a) do not dictate that in approaching his or her selection any of those choices is a preferred or default position. Rather, the expression of choice in s 269ZDB(1)(a) and the process of a review under Div 5 of Pt XVB itself suggest that the CEO's recommendations and the Minister's decision will be to give effect to the appropriate and adapted measure or measures, if any, that the factual and other considerations reveal to the decision-maker as serving the purposes of the Act. That is, the task for the Minister under s 269ZDB(1)(a) is to consider what, if any, anti-dumping measures are justified having regard to the contents of the report of the CEO and any other information the Minister considers relevant. I am of opinion that the legislative scheme envisages that when the Minister makes a decision under s 289ZDB(1)(a), he or she will ascertain whether and what anti-dumping measures are appropriate and adapted to meet any material injury caused by dumping or threatened by present dumping or dumping that is sufficiently likely to occur if any existing measures were removed or varied. In Report 134 the CEO assumed that material injury to Qenos had been or was being caused or threatened because of the dumping by Siam. The Report made a perfunctory generalisation that "[a]nti-dumping measures often cause exporters to modify their behaviour and are designed to discourage dumping or remedy material injury caused by dumping" (A39.3). But this did not address the causal link, or indeed the associated element of injury (past, present or threatened) specified in s 269TG(2)(b), except by making that generalisation. It was not applied to what Siam's dumping had done or might threaten. As the respondents' admitted in their defence, there was no evidence or other material of any injury to Qenos caused by Siam's exports. Given the changes in the market that had made the existing measures irrelevant, the questions for the Minister and (by force of s 269TE(2)) the CEO in preparing the report under s 269ZDA(1)) were: whether or not there was any dumping by Siam; if so, whether or not that dumping at the time of making a decision under s 269ZDB(1)(a) had caused, was causing or was threatening to cause material injury to Qenos that required new anti-dumping measures to be taken and; if so, what were the variable factors that should be adopted to address appropriately the injury or threatened injury caused, or likely to be caused, by the dumping. At the time of the review the market was apparently operating efficiently on materially higher prices than the existing notice under s 269TG(2) contemplated without any injury to Qenos (as the only Australian industry) being identified, let alone any injury related to Siam's dumping. This required the CEO in making the report, and the Minister, to address the purpose of the Act in s 269TG(2)(b). Instead, the report concluded that "... Customs is not satisfied that circumstances exist to recommend that measures should be revoked as they relate to [Siam] or to exporters generally". It then recommended, and the Minister accepted, that using increased volumes for variable factors, imports into Australia by Siam should have dumping duty increased from nil to a more substantive figure. Such an increase was not a revocation. It was a new, substantive impost on Siam's product, made after a period of competition in the market at prices, involving dumping, that had not been found to injure or threaten Quenos' strongly performing business. Where a decision-maker must consider matters prescribed by law, generally, he or she cannot jettison or ignore some of those factors or give them cursory consideration only in order to put them to one side: East Australian Pipeline Pty Ltd v Australian Competition and Consumer Commission [2007] HCA 44 ; (2007) 233 CLR 229 at 244 [52] per Gleeson CJ, Heydon and Crennan JJ; Telstra 107 ALD at 502 [107]. There was no explanation of any connection between the new measures, the current market and any past material injury or threat of future material injury in the public reasons of Report 134. Rather, the only statements that could amount to findings in that portion of the Report were statements that if the anti-dumping measures currently in existence were removed Customs was not satisfied that dumping would not cause material injury. As s 269TG(2)(b) emphasised, reinforced by the gateway provisions in ss 269ZA and 269ZC to which I have referred, and Art 11.1 of the implementation agreement, any anti-dumping measures must be justified on the basis that they can positively be seen as counteracting dumping that in fact is causing or is likely to cause injury in the sense for which the Act provides. The WTO Appellate Body decisions recognised that in a review, no single prescriptive test or methodology necessarily would apply. The considerations in each review will need to address the facts and circumstances of the particular anti-dumping measures that are in place in the context of the current market and other factors: Oil Country Tubular Goods (AB-2004-4) at [283]-[294]; US Corrosion Resistant Steel (AB-2003-5) at [113]-[115]. Nonetheless, Art 11.1 identifies the key issue in a review as being the necessity to impose the anti-dumping duty "... to counteract dumping which is causing injury" (in the sense of actual or threatened injury). Here, the only injury that could be under examination (given the respondents' admission that in the review period there was no evidence or other material before them that any injury to Qenos was caused by Siam's exports) must have been the threat of future injury that could be based on the likelihood of a recurrence of past injury: see too the WTO panel decision in DRAMS (99-0256) at [6.28]. As the WTO Appellate Body concluded in Oil Country Tubular Goods (AB-2004-4) at [284], a determination of injury on a review requires positive evidence and an objective examination. Here, Report 134 made no finding of any actual or threatened injury caused or likely to be caused by Siam's dumping. Instead, it simply asserted that on the available evidence the CEO could not be satisfied that dumping by Siam would not cause material injury if the measures were revoked. I am satisfied that at the time he made the declaration the Minister (and the CEO) did not consider or have regard to the likelihood of whether, if the notice were revoked, Siam's dumping threatened to cause material injury to Qenos. The consideration of this question was a matter to which fundamental weight had to be given in arriving at a decision to make a declaration: see Telstra 107 ALD at 501-503 [103]-[112]; ss 269ZC(2)(b), 269ZD(2)(a)(i), 269ZDA(3)(a)(i), 269TG(2) and 269ZDB(1). The purposes of the Act and the Dumping Duty Act involved the legitimate, principled and limited imposition of dumping duty, in accordance with the tests in those Acts, to perform Australia's obligations (to the extent that the Parliament gave these effect in that legislation) under the implementation agreement. Accordingly, I am of opinion that, in the circumstances, the test applied by the CEO and the Minister that they be satisfied "that dumping would not cause material injury if the measures were revoked" was not open to them. That was a jurisdictional error. Its conclusion was that "... the dumped goods had a limited effect on Australian industry selling prices in the review period". The Report selected those selling prices as the unsuppressed selling price. It then used that unsuppressed selling price to calculate the non-injurious price. However, the "limited effect" of dumping on Qenos' selling prices was not explained by Customs in the Report, despite its findings that in the review period Qenos: Customs found that Qenos' business in respect of the product "performed strongly over the review period". And, the respondents conceded that there was no evidence or material before them that Siam's dumping had caused any injury to Qenos in the review period, whatever they may have meant by dumping in general having had a "limited effect on [Qenos'] selling prices". Importantly, s 269TAE(2A)(d) required the Minister (and the CEO) to consider whether any injury to Qenos was being caused or threatened by a factor other than the exportation of Siam's goods to Australia "... such as ... competition between foreign and Australian producers of like goods", and the section required that any such injury not be attributed to the exportation of those goods. Thus, Customs' selection of Qenos' selling price as the unsuppressed selling price appeared to accept that whatever effect dumping had had it had not distorted the market. That was because the Report said that it calculated the unsuppressed selling price as Qenos' selling price. Next, Customs had to determine the non-injurious price of goods exported to Australia in accordance with s 269TACA(a), namely "... the minimum price necessary ... to prevent the injury, or a recurrence of the injury ... referred to in ... [s 269TG(2)]". The effect, if any, of Siam's dumping and the injury sought to be prevented by fixing a non-injurious price had to be assessed against the findings that Qenos had improved its profitability and increased its sales during the review period, and held over 50% of the market. But, the Report did not identify the "limited effect" of dumping or the "injury" despite the necessity to do so in order to assess the non-injurious price, if it were different to the price the market had set. The Report set a higher non-injurious price for Siam than it had sold at in the market in which Qenos' business profitability and market share in selling the product had all improved. In answer to Dow's and Siam's submission to Customs that the absence of any finding of injury should have led to the revocation of the anti-dumping measures against Siam, the Report simply asserted, without any reasons, that Customs was not satisfied that circumstances existed to recommend revocation. I reject the respondents' argument that the confidential sections of Report 134 explained how the new non-injurious price was justified. The Report, in terms, found that dumped imports during the previous review period had a limited effect on the Australian industry selling prices. It found that the market share of Qenos was larger than all imports and that imports subject to anti-dumping measures, as well as imports not subject to those measures, were both significant, although not all exporters during the period under review who were subject to anti-dumping measures sold their goods at dumped prices. The Report found that Qenos' business had performed strongly during that period, and its sales volumes and profitability had improved. Price competition, as with other aspects of competition is a usual and necessary feature of any efficient market. The purpose of the anti-dumping measures, identified in s 269TG(2) is to address material injury and threatened material injury to the Australian industry producing like goods to those which are being sold at dumped prices in the Australian market, caused or likely to be caused by the dumping. That requires the decision-maker to have some objectively identified basis for concluding that the dumping has been, or is causing, or is threatening to cause, the relevant material injury after excluding the operation of any other cause of such injury or threat (s 269TAE(2A)). But, although a quantitative assessment is involved, the authorities have made clear that this is essentially a practical exercise and material injury to an industry may be identified even though precise quantification of the injury is not possible. What is material injury will depend on the circumstances of the particular case and may vary from industry to industry and from time to time: ICI Australia Operations Pty Ltd v Fraser [1992] FCA 120 ; (1992) 34 FCR 564 at 577-578 per Black CJ, Neaves and von Doussa JJ; see too Swan Portland Cement Ltd v Minister for Small Business and Customs [1991] FCA 49 ; (1991) 28 FCR 135 at 144-145 per Lockhart J; Schaefer Waste Technology Sdn Bhd v Chief Executive Officer, Australian Customs Service [2006] FCA 1644 ; (2006) 156 FCR 94 at 115-116 [147] - [149] per Jacobson J and the authorities he collected there. As, I concluded in my consideration of Issue 1, the mere fact that there are sales at dumped prices is not enough to warrant the imposition or continuation of anti-dumping measures, because the statutory scheme makes it clear that there must also be either actual material injury to the Australian industry (past or present) or threatened injury. Report 134 contained no explanation and gave no analysis or reasoning process of any injury or threat to Qenos caused or likely to be caused by Siam's sales of the product at dumped prices. Moreover, the Report found that the volume of Siam's dumped goods was small, not only in relation to total imports, but to the Australian market as a whole. It also found that Qenos had a larger market share than all imports combined and that only some imports were at dumped prices. The continuation of the measures required a reasoning process, as s 269ZDA(5) provides. The mere assertion that Customs was not satisfied that dumping would not cause material injury if the anti-dumping measures were revoked, was not a reasoning process. Rather, it was a statement of an ultimate conclusion. The non-injurious price assessed by the CEO and Minister did not carry the matter further. The non-injurious price arrived at was more than double the non-injurious price for Siam that had existed during the period of review. Yet, there was no analysis of the material injury that would be likely to be caused to Qenos by dumping if Siam continued in the future to sell exports at dumped prices. In the preceding four years Siam's imputed rate of duty had been nil, including the period of the 12 months ending September 2007 in which the review had been conducted. A dumped price that was less than Qenos' price, is not self-evidently a reason for concluding that "material injury" had been caused, was being caused or was threatened by that dumping. It is not enough for a decision-maker to give cursory consideration only to put to one side matters which the statute requires him or her to consider: East Australian Pipeline 223 CLR at 244 [52] per Gleeson CJ, Heydonn and Crennan JJ, see also Gummow and Hayne JJ at 256 [102]; Telstra 107 ALD at 501-503 at [103]-[112]. In order to set the non-injurious price the CEO and the Minister were required by s 269TACA(a) to consider the minimum price necessary to prevent the injury or the recurrence of the injury referred to in s 269TG(2). That is, they had to determine what level of non-injurious price should be fixed to prevent the dumping by Siam causing or threatening to cause material injury to Qenos. That price would then be used to calculate the dumping duty, if any, to be imposed. The respondents argued that confidential appendix 4 of the Report showed that a new non-injurious price had been set based on a calculation using the unsuppressed selling price and the method outlined in the Report. The mere fact that the CEO recommended, and the Minister set, a new non-injurious price in the declaration under s 269ZDB(1)(a) did not, of itself, mean that either of them had considered the question of material injury or threat. The reasons in Report 134 do not deal with the topic of material injury caused or threatened by Siam's dumping. The non-injurious price had to be calculated by reference to the question of material injury, an assessment of its extent and the establishment of the causal link between dumping and the injury: cp SPP Nemo SA Comercial Exportadora v Minister of State for Small Business and Consumer Affairs [1998] FCA 1627 per Drummond, North and Mansfield JJ (15 December 1998 unreported) at pp 23-24. Their Honours were there dealing with the provisions of the Act before amendments were made in 1998. Even so, I consider that the present statutory scheme, like its predecessor, required the decision-maker to consider the question of material injury in setting the non-injurious price and to give a reasoning process that justified the conclusions on both subjects (injury and price): cp SPP Nemo [1998] FCA 1627 at p 24. This is reinforced by s 269TACA(a) which required the setting of a non-injurious price for goods the subject of a notice under s 269TG(2) to be "the minimum price necessary ... to prevent the injury [or] the recurrence of the injury; ... referred to in ..." s 269TG(2)(b). The requirements of s 269TACA(a) remain constant (although the manner of addressing material injury may vary for the reasons I have explained above) whether the non-injurious price is that initially set when the notice is given under s 269TG(2), or is affected by a declaration under s 269ZDB(1)(a). I am of opinion that the present circumstances are similar to those in SPP Nemo [1998] FCA 1627 at pp 23-24 and that Report 134 did not provide any basis for the Minister to form any view on the issues of material injury or any causative effect of Siam's dumping on Qenos. The mathematical calculations contained in the confidential material proceeded upon the unfounded assumption that the non-injurious price had been fixed by reference to the earlier examination of the minimum level of pricing necessary to eliminate or prevent actual material injury to Qenos or its threat or recurrence. Mere price competition, by itself, even from dumped product, was insufficient because of s 269TAE(2A)(d). One purpose of price competition is to win customers from a competitor, as Gleeson CJ and Callinan J observed in Boral Besser Masonry Ltd v Australia Competition and Consumer Commission [2003] HCA 5 ; (2003) 215 CLR 374 at 411 [86] - [87] , and, in that sense, a purpose of competitive conduct is to damage a competitor. In the changed market that had occurred during the review period, prices and costs had increased but the volume of dumped goods was small in relation to both total imports and the Australian market for the product as a whole. A mere difference in prices did not demonstrate the unstated premise in Report 134, that there was material injury done or threatened to Qenos by Siam's dumping. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen an imminent. In drawing conclusions from that examination, the investigating authority must arrive at a reasoned determination resting on a sufficient factual basis; it may not rely on assumptions or conjecture. Because the three factors are necessary to be considered, dumping, injury and causation, the latter two cannot be presupposed merely by establishing the existence of the practice of dumping. Indeed, s 269TAE(2A) prohibits such presupposition. And, Customs identified the very difficulty which this process of presupposition entailed. It noted that Qenos had performed strongly in a market where some dumping was observed but the volume of dumped goods was small relative to both total imports (bearing in mind that Qenos had been found by Customs to have had a larger market share than all of the imports combined). The respondents argued that the use of the economic concept of unsuppressed selling price "... is virtually always used to establish the non-injurious price and has also been endorsed by this Court: Expo-Trade Pty Ltd v Minister for Justice and Customs [2003] FCA 1421 ; (2003) 134 FCR 189 at 206". They contended that having decided not to revoke the existing measures, the respondents decided to change the variable factors based on "... the most current information available". I reject that argument. The report failed to identify why, or give any reason for finding that, the non-injurious price was set at the level it was for Siam. In essence, the Report simply assumed that once it had found dumping, material injury was either caused or threatened by the dumping. That appears from the statements in the Report referring to the fact that Dow and Siam made a submission for revocation on 17 January 2008, 5 days later than the 40 days allowed for submissions after the initial advertisement in s 269ZC(7)(d). After this, Customs visited Siam in Thailand in February 2008 and obtained all information from it that was required. Customs found that exports to Australia by [Siam] over the review period were at dumped prices. As the issue of revocation was only raised when the review was significantly advanced, Customs was unable to evaluate and form a view on all other factors relevant to whether the measures should be revoked . I am of opinion that the consideration of the essential matters of material injury, threat recurrence and causation had to be considered on a review in order to determine, among other things, how to set a non-injurious price, whether or not an affected person argued for revocation. Where the Australian industry has suffered, or is likely to suffer, detriment from a number of causes, the Minister must first quantitatively (but as part of a practical exercise), separate the detriment caused or threatened by factors other than the dumping of the exported goods. Only then can the Minister determine whether he or she is satisfied that the dumping itself has caused, is causing or is threatening to cause material injury to the Australian industry: ICI Australia 34 FCR at 572, 576, 577-578 per Black CJ, Neaves and von Doussa JJ. The absence of a reasoned explanation of how the Minister was entitled to change the variable factors, including the non-injurious price, relating to exports of the product to Australia by Siam was not addressed by the respondents' argument. The selection of the figures for these variable factors in the confidential sections of Report 134 had not been explained. Rather those figures were mere assertions that appeared to be contrary to the express findings in the Report of the operation of the market and the increasing strength of Qenos. The aim of Art 11.1 of the implementation agreement is to ensure that anti-dumping duty "... shall remain in force only so long as and to the extent necessary to counteract dumping which is causing injury". That aim is reflected in s 269TACA(a)'s requirements for setting a non-injurious price. The necessity for such a price to be set for Siam at the level it was by the Minister's declaration was not explained in the Report. The relevant injury for s 269TACA(a) is that caused or likely to be caused by the dumping; that is by the sales of imported product into Australia at a level of price sufficient to cause or threaten material injury to Qenos' business or its recurrence. That was not addressed in Report 134. The Report itself demonstrated that there was no immediate past or current injury. There was no suggestion in the Report of any imminent or foreseeable change to the current position that had been reached in the competitive and growing market, it had found, in which prices and costs were increasing. The absence of any analysis of the questions of material injury, causation or how the non-injurious price was set consistently with the requirements of s 269TACA(a) give rise to the inference, that I draw, that the Minister had no good reason for making the declaration complained of so far as it affected Siam: Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56 ; (2003) 216 CLR 212 at 224 [39] - [40] per Gleeson CJ, Gummow and Heydon JJ. ISSUE 3: WAS THE DECLARATION MADE WITHOUT ANY IDENTIFICATION OF ACTUAL OR THREATENED MATERIAL INJURY CAUSED BY SIAM? I am also satisfied that the CEO and the Minister gave no reasons for asserting, in the actual market they had found Qenos to be operating in during the review period, that it was necessary to determine a non-injurious price under s 269TACA(a) for Siam less than the market price. The respondents argued that the report found that Siam's ascertained export price was below Qenos' unsuppressed selling price being the price "... Qenos could realistically have achieved in the absence of dumping". That argument demonstrates the fundamental flaw in the Report, since the unsuppressed selling price was the actual market price. I reject the argument. After I published these reasons on a confidential basis on 7 August 2009 (see Siam Polyethylene Co Ltd v Minister of State for Home Affairs (No 3) [2009] FCA 839) the parties informed me that I had used a confidential figure in [95] above. I have withdrawn those reasons and made a correction by deleting the reference and using a neutral description in its place. That is the only change to those reasons, apart from the addition of this paragraph. 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 Rares. | anti-dumping duty review application of existing anti-dumping measures customs act 1901 (cth) div 5 pt xvb ss 269tae , 269tg , 269zda , 269zdb nature of review process chief executive officer of customs prepares statement of essential facts and report and makes recommendation to minister as to whether anti-dumping duty notice should remain unaltered, be revoked or varied relevance to review application of statutory criteria governing initial declaration of anti-dumping duty, under s 269tg whether ceo and minister required to consider again in review whether the dumping of imports is causing or threatening to cause material injury to an australian industry whether the ceo and minister permitted to set a new non-injurious price by following customs' standard policy of using the unsuppressed selling price of australian like products without considering whether that price is affected by other factors than the dumping administrative decision making minister as decision-maker discretion in making decision decision must be made having regard to the subject matter, scope and purpose of the legislative scheme decision must be made on the basis of the most current information available importance of the decision maker actively considering a statutory requirement, rather than giving it cursory consideration and putting it to one side statutes implementing international conventions principles governing construction using international instrument as an aid to construction importance of construing implemented international instrument liberally decisions of international tribunal on the implemented international instrument should be given significant weight in interpreting domestic legislation administrative law administrative law statutes |
The issue for determination is whether various objections by the respondents ("Tibra") to evidence filed by way of affidavit by the applicant ("Optiver") are sustainable. 2 The background to these proceedings is summarised briefly in my earlier judgment: see Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1348 at [3] - [4] . I do not propose to repeat that information in these reasons. 3 Tibra advances three broad objections to Optiver's evidence, each of which arises out of the proposition that the evidence must be in a form which is admissible on a final hearing because an application under O 15A r 6 finally determines the rights of the parties in so far as it resolves the discovery issue, and therefore is not interlocutory but final. The first is because the task for the Court on an application under O 15A r 6 is not to determine questions of fact on a final binding basis, but rather to determine whether the applicant has reasonable cause to believe that it has or may have a cause of action against the respondent, and if so to decide whether it will commence proceedings . It is not to decide whether a reasonable cause of action actually exists or whether the claim will ultimately succeed. The second reason is that such an application is interlocutory in nature, and therefore the rules of evidence do not apply in with the same rigidity as they would apply on a final hearing. Thirdly, this is an appropriate case for the application of s 190(3)(b) of the Evidence Act 1995 (Cth) ("the Act "), which allows the Court to dispense with the rules of evidence where they might otherwise cause undue expense or delay. An application for preliminary discovery under O 15A r 6 requires the Court to determine whether the applicant has reasonable cause to believe that it has a right to obtain relief from the prospective respondent. In making this determination, the Court need not make any findings of fact. Although the Court will require some evidence to conduct its objective assessment of the applicant's 'reasonable cause to believe', some things, such as the exact nature and significance of the evidence, may be left to surmise or conjecture: see John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [14] ; see also George v Rockett [1990] HCA 26 ; (1990) 170 CLR 104 at 115-116. I have not limited myself to considering evidence which is in a form which would be strictly admissible at a final trial. During the hearing I ruled that press reports and other hearsay material were not necessarily excluded on that account. The issue against which the admissibility of evidence is to be tested is whether there is reasonable cause to believe that the applicant may have the right to obtain relief. This does not tender an issue of fact in the usual way. His Honour's observation that the task of the Court on an application for preliminary discovery " does not tender an issue of fact in the usual way " assists in the characterisation of the application. Because it is directed to the grounds of the applicant's belief , the application does not call for and is not directed to making a determination of fact or entitlement on a final basis. It is therefore not appropriate to strictly apply the laws of evidence as if the application for preliminary discovery involved a final hearing of the issues in the prospective substantive application. 8 An applicant may base a 'reasonable cause to believe' on a range of considerations, evidence of which may not be admissible on a final hearing but which may be sufficient to ground his or her belief for the purposes of O 15A r 6. For example, if a solicitor reviews the material surrounding a case and advises his or her client that a reasonable cause of action exists, this examination together with other evidence of a hearsay nature may be sufficient to ground the requisite belief. If a computer scientist expresses an opinion that a prospective respondent could only have achieved certain operational standards by copying or appropriating software from an applicant, this may also suffice as a ground for a belief sufficient to satisfy O 15A r 6 in the absence of strict compliance with all the principles canvassed in Makita . 9 The issue which the Court must address on preliminary discovery is whether circumstances exist which support a conclusion that the applicant has a 'reasonable cause to believe': see Malouf v Malouf [1999] FCA 710 at [16] ; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 541-542. It is not for the Court at the stage of preliminary discovery to determine finally the detail or weight of the evidence on which the applicant's belief is founded. That is a matter for the final hearing, when evidence is fully adduced and tested in cross-examination, after all interlocutory procedures have been undertaken and full discovery given. In the present case there is a question whether the rights referred to are the substantive rights on the final hearing of the prospective action which may be instituted or the rights affected by an order under O 15A to produce documents. 11 Counsel for Tibra relies on the decision of Lindgren J in Levis v McDonald (1997) 75 FCR 36 (" Levis "), where his Honour held that an application under O 15A r 3 for discovery to identify a respondent was final in character because, in his Honour's view, a determination whether documents should be produced had the consequence of finally determining the rights of the parties in relation to the particular issue tendered for decision, namely whether the person concerned should be ordered to provide the information. His Honour believed that, without reference to authorities, such an application would not be interlocutory. On this basis, his Honour held that the evidence must be in a form admissible on a final hearing. In my view, with respect to his Honour, this analysis is too narrow. 12 His Honour referred to the decision of Sheppard J in Stewart v Miller (1979) 2 NSWLR 128 (" Stewart "). That case concerned a rule of the Supreme Court of New South Wales relating to preliminary discovery, and does not appear to have enlivened the question of admissibility of evidence on preliminary discovery applications. His Honour's reasons do not address any arguments whether such an application would be final or interlocutory. Although his Honour observed that the application for preliminary discovery was of a final nature, his Honour did not give any reasons for his conclusion that the decision was final. In that case, the High Court considered the same Supreme Court rule as that considered in Stewart in the context of a proposed defamation action in relation to what was known as the 'newspaper rule'; that is, the common law practice that courts would normally refuse to make an order which would compel a newspaper company to disclose its sources prior to commencement of an action. The respondent to an application ... is not, as such, a defendant in a defamation action. Such an application is not an interlocutory proceeding in such an action . ' (Emphasis added. The reasoning does not assist in the present case because the Court limited its statement to an observation that an application for preliminary discovery is not an interlocutory proceeding in a defamation action ; which it plainly is not and could not be. This observation does not mean that the determination must be treated as a binding determination of an application for preliminary discovery which finally settles the rights of the parties. 15 There are a number of other more recent decisions directly in point to the effect that applications for pre-action discovery under O 15A r 3 and O 15A r 6 are interlocutory and not final. In London Economics (Aust) Pty Ltd v Frontier Economics Pty Ltd [1999] FCA 932 at [19] (" London Economics "), Finkelstein J expressly disagreed with the reasoning of Lindgren J in Levis and referred to a number of decisions of intermediate appellate courts to which Lindgren J had not been referred and which held that applications under rules of courts equivalent of O 15A are interlocutory in nature. His Honour referred in particular to the decision of the Victorian Full Court in The Herald and Weekly Times Ltd v The Guide Dog Owners' and Friends' Association [1990] VR 451. In that case, O'Bryan J at 455 considered that an order for preliminary discovery was interlocutory because it did not finally determine the rights of the parties in the litigation. Marks J agreed that the order was interlocutory, and required leave to bring the appeal. The order merely set in motion an investigation by examination of documents and persons whether certain information exists and if so, what it is. ... The order was merely the first step. It did not preclude further orders limiting or extending the scope of the investigation which the rule permits. The latter requirement merely places the parties in the hands of the Court. Relaxation of the hearsay rule may substantially affect the outcome of the proceedings or the way in which they are conducted. The above observation by their Honours was unnecessary to the decision. It is tentative and speculative in nature, and in my view does not assist in the determination of the present question as to whether the application is interlocutory or final in nature. 18 In C7 Pty Ltd , Gyles J had to consider whether, on an application under O 15A r 6, evidence was required to be in a form admissible at a final trial. His Honour rejected that approach and said that in order to satisfy the requirements of O 15A r 6, evidence could be lead in the form of press reports and other hearsay material. His Honour said at [17] that " the proceeding is, in essence, interlocutory ". 19 In a later decision in Kennedy v Wallace 208 ALR 424, Gyles J decided that a determination of a claim for legal professional privilege was a final resolution of a dispute or controversy between the parties, and was therefore final in nature. This is perhaps not surprising because there is authority that legal professional privilege is in the nature of a substantive right: see Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 192 ALR 561 at 564-565. At 454, his Honour referred to the decisions in London Economics , Levis and in particular the passage in Malouf , cited by Tibra on this application and quoted above, concerning the relaxation of the hearsay rule,. His Honour noted that this was a guarded statement unnecessary to resolve the evidentiary question for the purpose of the point being considered in that case. 20 An important decision in considering the nature of an application under O 15A is the decision of the Full Federal Court in Hooper v Kirella Pty Ltd [1999] FCA 1584 ; (1999) 96 FCR 1, in which the constitutional validity of O 15A was challenged on the ground that it did not give rise to a federal 'matter'. The argument raised on the challenge was that there is no federal 'matter' decided on an O 15A application because it does not finally determine a dispute. On this question, the Full Court decided that there was a 'matter' which established the jurisdiction of the Court to apply O 15A. Their Honours that the proceeding which would determine the rights of the parties was the substantive action in respect of which the preliminary discovery application was brought. The 'matter' was the underlying substantive claim, and not the ancillary application for preliminary discovery. Being ancillary, the preliminary discovery decision was deemed to be within the scope of the substantive 'matter'. This treatment of the preliminary discovery application provides support for the conclusion that, when determining whether a preliminary discovery application is interlocutory or final, it is the substantive rights of the parties in the prospective action to which attention must be directed when considering whether the determination finally resolves those rights. This is consistent with the view in the present case that, since preliminary discovery is ancillary in nature and part of the larger dispute, no substantive rights are finally determined until a decision is made in the contemplated substantive application. This conclusion is consistent with that of Graham J in Telstra Corporation Ltd v Minister for Communications, Information Technology and the Arts (No. 3) [2007] FCA 1567 at [70] . There are two heads of discretion in the provision, s190(3)(a) and s 190(3)(b). 22 Given my findings above, it is unnecessary for me to decide this question. However, having regard to the considerations contained in s 190(4) of the Act , I would find in this case, if required, that undue expense and delay would result from a stringent application of the rules of evidence on a final basis, and exercise the discretion in s 190(3)(b) to waive the rules of evidence for the purpose of this particular application for preliminary discovery. 23 As far as is relevant, s 190(3)(b) of the Act provides that the Court may dispense with the rules of evidence relating to hearsay and opinion where the application of those rules would otherwise cause or involve unnecessary expense or delay. 24 There are instances of s 190(3) being invoked. In Williams Advanced Materials Inc. v Target Technology Co. LLC (2004) 63 IPR 645 at 647-648, s 190(3)(b) was applied by Bennett J with some brief discussion of the provision. In Sony Entertainment (Australia) Limited v Smith 64 IPR 18 at 30, Jacobson J also applied the provision. The Family Court of Australia has on occasion, pursuant to its Practice Direction No. 2 of 2006, waived the rules of evidence in cases concerning custody of children: see Waterhouse v Shelley [2007] FamCA 541 ; Jakiemiec v Buckingham [2007] FamCA 542. The provision is discussed by Santow J in Edmunds-Jones Pty Ltd v Australian Women's Hockey Association Inc [1999] NSWSC 285 at [19] - [29] , where his Honour dispensed with the hearsay rule in order to admit evidence which " could rationally affect the assessment of the probability of the existence of a fact in issue " (see [9]). 25 Counsel for Tibra referred to the decision of Kendell v Moraitis (unreported, Supreme Court of New South Wales, Hunt CJ, 18 December 1991), in which Hunt CJ found that the circumstances in that case did not invite undue hardship or delay warranting the exercise of the discretion to admit hearsay evidence. In this case, the delay and expense involved in adducing evidence admissible on a final hearing basis at this stage is clearly significant. Quite apart from the relatively simple task of providing the original source code, expense and delay would accrue while confidentiality orders are drafted and executed to take account of the special sensitivity which production of the source code would entail. The increase in costs and time are unnecessary at this early stage of the proceedings. An application for preliminary discovery is a procedure intended to facilitate the administration of justice by allowing an applicant to decide whether to commence the proceedings. It is not appropriate at this early stage for evidence to be exhaustively adduced and tested so that findings of facts can be made on a final basis. 26 Accordingly, even if, contrary to my finding, an application for preliminary discovery is a final hearing, I consider that as a proper exercise of the Court's discretion the strict rules of evidence should be waived in relation to this application under s 190(3)(b) of the Act . I order that the matter be stood over until Optiver's application for preliminary discovery is to be heard, on a date which is to be fixed by the parties with my associate. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | preliminary discovery o 15a r 6 of the federal court rules 1979 (cth) admissibility of evidence not complying with strict rules of evidence character of preliminary discovery applicant's reasonable cause to believe application for preliminary discovery is interlocutory application ancillary to underlying federal 'matter' discretion to waive rules of evidence undue expense and delay. "reasonable cause to believe" practice and procedure words and phrases |
The reasons for judgment here should be read together with those other reasons for judgment, which provide the relevant background, both factually and legally, to the disposition of the two motions before the Court. The Notices of Motion are in respect of Robert Peter Alivojvodic, Bruce James Allsopp, Brett Harold Andrews and Alex Ian Cromb, respectively the second, third, eighty-third and ninety-second respondents ("the defaulters"). I have had the benefit of very detailed and helpful written submissions from which I have drawn, in compiling these reasons. I have had regard to these in making the following findings of fact in respect of each of the respondents. In determining the relief, O 35A permits regard to be had to the "face of the statement of claim"; no evidence need be adduced to prove the factual contentions; allegations of fact in the statement of claim are deemed admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 at [42] ; Wu v Avin Operations Pty Ltd [2006] FCA 36 at [57] ; Macquarie Bank Ltd v Seagle [2005] FCA 1239 ; (2005) 146 FCR 400. The findings set out at paragraphs 4(b) and 6(b) above constitute events of default pursuant to O 35A r 2(2)(b). The findings set out at paragraphs 5(b) and 7(b) above constitute events of default pursuant to O 35A r 2(2)(a). 10 The Statement of Claim, in the case of each of these respondents, pleads all the material facts sufficient to establish the breaches of s 38 of the BCII Act and breach of the s 127 order under the WR Act and thereby rendering them liable to the imposition of penalties under s 49(1)(a) of the BCII Act and s 178 of the WR Act respectively. The pleaded facts also sustain the making of relevant declarations. Although it is still open to the applicant to move for default judgment in the circumstances (these two defaulters having been served with the initiating process and being relevantly in default) an issue does arise as to whether, in the Court's discretion, it is just to enter judgment in default. 12 The applicant acknowledges the general reluctance of courts to permit a party to obtain orders in circumstances where notice of the application for those orders had not been given to the other parties affected. However it is submitted by the applicant that the position is different in relation to defaulters. 13 As a matter of principle, where it can be shown that a party has been served with the originating process, and if that party thereafter declines to take any of the steps required as a result of such service (such as entering an appearance, filing a defence or attending at directions hearings), the party may (and often ought) be regarded as having waived his or her rights and as having, in effect, consented to judgment on the basis of the facts alleged in the statement of claim. 14 Indeed, if it is not possible to proceed against a defaulter under O 35A unless notice of the hearing has been given, that would enable a defaulter to avoid judgment if he or she could avoid being personally served with notice of the application for orders under O 35A, notwithstanding the clear default in complying with standard procedural steps or orders of the court. 15 In British American Tobacco Australasia Limited v The Person Identified by the Australian Customs Service as "Gory Sabar" [2007] FCA 1417 , an application was made for judgment under Order 35A. It appears that this application may have been made by a notice of motion, which was made returnable instanter , and Stone J made orders 'pursuant to Order 19 rule 2(2)(d) that service of this Notice of Motion be dispensed with'. These orders were made despite the fact that neither of the respondents had filed a notice of appearance, or had appeared before the Court at any stage. 16 Stone J went on to find that the respondents were in default under O 35A r 2(2)(a) and 2(2)(c), and proceeded to enter judgment against them, notwithstanding that there was no evidence that they were aware of the hearing seeking default judgment. Notice of that hearing had not been personally served, as Order 19, r 4 would have required, if not dispensed with. 17 To similar effect, Kiefel J's analysis of the effect of Order 35A, at first instance, in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [46], appears to assume implicitly that notice of the default judgment proceedings is not necessary unless the relief ultimately being sought is different to that expressed in the statement of claim. Her Honour indicated that the touchstone ought to be fairness in the conduct of litigation, with what is required potentially differing from case to case. 18 I have found that the eighty-third and ninety-second respondents have been served with the originating process and have made no, or no proper, effort, to respond to the Court's processes. No injustice would be occasioned by entering default judgment against them. 20 The defaulters are deemed to have made admissions of the facts pleaded in the Statement of Claim. Declaratory relief as against the defaulters in those circumstances is not materially different to the position of the other respondents who are signatories to the Statements of Agreed Facts. 21 Older precedent reflects a certain reluctance to grant declaratory relief in the absence of facts found on evidence. Contemporary authority in this court reflects a strong disinclination to follow those earlier decisions. In Dataline , Kiefel J, reviewed much of that earlier authority. The power to grant declarations (s 21 Federal Court of Australia Act 1976 (Cth)) is unconfined. Order 35A itself imposes no constraints upon the relief sought. Refusals to make declarations in cases of default are based upon a practice, not a rule of law. The practice is one of long standing and might be seen as derived from views about litigation which pre-date more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall. Views expressed in older cases may not take account of the increase in the use made of declaratory orders in developing areas of law which may involve matters of public interest (emphasis added). A caution with respect to the use of older authority is made in the White Book Service 2003 to the English Civil Procedure Rules 1998 (40.20.2). It may no longer be correct to have a practice which operates as a prohibition in every case of default and preferable to consider the circumstances pertaining to the particular case and the purpose and effect of the declaration ... Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct constitutes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness (emphasis added). It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made 'upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court'. Having noted the historical reluctance to base declarations on admissions, his Honour went on to approve and adopt the statements of Kiefel J in Dataline and to exercise his discretion to make declarations on the basis of those deemed admissions, at [13]-[16]. 23 Accordingly I propose to make the declarations sought, predicated by a statement that they are made on the basis of deemed admissions. Although the WR Act is a no costs jurisdiction, there is no such provision in the BCII Act. Agreement was reached with the primary group of respondents who admitted contraventions that there would be no order as to costs. No such agreement has been reached with these respondents. The defaulters have failed to either file an appearance or a defence in the proceedings and the applicant has incurred additional legal costs as a result. 27 The applicant therefore seeks an order as to costs against each defaulter. On a party/party basis, it is estimated that the costs of the applicant in respect of the defaulters, including the costs of the Notices of Motion and supporting affidavits and the hearing on 14 November 2007, will exceed $33,000. However a costs order of $5,000 is sought in respect of each defaulter, a total of $20,000, which, on my view, is a conservative figure in the circumstances. 28 I propose then to order that each defaulter pay the costs of the applicant fixed at $5,000. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | breaches of s 38 building and construction industry improvement act 2005 (cth) by unlawful industrial action breaches of order made under s 127 (pre-reform) workplace relations act 1996 (cth) by unlawful industrial action penalties suspended in part whether declarations should be made by reference to deemed admissions. industrial law |
Thus, inconsistent with established principle, the pleading fails to define, it is said, the issues with sufficient clarity to enable the respondent to understand and have the opportunity to meet the case made against it and further, the pleading asserts conclusions unsupported by material facts. As to those principles, see: Dare v Pulham [1982] HCA 70 ; (1982) 148 CLR 658 at 664; Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] ATPR 41-591 at 44, 151; Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713; and Trade Practices Commission v David Jones (Australia) Pty Ltd [1985] FCA 228 ; (1985) 7 FCR 109 at 114-5. 2 However, where a demonstrated failure to plead material facts gives rise to no real confusion or gives rise to no issue of substantive principle, the Court will be restrained in the exercise of the strike-out power. Not all conclusionary pleadings will be struck out. Whether a pleading ought to be struck out will depend upon whether the facts have been pleaded at too great a level of generality or at too high a level of abstraction ( HECEC Australia Pty Ltd v Hydro-Electric Corp [1999] FCA 822 ; State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] ATPR 41-691 at 42, 828-9; Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees' Association (WA) (1987) 13 FCR 413 ; and Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd [1991] FCA 557). The authorities governing the exercise of the discretion to strike out a pleading are usefully assembled by Weinberg J in McKellar v Container Terminal Management Services Ltd [1999] FCA 1101 ; (1999) 165 ALR 409 at 415-421; adopted by Tracey J in Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458 ; and as Tracey J notes, applied in Australian Automotive Repairers' Association (Political Action Committee) Inc. v NRMA Insurance Ltd [2002] FCA 1568 at [14] - [17] ; Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 ; [2005] ATPR 42-053 at 42, 669-42, 670. It is not necessary to restate comprehensively the content of those well understood principles. 3 In the alternative, the respondent seeks an order that the applicant provide further and better particulars of various paragraphs of the statement of claim pursuant to a request made by the respondent's solicitors of the applicant's solicitors, said to be the subject of an inadequate response. The word "material" means necessary for the purpose of formulating a complete cause of action; and if any one "material" fact is omitted, the statement of claim is bad; it is "demurrable" in the old phraseology, and in the new is liable to be "struck out". The function of "particulars" is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim --- gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. 4 The essential criticism of the pleading is that it is impermissibly reductionist. It reduces a structured pleading of material facts to a series of inter-dependent definitions some of which are inclusive of particular matters and thus open-ended rather than an exhaustive statement of the relevant matters. Those definitions are then adopted as defined terms to plead contraventions of the Act . The pleading in that form fails, it is said, to isolate the essential integers of a cause of action derived from ss 45(2)(a)(ii) and 45 (2)(b)(ii) and 45A of the Act and, in consequence, fails to isolate and plead material facts establishing those integers. In order to plead to the statement of claim, ANZ is required, it is said, to either deny or admit that a term has the aggregated meaning attributed to it or to deconstruct the definition, isolate its component parts and admit or deny each part and plead contrary facts. This form of pleading is said to raise three faults. First, it fails to plead facts material to the cause of action and adopts or assumes terms the content of which need to be sequentially asserted as facts as their use as a "shorthand" for a collection of elements or notions is confusing contextually in the subsequent pleading. Secondly, the definitional device obscures the case put against ANZ. Thirdly, the device inverts the obligation of the ACCC to plead its case by requiring ANZ to isolate the ACCC's case from a collection of definitional terms, restate the perceived case and plead to that case. 5 In particular, the use of this definitional device is said to obfuscate whether ANZ provides the same, similar or substitutable services as those supplied by the market participant with whom ANZ is said to have imposed an s 45A provision in relation to prices as part of a contended contract arrangement or understanding struck with that participant. 6 The ACCC says its pleading exhibits none of these contended failings. It says the pleading of the contravention of s 45 in reliance upon s 45A is in truth a simple and straightforward matter. It says the adoption of a definitional device does not assume any or a collection of matters but rather asserts as facts that the content of terms are comprehended by the elements of the definition. The subsequent use of those terms in the pleading, although they encapsulate more than one element, makes the contention of contravening conduct plain and clear. As to the obfuscation of the services and whether they are the same, similar or substitutable services provided in competition in a market between ANZ and the relevant participant, the ACCC says that because it relies upon ss 45(2)(a)(ii) and 45 (2)(b)(ii) in conjunction with s 45A , it is simply not necessary to plead all of the various layered onion rings of contestable conduct within the relevant market. What is necessary is to plead, at the centre, whether ANZ and the relevant participant are engaged in an identified market in the provision of identified services in competition. Whether others are in competition with those participants and isolating the composition and characteristics of the outer ring of contestable substitution is neither here nor there nor relevant. Pleading the full structural elements of the market and the boundaries of substitution is thus not required in order to establish the cause of action. Such a proposition is said to be supported by the observations of Heerey J in Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd & Ors (1997) ATPR 41-570 at 43, 920 and consistent with Australian Competition and Consumer Commission v McMahon Services Pty Ltd [2004] FCA 353 ; (2004) ATPR 41-996 per Selway J at 48, 671. Section 45(2)(b)(ii) symmetrically provides, relevantly, that a corporation shall not give effect to a provision of a contract, arrangement or understanding if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition. 8 Accordingly, in order to plead a contravention of s 45(2) , the applicant must plead material facts that establish the making of a contract or arrangement or an understanding arrived at between the relevant participants; isolate a provision of that contract, arrangement or understanding which is said to have the purpose or would have or be likely to have the effect required by the Act ; isolate material facts from which an inference of purpose might be drawn or facts from which the contended effect might be established; and plead material facts that establish the relevant market in which competition would be lessened and the circumstances of lessening. If s 45A is to be relied upon, the applicant must isolate a provision of the contract, arrangement or understanding which has the purpose or has or is likely to have the effect of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to particular services. The applicant must plead material facts identifying the particular services either supplied or acquired or to be supplied or acquired by the parties to the contract, arrangement or understanding or by any of them (or related entities) and material facts which establish that the parties to the contract, arrangement or understanding engaged in the supply or acquisition of the relevant services are in competition with each other in relation to those services. 9 The pleading of material facts which establish the integers of s 45A give rise to a conclusion, for the purposes of the pleading, drawn from those facts of a contravention of s 45. Pleading material facts which establish the purpose, effect or likely effect of a provision of a contract, arrangement or understanding of the kind described in s 45A makes it unnecessary to plead facts going to purpose or effect or likely effect of substantially lessening competition. Section 45A , if established, effects a deemed contravention of s 45 as the parliament regards arrangements between competitors in relation to prices (of the kind described by s 45A) as perverse to competition as a process, a threat to consumers and inconsistent with the object of the Act (s 2). However, an essential integer of s 45A is whether the parties (or perhaps some of them) to the contract, arrangement or understanding are in competition with each other in the supply or acquisition or proposed supply or acquisition of the identified services. Competition is a "rich" and "dynamic" process which expresses itself as "rivalrous market behaviour". Whether firms compete "is very much a matter of the structure of the market in which they operate" ( Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Limited [1976] 25 FLR 169 at 187, 188 and 189). 10 Section 45(3) provides that "competition" for the purposes of s 45A in relation to a provision of a contract, arrangement or understanding means "competition in any market in which a corporation that is a party to the contract, arrangement or understanding ... supplies or acquires ... services". 11 Thus, it is necessary to plead material facts which establish that the participants to the contract, arrangement or understanding embodying the s 45A provision are engaged in the supply or acquisition of the identified services in any market in Australia and secondly, that the participants are engaged in rivalry with each other in that market in those services. Rivalry however takes place within a field of transactions between buyers and sellers and the boundaries of the field of rivalry are to be determined by not only the services supplied or acquired by a participant to the contract, arrangement or understanding but also having regard to services that are substitutable for or otherwise competitive with those services (s 4E of the Act ). Section 4E of the Act simply recognises the economic orthodoxy of close competition determined by strong substitution (over the long run --- two years not simply transient demand or supply responses, given a sufficient price incentive) within a field of actual and potential transactions between buyers and sellers, as the determinant of the boundaries of a market. It is not necessary to repeat the well understood passage from Re Queensland Co-operative Milling Association Ltd (supra) at p 190 adopted with approval by many authorities including Queensland Wire Industries Pty Ltd v The Broken Hill Proprietary Company Ltd [1989] HCA 6 ; (1989) 167 CLR 177 and Boral Besser Masonry Limited v Australian Competition and Consumer Commission [2003] HCA 5 ; (2003) 215 CLR 374. 13 The ACCC also seeks a declaration that ANZ by accepting loan applications submitted to it by MRPL on condition that MRPL abide by the provision of the contract recited in the declaration, has given effect to the contravening provision and thereby contravened s 45(2)(b)(ii) of the Act by operation of s 45A. The ACCC seeks an injunction restraining ANZ for a period of five years by itself (or otherwise howsoever) from making, arriving at or giving effect to a contract, arrangement or understanding with a competitor containing a provision which has the purpose or effect or likely effect of fixing (adopting the remaining facultative language of s 45A) the amount of "refund, discount, allowance, rebate or credit that can be offered, by any of the parties, to a customer in relation to loan arrangement services provided by any of the parties in competition with one another". 14 The ACCC also seeks an injunction restraining ANZ from removing accreditation from a mortgage broker otherwise in compliance with ANZ's rules and standards of accreditation for the submission of loan applications to ANZ for ANZ loan products and an injunction restraining ANZ from refusing to accredit a mortgage broker seeking accreditation in circumstances where that broker complies with ANZ's protocols for accreditation. Further, the ACCC seeks an order that ANZ pay a pecuniary penalty to the Commonwealth as the Court determines and that orders of the Court so obtained be disclosed to shareholders at the next annual general meeting of ANZ's shareholders. 16 By para 1, the statement of claim defines a number of terms which are used to frame assertions of fact in subsequent paragraphs of the pleading. "broker" means a person who supplies loan arrangement services and is remunerated by either direct payment from the customer, or commission paid by the loan provider (either directly or through an aggregator) if the customer acquires the loan product of that loan provider, or a combination of both; and is expressly not an agent of the loan providers whose loan products they deal with. "customer" means a potential acquirer of both loan arrangement services and a loan product. "loan arrangement services" are services offered by suppliers to customers to assist them with choosing and acquiring a loan product. Such services include advising as to the respective features of available loan products from one or more loan providers; advising which available products best suit the customer; assisting customers to complete and lodge applications in a manner that meets the requirements of the chosen loan provider; acting as facilitator or liaison in the transaction for the acquisition of a loan product between the customer and those sections or divisions of a loan provider responsible for supplying loan products; and managing the ongoing relationship between the customer and the loan provider after the loan product has been acquired. "loan product" means a residential home loan offered by a loan provider. "loan provider" means a supplier of loan products within Australia. 17 By para 3, the applicant pleads that ANZ is a loan provider and was and is a supplier of loan arrangement services to customers through ANZ branches and franchises in Australia, including Queensland. 19 As to MRPL, the ACCC pleads at para 4 that MRPL was a broker and supplier of loan arrangement services to members of the public in Australia including Queensland. By para 4.5, MRPL supplied all of the loan arrangement services described within the definition of that term. By para 4.6, MRPL was not a supplier of loan products and by para 4.7, MRPL was authorised by Australian Finance Group Ltd ("AFG") to submit loan applications on behalf of customers in respect of loan products to loan providers and to supply loan arrangement services to customers in respect of those products. By para 4.8, MRPL was remunerated for its supply of loan arrangement services by commission paid by a loan provider through AFG if the customer acquired the loan product of that provider. By para 4.9, MRPL from February 2003 was accredited by ANZ through AFG to submit loan applications to ANZ for ANZ loan products and by para 4.10, in the case of ANZ loan products, MRPL was paid commission for its loan arrangement services by ANZ through AFG if its customers acquired an ANZ loan product. By para 4.11, MRPL was not an agent of ANZ. 20 As to AFG, the ACCC pleads that it was an aggregator with contracts with loan providers for its accredited member brokers to submit loan applications on behalf of customers for the loan provider's loan products (para 5.2). It contracted with loan providers to ensure member brokers complied with the loan providers' standard procedures and requirements in submitting loan applications (para 5.3). From November 2002, AFG was the aggregator through which MRPL was accredited to submit loan applications on behalf of customers for loan provider's loan products (para 5.4) and from on or about February 2003, AFG was the aggregator through which MRPL was accredited to submit applications on behalf of customers to ANZ for an ANZ loan product (para 5.5). By para 5.6, AFG was remunerated by retaining a proportion of the commission payable by the loan provider to the broker who provided loan arrangement services. From February 2003, MRPL offered customers such a refund in respect of its provision of loan arrangement services to those customers for an ANZ loan product (para 9). On or about 25 March 2004, ANZ by letter to AFG cancelled the accreditation of MRPL to submit loan applications to ANZ in respect of an ANZ loan product (para 10). ANZ engaged in that conduct for the reason that MRPL had offered customers a refund of part of its commission received from ANZ in respect of MRPL's provision of loan arrangement services for an ANZ product, to customers (para 11). On or about 29 April 2004, ANZ by letter to MRPL offered to enter into an agreement to re-accredit MRPL to submit loan applications to ANZ in respect of its products (para 12). 23 On or about 10 May 2004, MRPL signed and entered into the maximum refund agreement (para 14). 25 By para 17, the applicant contends that ANZ thus made a contract or arrived at an arrangement or understanding that contained a provision that had the purpose or effect of substantially lessening competition in contravention of s 45(2)(a)(ii) and gave effect to the provision that had that purpose or effect, in contravention of s 45(2)(b)(ii) of the Act . 26 Accordingly, the case made against ANZ is this. 27 First, there is a market for services described as loan arrangement services . They are services offered by a supplier to customers . A customer is a potential acquirer of both a residential home loan (a loan product ) from a provider of residential home loans, and a loan arrangement service from a supplier of that service. The content of a loan arrangement service is defined as a service supplied to such customers of assisting them in choosing a particular residential home loan offered by a provider of such loans (i.e., a residential home loan lender). However, that service, by definition (para 1) has a number of component parts. A supplier of a loan arrangement service is someone that does these things: first, advises customers as to the features of available loan products from one or more residential home loan lenders; secondly, advises a customer of the available products that best suit the customer; thirdly, assists customers to complete and lodge an application for a loan which meets the lender's requirements; fourthly, acts as a facilitator or liaison between the customer and the lender in the transaction for the acquisition of a loan; and fifthly, manages the ongoing relationship between the customer and the lender after the loan has been taken up. This definitional statement of the content of loan arrangement services offered by suppliers of such services is expressed to be inclusive of these component parts. There may be other component services making up loan arrangement services but loan arrangement services at least include these elements. MRPL is a supplier of all of these services. ANZ however is not a supplier of loan arrangement services as defined by para 1. By para 3, ANZ is said to be a provider of loan arrangement services confined to its own loan products, their features, availability, terms and conditions, particular suitability to the customer's needs and the provision of assistance in the completion and lodging of applications to ANZ that meet the requirements stipulated by ANZ for such applications and the subsequent management of the banker/customer relationship in relation to that loan. 28 Secondly, the market for loan arrangement services is characterised by demand for these services in Australia or alternatively in Queensland from members of the public seeking to acquire a separate service, i.e., the acquisition of a residential home loan. 29 Thirdly, on the supply side, loan arrangement services are provided to those on the demand side by brokers (that is, a supplier not an agent of the lender, remunerated directly by the customer or by commission from the lender should the customer take up a loan (or a combination of both)) and by ANZ , among others . 30 Fourthly, from February 2003 MRPL was in competition with ANZ (among others) in the market to supply loan arrangement services to those on the demand side of the market. Alternatively and more narrowly, MRPL was in competition with ANZ in the supply of loan arrangement services to customers simply in respect of ANZ loan products; and ANZ was in competition with MRPL and others in the supply of loan arrangement services or simply in respect of ANZ loan products. 31 Fifthly, the provision (para 13 [22]) contained in the maximum refund agreement between ANZ and MRPL had the substantial purpose of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of a discount, allowance, rebate or credit in relation to loan arrangement services supplied or to be supplied by MRPL in competition with ANZ. Thus, ANZ is said to have made a contract, arrangement or understanding containing the provision and subsequently to have given effect to it. 32 The pleading therefore sets up a market in which there are only two identified supply side participants, brokers which include MRPL and ANZ. The services supplied by each are not said to be the same services. Plainly, it would be an odd pleading that asserted that ANZ was a provider of the five content services described at [27] to a potential acquirer of a residential home loan, making enquiries of ANZ. The bank confines its attention, as para 3 of the pleading makes plain, to the features, availability and qualifying conditions and management of applications relevant to its own residential home loan products. That seems to raise some fundamental questions. Is there a separate market for services which might be described as loan arrangement services supplied to those seeking a residential home loan? If so, what is the content of those services? Who are the essential participants on the supply side of that market? Does ANZ provide any of those services? If ANZ provides not those services but other services (such as arrangements in relation to its own loan products) are those other services strong substitutes in close competition with services provided by particular suppliers in the asserted market or categories of suppliers (such as brokers etc) in that market? Is ANZ in the provision of advice to a potential borrower and in undertaking all of the relevant steps required by whatever protocols govern the lodging, analysis and assessment of applications for residential home loans, engaged in steps which are a necessary incident of engaging in lending services? If the services provided by ANZ described at para 3 of the statement of claim are a necessary incident of lending services, is ANZ a participant in a market for the supply of lending products rather than a participant in an entirely separate field of rivalry for the services of arranging a loan. If there is a separate market for the services of arranging a loan, is ANZ in the market for the acquisition of such services from brokers including MRPL? A central element of the ACCC's case necessarily involves pleading material facts which demonstrate a contended market in which there is contestability and close competition between ANZ and MRPL. That close competition necessarily arises in a market which must be pleaded in a way which establishes contestability within the boundaries of a separate market for the asserted services. 33 Where one of the central questions in the controversy is whether there is a separate market in which the suppliers of differentiated services are in close competition and thus engaged in a field of actual and potential transactions between buyers and sellers, the market must be pleaded with some degree of specificity even if only to demonstrate that MRPL and ANZ are in the same market and in close competition in that market for the supply of a relevant service. For example, the pleading would ordinarily assert facts identifying the market as a market for a particular service or services. It might be asserted as a fact that the service is comprised of particular activities undertaken by suppliers of that service. The market might be identified by pleading the primary or core participants on the supply side of the market that provide those services. Broader categories of suppliers might be identified. The acquirers of that service would be identified. The services provided by the respondent would be identified together with the acquirers of that service. If the services are differentiated services, facts would be pleaded which assert strong substitution by acquirers of the primary service and the ANZ service and services provided by other relevant market participants but in particular MRPL. 34 In this case, two alternative markets are, in effect, pleaded by para 7 of the statement of claim in which competition between MRPL and ANZ is said to occur. First, a market for at least the content services at [27] comprising loan arrangement services for residential home loans made or to be made by lenders of such loans to members of the public and secondly, a market for loan arrangement services (as defined: presumably the five defined content services at [27]) but confined to (and thus different services) loans made or to be made by ANZ. The first market is plainly broader than the second and contends for supply side contestability between ANZ in the provision of its services and the range of content services as defined. Is ANZ, for example, providing advice in relation to the comparative merits of loan products (i.e., the characteristics, terms and conditions of residential home loans) offered by other lenders of such loans to acquirers of residential home loan products. If not, and ANZ simply provides advice about its own internal or domestic products, is it nevertheless doing so (when engaging with potential borrowers) on the supply side of the broader market where others, including brokers and presumably banks, are supplying similar or substitutable services? 35 The alternative market pleaded is confined to a market for services in relation to ANZ residential home loan products. This market is, in effect, said to be a separate product specific services market related solely to ANZ residential home loans. Presumably, the services in that market include some of the defined loan arrangement services but not others. For example, presumably a supplier of services in that market provides advice to customers of that service as to the features of available loan products from one or more residential home loan lenders. Presumably, when such a customer chooses to pursue a residential home loan product of ANZ, the field of loan arrangement services provided by such a supplier is then limited to the product specific loan arrangement services related to an ANZ residential home loan. 36 The pleaded cap or limitation upon the extent to which MRPL might pass on a rebate, discount or allowance for providing particular services to a customer taking up a loan from ANZ seems to suggest, at least as pleaded, contestability and substitution for particular services was occurring at material times between ANZ and MRPL by reference to price. 37 It seems to me however that material facts must be pleaded that establish each of the contended markets in which competition between MRPL and ANZ occurs. Those facts in this case would isolate the services for which there is a market; the principal suppliers of those services; the services supplied by MRPL; the services supplied by ANZ; the contestability and strong substitution between the services offered by MRPL and those offered by ANZ to those seeking to acquire services within the contended services market. Those material facts might plead the subsistence of a broader market in which MRPL and ANZ are supply side participants for one or more of the content services or a narrower services ANZ product specific market. 38 Perhaps the real difficulty with the present pleading is that it defines a market by reference to the collective activities of a contended participant and then asserts that ANZ does some of those things with the result that the service offerings between the two are said to be contestable within a market for the service offerings of the selected participant, rather than first defining the market by reference to the functional services making up one or more of the contended markets and then identifying the participants in each of those markets, the relevant service offerings and the level of contestability between those offerings, thus leading to a conclusion of competition between ANZ and MRPL in a market. 39 The ACCC contends that the Court will not be called upon in resolving the matters in controversy in this proceeding to determine the market in which MRPL and ANZ are in competition. The ACCC says that it is sufficient, in order to establish the cause of action, for the Commission to establish that there is at least a market, whatever the boundaries of that market might be, in which MRPL and ANZ are in competition. Thus, a detailed pleading of the structure of the market, the boundaries of the field of rivalry and range of substitution possibilities is irrelevant as it does not matter whether a particular field of market participants are engaging in rivalrous behaviour so long as MRPL and ANZ are shown to be rivals in a market in respect of particular services. 40 In broad terms, aspects of that submission are correct. However, whilst it is true that the outer layer of contestability need not be pleaded and nor is it necessary to scope in a prolix and detailed way every structural facet of each of the contended markets, it remains necessary to plead material facts which establish a field of rivalry within which MRPL and ANZ experience contestability and strong substitution. Section 45A is a deeming provision that stands or falls in its application (apart from anything else) on whether or not the pricing conduct meeting the section occurred between competitors in the supply of contestable services. The need to plead a market and prove contestability is an essential element of s 45A thus leading to a conclusion that A and B are in competition in the supply of the relevant services in the market or markets adopted by the pleading. It is true that the content of the pleading of a market said to exhibit the relevant close competition between the participants to an s 45A provision within the contended contract, arrangement or understanding will necessarily vary according to the relationship between the contended conduct and the market for goods or services in which the conduct occurred. 41 For example, a company might be engaged in the transportation of manufactured goods (clothing made by a particular manufacturer in Adelaide) from Adelaide to Sydney. Such a company may have enjoyed the benefit of a contract for the acquisition of its transportation service by that manufacturer for some years. Such a manufacturer might elect to invite nominated other providers of that service to submit a quotation for the future supply of that service. An incumbent supplier that strikes an arrangement with an invitee requested to supply a quotation for the provision of that service, to fix or control the price for the service potentially to be provided after the expiry of the contract would, no doubt, face the contention that such conduct contravened s 45 by reason of s 45A of the Act . In pleading such a contravention, plainly enough, it is reasonably straightforward to isolate a market for the transportation of goods including clothing from Adelaide to Sydney, which may be part of a broader geographic market for that service. Secondly, the service is precisely the same service of transporting clothing from Adelaide to Sydney to be provided by, potentially, either party to the arrangement. Thirdly, the proposed arrangement relates to services to be provided to a particular customer in respect of a particular contract. In such a case, it is a simple matter to identify material facts which isolate the market, the transaction, the participants and the service to be supplied in respect of which the participants are in close competition and in respect of which the participants have struck the price controlling arrangement. To illustrate the point, one might ask rhetorically what would it matter for the purposes of the present case if, after elaborate discovery and issue of many subpoenas, expensive expert evidence, and a trial lasting several weeks, if not months, it were proved that Air Road and COPE were not participants in the alleged market, that some other firms not named in para 10 were participants, or that the alleged market did not cover the whole of Australia but only Victoria, South Australia and New South Wales. 44 His Honour further observed that the paragraphs of the pleading before him pleading the structural elements of the market "are prolix, unnecessary and irrelevant and raise false issues which are likely to embarrass and delay the fair trial of this proceeding". 45 With respect, his Honour's observations are undoubtedly correct in that case as there was no contest between the parties that precisely the same service was in issue involving precisely the same customers in respect of a readily identifiable market for express freight transportation services between particular geographic points. Whether the market comprised broader rings of geographic boundary or outer rings of particular participants was irrelevant to the question of whether McPhee and DFE were in competition in the identified express freight transportation market in respect of precisely the same service. However, it is plain from ACCC v McPhee that pleading material facts of the particular market in which there is competition for the relevant services between the participants to the s 45A provision of the pleaded contract, arrangement or understanding, remains fundamental. In principle therefore, having regard to the relationship between contended conduct by the parties to the provision and the market in which the conduct is said to have occurred, the pleading of material facts establishing close competition in the market might well be quite contained, as Heerey J concluded in the circumstances of the case before his Honour. 46 Similarly, in Australian Competition and Consumer Commission v McMahon Services Pty Ltd (supra) Selway J at 48, 671 noted the precise limitations in the scope of the conduct alleged in that case. The conduct concerned a contended arrangement in relation to a tender price for a specific contract to be let by the Department of Defence arising out of the tender process. The ACCC relied upon s 45A of the Act . The competitors involved in that tender process are specified by name in the statement of claim. So too are those said to be parties to the arrangement or understanding. The price said to be fixed has not been particularised, but is either the price contained in the offer by the fifth respondent (which seems to be the case that the ACCC intends to put) or the price obtained by the Department of Defence. Plainly enough, it is not the price of services generally available in the marketplace. If the allegation related to the effect of an agreement or understanding on the overall operation of the market then it may be necessary for the ACCC to provide quite detailed particulars of that market in order to identify the relevant effect. However, in this case the relevant anti-competitive purpose or effect is strictly limited in scope. 48 Because the conduct involved a quite specific price fixing allegation between particular parties in respect of a particular tender (and consequential contract) let by the Department of Defence in respect of the supply and acquisition of construction services, his Honour concluded that the pleading of those elements, that is, the market, the contract, the participants, the identical services in the context of that transactional arrangement, did not require any greater or more detailed pleading of the market. However, the issue was not whether the applicant was required to plead material facts going to the market for the services and competition between the participants to the contract, arrangement or understanding in respect of those services but whether the material facts pleaded by the statement of claim, in the context of the transaction in question, adequately put the respondent on notice of the case to be met. His Honour concluded that it did. Again, there was no controversy that the service in question was precisely the same service provided in an uncontroversial market for the provision of construction services and the conduct related to a single party, the Department of Defence, in respect of a particular tender transaction. With respect, his Honour was plainly correct in concluding that it was not necessary to plead the market in any broader sense. 49 In simple terms, there is no great leap of pleading faith in either of these cases that the participants to the arrangement containing the s 45A provision were in competition in the supply of the relevant service in a market. 50 The distinction between these authorities and the present case is that here, the very question in controversy, is whether there is a separate market or markets as asserted in which close competition between MRPL and ANZ takes place. The pleader can not simply say there is such a market unless that contention is made good as a logical conclusion drawing together and drawn from material facts that plead the subsistence of the contended markets and contestable participation by MRPL and ANZ in each market. That is not to say that a pedantic or prolix and detailed pleading of the boundary of the entire field of rivalry need be scoped in the pleading or that the outer boundary of contestability between all participants in the market need be framed. It is however important to start at the centre and work outwards by identifying the services which are the subject of one or more markets, the core or emblematic participants in the contended markets for those services (i.e., the core or essential suppliers of the identified services; and the class of acquirers of the service (potential residential home loan borrowers seeking the relevant related services)), the services in fact provided by MRPL and those services in fact supplied by ANZ and the material facts which demonstrate that those services are strong substitutes thus falling within a separate market. Having done so, the pleading, in principle, need do no more so far as the market is concerned. In order to make good the remaining elements of s 45A , the applicant must plead that the provision of the contract, arrangement or understanding has the purpose or effect or likely effect of, put in abbreviated terms, fixing a price for the contestable supply of these services. 51 Once the question of whether a separate market subsists and whether MRPL and ANZ are in competition in one or more separate markets arises, material facts which demonstrate those matters must be pleaded and ultimately established ( Trade Practices Commission v Nicholas Enterprises Pty Ltd & Ors (No. 2) [1979] 40 FLR 83 pp 110-115; (1979) 26 ALR 609 at 645-651) notwithstanding that reliance is placed upon s 45A of the Act . 52 It seems to me that the pleading as presently formulated fails to clearly plead material facts which establish the market and other elements discussed in these reasons. The failure to plead those material facts can not be cured by an order for particulars ( Bruce v Odhams Press Limited (supra) [3]). Accordingly, it seems to me that the proper course is to strike out the statement of claim and give leave to deliver an amended statement of claim. That is not to say that the contentions advanced by the ACCC are inherently unsound. The contentions however must be framed by material facts going to each of the integers of the cause of action as the foundation on which the claims are to be made good. And if so, from whom? In the language of economics the question is this: from which products and which activities would we expect a relatively high demand or supply response to price change, i.e. a relatively cross-elasticity of demand or cross-elasticity of supply? By this pleading, the ACCC contends that MRPL supplied certain services to customers (as defined) and ANZ supplied particular services to the same customers. The pass-through by MRPL to customers of a proportion of a commission fee it received from ANZ so as to reduce the price of activities undertaken by MRPL in connection with an approved ANZ residential home loan below the establishment fee charged by ANZ (whether as part of a loan service or, as contended, a price for separate services) seemed, as pleaded, to produce put colloquially "a bit of a reaction". The reaction, as pleaded, was the withdrawal of accreditation and re-accreditation on terms which involved the price of a service provided by MRPL. Whether MRPL and ANZ are in the same market needs however to be properly pleaded. 53 I do not propose to deal in any detail with the second limb of ANZ's motion seeking, in the alternative, an order that the applicant provide further and better particulars of the statement of claim in response to a request made by ANZ's solicitors. The pleading of material facts by an amended statement of claim ought to deal with many of those matters. However, it may be helpful to say something about the general area of earlier disagreement on those matters which may or may not remain relevant having regard to a re-formulated pleading. 54 First, ANZ sought a statement of the services comprising "loan arrangement services" since the definition was inclusive rather than exhaustive. The ACCC confirmed that the scope of the services was said to be inclusive and as to any other services, the request was not a proper request for particulars. It seems to me, as I have said, that the applicant ought to identify the services comprising of the markets alleged, the services provided by MRPL and those provided by ANZ. 55 Secondly, ANZ sought particulars of each loan provider MRPL dealt with at any material time in relation to residential home loan products of such a lender. Those particulars were sought because a broker is someone that provides loan arrangement services as defined. Loan arrangement services include giving advice to customers as to the respective features of loan products from "one or more loan providers". Some illustrative specificity of those loan providers is likely to focus an understanding of the services provided by brokers. For example, presumably brokers provide, as MRPL is said to provide, all of the presently pleaded loan arrangement services in respect of particular banks, building societies and other classes of residential home loan lenders. It seems to me to be unnecessary for the applicant to isolate each and every loan provider MRPL dealt with at material times provided examples of each class of lender reflecting each different category of lender is identified. Such information goes to the services offered by brokers and in particular MRPL, to be compared with the services provided by ANZ. For example, are brokers and MRPL intermediaries at large in the residential home loan market standing between lenders and borrowers and providing particular services adapted to particular classes of lenders (such as prime lenders, sub-prime lenders, lenders of last resort etc)? The range or character of services supplied by brokers might vary according to the class of lender. It may not. Illustrative examples of participants in each class might usefully be identified. 56 Thirdly, MRPL is said to provide all of the defined loan arrangement services which includes acting as a facilitator or liaison in the transaction for the acquisition of loan products between the customer and those sections or divisions of a loan provider responsible for supplying loan products. Further, MRPL as a broker is said to manage the ongoing relationship in relation to the relevant home loan product, as part of a separate service between the banker and customer once that relationship has been struck as to that loan. ANZ has sought particulars of MRPL having acted as a facilitator and as a manager in the sense described. It seems to me that since these matters go to the particular services performed by MRPL said to be in competition with ANZ, particulars of those matters ought to be given. 57 Fourthly, to the extent that AFG is an accreditor of MRPL and reliance is placed upon AFG's role, any relevant contract between AFG and MRPL should be identified. 58 Fifthly, at para 6.2 the applicant pleads that loan arrangement services are supplied by brokers and loan providers including ANZ. ANZ has sought confirmation of whether it is alleged that loan arrangement services were provided by persons other than brokers and loan providers and if so which categories of providers. These matters go to the isolation of the services as already discussed and the extent to which close competition is occurring. 59 The ACCC has delivered notices requiring the production of a range of documentation from ANZ pursuant to s 155 of the Act . It seems to be uncontroversial that documents falling within the scope of the s 155 notices have been produced by ANZ. It ought therefore not to be unnecessarily difficult for the ACCC to provide particulars of the relevant matters. 60 Accordingly, I propose to order that the statement of claim be struck out. The applicant is given leave to file and serve an amended statement of claim by 12 December 2008. I propose to reserve the costs of and incidental to the notice of motion pending submissions on costs. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of a pleading asserting contraventions of ss 45(2)(a)(ii) and 45(2)(b)(ii) in conjunction with s 45a of the trade practices act 1974 (cth) consideration of whether a statement of claim filed and served by the applicant properly pleads material facts in relation to a separate and contestable market between the participants to a contract, arrangement or understanding containing a provision said to fall within the scope of s 45a of the act consideration of an application to strike out a statement of claim pursuant to order 11, r 16(b) of the federal court rules on the footing that the pleading has a tendency to cause prejudice or embarrassment as it fails to plead as required by order 11, r 2(a) material facts going to the causes of action alleged trade practices practice and procedure |
The fall of the wall was caused by the operation of a mechanical pallet stacker by an employee of a company, Designcraft Furniture Pty Ltd (Designcraft), which had been engaged by the respondent to undertake work in connection with setting up that temporary exhibition. Two other employees of Designcraft were bracing the walls in the vicinity. Hence, one was injured by reason of the fall, and another may have been injured. Designcraft was a contractor within the meaning of s 9A of the Occupational Health and Safety Act 1991 (the Act). 2 By reason of the operation of s 16(4) of the Act, the obligations of an employer apply also in respect of persons who are contractors in relation to certain matters over which the employer has control. Hence, after an investigation, these proceedings have been brought for a penalty against the respondent for breach of the Act. Upon the examination, the essence of the defaults on the part of the respondent, leaving aside the liability for the action of the employees of the contractor, sprang from the failure to appoint one single project manager to manage the work to be performed and from the provision of access or work permits to Designcraft and its employees to carry out work that had not been assessed for risks to health and safety or reviewed and approved by the respondent's employees. 3 The respondent has accepted that it breached the Act, and the parties have agreed upon a statement of facts which has become Exhibit A in the proceeding. Exhibit B in the proceeding is a document referred to in that statement of agreed facts. The statement of facts and the incorporated documents set out in considerable detail the circumstances surrounding the incident itself, the arrangements made with the contractor, the investigation of what occurred, and what has occurred thereafter to ensure that this does not happen again. The parties are agreed that in addition to a declaration as to breach, there should be a pecuniary penalty ordered in the sum of $20,000. 4 In support of the appropriateness of that figure, I am invited to approach what is put forward along the lines discussed by the Full Court in Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993, [2004] FCAFC 72. That, of course, was a case under a different Act from that which is involved here, and an Act with different objectives. However, insofar as it dealt with the manner in which the Court should approach a statutory penalty where there is an agreement between the parties as to the appropriate penalty, that decision does provide appropriate guidance. I have also been referred to other authorities dealing more closely with questions of occupational health and safety including the recent case of Comcare v Commonwealth of Australia (2007) 162 IR 407, [2007] FCA 662 , where Madgwick J looked at a number of the factors which have been regarded as relevant by courts dealing with similar legislation in other jurisdictions. 5 The maximum penalty which might be involved is $242,000. That, of course, is a figure reserved for the most serious of cases. The parties have put forward a number of reasons why $20,000 is appropriate in this particular case, justifying the significant discount from the maximum penalty. The submissions on behalf of the applicant, in addition to explaining the background of the contravention and how it arose, dealt with the actions taken by the respondent subsequent to it; the report by Comcare and, in relation to the matters of penalty, spoke of the objects of the Act; the maximum penalty; deterrence; the seriousness of the contravention; the foreseeability of risk; the admission of contravention at an early stage; the fact that there is no prior record of the respondent contravening the Act; its cooperation with the Comcare investigation; its implementation of all of the recommendations made to it; and, whilst one cannot downplay the serious risks involved, the fact that the injuries were fortunately relatively mild. 6 The respondent has, of course, underlined the factors which would support a significant discount from the maximum. It is submitted that there was no systematic failure by the employer to address the relevant risks. The risk was caused by reason of inadvertence in the conduct of the employee of the contractor concerned who was driving the mechanical stacker. It is true that there was no direct involvement of the respondent in the supervision of that employee, but, nonetheless, there was the failure to take steps to ensure that there was an assessment of what was to take place. There is some suggestion that even if the paperwork had been attended to, the accident might still have happened, but I do not think I can take that into account. I have to assume that carrying out the system would at least seriously minimise the chances of the risk occurring. 7 The respondent has also stressed that the contractor in question and its employees possessed the relevant expertise and experience. The particular workman involved, who was the project manager at the time, was formerly employed by the respondent as manager of its workshop and had knowledge of the kind of work involved. It is submitted that it is reasonable to take into account on penalty the skill and expertise of the contractor including in relation to appropriate safety precautions. The respondent stresses not only the lack of any previous contravention, but the significant effort and resources which are devoted by the respondent to meeting those obligations. 8 All things considered, I am satisfied that the pecuniary penalty proposed is appropriate. As the cases indicate, it is not so much a question of me deciding what figure I would independently propose and then seeing whether it accords with the figure proposed. A common sense approach is to take the agreed figure and give consideration to whether it is within the range of appropriate figures. In my opinion it is. I make the orders set out in the draft order which I have initialled and placed with the papers. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | employer admits breach of occupational health and safety act 1991 (cth) in respect of contractor over which it had control agreed facts and penalty jointly proposed industrial law |
A dispute has arisen out of the second applicant's claim to various social security payments. In particular, for present purposes, between 30 June 1995 and 1 September 1995, the second applicant, Mrs Scott, was not paid a Special Benefits payment. The applicants allege that Centrelink's conduct in that period amounted to torture and cruel, inhuman or degrading treatment, or imposed upon them "mental suffering and physical pain". The applicants complained to the Human Rights and Equal Opportunity Commission ("HREOC"), who declined to investigate the complaint pursuant to s 20(2)(c)(ii) and (iii) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) ("HREOC Act"). The applicants sought judicial review of HREOC's decision not to inquire into their complaint pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth). On the application of the second respondent, the Commonwealth of Australia, the Federal Magistrates Court summarily dismissed their application. It is from this decision that the applicants seek leave to appeal. 2 There are presently three matters before the Court. Following the hearing, by letter dated 10 December 2007, the applicants sought to withdraw this motion. The factual matters forming the background to this claim are set out in Scott v Pedler [2004] FCAFC 67 per Conti J (Gyles and Allsop JJ agreeing). I do not propose to repeat them in detail here. 4 In summary, the present proceeding arises out of HREOC's decision on 28 August 2006 to decline to investigate the applicants' complaint initiated by letter on 29 May 2006. The applicants' complaint related to the conduct of Centrelink and the Commonwealth of Australia, and decisions of the High Court of Australia and the Federal Court of Australia relating to that conduct. The complaint alleged violations of the applicants' human rights in contravention of the International Covenant on Civil and Political Rights, the Declaration on the Rights of Disabled Persons , the Crimes Act 1958 (Vic), and the Convention Against Torture and other Cruel, Inhuman or Degrading Treatment. It is plain enough from their letter of 29 May 2006 that the applicants were complaining about the conduct that had already been the subject of the previous court proceedings. Referring to s 20(2)(c)(iii) of the HREOC Act , the delegate of the President of HREOC stated that "the subject matter of your [the applicants'] complaint has been adequately dealt with". Reference was made to the applicants' extensive litigation history. Relying on s 20(2)(c)(ii) of the HREOC Act , the delegate also held that the applicants' complaint was misconceived. The delegate considered that the doctrine of judicial immunity protected the High Court and Federal Court from the investigation that the applicants sought. Citing Re East: Ex Parte Nguyen [1998] HCA 73 ; (1998) 196 CLR 354 (" Nguyen "), the delegate stated that the doctrine extended to "protection from claims brought under Commonwealth anti-discrimination and human rights laws". Additionally, the delegate was of the view that it was "arguable whether or not the human rights provisions in the HREOC Act apply to an act or practice of the Federal Court of Australia and the High Court of Australia in the exercise of its judicial power" due to the separation of powers doctrine. It was the delegate's opinion that HREOC's power to investigate an act or practice of the Commonwealth "is generally limited to the Commonwealth within its executive role. By order dated 4 December 2006, Sundberg J transferred the proceedings to the Federal Magistrates Court. On 2 March 2006 the second respondent made an application for summary judgment. 7 The Federal Magistrate gave judgment for the second respondent on 18 October 2007, in which he summarily dismissed the application for judicial review. In so doing, the Federal Magistrate briefly set out the background to the action and referred to the previous actions that have been pursued by the applicants. 8 In considering whether the applicants' judicial review application had no reasonable prospect of success, the Federal Magistrate considered two matters. First, his Honour considered whether there might be any error in HREOC's determination that the complaint had been adequately dealt with. Two judges of the Federal Court heard evidence given by all involved. They found no cause for complaint against the Department or its officers, in fact the contrary. Appeals against the decisions were dismissed. The commission [sic] relied on those cases and the findings made in coming to its conclusion. There is no reasonable argument that the Commission, in doing so, took into account anything other than what was relevant or that there was an improper exercise of power. In Ex parte Nguyen (1998) 196 CLR 254 the High Court dealt with a claim that a Magistrate and a Chief Judge had discriminated against a litigant on the basis of race. The High Court referred to the immunity from suit which protects judicial officers from actions arising out of the judicial function. They said there was nothing in the Race Discrimination Act that suggests that Parliament intended to override the immunity. The same reasoning applies to the Human Rights and Equal Opportunity Commission Act . Function of the HREOC under s.11(1)(f) of the HREOC Act and the mandatory nature of art.2(3)(a) of the International Covenant on Civil and Political Rights mean that the HREOC may not decline to investigate the merituous complaint and may not deny any remedy to persons whose rights and freedoms contained in the ICCPR are violated and when the judicial findings are wrong on evidence and constitute miscarriage of justice. Departmental officers I. Peak and S. McLeod involved in the matter were not giving evidence before the stated above two judges of the Federal Court. Peak and S. McLeod committed the tort of fraudulent representation, by which also contravened human rights within the meaning of the HREOC Act towards the applicants. The accepted by the Court reliance on the alleged evidence given by the above stated officers before two judges of the Federal Court, even assuming the existence of that evidence --- what the applicants deny, and on findings of the Federal Courts in preference to the above stated incontrovertible documentary evidence constitutes an error of law/prejudgement. The accepted by the Court reliance on evidence of Centrelink officers and findings of the Federal Courts, in preference to the above stated incontrovertible documentary evidence constitutes an error of law/prejudgement . e) Documentary evidence from Centrelink and from the Federal Court incontrovertibly proves that all Centrelink officers involved in the matter acted in concert by unlawful or illegal means and with the common purpose of not accepting the second applicant's entitlement to a pension on physical impairment. The accepted by the Court reliance on evidence of Centrelink officers and on findings of the Federal Court, in preference to the above stated incontrovertible documentary evidence constitutes an error of law/prejudgement . f) Evidence of the removal of original evidence from the Centrelink files which was establishing knowledge and "the guilty state of mind" was not available during the first set of the Federal Court proceedings; evidence showing analysis and rejection of medical evidence about significant physical impairment of the second applicant by officer Chrystal in 1995 is a fresh evidence not presented before the Federal Courts, but presented in the Federal Magistrates Court below as the fresh evidence. The Court erred in rejecting the appellants' application by infringing the principle that justice must be done and must indoubtedly seen to be done. So far as is relevant, the applicants' submissions may be summarised as follows. It is unnecessary to refer to the contents of these submissions, which do not effect what is said below. 14 HREOC has filed a submitting appearance in accordance with the principle in The Queen v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13 ; (1980) 144 CLR 13 at 35-36. 15 The Commonwealth of Australia made submissions in opposition to the grant of leave, as well as in opposition to the applicants' other motions. As was said in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572 ; (2000) 104 FCR 564 at [43] per French J (with whom Beaumont and Finkelstein JJ agreed) "[i]f a proceeding is dismissed because it is frivolous or vexatious or because no reasonable cause of action is disclosed the decision is treated as interlocutory": see also Finikiotis v Sims Partners [2005] FCA 1774 at [10] per Lander J and Rana v University of South Australia [2004] FCA 559 ; (2004) 136 FCR 344 at 345-346 per Lander J. Interlocutory decisions require leave to appeal pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth). An application for leave to appeal must be determined according to the test in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 per Sheppard, Burchett and Heerey JJ. The applicants need to establish that, in all the circumstances, the impugned decision is attended by sufficient doubt to warrant it being reconsidered by an appellate court, and that substantial injustice would result if leave were refused, supposing the decision to be wrong. 17 The decision is not attended by sufficient doubt to warrant it being reconsidered. The applicants' judicial review application stated the following grounds: failure to take into account relevant considerations; taking into account irrelevant considerations; exercising discretion at the behest of another; improper exercise of power; unreasonable exercise of power; and abuse of power. The gravamen of the applicants' allegations appears from their affidavits and submissions. 18 Consideration of the applicants' challenge to HREOC's decision does not suggest any appealable error in the Federal Magistrate's decision. Although the applicants now formulate their claims before HREOC as violations of their human rights, there is no doubt that they continue to attack (though by another route) the conduct of Centrelink in refusing to grant Mrs Scott a Special Benefit. For the most part, the judgments of this Court have been the subject of appeal or application for special leave to appeal. That is, they have already been the subject of examination and consideration by another court in the court hierarchy. Paragraph 20(2)(c)(iii) enables HREOC to decline to investigate a complaint where HREOC is of the opinion that the subject matter of the complaint has been adequately dealt with. HREOC may so conclude where the subject matter of the complaint has already been the subject of scrutiny by another person or body (such as a court). The applicants have been unable to point to anything in the present case that might raise an arguable ground for judicial review in respect of HREOC's decision to decline to inquire on the basis of an opinion formed in accordance with s 20(2)(c)(iii) of the HREOC Act . No error would appear in the Federal Magistrate's decision in this regard. 21 Furthermore, Nguyen supports HREOC's decision to decline to inquire on the basis of an opinion formed under s 20(2)(c)(ii). Nguyen concerned a claim that a State magistrate and the Chief Judge of the County Court of Victoria contravened s 9 of the Racial Discrimination Act 1975 (Cth) by not providing the applicant with a copy of a Community Based Order Breach Report in his first language and by not providing an interpreter. In their joint judgment, Gleeson CJ, Gaudron, McHugh, Gummow and Callinan JJ held that there was a fundamental difficulty with "the notion that either a judicial officer, or a court, may be subject to legal redress, on the ground of an alleged contravention of s 9 of the Act". There is nothing in the Act which suggests that it was the intention of the Parliament to override that immunity. There is no suggestion of error in the Federal Magistrate's decision in this regard either. 22 Mr and Mrs Scott cannot satisfy the first limb of the test for leave to appeal. That is, they have been unable to establish that, in all the circumstances, the impugned decision is attended by sufficient doubt to warrant it being reconsidered by an appellate court. 23 As we have seen, the courts have already given extensive consideration to their claims and have given judgment. The time has come for Mr and Mrs Scott to turn away from their dispute with Centrelink over the Special Benefits payment. 24 I would refuse the application for leave to appeal. Further, the applicants have not shown that they have any entitlement to the relief sought in their motion, notice of which was dated 26 November 2007. I would dismiss this motion and the applicants' motion, notice of which was dated 29 November 2007. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | leave to appeal decision of federal magistrate where federal magistrate summarily dismissed application for review of decision of the human rights and equal opportunity commission whether decision attended by sufficient doubt to warrant it being reconsidered by an appellate court human rights and equal opportunity commission act 1986 (cth), sections 20(2)(c)(ii) and 20 (2)(c)(iii) practice and procedure human rights |
The application before his Honour was an application by the Minister seeking the summary dismissal of an application for judicial review of a decision of the Migration Review Tribunal which had dismissed the application for review on the basis that it had been filed one day out of time. His Honour found in Silia v Minister for Immigration [2005] FMCA at 1723 [4] that the applicant had not filed any further evidence relating to the question of whether her application to the Tribunal was out of time. She had asserted in her amended judicial review application that it was not out of time and that the Tribunal had been mistaken. That evidence and the result of the application of the legislation is clear. This application was refused by a delegate of the first respondent on 19 October 2004. A handwritten annotation states that a leaflet providing address details about where an application for review to the MRT could be lodged was enclosed within the letter (court book, page 112). The applicant is therefore taken to have been notified of the decision on 28 October 2004. The prescribed period for applying for review was 21 calendar days from the date of notification of the Department's decision. The applicant did not file an application for review until 19 November 2004. The Minister had earlier filed a motion for summary dismissal which was amended to deal with the amended application. The ground of the amended application before his Honour had been that the Tribunal had made a jurisdictional error when interpreting the prescribed period for notification of the delegate's decision and that its reasoning was so irrational or illogical as to indicate a failure to perform its review function at all. 3 His Honour upheld the decision of the Tribunal that it lacked jurisdiction to deal with the purported review application on the ground that it was one day out of time. By reason of that his Honour summarily dismissed the application as it was incapable of founding the relief sought. An applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave. The applicant must also show that substantial injustice will result from a refusal of leave to appeal. The latest decision of which I am aware is Xie v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 172 , a decision of the Full Court given on 23 August 2005. In that decision at [15] the court noted that, as in this case, that the applicant had been informed of the applicable time limits when, in that case, he was still able to file a valid application to the Tribunal. 5 As in that case, the letter from the Department dated 19 October 2004 notifying the applicant that her application had been refused set out in clear terms the timetable which is provided by s 347 and adapted by s 494B of the Act. There does not appear to be any dispute that the applicant was on that timetable one day out of time and that therefore the Tribunal did not have jurisdiction to entertain the review. That being the case, I am not satisfied that the applicant has shown that the decision of his Honour summarily to dismiss her application for review is attended by sufficient doubt to warrant the grant of leave or, that by reason of the settled interpretation of the section, any substantial injustice would result from a refusal of leave to appeal. 6 For these reasons I refuse the application for leave to appeal. 7 The Minister has applied for an order for costs in the sum of $350. The applicant has not opposed the making of that order. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares J. | no question of principle migration law |
In each proceeding Mr Priestley is seeking statements of reasons for, and the disclosure of evidence leading to, decisions of the respondents to make no further enquiry into certain allegations made by Mr Priestley. 2 The respondents in each proceeding have filed and served notices of objections to competency. When the notices came on for hearing before Gyles J, Mr Priestley raised a constitutional issue ('the constitutional issue'). Accordingly, Gyles J did not proceed with the hearing but ordered that s 78B notices be served ( Priestley v Godwin [2008] FCA 835 (' Priestley ') at [3]). 3 Mr Priestley challenges the constitutional validity of s 31A of the Federal Court of Australia Act 1976 (Cth) ('the Act') and O 20 r 5 of the Federal Court Rules which was made in furtherance of that section. Mr Priestley's primary submission is that the judges of the Federal Court were influenced by Parliament to replace the former test in the Federal Court Rules of "no reasonable cause of action" made, he says, under the Court's inherent jurisdiction, with the statutory test contained in s 31A, thereby compromising the independence of the Court. On 14 July 2008 Mr Priestley sent a letter to my Chambers requesting that the hearing be ' adjourned for a time and date to be determined by the Federal Court '. The basis for this request was ' the commencement of proceedings in the High Court ' for an order to show cause. I declined to adjourn the hearing and the matter came before me on 16 July 2008. 5 Mr Priestley presses his application for an adjournment, on the basis that he has filed an application in the High Court. That application relates to his objection to any judge of the Federal Court, or any judge that participated in the making of O 20 r 5 of the Federal Court Rules , sitting on his matter. The application to the High Court also relates to the decision of Stone J in Priestley not to recuse herself. Mr Priestley has joined me as a defendant in the High Court proceedings, filed before the first return of these proceedings before me, on the basis of bias and/ or reasonable apprehension of bias. 6 The respondents neither consent to nor oppose the application for adjournment. Although proceedings have been filed in the High Court, no application has been made to remove this matter to the High Court. The proceedings are before me for hearing. The Court has set aside the time for that hearing and the parties are present. The respondents are represented by counsel and solicitors. I see no sufficient reason to adjourn the matter because Mr Priestley has brought an application in the High Court. That application relates, in part, to a prior aspect of these proceedings, specifically Stone J's refusal to recuse herself, and an anticipatory claim concerning me. 7 The application for an adjournment is refused. Mr Priestley points to Deane J's statement in Webb v The Queen [1994] HCA 30 ; (1994) 181 CLR 41 at 74 where his Honour noted that one of the categories of disqualification by reason of appearance of bias was ' disqualification by interest... where some direct or indirect interest in the proceedings, whether pecuniary or otherwise, gives rise to a reasonable apprehension of prejudice '. Mr Priestley submits that I have an interest in the proceedings and that I am biased as a rule making judge of the Federal Court. 10 Further, it is Mr Priestley's submission that there is no judge presently sitting on the Federal Court who can sit on his case, either because that judge was also a rule making judge with respect to the impugned rule, or because the judge has applied s 31A of the Act. Although judges have been appointed to the bench since O 20 r 5 was passed, Mr Priestley submits that these judges are also biased as they have applied s 31A of the Act in their judgments. Mr Priestley says that would give rise to a reasonable apprehension of bias on the part of that judge because he or she has therefore been influenced by Parliament. 11 Mr Priestley proffers two alternatives to myself or any other judge of the Court hearing his matter. He submits that the matter could be referred to the High Court under s 40 of the Judiciary Act 1903 (Cth) ('the Judiciary Act ') and that he could apply for a writ of prohibition and ask the High Court to issue s 78B notices in order for the High Court to examine the constitutional validity of s 31A of the Act. The other alternative Mr Priestley proffers is that Parliament appoint a new judge to the Federal Court to sit on his case. 12 I put to Mr Priestley that one solution to the jurisdictional dilemma posed by him was to dismiss his proceedings. Mr Priestley then pointed to the doctrine of necessity and stated that ' irrespective of whatever rights I have under the Judiciary Act you may, in your discretion decide, because of the doctrine of necessity, to hear these Constitutional issues '. Despite this, Mr Priestley indicates that he would object to me hearing the matter under the doctrine of necessity and that he would ask me to stand down if I proceeded on this basis. 13 I do not see that the grounds raised by Mr Priestley give rise to a reasonable apprehension of bias on my part. I do not see them as reasons to recuse myself. I reject the general proposition that the fact that a judge is a rule making judge or has applied s 31A of the Act gives rise to a reasonable apprehension of bias. Mr Priestley wishes to proceed with his application and does not wish to have it dismissed. Mr Priestley has made no application for removal to the High Court under s 40 of the Judiciary Act and continues to object to any judge of this Court hearing his matter. The only alternative Mr Priestley can proffer, except for applying for removal to the High Court which he has not done, is that Parliament appoint another judge to the Federal Court to hear his case. I do not see that as a reasonable alternative. 14 In any event, where the basis for the alleged apprehension of bias applies to all judges of the Court, the doctrine of necessity applies so that a judge of this Court has to hear the application. The doctrine of necessity permits a member of a court who has some interest in the subject matter of the litigation to sit on a case where no judge without such an interest is available to sit ( Laws v Australian Broadcasting Tribunal [1990] HCA 31 ; (1990) 170 CLR 70 per Mason CJ and Brennan J at 88). 15 Accordingly, this application for recusal is refused. 17 Mr Priestley submits that I am disqualified from hearing this matter by reason of my specific interest in O 20 r 5 of the Federal Court Rules . Mr Priestley submits that I have made comments in a judgment regarding s 31A of the Act and that I have therefore considered and applied s 31A. He submits that this is a further ground for a reasonable apprehension of bias. He says that in Rossetto v Meriton Apartments Proprietary Limited [2006] FCA 1290 I made comments to the effect that s 31A is a valid law of the Commonwealth and that this shows that there is a reasonable apprehension of bias on my part. 18 In Rossetto at [45] I referred to the test in s 31A and observed that it provides ' a more flexible and arguably less stringent test than that of Dey and General Steel', referring to Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125. In Rossetto at [46] I concluded that, by either test, I was satisfied that the cause of action in that case could not succeed and was liable to be struck out. 19 The respondents submit that this does not show reasonable apprehension of bias and that there is no basis upon which I should recuse myself. I see nothing arising from that decision to change my view as set out previously concerning the application for recusal and I reject this as a ground for reasonable apprehension of bias. He submits that I made an error of law. 21 Mr Priestley points to Ebner at 363 where Gaudron J noted that the test with respect to the appearance of bias is ' "whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question [he or she] is required to decide" ' (citing Johnson v Johnson (2000) 201 CLR 488 at [11] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ). Mr Priestley says that it is necessary for me first to test his application for my recusal in the way described by the Court in Ebner and to consider the history of the proceedings and all relevant facts and circumstances as a whole to decide whether a perception of bias has arisen. 22 The respondents submit that this submission is without any reasonable foundation and that there is no evidence to suggest that I did not apply the correct test in my refusal to recuse myself. 23 I understand this submission by Mr Priestley to be a further application for recusal on the ground of reasonable apprehension of bias and on the basis that I did not give sufficient reasons for refusing his previous applications. 24 I am fully aware of the test in Ebner and my consideration of Mr Priestley's submissions regarding a reasonable apprehension of bias was in accordance with that test. I do not consider that this ground supports a basis for me to recuse myself. Accordingly, this application for recusal is refused. He argues that I have not complied with the Guide to Judicial Conduct 2007 at paragraph 3.5(f). That paragraph provides that if a judge decides to sit, the reasons for that decision should be recorded in open court, as should the disclosure of all relevant circumstances. 26 The reasons for my decision on applications 1 and 2 have been recorded. Mr Priestley submits that the "relevant circumstances" that require disclosure are the circumstances surrounding my participation as a rule making judge and the process by which O 20 r 5 of the Federal Court Rules was passed. 27 The respondents submit that the rule exists and has been made. The respondents say that the matters that go beyond this fact, such as who actually drafted the rule, are irrelevant. 28 I do not consider that this application contains grounds that support a basis for recusal. Accordingly, this application for recusal is refused. He submits that the rights contained in s 21(1) of the Human Rights Act 2004 (ACT) ('the Human Rights Act ') apply to the Federal Court by virtue of s 79 of the Judiciary Act . He says that the Human Rights Act incorporates Article 14.1 of the International Covenant on Civil and Political Rights which states that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. Mr Priestley submits that, under s 21A of the Human Rights Act , a court must be independent and that this Court has compromised its independence by abrogating the previous rule in the Federal Court Rules and establishing O 20 r 5. 30 Mr Priestley is not suggesting that he is not getting a public hearing. His submission is that the Human Rights Act applies and raises two aspects; an independent court and also an impartial court. He submits that in refusing to recuse myself on the basis of a reasonable apprehension of bias under the common law, I have dealt only with the aspect of impartiality. He submits that there is also an issue of independence. Mr Priestley submits that the Federal Court, by which I take him to mean the Court and all of the judges of the Court, compromise the Court's and the judges' independence by having abrogated to Parliament the determination of what constitutes "no reasonable cause" in relation to a proceeding in the Federal Court. 31 The respondents submit that the Human Rights Act is irrelevant to the proceedings before me. 32 This application for recusal raises the same subject matter of the proceedings, namely the constitutionality of s 31A of the Act and O 20 r 5 of the Federal Court Rules . Insofar as it constitutes a separate ground for recusal of a judge, it would apply to all judges of the Court. Again, as Mr Priestley wishes to have the matter proceed in the Federal Court, it would seem that the doctrine of necessity applies and the case should proceed to hearing. To the extent that this ground raises the substantial question in issue in the proceedings, it can only be determined when that substantial question is determined. 33 I will consider this aspect of Mr Priestley's submissions further and will reserve judgment on this aspect. I also see no basis upon which to recuse myself from proceeding to hear the constitutional issue. I will, however, consider further Mr Priestley's submissions regarding the application of the Human Rights Act to this Court. I direct the parties to provide any further written submissions they wish to make on this point within seven days. The hearing of the constitutional issue will proceed today. The applicant's application for adjournment is refused. 2. The applicant's first, second and third applications for recusal are refused. 3. The decision on the fourth application for recusal is reserved. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | applications for recusal and adjournment applications refused practice and procedure |
These proceedings arise out of an investigation by the Australian Securities and Investment Commission ("ASIC") into a private mortgage lending business (the "mortgage business") conducted by the second respondents, a firm of solicitors ("MDRN"). In conducting the mortgage business, MDRN solicited funds from persons wishing to lend ("investors"). Investors were frequently clients of MDRN's legal practice. MDRN also identified potential borrowers. Lending to such borrowers would be for a specified project, with repayment secured by a first mortgage over realty. In the usual course of events, MDRN would provide details of proposed loans to potential investors. Each was invited to choose the borrower to whom he or she wished to lend and nominate the amount to be lent. Normally, the loan to a particular borrower would be made up of funds coming from numerous lenders. 2. The first respondent (the "trustee company") was a "practitioner nominee company" for the purposes of rules made by the Queensland Law Society (Inc) to regulate the conduct by solicitors of such mortgage businesses. In effect, the trustee company's role was to receive and advance investors' funds, to take security for repayment thereof and to realize the security if necessary. 3. The applicants deposited funds with MDRN for lending to Rivett Project Results Pty Ltd ("Project Results") for use in a development project at Yandina (the "Yandina project"). John Philip Rivett ("Mr Rivett") was a director and in effective control of Project Results. The applicants' funds were advanced as contemplated. The Yandina project failed. At a later stage, I will discuss the causes of such failure. The applicants claim to have suffered loss as a result of the respondents' conduct and sue accordingly. The first and second cross-respondents ("St Paul" and "QBE") are insurers from whom MDRN claim indemnity and/or damages in respect of any amounts payable by them to the applicants. 4. Almost all claims arise out of statements in promotional material sent by MDRN and/or the trustee company to the various applicants, in particular a document describing the proposed investment in the Yandina project (the "investment summary"). Some applicants claim to have relied on other documents to which I will refer in due course, but such reliance is generally in support of claims which also depend on the investment summary. Some applicants rely on oral statements. I will also deal with them at a later stage. The allegedly misleading conduct is primarily in connection with statements made in the investment summary. It was also said that the investment summary was misleading or deceptive in failing to disclose the proposed use by Project Results of "trade dollars". 8. The applicants' case pursuant to s 995 seems to be put in two ways. Firstly it is said that these various statements were simply misleading or deceptive or likely to mislead or deceive. The second is that the respondents represented to the applicants that they had checked the accuracy of the statements when they had not done so. In their written submissions the respondents asserted that the applicants' case was limited to the second of these approaches, but neither the pleading nor the applicants' submissions were so limited. In any event the distinction is probably of no significance, given the circumstances of this case. As to the claim against the trustee company for breach of duty it is said that it had a duty to take reasonable care not to recommend, nor to make, an imprudent investment and that it breached such duty. The respondents admit that the trustee company had a duty to take reasonable care not to recommend, or alternatively not to make, an imprudent investment. The claim against MDRN is for breach of duty as solicitors. The respondents admit that MDRN acted as solicitors for the applicants in the making and management of the loan to Project Results, and that they owed to each applicant a duty to exercise reasonable skill and care in so acting. 10. The applicants' case against both respondents is that they were negligent in recommending the loan to Project Results and in their assessment of the application for such loan. Applicants who rely primarily on the allegedly misleading statements in the investment summary are the first to nineteenth and twenty-second to thirty-ninth applicants. The twentieth and twenty-first applicants did not see the investment summary but claim to have relied on oral representations by Mr David Gill an employee of MDRN. The first to thirty-seventh applicants are described in the statement of claim as the 'initial investors' . The thirty-eighth and thirty-ninth applicants are described in the pleading as the 'subsequent investors' . As those descriptions suggest, the initial investors deposited funds for loan to Project Results at an earlier stage than did the subsequent investors. The subsequent investors invested after Project Results had defaulted in paying interest. They complain that they were not told of this and also of misrepresentation in the investment summary. 12. Some of the initial investors claim to have relied upon the combined effect of the investment summary and one or more other documents. In the statement of claim the sixth, eighth, twelfth, twenty-fourth and twenty-sixth applicants claim to have relied on a brochure issued by the respondents (the "brochure"). The eighth, twelfth, thirteenth, seventeenth, eighteenth and twenty-fourth applicants claim to have relied on a newsletter (the "autumn 1999 newsletter"). The second, eighth, twelfth, thirteenth, seventeenth, eighteenth, twenty-fourth, thirtieth and thirty-second applicants claim to have relied on another newsletter (the "winter 1999 newsletter"). However, in submissions, only the autumn 1999 newsletter was treated as relevant. At the end of the trial, counsel for the respondents indicated that they would not be contending to the contrary of certain matters. I will use the expression "not contradicted" rather than the more cumbersome "not contended to the contrary of". I understand both expressions to mean that the relevant matter is not admitted so that the applicants must still prove it to the extent that they bear the onus of proof. The terms of the documents referred to in paragraph 18, represented and contained advice that a strict process was used in evaluating each loan proposal submitted and which included loan monitoring, inquiry as to the ability to pay, the carrying out of credit checks, valuation support and a prudent LVR to ascertain that the loan/security ratio did not exceed 70%. The Applicants shall refer to the said documentation at trial for their full terms meaning and effect. The respondents indicated that they did not contradict par 19 to the extent that it applies to 'the issues raised by subparagraphs 14(b) and (i)' of the statement of claim. The respondents indicated that they did not contradict the plea in subpar 31(c)(iv), that MDRN owed a duty to each applicant 'to perform their professional services with all due care, skill and diligence. ' This concession related only to the matters alleged in subpars 14(b) and (i) to which I have already referred and is 'only in respect of [the respondents'] acting in the capacity as solicitor/lenders' . I am not quite sure what that means. The respondents did not contradict this plea to the extent that it related to the personal wealth and asset position of Project Results and Mr Rivett as pleaded in subpars 14(b) and (i). To the extent of the concession made in connection with par 32, the respondents did not contradict the plea in par 56. The respondents did not contradict this paragraph to the extent that it applied to the plea in subpars 14(b) and (i), in conjunction with par 19. To the extent that the respondents did not contradict the pleas in par 59A, they also did not contradict the pleas in par 59C. The respondents did not contradict the plea of reliance by the 'initial investors' save for the seventh and eleventh applicants. The twentieth and twenty-first applicants do not rely on the investment summary. Reliance by the subsequent investors was not conceded. 18. So in terms of those investors it will leave only the issue of the proper assessment of what, if any, damage or loss flows from that. And then we are left with these investors, you Honour - McIntyre and Bengston on the basis that it's not accepted there was reliance on the representations I've just identified in relation to financial position. Helpful as these "non-contentions" were, they did not obviate the need to address the evidence in some detail. However, at a later stage, the respondents converted their non-contentions into admissions. (See TS 2596. ) As a result most applicants are entitled to judgment for breach of s 995 and for breach of duty against both respondents, with damages remaining to be assessed. However the cases for the seventh, eleventh, twentieth, twenty-first, thirty-eighth and thirty-ninth applicants remain for consideration. Further, despite the respondents' admissions, St Paul continues to claim the right to avoid liability under a policy of insurance on the basis of fraud or dishonesty by MDRN in connection with various other statements upon which the applicants previously relied. For that reason, I have deemed it appropriate to deal with those other aspects of the case notwithstanding the respondents' admissions. Those matters are also relevant to the claim against QBE. It is, in any event, necessary that I discuss most of those issues in connection with the claims by one or other of the applicants whose claims have not been admitted. Most of the applicants claim that they relied upon various statements made in one or more of four documents, namely the brochure (ex 49); the autumn 1999 newsletter (ex 41); the winter 1999 newsletter (ex 42); and the investment summary, issued in two versions which are Parts A and B of ex 54 and will be referred to as ex 54A and ex 54B respectively. I will refer to those documents as the "key documents". In the end, only the investment summary and the autumn 1999 newsletter seem to be relevant. It is convenient to explain, at this stage, a number of common factual issues. In so doing, I will be able to explain my reasons for summarily dismissing certain aspects of the applicants' claims. The loan was to be in the amount of $1 400 000, bearing interest at 9.25 per cent per annum for twelve months. Interest for the first six months was to be pre-paid from the amount advanced. The loan was to be used in acquiring land upon which a retirement village would be constructed and in completing Stage 1 of the development, which was to be built in three stages. Stage 1 included the construction of twelve residential units and the manager's residence. The relevant land comprised lots 2 to 6 on RP 111584 (the "subject land"). The retirement village was to be located on lot 6. In the investment summary, it was claimed that the other four blocks were zoned for townhouse development and that Mr Rivett was seeking approval to construct a nursing home on them. The investment summary stated that the Yandina project would have a 'Loan to Value Ratio' (the "LVR") of 70 per cent. I understand this to mean that the amount of the loan secured on the subject land would not exceed 70 per cent of the value thereof. The amount owing would increase as the project proceeded and funds were advanced, but the value of the subject land would also increase as the project advanced. It was anticipated that a quantity surveyor would ensure that the specified LVR was observed at all times. Two issues arise out of this summary. Lot 6 was, or was to be, purchased for $400 000. Lots 2, 3, 4 and 5 were, or were to be, purchased for $398 000. However that amount was to remain unpaid, repayment being secured by a second mortgage over those lots, with priority after the mortgage to be granted in favour of the trustee company. In the above table, the debt has been "rounded off" to $400 000. Some applicants complain that they understood the table to mean that Mr Rivett and Project Results had paid $400 000 towards the project, not merely undertaken to do so. 27. The second issue concerns the sum of $238 677 to be paid towards construction costs. It seems that Mr Rivett or Project Results held a substantial quantity of "trade dollars". There are privately conducted markets on which creditors are able to trade debts owed to them. Debts which are so traded are called "trade dollars". The evidence suggests that such debts are generally traded at discounted values. It seems that Mr Rivett or Project Results intended to use trade dollars to pay for part of the development work. Some applicants say that had they known that, they would not have invested in the Yandina project. According to the investment summary, a valuation of the subject land had been obtained and was available for inspection. These are challenges to the validity of assumptions upon which it is based. The notes on p 2 of the investment summary indicate that MDRN were holding a document described as 'Director's Personal Statement of Assets and Liabilities' . Obviously, this statement of assets and liabilities was designed to demonstrate that Mr Rivett's personal guarantee was substantial. However the valuation of shareholdings in proprietary companies is notoriously problematic. The inclusion of trust interests raises questions as to the terms of such trusts, the beneficiaries and ultimate authority over distribution of income and capital. The values attributed to individual assets were allegedly unsustainable. It was a condition of the advance that six months' interest be pre-paid by Project Results, held in trust by MDRN and remitted as it fell due. The table on p 2 of the investment summary shows that such payment was to come from the advanced funds. Numerous applicants assert that they understood the investment summary to mean that Project Results or Mr Rivett would pre-pay such interest from other funds, thus increasing its, or his, overall investment in the project. In my view the investment summary clearly showed that the pre-paid interest was to come from loan funds. To the extent that any applicant thought to the contrary, he or she was mistaken, not misled. The Yandina project was to be completed in stages, but funding was being provided only for Stage 1. The LVR at this stage will be below 70 per cent. The borrower will then look to develop Stage 2 with increased borrowings of $550,000. Stage 2 will be subject to full review by [MDRN] and no commitment to fund Stage 2 has been given. Applicants have asserted that they understood this to mean that there would be a residual surplus of $400 000 at the end of Stage 1. Some asserted that the expectation of such a surplus influenced their decisions to invest. If the sentence is taken in isolation, the absence of the word "debt" after the word 'residual' leaves open such an inference. However it would be inconsistent with the rest of the paragraph. The reference to an LVR 'below 70 per cent' indicates that at the end of Stage 1 there was to be an outstanding debt. There could otherwise be no LVR. The reference in the third sentence to 'increased borrowings' clearly indicates that there would be residual outstanding borrowings. No sensible reading of the clause leads to the inference that there was to be a nett surplus of $400 000. Again, the relevant applicants may have been mistaken, but they were not misled. This statement appears under the heading 'Financial Strength' on p 3 of the investment summary. The figure is the excess of assets over liabilities in Mr Rivett's statement of assets and liabilities. I have previously mentioned some of the alleged difficulties with that document. This statement also appears under the heading 'Financial Strength' on p 3 of the investment summary. Mr Rivett's statement of assets and liabilities showed Project Results' nett asset position as $170 000, although it held other assets as trustee. It also had acquired, or was to acquire, the subject land and had, or would have, the acquisition cost as a debt. A number of passages in the investment summary deal with the pre-sale of units. Firstly, on p 2, it is said that amongst the documents held by MDRN and available for inspection were '... presale contracts of the units' . It is through this that Mr Rivett has successfully secured contracts to sell all the units in Stage 1 and has strong expressions from purchasers for the remaining two stages. In each version, under the heading 'Condition Precedent' it is said that 'Presale Contracts for at least six units to be provided prior to the first draw' . 42. In my view the reference in ex 54A to 'all units' should be understood as meaning 'all units in Stage 1' . It is clear that the project was to be built in stages and that the loan was for, and for the term of, Stage 1. On p 2 of both versions, it is said that all units in Stage 1 had been sold and that there had been expressions of interest in the remaining stages. It is made clear that investors had no commitment to fund later stages and that Stage 2 was to be 'subject to full review by MDRN' . This suggests that funding might yet have come from an MDRN scheme, implying that no other funding arrangements were in place. This suggests that there was no final commitment to build Stage 2, and so 'presales' would seem unlikely. When sale of units is discussed in ex 54A, it is clearly speaking of the units to be built in Stage 1. 45. A further difficulty arises from the requirement that there be evidence of six sales. As Stage 1 was to consist of twelve units and the manager's accommodation, the reference to evidence of 'six sales' suggests a distinction between a "sale" and a "pre-sale". I will return to this matter at a later stage. Numerous applicants claim to have inferred that MDRN had investigated the project and/or checked information and/or evaluated its prospects. Some applicants seem to have considered that MDRN, in effect, guaranteed repayment of the loan. All that is known about this aspect of the matter is that there was such an arrangement. Some applicants claim that had they known of this matter, it would have influenced their decisions to invest. There is some debate as to whether MDRN could have discovered this fact and whether they should have taken any step to do so. 48. It seems unlikely to me that an arrangement with creditors made in 1984 would have influenced a decision to invest in 1999, particularly given the apparently strong financial positions of Mr Rivett and Project Results which appeared from the investment summary. Such knowledge may have caused some applicants to be more careful, but I doubt whether it would have influenced the decisions in view of the other information in the investment summary. Some applicants complain that they were unaware that contracts for the sale of units provided for the purchase prices to be paid partly in trade dollars. They claim that had they been aware of this, they would not have invested. As indicated above, the investment summary discloses that Mr Rivett had been involved in the trade dollar market. 50. The Sunshine Coast has proven to be a very active region for trade dollar exchanges. He indicates that there is some 1200 trade members in the region. It is through this that Mr Rivett has successfully secured contracts to sell all the units in Stage 1 and has strong expressions from purchasers for the remaining two stages. The statement identified a clear link between the use of trade dollars in property and finance transactions, the number of persons engaged in the use of those trade dollars in the Sunshine Coast area and the successful completion of contracts of sale for units in Stage 1. Any reasonable reader would have inferred that at least some of the contracts would involve utilization of trade dollars. In those circumstances I do not consider that there was anything misleading or deceptive about failing to give particulars of the extent of such involvement. Applicants may have misunderstood the position, but they were not misled. I will now examine the evidence. I will first discuss the applicants' own evidence and then evidence from the respondents and Mr Blackadder, MDRN's principal employee in the mortgage business, concerning the conduct of the mortgage business and the making of the loan to Project Results. I will then discuss the other evidence relevant to the applicants' claims against the respondents. I will discuss evidence solely relevant to the cross-claims after I have disposed of the applicants' claims. Mr Eaton is a shareholder and director of the first applicant, A & D Douglas Pty Ltd. That company invested $30 000 in the Yandina project. I infer that Mr Eaton made the decision to invest those funds on behalf of that company. 55. Mr Eaton had previously invested in seven first mortgage schemes promoted by MDRN, the first in February 1998. He is an experienced businessman with a range of investments. Mr Eaton received the investment summary. I did not make any further inquiries with respect to this investment other than my consideration of the brochure. As I had invested with MDRN before and had not had any problems in the past, I felt confident in this project. In oral evidence-in-chief Mr Eaton claimed also to have relied upon the fact that the application had been approved under MDRN's private mortgage loan application assessment programme. He understood this to mean that they had 'approved the loan and had sort of looked into all the figures and it was okay' . Had he known that Mr Rivett had, in 1984, entered into an arrangement under Part X of the Bankruptcy Act 1966 (Cth) (the " Bankruptcy Act "), it would have been significant in his decision-making, and he would have 'put my money somewhere else' . As to the figure of $400 000 shown as 'Borrower Contribution' on p 2 of the investment summary, Mr Eaton said that had he known that it was the unpaid purchase price, secured by a second mortgage, it would have affected his decision to invest. Had he known that the sum of $238 677 was to be invested in trade dollars, it would similarly have affected his decision. In cross-examination, Mr Eaton said that critical matters affecting his decision to invest were the availability of mortgage security and the figures which he had been given. 59. Although I thought that Mr Eaton was a little "eager" in his assertions of reliance upon various matters, I saw no reason to doubt his honesty. In particular, I accept that he relied to some extent upon the "figures" given in the investment summary. The applicants had dealt with MDRN prior to their involvement in the Yandina project. On or about 11 June 1999 they received the investment summary. Mr Andersen was not cross-examined. 62. I have no difficulty in accepting that the various matters identified by him were material to his decision to invest. Ms Andrew and another applicant, Mr Ritorze, are partners. Both invested in the project, but as I understand it, the investments were placed separately. Ms Andrew first became aware of MDRN in their capacity as solicitors. She was introduced to their first mortgage investment schemes by Mr Ritorze who had previously invested with them. Prior to June 1999 Ms Andrew had been involved in one other first mortgage investment scheme arranged by MDRN. In June 1999 Ms Andrew received a letter from MDRN suggesting that she might like to invest $5 000 (which sum the firm was holding) with Project Results. The investment summary was included with the letter. From meetings held with him we believe him to be very credible. Ms Andrew inferred that Mr Rivett had relevant experience in property development. She relied upon the statements in the investment summary headed 'Financial Strength' on p 3 and the 'Good asset position of the director' on p 5. She understood these statements to mean that Mr Rivett personally had surplus assets of $1.79 million, which would be available for repayment of the loan if necessary, and that the company had $640 000 in assets. 66. In oral evidence she said that she also relied upon the LVR of 70 per cent, the period of the loan of twelve months and the registered mortgage. She formed the view that MDRN had thoroughly checked the information concerning Mr Rivett and Project Results' assets and the availability of a valuation from a recognized valuer. When asked, the witness indicated that she understood this statement to mean that MDRN had 'completed exhaustive thorough checks and approved a loan to Mr Rivett and that they had done absolutely thorough checks, more so than what a bank might do because they were a legal firm as well. I have great difficulty in accepting this evidence. Firstly, it sounds contrived. Secondly, it was elicited from her by inviting her to comment on particular passages in the investment summary and thus implying to her that they were important. 69. The witness said that she inferred from Mr Rivett's curriculum vitae that he was 'very well experienced in regard to his management experience, and as a barrister I thought he would have to be a very credible person. ' She said that she would not have invested with him had she known that he had previously entered into an arrangement with his creditors. She also claimed to have been influenced by the fact that he had secured contracts for the sale of all units in Stage 1. She did not realize that such contracts involved part-payment in trade dollars. She was also influenced by the reference to a 'final margin of 25.7% achievable to the borrower' and the reference to Mr Rivett's companies providing interest coverage. 70. The witness also referred to the statement 'Interest for this loan is being prepared [sic] by the borrower' under the heading 'Serviceability' on p 3 of the investment summary. She took this to mean that the borrower would be paying interest from his own funds. It seems likely to me that the word 'prepared' should be "pre-paid", however the witness seems not to have so understood it. She also relied upon Mr Rivett's director's guarantee. She said that she understood that the interest was to be paid from the borrower's own funds and not from the advance. 71. I trusted MDRN to do the right thing beyond what any other lending authority might do, because they were a legal firm ... . If I want to get advice, I go to a legal firm and get advice. Again, I cannot accept that evidence. It is, in my view, little more than a gratuitous assertion of a point of view which the witness thought would be of assistance to her case. 73. I have indicated in the course of summarizing the evidence that in at least two respects I am unwilling to act upon Ms Andrew's evidence. She appeared to be a suggestible witness and, unfortunately, counsel chose to take her through the evidence in a way which amounted, in effect, to subtle prompting. As a result she claimed to have relied upon many aspects of the document which she had not addressed in her affidavit. It may be that these matters will not be of great significance at the end of the day, but I will treat her evidence with caution. Prior to his investment in the Yandina project, Mr Ritorze had invested in other schemes fostered by MDRN. He received a letter from them dated 23 June 1999, enclosed with which was the investment summary for the Yandina project. In his oral evidence he said that he and Ms Andrew had invested in 32 different loans with MDRN. He was referred to the winter 1996 newsletter. He said that in 1999, he received similar newsletters prior to receiving the investment summary. The witness said that he took this to mean that 'they checked everything out' . He said that he had conversations with Mr Ryan (one of the second respondents) and David Gill (an employee) who 'also told me the same thing, that everybody is completely vetted. At the time we did have many investors contact us asking if a similar return would be obtained through private mortgages placed through our firm. Most law firms (including us) offer investment in private mortgages which provide a return of approximately 11 per cent per annum. This reflects a similar return paid by business borrowers to a bank. The obvious question with Private Mortgage Lending Ltd was-what was the quality of a borrower willing to pay in excess of 15 per cent per annum interest? With a such a high return to investors there was obviously a higher risk. The witness said that Mr Gill told him that MDRN's mortgages were not 'with that group' , and that 'they were safer but did not offer 15%' . 78. Counsel then invited the witness to go through the investment summary 'and if you could tell us, please, of any items that you see there that were of significance to you in your decision to invest in this loan? ' . In answer he referred to the LVR of 70 per cent, to the term of twelve months, to the interest rate, to the fact that interest had been pre-paid for six months and to the various securities. The witness attached particular significance to the guarantee because of Mr Rivett's asset backing and the fact that he had a company 'that's got assets of $640,000. ' Mr Ritorze thought that Mr Rivett's nett asset position did not include his interest in Project Results, and that its nett value could be added to Mr Rivett's for the purpose of assessing the assets available to support repayment of the loan. Mr Ritorze also said that it would have affected his decision had he known that Mr Rivett had entered into an arrangement with creditors. He said that he would not have trusted the investment. The assertion that the trading profits of Mr Rivett's company would cover interest was important to him. He understood that the first six months' interest was being retained out of the loan funds. 79. Mr Ritorze understood that MDRN were commending Mr Rivett to him as a person with the necessary experience and qualifications to undertake the project. He claimed that he relied upon them as his solicitors to give him appropriate advice. He also relied upon the fact that all units had been sold. Had he been told that six or fewer had been sold, it would only have made a slight difference to him. It would have sounded like a good deal anyway. He understood that the units were to be sold at $85 000. He did not understand that trade dollars were involved. 80. He was questioned concerning the extent to which he would have been affected by assumptions underlying the valuation. However it seemed that the valuation did not affect his decision to invest. This was because of the asset positions of Mr Rivett and Project Results. 81. In cross-examination Mr Ritorze said that he expected that MDRN would have made the assessments 'that a reasonably prudent lender would make' . He agreed that he had always understood that there was a trade-off between the degree of risk and the rate of return. He understood that there were risks of default and shortfall. However he seemed to assume that he could avoid any such risk. It is very difficult to accept this at face value. He denied that it was clear from the investment summary that the sales contracts for the units involved trade dollars. 82. Mr Ritorze is quite intelligent and has reasonable business understanding. I had difficulty with some aspects of his evidence. However, on at least two occasions, he conceded that certain aspects of the material had not been of great significance in his decision-making process. To the extent that he asserted, in his oral evidence, reliance upon aspects other than those identified in his affidavit, I conclude that the affidavit sets out those aspects which were of real importance to him. I do not accept that he relied upon the summer 1997 newsletter. It seems quite unlikely that in mid-1999, he would have referred back to specific passages in that letter in order to inform his decision. If he had done so, he would have said so in the affidavit. He did not. Mr Armstrong first established contact with MDRN after seeing an advertisement in a local newspaper promoting safe investment opportunities with a return of 9.25 per cent. In early June he contacted them by telephone to discuss the advertisement and to obtain further information. He subsequently received investment summaries for the Yandina project and for another project. He decided to invest $10 000 in the Yandina project. The financial information set out in the investment summary indicated that the investment was safe, particularly as it was to be secured by a registered mortgage. He understood that the reference to 'pre-paid interest' meant that interest was to be paid to MDRN by Mr Rivett (or, presumably, his company) from his own resources. He understood the reference to 'a residual of approximately $400,000' on p 3 of the investment summary to be to a profit after sale. As I have indicated, I do not consider the words to be capable of that interpretation. 85. At p 5 of the investment summary there are seven points upon which MDRN relied in supporting the proposal. Mr Armstrong was not cross-examined. 87. I have no difficulty in accepting his evidence at face value, subject only to the qualifications which I have set out above. Curiously, Mr Ryan, who is one of the partners in MDRN and therefore a respondent in these proceedings, is also one of the fifth applicants. He is the joint executor of the estate of Elsie Edith Backwell (deceased), an investor. Mrs Backwell died on 11 August 2001. Cheryl Lynette Backwell ("Ms Backwell") is her daughter. It seems that in 1992, Mrs Backwell received the proceeds of sale of the family farm. Over the years she invested in MDRN's private mortgage schemes. Ms Backwell recalled her mother receiving information concerning the Yandina project. Mr Ryan agreed (at TS 2115) that Mrs Backwell would have received the investment summary. He also accepted, based upon his experience of her, that she would have acted upon its contents. I have no reason to doubt any aspect of the evidence of Ms Backwell or Mr Ryan in that respect. Mr Bauer is a retired carpenter. He gave evidence but his wife did not. In 1998 they consulted MDRN concerning a legal matter. At that time Mr Bauer picked up a pamphlet entitled 'Private Mortgages' , apparently published by MDRN in connection with their private mortgage lending business. In April 1999 he went to their office to discuss such an investment. He spoke to David Gill. Mr Gill provided him with information on various projects, including an investment summary for the Yandina project. As a result Mr and Mrs Bauer invested $15 000 in the Ammbar project and $20 000 in the Yandina project. Mr Bauer found the investment summary 'very convincing' . In oral evidence Mr Bauer conceded that he may have received the investment summary by mail rather than personally from Mr Gill. 91. When referred to p 3 of the investment summary, he said that he considered Mr Rivett's asset position to be an important matter in his decision-making. He said that had he been told that Mr Rivett did not have assets totaling $1 790 000, it would have made a difference to his decision to invest. Had he known that Mr Rivett's assets were less than $100 000, he would not have invested. Similarly, with respect to the company's assets of $640 000, he said that had he would not have invested had he known that the company had no assets. He also said that his decision would have been affected had he known that Mr Rivett had previously entered into an arrangement with his creditors. 92. He was asked whether ex 1 to his affidavit (the brochure) had any relevance to his decision. He said that the whole document 'looked really good' . He said of the brochure that the section headed 'Evaluation Procedure' was of importance. This is set by the Queensland Law Society. He said that all of this looked 'very correct and very sure, like bank guarantees, secure facility insurance through the Queensland Law Foundation and so on. ' As I understand it, the use of external loan assessors had been abandoned by the time of events which are presently relevant. 94. In cross-examination Mr Bauer said that had he been told that Project Results' asset position and the asset position of Mr Rivett had not been checked by MDRN, he would not have entered into the transaction. 95. Mr Bauer's evidence concerning his reliance upon the brochure, as opposed to the investment summary was not convincing. It was prompted by the way in which his evidence was led. However such evidence was not really challenged. Mr Bengston is a retired farmer. He and his brother had first consulted MDRN as solicitors in the late 1980s. They had some experience in investment and were sole trustees of their self-managed superannuation fund. They had owned commercial property. 97. In 1998, having sold property at Redland Bay for about $3 million, they invested in one of MDRN's private mortgage investment schemes. This involved an investment of $1 million. It was successful. Thereafter, they regularly received promotional material from MDRN. In early to mid-1999 Mr Bengston and his brother decided to spread their risk. Having received repayment of a substantial part of their $1 million investment, they spread it between two new investments, one of which was the Yandina project. Curiously, Mr Bengston seems to have believed that although the finance was for Stage 1 only, they would not receive their capital back at the end of that stage. However that misapprehension seems not to matter. ' , which he understood to mean that a surplus of $400 000 would be available. Mr Bengston understood that the first six months' interest was to be repaid from borrowed funds. 99. He discussed these matters with his brother and subsequently received from Mr Gill a copy of the valuation referred to in the investment summary. In July they deposited the sum of $250 000 with MDRN for investment in the project. 100. In late 1999 Mr Bengston's brother required funds for private purposes and asked if Mr Bengston would, in effect, buy his share of the investment. Mr Bengston did so and advised MDRN. 101. In his evidence-in-chief, Mr Bengston said that he understood that Mr Rivett was 'with the land, providing his equity of the $400,000 which isn't really his money, it's already there. ' This seems to be a correct understanding of the position. He said also that he did not place much weight on Mr Rivett's financial position as he considered the project to be strong enough to stand on its own. 102. It would have made a difference had he known that only three or four units had been sold out of the first twelve. He thought that marketing would be important and that 'if you've got buyers lined up the marketing is easy, and if you haven't got buyers lined up the whole arrangement could drag on. ' His understanding of the assertion that all units had been sold was that 'somebody had put their name down on the list for a particular unit' and that there was not necessarily a contract in each case. 103. Mr Bengston said that had he been aware that pursuant to such contracts as there were, 40 per cent of the purchase prices could be paid in trade dollars, it would have affected his decision. He considers trade dollars to be a problem. In order to spend them, there must be somebody who wants to buy them. He would not have proceeded with the investment had he known that trade dollars were involved. In cross-examination it emerged that he believed that the $400 000 residual surplus at the end of Stage 1 was the value of the land rather than cash in hand. 104. I generally accept Mr Bengston's evidence. He did not understand that trade dollars were involved. From the autumn 1999 newsletter Mr Bryden learned of the "MDRN Ten Point Assessment Plan' . The investigations take place right up to settlement to ensure that the loan is going to perform and that investors are fully secured. I believed that because MDRN had made these checks, that was how they came to make the statements in relation to the net asset positions for Rivett of $1 790 000 and [Project Results] of $640 000 and the fact that Rivett's companies could provide interest coverage. I also believed that part of the background checks and credit history checks would require a clean credit history with the Credit Reference Association of Australia. (See the autumn 1999 newsletter). These statements were important in Mr Bryden's decision-making 'because it reinforced the thorough evaluation procedure that MDRN stated they followed as per the autumn 1999 newsletter, and the fact that the loan did not rely upon the valuation of the project, but could rely upon the serviceability and financial strengths of John Rivett and [Project Results] ' . 110. On or about 23 June 1999, as a result of a conversation with Mr Gill, Mr and Mrs Bryden received a letter from Mr Blackadder entitled 'A Reliable High Return Investment Opportunity for You' . 111. The contents of the letter reinforced what Gill had said to me at our meeting. However evidence of his conversations with Mr Gill was excluded from evidence. The reference to this letter therefore adds little to the Bryden case. The Brydens also received a second investment summary. Mr Bryden claimed that 'We also relied upon this information ...'. It is a little difficult to understand this statement, given that it was merely a copy of the document which they had previously seen. 113. In oral evidence Mr Bryden was asked if it would have made any difference to him had he known that the $400 000 being advanced by the borrower was the unpaid purchase price for the property and that the sum of $238 077 was to be invested by the developer in trade dollars. He said that it would have affected his decision. He was influenced by the fact that Mr Rivett had relevant experience and was a barrister. Mr Bryden thought that a barrister 'would have things well sorted' . He said that he would have been less likely to enter into the project had he known that Mr Rivett had previously made an arrangement with his creditors. He also said that the project attracted him because projects of that kind were 'very popular' and that 'being a pensioner myself, I can understand that' . The statement that such projects were 'very popular with several developers in Queensland undertaking this type of project' also influenced him. He noted that a final margin of 25.7 per cent was said to be achievable by the borrower. He thought that this showed that the developers had done a feasibility study and were certain to make money. 114. He reiterated his reliance upon the purported sale of all units in Stage 1 and upon the fact that the cost and timing of the project had been confirmed by a qualified quantity surveyor. He said that he would not have gone into the project had he known that Mr Rivett and Project Results did not have the cash reserves which he understood the investment summary to assert. He was also attracted by the idea of a first mortgage. He noted references to the project having amenities and available transport which he considered to be important to retired people. He also relied upon a statement that Alan Ludlow of Stanton Hillier Parker, the valuers, was recognized as one of the most experienced valuers in connection with this type of development. He relied upon the fact that Mr Rivett was giving a personal guarantee. He said that had he known that not all units had been sold, 'it wouldn't have been nearly as impressive ...' . He also said that if he had been told that 40 per cent of the purchase prices for the units was to be in trade dollars 'Alarm bells would have started to ring very loud' . 115. As with a number of the other witnesses, I have difficulty in accepting at face value assertions of reliance upon aspects of the documentation evinced in evidence-in-chief which were not referred to in the original affidavit. Mr Bryden seemed willing to claim reliance on every aspect. Nonetheless, his affidavit is reasonably comprehensive. For reasons which I have given elsewhere, his understanding of some aspects of the investment summary is not supported by a fair reading of it. Ms Campbell is a solicitor. She is not presently practising. She has developed various subdivisions, renovated premises and bought and sold home units. I formed the impression that she was quite experienced in property matters. She first dealt with MDRN whilst she was still in practice. She discussed investment of her own superannuation fund with Mr Ryan and subsequently received investment summaries for the Yandina project and the Ammbar project. She invested $100 000 in each. Although she had previously met Mr Rivett, she had no knowledge of his financial position and relied upon the relevant statements in the investment summary. In her oral evidence she said that had she realized that the sum of $400 000 was not a cash contribution, but represented the unpaid purchase price of the land, and that the further amount of $238 677 was to be in trade dollars, it would have affected her decision to invest. 118. Ms Campbell knew that Mr Rivett had made an arrangement with his creditors in 1984. She understood that the assertion that there were contracts over all units in Stage 1 'indicated as was fairly typical in looking for finance to be able to proceed, that he already had dedicated purchasers and also had access to a wide range of people who were interested in purchasing. ' (TS 101) This was significant to her. Ms Campbell said that had she been told that only three contracts had been entered into, and that each purchase price was payable as to 40 per cent in trade dollars, it would have affected her decision. The strong asset position of Mr Rivett and the nett asset position of Project Results were of significance to her. She said that she was surprised by the extent of Mr Rivett's assets but it was 'more significant from the point of view of looking at the nature of the contribution and the amount that would be available to secure repayment of the advance, if need be. I took that as looking at the usual - what - you know, a bank or other financier may require. That they may not need all of them to necessarily proceed, but they would certainly want evidence of the number that they felt was adequate to substantiate the development. As to the outstanding purchase price for the land, Ms Campbell agreed in cross-examination that it was at least arguable that the vendor's interest-free loan for two years was advantageous to investors. For example, the covering letter referred to the interest being pre-paid, the balance being met from trading profits and that the two-thirds of the loan repaid from the sale of units in Stage 1. Well, that gives you - you know, automatically gives rise to thinking that they would have contracts in existence for those sales. That the various conditions would have been satisfied with respect to prior to making the advance available on those sorts of things. ... It's not so much a matter of misleading on this document, it's more the events as they transpired and the difficulties which seem to compound themselves subsequently which then indicated that perhaps information or the way in which this had been presented was not strictly correct. Ms Campbell was cross-examined about ex 3 which is a questionnaire circulated by ASIC in connection with its investigation of the Yandina project. Ms Campbell responded to the survey. The completed response is ex 7. In it she denied that in investing, she relied upon certain letters. In cross-examination she said that she was referring to attachments to the letters, including the investment summary. 123. Ms Campbell was asked about par 19(c) of her affidavit in which she alleged that in the investment summary there was an assertion that MDRN 'had stated a process they followed which contained certain checks to ascertain the suitability of a loan application before offering an investment to members of public. This was a reference to p 5 of the investment summary. She was then asked: 'So you have made an assumption that they have done what you say in par (c)? ' She replied: 'Well, I think it is supported by the fact that the information which is there can only have been gathered by certainly, at some part, having gathered to support it. In re-examination the witness said that she had anticipated the use of trade dollars in the later stages of the development, that is in Stages 2 and 3. 128. Ms Campbell was basically, a straightforward witness, but her specialized knowledge and experience may have led her to reconstruct, to some extent, the inferences which she drew from the investment summary. As I have previously observed with respect to the question of the $400 000 "residual", I cannot accept that any fair reading of the passage could lead to her view as to its meaning. Whilst I think that she was an honest witness, it is necessary to approach her evidence with care. Ms Carson saw an advertisement for MDRN's business in a local newspaper and telephoned for further information. She and her husband subsequently received a letter from them headed 'A Reliable High Return Investment Opportunity for You' , together with two "flyers" headed 'Meet the Team Looking After You at MDRN Private Mortgages' and 'Introducing your Investment Experts MDRN Private Mortgages' . They subsequently deposited $40 000 with MDRN without having, at that stage, identified any particular investment. Subsequently, they received investment summaries for the Ammbar project and the Yandina project. They decided to invest $20 000 in the Ammbar project and $10 000 in the Yandina project. The remaining $10 000 was invested elsewhere. In deciding to invest in the Yandina project, they relied upon the letter of 22 June 1999 with which the investment summary was enclosed, and the investment summary itself. They claim also to have believed that MDRN employed strict loan assessment procedures and that Project Results, Mr Rivett and the Yandina project had qualified according to those procedures. 131. In her oral evidence Ms Carson claimed that the pre-payment of six months' interest was 'notable' . This meant that 'Mr Rivett had actually paid the first six months' interest upfront, so that we knew that that first six months' interest was solid. ' She said that she probably would not have been 'comfortable' had she known that the interest was to be paid out of the advance. 132. It seems that this explanation came not from the investment summary, but from one of the other documents exhibited to her affidavit. Ms Carson, understood that there was 'a definite contract on the twelve units' . (TS 463) Had she been told that only three or six had been sold it would have affected her decision. She would have taken more time to make the decision. Had she known that 40 per cent of each purchase price was to be paid in trade dollars, she might not have gone ahead. Ms Carson took the reference to Mr Rivett's assets to mean that he had a nett surplus of $1.79 million. This was important to her because the amount of the loan was only $1.4 million and so 'he had enough assets to cover that' . Had she been told that Mr Rivett had previously entered into an arrangement with his creditors, she would not have considered him quite as credible. It was important that Mr Rivett was an experienced and well-qualified director with a good asset position, as was the LVR of 70 per cent and pre-sale of all units. All of these matters 'helped us to make the decision' . 134. Ms Carson said in cross-examination that she understood that twelve units were subject to existing contracts. In that context, she was unable to explain her understanding of the requirement that six contracts be produced prior to settlement of the loan. Ms Carson did not understand that part of the purchase price for each unit which had been sold might be paid in trade dollars. As to Mr Rivett's asset position, Ms Carson expected that MDRN would review the information in the way that 'a lender acting reasonably and prudently' would do. She said that she understood that a prudent lender would 'just examine everything and, I suppose, ensure that there was enough financial security to cover the loans, if there were some problem. Ms Carson was another witness who seemed to be willing to assert reliance upon virtually any aspect of the documents which might favour her case. To the extent that such evidence was prompted in oral evidence-in-chief, but not reflected in the earlier affidavit, I am inclined to give it little weight. Mr McIntyre is a solicitor who, in the course of his practice, was appointed executor of Mr Cheney's will. He is no longer in private practice. His firm merged with MDRN. He was employed as a senior associate until he resigned in May 2000. He continues as executor of the estate. He had previously invested estate moneys in mortgage schemes fostered by MDRN. On 30 June 1999 he received a letter from them, advising of investment opportunities in the Ammbar project and the Yandina project. The letter was accompanied by relevant investment summaries. Although I did not seek to inspect these documents, I relied upon MDRN's assessment processes to verify the worthiness of such documents. The fact the documents existed and were being made available to investors portrayed an impression to me of openness and quality in the documents. ... I took comfort from the fact that such a system existed and this was important to me. I did not know that any other mortgages might have been in existence, or that there may not have been any substance to the mortgage, debenture or guarantee. 138. Mr McIntyre said that the aspects of the investment summary which particularly influenced him were the LVR of 70 per cent, the security being offered, (including the director's guarantee), the borrower's contribution and the fact that the project had been subjected to MDRN's assessment processes. Had he been told that Mr Rivett's assets totalled something less than $100 000, 'the figures wouldn't stack up' . Had he been told that the borrower's contribution of $400 000 was by way of second mortgage and that the $238 677 was to be contributed in trade dollars, he would not have invested. 139. In cross-examination Mr McIntyre said that he considered a satisfactory LVR for his purposes to be 70 or 80 per cent. He also said that he looked for projects in which the developers 'were prepared to place their own net assets on the line as security' . For that reason the various securities over assets other than the subject land were important aspects in his decision-making. He sought to ensure that, should the project fail, sufficient assets would be available to meet any shortfall, even in the event of a forced sale. He understood that the assets of Mr Rivett and of Project Results, other than the subject land, might be disposed of prior to any default and would then not be available in the event of such failure. 140. Mr McIntyre accepted that the return on investment of this kind varied with the risk, and that a higher return rate reflected a higher risk. He agreed that MDRN had not guaranteed the information provided to them by Mr Rivett. However he expected that they would have assessed the information in the way that a 'reasonably prudent lender' would. In the case of Mr Rivett's assets, he understood MDRN to be telling him that 'We have looked at it and we think his assets evidence this' . He understood that the obligation of the borrower was to contribute the land. 141. In cross-examination Mr McIntyre agreed that his assertion in par 32 of his affidavit was incorrect. That assertion was that he understood that the pre-paid interest was to come from some source other than the advanced funds. He said he could not remember what his understanding was at the time. In par 35 of his affidavit he asserted that he took comfort from the fact that the trading profits of Mr Rivett's companies were to be available to provide interest coverage. In cross-examination it was pointed out to him that it was anticipated that Stage 1 would be completed within six months and that therefore all of the interest would have been pre-paid. In light of that he agreed that the statement referred to in par 35 was not of great importance to him at the time. 142. He also agreed that his assertion that the reference to a 'residual' of $400 000 was to a surplus in that amount was probably incorrect. He agreed that the estimated return from unit sales was not sufficient to lead to a $400 000 surplus at the end of Stage 1. He also agreed that the covering letter which accompanied the investment summary made it clear that the six months' pre-paid interest was to come from the advance, and that a passage in that document also supported the notion of a residual debt as opposed to a surplus. He understood that the value of the assets of Project Results were reflected in the value of Mr Rivett's assets. 143. Mr McIntyre agreed that it was 'very unlikely' that there would be 'unconditional contracts of sale in respect of a development that hasn't even started' . Such a contract would typically contain a condition that the building be built and other conditions. He did not believe, at the time of entering into the investment, that there were unconditional contracts of sale. He agreed that the first sentence in par 43 of his affidavit was incorrect. He suggested that the paragraph had been drafted by somebody else and signed by him without sufficient care. This is a matter of some concern. Similar concerns arise from the cross-examination of other witnesses. 144. Mr McIntyre said that had he been told that MDRN had not checked the asset positions of Project Results and Mr Rivett, he would have asked them to do so. Had he been told that Project Results had no nett assets, he would have made further inquiries. Had he been told that 40 per cent of the purchase price of each unit which had been sold was to be paid in trade dollars, he would also have inquired further. 145. Mr McIntyre's answers in cross-examination suggest that some aspects of his affidavit should be treated with great care. Prior to investing in the Yandina project Mr and Mrs Cladingboel had invested in other private mortgage schemes fostered by MDRN. In the autumn 1999 newsletter, reference was made to the assessment of loan applications using a ten point assessment plan. Mr Cladingboel inferred that MDRN performed detailed investigations in assessing loan applications. He relied upon their 'honesty and integrity in performing the checks ...' . 148. In the winter 1999 newsletter it was said that 'Loans Manager Dale Blackadder conducts full checks for every prospective borrower and no loan is approved unless it meets our Ten Point Assessment Plan ...' . 149. On or about 2 July 1999 Mr and Mrs Cladingboel received the investment summary. The valuer reports positively of the overall project. In oral evidence-in-chief, Mr Cladingboel said that had he known that Mr Rivett had entered into an arrangement with his creditors, he would not have invested. He considered the personal guarantee to be 'the one thing that really concerned me in this whole operation' . He understood that this was a matter that National Mortgage and Development would have checked on behalf of MDRN and the investors. 151. In cross-examination it emerged that Mr Cladingboel understood that there were to be two 'external checks', one by National Mortgage and Investment Ltd and the other by Credit Reference Australia ("CRA") as well as 'internal' checks by MDRN. That case has not been pleaded. In the end it seems that his primary complaint is that he was 'misled as to the status of John Rivett, his assets, his contribution to the project and the safety of the investment. ' Mr Cladingboel agreed that he understood, concerning the LVR of 70 per cent, that the loan was not to exceed 70 per cent of the value of the completed development. He also agreed that he understood that only six contracts were to be available prior to the advance. 152. The witness was cross-examined concerning the Christmas 1998 newsletter. He had no recollection of seeing it, although he could not deny that he had received it. In the end I am not sure that it adds anything to the matter. In cross-examination he conceded that he had probably misunderstood the reference to a 'residual' of $400 000. He said that Mr Rivett's experience in construction was of less significance to him than other matters. Mr Cladingboel was unable to explain how he came to assert in his affidavit that the $400 000 'residual' was a residual cash balance rather than a residual debt. He attributed it to clerical error. 153. Although there were aspects of Mr Cladingboel's evidence which appeared to be tailored to improve his case, he was also willing to concede that some matters were of less significance to him than others and to concede the error concerning his understanding of the $400 000 residual. All in all, I accept him as a substantially reliable witness. Mr Duncan is a retired accountant. Although he initially invested jointly with his wife, the investment was subsequently transferred to the Duncan Family Superannuation Fund. In the autumn 1999 newsletter, there was reference to the ten point assessment plan from which, as Mr Duncan claimed, he and his wife took comfort. They took it to be 'a thorough evaluation of an applicant's background and credit history via character and credit checks; the financial strength and serviceability of a loan by inspecting balance sheets, profit and loss statements, bank statements and other basic financial records. ' The matters of particular importance to Mr Duncan were ability of an applicant to service a loan and his or her financial strength or personal wealth. 155. On or about 30 June 1999, they received a letter accompanied by a copy of the investment summary. To some extent, the Duncans seem to have derived some information from the letter rather than the investment summary. Mr Duncan considered that the ten point plan was 'the minimum that an investor could rely on a prudent lender performing' . He understood that MDRN had followed this process. In cross-examination he said that had he known that Mr Rivett had entered into an arrangement with his creditors in 1984, it may not have affected his decision in view of the passage of time. Had he been told that only three units had been sold, and that in each case, up to 40 per cent of the purchase price was payable in trade dollars, it would have influenced his decision. If there were only three contracts, it would have indicated that there was not a great demand for the product. If payments were made in trade dollars 'it would be difficult to see how the investors such as myself were actually going to be repaid. ' He also said that the capacity of Mr Rivett's companies to provide interest from trading profits was important to him because, in the event that the project ran over time, they would be able to pay any interest in excess of the six months' interest paid in advance. Although the investment was in the name of Ms Hamaty, all decisions were made in conjunction with her husband, John Hamaty, who also swore an affidavit. Ms Hamaty had read his affidavit and agreed that the matters which he described as important in deciding to invest in the Yandina project were important to her and that the affidavit was otherwise accurate. 159. Mr Hamaty said that his first dealings with the firm were in 1998 when his accountant recommended first mortgage investments as an investment option and referred him to MDRN. His first contact was with Mr Ryan. Subsequent contact was with Mr Gill. On one occasion he attended an investment seminar conducted by MDRN at which Messrs Ryan, McCarthy and Durie were present. He invested in numerous projects apart from the Yandina project and spoke regularly to Mr Gill. If a particular investment attracted him he would let Mr Gill know. Mr Hamaty first heard of the Yandina project in a letter from Mr Gill dated 15 June 1999, enclosing an investment summary. There was then reference to particulars of the loan, including the LVR of 70 per cent. 161. He said that on numerous occasions 'both in respect to the Yandina Greens Project and others' Mr Gill told him that all applications were 'evaluated very carefully, and that the valuers used were local, registered and well respected. ' He said that the LVR of 70 per cent was also very important. 163. On or about 24 June 1999 he instructed the firm to invest $12 000 in the Yandina project. He did this on behalf of his wife. Dr Holmes is the principal trustee of the Meltzner Trust, a discretionary family trust. The trust invests from time to time. Dr Holmes is assisted in investment decisions by his daughter, Ingrid, one of the beneficiaries. The Meltzner Trust placed funds in twelve investment projects with MDRN, of which seven were successful. 165. In or about June 1999 Dr Holmes received from his daughter a copy of an investment summary for the Yandina project. He relied upon it in deciding to invest $10 000 in the project. Dr Holmes said when he decided to invest he had not heard of trade dollars. Had he known that trade dollars were being used in the contracts for the sale of units, he would not have invested. 167. In or about July 1999 the trust invested $10 000 in the project. 168. In cross-examination Dr Holmes demonstrated that he understood that, notwithstanding the content of his affidavit, the reference to a 'residual' of $400 000 must have been to a debt. He said that his understanding of the various statements concerning pre-sale of units was that there were contracts for the sale of all of the units but that it was only necessary that contracts be sighted for six of them prior to the advance being made. He understood that Mr Rivett controlled a company called Barter Pacific Property and Finance which specialized in property and finance using trade dollars. He seems also to have been aware of the concept of trade dollars, despite his statement to the contrary in his affidavit. He had not understood that they were being used in connection with the Yandina project. 169. Had he been told that MDRN had not checked the asset position of Project Results or Mr Rivett or the statements made by Mr Rivett about such asset positions, he 'would have been very reluctant to go ahead ... in those circumstances' . Had he been told that there had been no inquiries into the trading profits of the other companies, which profits were said to be available to cover interest payments. He would have been most concerned and reluctant to go ahead. 170. These last matters were extracted by counsel for the first cross-respondent. To the extent that they may indicate that Dr Holmes relied upon statements other than those identified in his affidavit, I would be reluctant to act upon such evidence. He was asked by counsel for the second cross-respondent whether his decision would have been affected had he not been told anything concerning the asset position of Mr Rivett or his company. He said that he would have been reluctant to go ahead. He also said that had there been no statement 'about how the interest coverage might be covered' , he would have been reluctant to invest. He would have needed information concerning the cash flow and how interest was to be paid. He relied on the standing of MDRN and the fact that they employed an independent assessor to look at things. A combination of things made him invest. 171. Again, I am unwilling to give any great emphasis to Dr Holmes' evidence, to the extent that goes beyond the content of his affidavit. Dr Howden had dealt with MDRN for many years prior to his involvement in the Yandina project. He often received promotional material from them. When he received such material he would read it. If he was interested, he would telephone MDRN and ask for further information which would come in the form of an investment summary. He received an investment summary for the Yandina project. He had a set of criteria which had to be met before he would invest in a project. The suggestion that Dr Howden acted on MDRN's advice is curious. It seems inconsistent to have a list of criteria and then abdicate the decision-making process to another. He considered that the Yandina project satisfied his criteria and decided to invest $20 000. 174. Dr Howden was not cross-examined. Ms Hughes is a retired book-keeper. She was first introduced to MDRN by a friend whose husband was a conveyancing clerk with them. In July 1997 she retained the firm for a conveyancing matter. Thereafter, in connection with mortgage investments, she spoke to Mr Gill. She first invested in 1997. In mid-1999 capital from that investment was returned. Mr Gill advised her to consider spreading her risk amongst different investments. She had just received some promotional material concerning various investments on offer by MDRN. She decided to split the amount of $25 000 between projects. 176. She received the investment summary for the Yandina project under cover of a letter dated 19 July 1999. She understood that Project Results and Mr Rivett had together invested a total of $638 677 in Australian currency in the project, showing that Mr Rivett was heavily involved in it, and that it offered security for that reason. She understood from the statement that the 'Director's personal statement of Asset and Liabilities' was available on request, that the firm had verified the contents of the document, and that any assertion as to Mr Rivett's financial position had been carefully checked and verified by the firm. The summary of Mr Rivett's background was also a source of comfort as it showed that he was experienced in investments of this kind. She understood that all twelve units in Stage 1 had been sold and that this was further evidence of the soundness of the investment, showing that there was a high demand for the units. That interest was being pre-paid indicated that Mr Rivett was paying it from his own resources, again evidencing his financial strength. 177. Ms Hughes understood that the trading profits from Mr Rivett's companies would be available to provide interest coverage. This showed there was another source of funds which could sustain the project in the event of financial trouble. She assumed that the statements concerning Mr Rivett's nett assets and those of Project Results had been verified by the firm. She also understood that when the summary spoke of units having been sold for $85 000, this meant $85 000 in cash. She had not at that stage heard of trade dollars. 178. In oral evidence-in-chief she was asked to identify the aspects of the investment summary which were influential in her decision to invest. She said that relevant factors were location, Mr Rivett's personal details and the fact that he was putting money into the project as well as borrowing. The details about Mr Rivett which influenced her were the fact that he had gone to university, was a lawyer, had worked for different firms and been involved in property investment, particularly in the Mooloolaba area. She assumed that he was of good repute and had been investigated by MDRN. She said that it would have influenced her decision had she known that his assets and those of Project Results were significantly less than the sums which appeared in the investment summary. Had she known that he had previously entered into an arrangement with his creditors, she would not have considered the investment. It was important to her that the units had been sold. It meant that money was going to be available to pay back the investment. She said that if she had been told that only three or four of the units had been sold, it would have influenced her decision. She would not have entered into the agreement. 179. In cross-examination Ms Hughes said that she had not understood that the advance payment of interest was to be from loan funds. She understood that evidence of the sale of six units was to be provided prior to the advance being made. At the relevant time she had no understanding of trade dollars and did not associate the use of trade dollars with the contracts for sale of the units. Trade dollars were explained to her in the course of evidence. She would not have invested had she known that part of the purchase price of each unit might be paid in trade dollars. Similarly, she would not have invested in the Yandina project had she known that the financial contribution to be made by Project Results towards the development was to be in trade dollars. 180. In re-examination she said that she probably had not thought about the source of the pre-payment of the interest. Mr Mohajerani is a director of Infotec MS Pty Ltd and seems to have made the decision to invest in the Yandina project. He first learned of MDRN from an advertisement in a Sydney newspaper and subsequently received brochures explaining the services which they offered in connection with investments. Between March 1998 and June 2001 he participated in a number of their first-mortgage investment schemes. On 16 March 1998 he invested $10 000 in the Ammbar project. In December 1998 he invested $10 000 in another project, Pacific Vista. Both were successful. On 12 November 1998 he lent $10 000 to a company called Blue Haven Estate. In 1999 Mr Mohajerani received the autumn 1999 newsletter which contained an article explaining how applications for mortgage loans were assessed by MDRN. Several months later he received the winter 1999 newsletter which described the security offered by a private mortgage investment organized through MDRN. In or about June 1999 he received the investment summary. 182. He noted the interest rate (which was better than that offered by banks) and the LVR of 70 per cent. He also noted that the loan was secured by a mortgage over five vacant allotments and a charge over the assets of Project Results. He formed the impression that the loan was 'secure' . He noted the director's guarantee and that the amount of the loan was 'not very big for this type of project and therefore could be managed' . He lived in Sydney and was not in a position to verify the information in the prospectus. He trusted MDRN to do that for him. On 13 July 1999 he telephoned Mr Gill and told him that Infotec would invest $10 000 in the Yandina project. Mr Mohajerani was not cross-examined. Mr Kennedy became aware of MDRN in about 1998 when he passed its office in Old Cleveland Road, Capalaba and noticed a sign offering 10 per cent interest on investments. He spoke to David Gill who gave him some printed material. This included investment summaries for a project at Carindale and a caravan park at Mt Isa. Mr Kennedy understood from this material that loan applications were approved by an external entity. He was impressed by the fact that investments were checked by this 'external entity' . Thereafter, he and his wife discussed the possibility of investing with MDRN. At about this time they also saw newspaper advertisements for such investments. In mid-1998 they decided to invest $25 000 in the Carindale project and $25 000 in the Mt Isa project. The Carindale advance was repaid within ten months and by June 1999, the amount of $25 000 was in MDRN's trust account. Mr Kennedy then spoke to Mr Gill about re-investing the money. He received two further investment summaries, one of which was for the Yandina project and the other, for a development at Yeppoon. Mr Kennedy formed the view that the Yandina project was 'a winner' . He was particularly impressed by the fact that all units had been sold. Mr Kennedy understood this to mean that all of the units had been sold 'off the plan' for $85 000. He assumed that contracts had been entered into and deposits paid. He assumed that such payments were in Australian money. 185. He also noted the statement 'This proposal is submitted for your consideration and supported on the basis of ... Pre-sale of all units in place (with clear evidence to be provided of at least 6 sales prior to the first draw-down). ' Mr Kennedy understood this statement to imply that all units had been pre-sold. He thought that the words in brackets concerning evidence of six sales was 'a safeguard in case some contracts had fallen over' . 186. He was also influenced by the fact that Mr Rivett appeared to be a person of substance. From meetings held with him we believe him to be very credible. The applicant company also shows a net asset position of $640 000.00. Mr Kennedy understood this to mean that Mr Rivett had personal assets totaling $1.79 million and that the company had further assets totalling $640 000. 189. Certain parts of the summary were highlighted in red when it was given to Mr Kennedy. They also impressed him. The marked parts referred to the fact that six months' interest would be paid in advance and that the trading profits from Mr Rivett's companies could provide interest coverage. Mr Kennedy understood that Project Results would pay the first six months' interest to MDRN which would hold the money and pay it to investors when interest payments fell due. He did not understand that the money was to be paid from funds to be advanced. 190. Mr Kennedy was impressed by the reference to the valuer, Mr Ludlow '... who is recognised as one of the most experienced valuer of this type of development in Queensland' . He also noted that, 'The valuer reports positively of the overall project. ' He was also impressed by the statement that 'Valuation from Stanton Hillier Parker to be confirmed as current and addressed to Lawyers Private Mortgages Pty Ltd for mortgage security purposes. ' He understood this to mean that MDRN had commissioned independent valuers who had checked out the value of the site and ensured that there was sufficient security to cover the loan. 191. He was impressed by the proposition that a quantity surveyor acceptable to the trustee company was to confirm overall project costs and authorize progress payments on a 'cost to complete basis' . He understood this to mean that there was an independent person who would check that everything was above board. He also considered that the LVR of 70 per cent meant that 'the land value would cover the loan should the project go belly-up' . He claimed that he had been led to believe this by MDRN. 192. He referred to the reference to a 'residual' of $400 000 and said that he understood it to mean that at the end of Stage 1, there would be enough made from the sale of units to repay the loan, and that Mr Rivett would have $400 000 in hand. He would then approach MDRN seeking a further loan of $550 000 to build Stage 2. Mr Kennedy believed that MDRN had assessed Mr Rivett's proposal and concluded that there would be sufficient profit from Stage 1 to repay the loan. The investment summary gave him the impression that MDRN had checked that all assertions and statements contained in it were true and accurate. In oral evidence-in-chief Mr Kennedy said that he was particularly impressed by the description of Mr Rivett and his assets. He was also impressed by the fact that all of the units had been pre-sold, that a quantity surveyor was to be appointed and that MDRN had commissioned independent valuers. He said that had he been told that Mr Rivett's assets amounted to less than $100 000, he would not have considered investing. Had he been told that only three or four of the units had been pre-sold, it may not have deterred him from investing, but he would have given it a lot of thought. Had he been told that pursuant to the contracts of sale which were in place, 40 per cent of each purchase price was to be paid in trade dollars, he would not have considered the investment. 194. In cross-examination he agreed that the requirement was that there be pre-sales of six units in Stage 1. He conceded that the passage concerning Mr Rivett's association with the trade dollar industry may indirectly have indicated the possibility of trade dollars being used in the sale of units. He had not taken much notice of it. 195. Although he claimed in his affidavit that he had not understood that the pre-payment of interest was to come out of the advance, he conceded in cross-examination that the wording of the brochure suggested as much. He also conceded that the reference to the 'residual' of $400 000, in conjunction with the reference to an LVR, made it clear that the reference was to a debt of $400 000. In cross-examination he also said that he had relied completely on the fact that MDRN had checked everything out, including the borrower's assets. Michael Colin Mellish and Wade Richard Mellish are brothers. MDRN acted as solicitors for the entities which conducted family businesses and handled their conveyancing. Such entities frequently held large sums of money in MDRN's trust account. In 1994 Mr Ryan approached Colin Mellish, the father of Michael and Wade, suggesting that he invest funds with MDRN. Subsequently Mr Gill made a similar suggestion to Michael Mellish. Such an investment would earn interest 'several percentage points higher than what banks would provide' . Mr Mellish understood that the private mortgage business was a 'division' of MDRN. He made several investments but cannot recall the amounts or details. Other members of his family and entities conducting family businesses also made investments. Not infrequently, members of the family were asked to 'prop up' a loan by investing in a particular project. Once MDRN had sufficient other investors in that project, the Mellish investments would be repaid. 197. In or about July 1999 Mr Gill telephoned with relation to the Yandina project. Mr Mellish did not see an investment summary but relied upon '... the due diligence that MDRN had undertaken in assessing the merits of the proposed loan and the general comments David Gill made regarding the loan. ' He recalls Mr Gill telling him that there was sufficient security over the assets of the borrower and guarantor and that the loan was 'a good one' . As a result Mr Mellish invested $15 000 in the Yandina development. In cross-examination he said that he relied upon the recommendation made by Mr Gill and also 'from all the other investments which were undertaken with them' . Had he been told that the asset position of Project Results and Mr Rivett had not been checked by MDRN, he would not have invested. Mr Wade Mellish first invested with MDRN in late 1998. Until early 2000, he and his family had a close working relationship with them. Mr Gill would frequently ring and ask either Mr Colin Mellish or Mr Wade Mellish to fill the balance of a loan where MDRN was short of investors. They would then fill the loan fund until there were enough investors to take over such investments. They only remained in such projects for a couple of months. In July 1999 Mr Gill telephoned concerning the Yandina project. Mr Wade Mellish agreed to invest $25 000. By this stage the family had invested in perhaps twenty such mortgages. He did not receive an investment summary. He relied on the firm's 'word that they had done the research and we relied on word of mouth, mainly by David Gill. Mr Mellish recalled Mr Gill saying words to the effect that the development was a retirement village with a great site and a great population and that it 'stacks up' . He said that there was a good valuation and that Mr Rivett was a solicitor on the coast with '... "heaps of money and heaps of property". There was a director's guarantee and security over assets. It was a "good loan". In cross-examination Mr Mellish said that Mr Gill told him that the project involved a retirement village in Yandina and that 'We've done all the checks. We've gone through the proposal that's been put to us. We've verified it with the information. It's short term. We can't get you anything else, but this is the facts of what's in the summary document. MDRN has investigated the loan, further looked through the credentials, and it's a good proposition. It's a good proposition for you. Mr Mellish's version in cross-examination of the assurances given him by Mr Gill was not particularly persuasive, especially when taken in conjunction with his evidence that family investments were usually short-term and designed to meet shortfalls in subscriptions to particular projects. It seemed to be a case of reconstruction. I accept that Mr Gill indicated that the proposal was "good", and that there was security. I am otherwise unpersuaded by Mr Wade Mellish's evidence. Given that his family's investments were usually very short-term, it is not surprising that he should have invested with little information and less consideration. Mr Mitchell and his wife are the trustees of the Mitchell Retirement Fund. Their first contact with MDRN was in 1999 when they saw an advertisement in a local newspaper. Mr and Mrs Mitchell spoke to Mr Gill and Mr Ryan, discussing MDRN's investment schemes. They received documents, including investment summaries, which they took home. As a result of their study of those documents they invested money in two investments. In June 1999 they received a letter concerning the Yandina project. Accompanying the letter was an investment summary. Mr Mitchell claims to have relied upon the 'truthfulness and accuracy of the statements in the summary' . This provided him with a level of comfort in his later decision to invest in the project. 203. In particular Mr Mitchell believed that there was an LVR of 70 per cent and that this represented an acceptable level of security. He also understood that Mr Rivett was investing $400 000 in Australian dollars from his own money and a further sum of $238 677 to fund the construction of Stage 1. Mr Mitchell had never heard of trade dollars. They were not mentioned by MDRN or its representative. 204. Mr Mitchell believed that there was a valuation and statement of Mr Rivett's assets which had been verified by MDRN. He had no reason to doubt MDRN's procedures. He took comfort from Mr Rivett's experience in similar types of development. He understood that all twelve units and the manager's accommodation had been sold. He also understood that the interest for the loan was '... capitalised within the loan, and that Rivett was not funding it from his own sources' . There was to be a surplus of $400 000 at the end of Stage 1. Mr Rivett's companies would provide a source of funds which could service the loan. I believed this due to the use of the word "also" in the description on page 3 [of the investment summary] meant that [Project Results] also shows a nett asset position of $640,000. He understood that the units had been sold for $85 000, that there were contracts in existence for all of them and that they had been sold for Australian dollars. Subsequently, at the MDRN offices, they saw further material relating to the Yandina project. 206. Concerning pre-sale of units, Mr Mitchell understood that Mr Rivett had said that all had been sold, and that evidence of sale of six units was to be produced prior to the advance of funds. He agreed that the paragraphs relating to Mr Rivett's involvement with Barter Pacific Property and Finance and trade dollars indicated that trade dollars would be involved in the purchase prices of the units. He did not consider that at the time. 207. I trusted MDRN's analysis of these documents and had no reason to doubt MDRN's processes. The basis of such belief is not clear. He seems to have concluded that it was "their job". He was asked about the effect upon his decision had he known that MDRN had not checked the assets of Project Results or Mr Rivett. He said that he would have walked away. Had he been told that the assets of Projects Results and Mr Rivett were less than $100 000 he would not have had anything to do with the project. Had he known that the contribution of $238 677 towards construction costs was to be partly in trade dollars, he would not have gone into the investment. He had no idea what a trade dollar was. Had he known that part of the purchase price of each unit was to be paid in trade dollars he would 'have asked a lot of questions' . Throughout the 1990s the Mohrs had made investments through another firm of solicitors. In the first half of 1999 they saw an advertisement lodged by MDRN, indicating that they did 'mortgage investment type of work' . She rang MDRN to ask for particulars and subsequently received information concerning investments, including an investment summary for the Yandina project. She and her husband decided to invest, acting upon information contained in that document. Ms Mohr understood that the project involved retirement units. She felt that this was a good project. She read about Mr Rivett's assets and thought that the amounts were substantial and would secure the loan. She also noted the LVR ratio of 70 per cent and that the interest rate was acceptable. She believed that MDRN had 'done their homework' and that the statements in the investment summary were true. 210. In her oral evidence-in-chief she said that she was principally influenced by the fact that the project was for pensioners, by Mr Rivett's curriculum vitae and his asset position. She thought that a firm dealing with such investments would check out the viability of the project and structure of the loan. She was asked what her attitude would have been had she known that Mr Rivett and Project Results had assets of less than $100 000. She said that it would have influenced her decision. She understood that MDRN had approved the loan and the structure of the loan and that they thought it was viable. She was also asked whether, if she had been told that the asset positions of Project Results and Mr Rivett had not been checked, it would have affected her decision. She said that she probably would not have become involved. Mrs Morrison first had contact with MDRN in 1981 in her capacity as a receptionist for a firm of accountants. Her sister worked with MDRN, and her parents had invested with them. In late 1997 or early 1998 Mr and Mrs Morrison were looking for a good return on their superannuation fund. In late 1998 Mr Morrison saw advertisements in a local newspaper and, as a result of those advertisements, telephoned MDRN and spoke to Mr Gill. They later met him and were given a booklet which they read. They relied upon the experience and processes of MDRN in assessing and approving the investments which they offered to the public. Sometime in 1998 they invested $10 000 in the Pacific Vista scheme and thereafter received promotional material in the mail on a periodic basis. In 1998 they invested in a project at Laguna Beach and in June 1999, in the Yandina project. They first became aware of it on 22 June 1999 as a result of a letter received from MDRN. Enclosed with the letter was an investment summary which Mr Morrison read. He and his wife discussed the matter and, relying upon a number of statements made in the investment summary, decided to invest. 213. Mr Morrison believed that investment in a retirement village was a sound concept 'as there was no similar pensioner accommodation in the Nambour/Yandina area. ' He perceived Mr Rivett to be a man with very good business credentials, knowledgeable in this type of development and of considerable means. He was impressed by the list of businesses which Mr Rivett had managed, the property developments he had undertaken, the positions he had held and that he had a law degree and had practiced. 214. Mr Morrison noted that valuations had been carried out. He believed that MDRN had conducted proper checks to ensure the valuation was conducted properly and that it provided the true value of the project, and therefore a level of security in case of financial difficulties with the loan. He believed that Mr Rivett was a person of considerable wealth, that he had an excess of assets over liabilities of $1 790 000 and that in addition, Project Results had an excess of assets over liabilities of $640 000. As to the question of a "residual" of $400 000, he understood this to mean that there would be a surplus of $400 000 after completion of Stage 1. He was impressed with the investment summary and believed that the firm had checked out the proposal. There would be sufficient profit out of Stage 1 to repay the loan. There was no commitment to continue funding thereafter. 215. He understood that the borrower would pay the first six months' interest and that such funds would be held for payment to investors as the interest fell due. He appears to have understood that the interest would come from Mr Rivett's companies and not from moneys advanced by investors. 216. Mr Morrison understood that each unit had been sold for $85 000, indicating that the investment was a good one and that contracts had been exchanged and deposits paid. The purchase prices would be payable in Australian dollars. He had never heard of trade dollars and did not consider that any part of the purchase prices would be paid in 'barter' . The LVR of 70 per cent meant that there would be sufficient equity to cover the loan should 'the project go belly-up' . He understood that there had been an independent valuation and that the independent valuer had 'confirmed that the value of the site gave sufficient security for the loan to be approved' . He also understood that an independent quantity surveyor would check that everything was 'above board' . He noted that the proposal was submitted for consideration on the basis that all units had been pre-sold '(with clear evidence to be provided of at least six sales prior to the first draw-down)' . He claimed not to have understood the significance of the qualification as to evidence of six sales. He understood all units to have been sold and that the words in brackets were there in case one or two of the contracts collapsed. 217. He noted that the wording of the investment summary for the Yandina project differed from other investment summaries which he had seen in that it did not refer to the loan having been 'approved by an independent entity' . He assumed that MDRN had checked that the statements in the investment summary were true and accurate. In this regard he relied upon the statement that the application had been approved under their assessment programme. 218. In his oral evidence Mr Morrison said that he received newsletters from MDRN which he read carefully. He was shown the autumn 1999 newsletter and said that he understood it to be 'the basis of [MDRN's] ten point assessment plan' . He could not be sure that he had received it. He recalled having heard something about such an assessment plan in which 'the credibility of the borrower, the valuations, the leverage, they were all considered and assessed by their finance minister, Mr Dale Blackadder. ' He had heard the expression 'a ten point plan' . 219. In the course of his oral evidence he was taken to ex 49 (the brochure) and invited to make comments concerning its content. However his evidence in that regard was quite speculative. I am by no means satisfied that he placed any reliance upon the brochure in making the decision to invest. He understood all of the units to have been sold 'off the plan' . This was significant to his decision. He claimed to believe that MDRN 'had a team of experts to check Mr Rivett's credibility' . He said that had he been told that only three or four of the units had been sold, it may not have made a difference given 'the additional criteria that this gentleman had to meet' . He did not know what trade dollars were. He was referred to the heading 'Notes' on p 2 of the investment summary. He considered everything there to be significant and, in particular, the statement that the borrower's application had been approved under MDRN's assessment programme. He expected MDRN to check Mr Rivett and Project Results' financial strength. It would be hard to say what he would have done, had he known that MDRN had not checked these matters. Had he been told that Mr Rivett had previously entered into an arrangement with his creditors under the Bankruptcy Act , he would not have invested. The basis of the recommendation on p 5 of the investment summary was also said to have been instrumental in his decision-making. 220. The evidence-in-chief of this witness was particularly unsatisfactory, at least in part because of the way in which he was questioned. He was, in effect, invited to comment on specific aspects of various documents and accepted the implicit invitation to respond in ways which were favourable to his case. 221. In cross-examination he was shown the questionnaire circulated by ASIC (ex 3). He was asked whether he agreed that the interest rate which he received on the investment was roughly double that being offered by the Commonwealth Bank. He was aware of that. He was asked if he understood that the interest rate reflected the risk. He said that he did not have that understanding because of MDRN's 'track record' . They had told him that they had never had an investment which failed and that at the most, he might lose his interest. He understood that there was an additional element of risk in this investment, but given 'that you had such incredibly extensive range of checks in place to check the credibility of the financial history of these people --- yes, there was some risk, I suppose, but it was minimal given that. I was also led to believe that not all applicants pass our criteria. He agreed that one of the aspects which appealed to him was the capacity to make his own decision as to whether the investment was worthwhile. Mr Rivett's qualifications were important to him. He was looking for an investment where 'the person behind it knew what he was actually doing' . In the event of default he would expect to be repaid out of the proceeds of the sale of the land. That was why the 70 per cent LVR was important. He understood the LVR to relate to the relationship between the value of the undeveloped land and the loan. He understood the reference to a $400 000 'residual' to be to a cash surplus but was unable to explain the reference to LVR. He eventually accepted that he may have misinterpreted the investment summary in this regard. He was asked whether he had read page 2 of the investment summary concerning the purpose of the loan and the way in which the project was to be financed. He said he could not remember. The witness struck me as anxious to present his case in the best way that he could. He may have been a little suggestible. Ms Murdoch first became aware of MDRN in about June 1999 when a friend gave her brochures. She subsequently received a telephone call from Mr Gill. He provided information concerning particular projects, including the Yandina project. She was asked to comment upon the effect on her decision had she known that Mr Rivett had assets of less than $100 000. She seems not to have understood the question. She would not have invested had she been told that only three or four of the units had been pre-sold. She had marked certain passages in her own copy of the investment summary as being of importance to her. She was cross-examined about her understanding of the requirement that six months' interest be pre-paid. Again, she seems not to have really understood the question. She eventually agreed that she understood that the interest was to be paid from the advance. 226. She was asked by counsel for one of the cross-respondents what she would have done had she known that Project Results and Mr Rivett's assets had not been checked by MDRN. Although the answer was a little unclear, it seems that she would not have invested. However the statement was really led from her. I have some doubts as to its veracity given that the issue was not addressed in her affidavit. Mr Nielsen was first introduced to MDRN in early 1998, at which time they were offering interest of 11 per cent. He met Mr Ryan at a social function and asked him to explain how the investment scheme worked. Mr Ryan said that he would send more information. Mr Nielsen subsequently received the brochure entitled 'MDRN Private Mortgages McCarthy Durie Ryan Neil Solicitors' . You are sent a copy of the recommendation document prior to your funds being placed. He subsequently received a list of available projects and invested $20 000 in one project. In June 1999 he received a letter from MDRN advising that that loan had been repaid and offering him investment in two other loans, one of which was the Yandina project. A copy of the investment summary was enclosed. 229. In deciding to invest in the Yandina project, Mr Nielsen was particularly impressed by Mr Rivett's background, experience and financial strength. In particular he was influenced by his asset position evidencing a nett surplus of $1 790 000 and Project Results' nett asset position of $640 000. He believed that their available assets were worth the total of those two amounts. He was also impressed by the information which MDRN was said to have available on request, in particular the valuation, the statement of assets and liabilities of the director, a disclosure statement by the borrower and pre-sale contracts. He assumed 'especially because of the procedures, outlined in the MDRN booklets, ... that MDRN had looked carefully at the documents and independently verified that the securities and guarantees ... had a real and sufficient value. ' He also took comfort from the fact that there was a valuation and that the loan was secured by the value of the land. He did not see the valuation. 230. In oral evidence-in-chief he said that the LVR ratio of 70 per cent influenced his decision to invest. He considered that it related to the unimproved value of the land. He was also influenced by the representations concerning Mr Rivett and his assets and the fact that the whole project had been pre-sold. Aspects of the brochure which impressed him were the fact that loans were for 70 per cent of the valuation of the property and the procedure for evaluation of the borrower. He claimed that at the time of his decision to invest in the Yandina project he still had these matters in mind. Had he known that Mr Rivett's assets and those of Project Results totaled less than $100 000, it would have affected his decision to invest. He would have wondered about their capacity to carry out the project. He said that had he known that only three or four units had been sold, and that they had been sold at purchase prices of which 40 per cent could be paid in trade dollars, it would also have affected his decision. He said that he did not then understand how trade dollars worked. 231. In cross-examination he agreed that now realized that the property would improve in value as construction proceeded, and that the increased value would be available to meet repayment of the loan. He said, however, that he had seen other notes elsewhere which may have contradicted this statement. He seemed to be referring to the fact that the firm claimed to have considerable insurance to protect the scheme or to protect him. He thought that MDRN would have verified the accuracy of information concerning Mr Rivett. In 1999 Ms Parker received money from a property settlement. She had no experience in investing. A friend suggested that she contact MDRN. She spoke to Mr Gill who gave her information concerning two projects, one of which was the Yandina project. She subsequently invested $20 000 in that project and $20 000 in another project. In investing in the Yandina project she was influenced by the statements in the investment summary concerning the borrower's background and the 'solid backing of property being used against the loan' . She was particularly influenced by statements at pp 2 and 3 concerning Mr Rivett and the recommendation at p 5. She understood Mr Rivett to be a part-owner and builder of all of the projects in which he was said to have been involved and that he was experienced. She understood there to be 'solid backing to the borrower' . She trusted MDRN to have checked the information concerning the assets and financial strength of Mr Rivett. On or about 23 June 1999 Mr Perring contacted MDRN, requesting information in relation to investments which they were offering. He received a copy of the investment summary under cover of a letter dated 23 June 1999. He studied the summary. Mr Perring assumed that MDRN had 'all the homework and due diligence completed by reliable persons who were selected and controlled by [MDRN] ...' . 236. In numerous conversations with Mr Ryan and Mr Gill, Mr Ryan repeatedly asserted his confidence in Mr Rivett and the success of the Yandina project. He also said that the firm was successful in this type of fund-raising and only dealt with professionals, and that the pre-sale indicated that the project could not fail. Mr Perring was not cross-examined. MDRN had acted for Mr Prince since about 1985, primarily in connection with conveyancing services. In 1996 he received a letter from them entitled 'Private Mortgage Investment --- 11.5% interest' . He was impressed by the statement in the letter that borrowers in the private mortgage market were excellent quality applicants, prepared to offer first mortgage security on the basis that the loan would not exceed 70 per cent of the value of their properties. He rang MDRN to obtain further information. He was told that some people did not want to deal with banks, that MDRN was able to recommend finance more quickly than a bank, that the amount of a loan was covered by the value of the land and that if the worst came to the worst, the land would be sold and lenders would get their money back. 238. Mr Prince and his wife made a number of investments and, in June or July 1999, Mr Gill telephoned concerning the Yandina project. Mr Gill said that Mr Rivett was 'a QC who had significant experience and ability to successfully undertake this project' and that they needed $50 000 to complete it. He said that he would send an investment summary, which he did. He understood the statement concerning the sale of units to be at $85 000 each in Australian currency. He understood that Mr Rivett had been successful in other undertakings and that he had 'done this type of development before and knew what he was doing' . Mr Prince inferred that MDRN had checked out everything about him and the Yandina project and that what was said in the investment summary was correct. He understood that Mr Rivett had assets totalling $2 430 000, and that they would be available to repay the loan and interest in the event of any shortfall. He also understood that Mr Rivett had enough money to pay six months' interest in advance, that his companies' trading profits had been checked and that MDRN was satisfied that they would be able to pay any further interest. He did not realize that the pre-payment of interest was to be from loan funds. 240. He understood that Stanton Hillier Parker had independently valued the land, and that the valuation confirmed that the loan was secured by the value of the land. He seems to have understood that this related only to the land on which the development was to be built, and that additional blocks were also being made available as further security. He said in evidence-in-chief that he understood that eight of the twelve units had been sold. Had he known that only three or four of the units had been sold, and that about 40 per cent of each purchase price was payable in trade dollars, he would have considered it to be of significance. Had he been told that Mr Rivett had previously made an arrangement with his creditors under the Bankruptcy Act he 'wouldn't have touched it' . Had he known that Mr Rivett and the company's assets were significantly less than those set out in the investment summary, he would not have invested. 241. In cross-examination he agreed that the investment summary made it clear that pre-paid interest was to come from funds advanced. He had not realized that at the time. He expected MDRN to make the inquiries that a reasonable and prudent lender would have made. In re-examination he said that a reasonable and prudent lender would have checked everything out, and that this would have been done by MDRN before the documents were sent to him. In particular, they would have checked that Mr Rivett 'had the finances, that it was financially viable from their surveyor's point of view' . Prior to May 1999 Ms Scott knew people who had made investments with MDRN. She decided to inquire concerning such investments and spoke to Mr Gill. She said that she required a safe investment. Mr Gill said that she couldn't lose her money, and that investors had first mortgage security on the basis that the loan would not exceed 70 per cent of the value of property. The worst that could happen would be that she might not get all of her interest. He said that this had occurred on three occasions. She subsequently received investment summaries relating to the Ammbar project and the Yandina project. In reading the investment summary for the Yandina project she said that she relied on MDRN for the comments and statements of fact and opinion contained in the summary. She noted that it had been approved under their private mortgage loan application assessment programme. She said that the investment summary gave her the impression that the assets and liabilities of Mr Rivett had been checked out and that the nett assets of Mr Rivett and Project Results would be available to investors if anything happened to the project. She thought that Mr Rivett's experience had been checked, and that MDRN could attest that he was reliable and trustworthy. She noted the observation at p 5 that the proposal was submitted for her consideration and supported on the basis of the experience and qualifications of the director, his asset position, the LVR ratio of 70 per cent and the pre-sale of all units. 244. She understood that the units were to be sold at $85 000 each and that contracts would be entered into. She understood that the price would be paid in 'real funds' . She believed that MDRN had checked the application for loan and that statements in the investment summary could be accepted. Ms Scott was not cross-examined. Mrs Shallard is now the sole trustee of the C & N Shallard Superannuation Fund. She and her husband were previously joint trustees. Mr Shallard died on 5 August 2004. Prior to his death, he swore an affidavit in these proceedings. 246. Mr and Mrs Shallard first heard of MDRN when they saw an advertisement in the early part of 1999. Mr Shallard telephoned Mr Gill, requesting information concerning investment schemes. A short time later they received a letter and certain investment summaries. They invested $30 000 with Ammbar Pty Ltd, which investment was successful. Mr Shallard understood from this statement that the firm had an experienced loans manager who made checks to verify and assess the quality of loan applications. These were in accordance with the ten point assessment plan. Mr and Mrs Shallard did not see the assessment plan as set out in the autumn newsletter. They relied upon MDRN's 'integrity in making this statement that they follow this process in all applications they assessed' . 248. On about 22 June 1999 they received the investment summary for the Yandina project. Mr and Mrs Stewart had first contact with MDRN through Mr McIntyre who acted as their solicitor from about 1990. Whilst they were finalizing their wills they observed leaflets and promotional material concerning investment schemes. They asked Mr McIntyre about these investments. He advised them to go to the office at Capalaba where the investment operation was based. On 15 June they spoke to Mr Gill at the Capalaba office, advising him that they wanted to invest $250 000. Mr Gill advised them to spread their money between several investments in order to spread the risk. He provided them with written information including investment summaries, one of which was for the Yandina project. They considered that the LVR of 70 per cent was adequate and inferred that Mr Rivett had contributed a total of $638 677 in Australian dollars 'already into the project' , indicating that he was committed to it. The valuation by Stanton Hillier Parker was also important. Mrs Stewart asked for a copy. Mr Gill said that he would send it but did not do so. Mr and Mrs Stewart assumed that it would 'corroborate' the LVR of 70 per cent. 250. They noted that the application had been approved under MDRN's private mortgage loan assessment programme. They understood that MDRN had a formal process for assessing applications and that 'all proper checks had been conducted before approving this loan' . They considered that Mr Rivett's experience offered comfort and that he had successfully secured contracts to sell all units in Stage 1. They understood that interest on the loan was to be pre-paid. They seem to have appreciated that the pre-payment was to come from the advance. They understood the reference to 'a residual of $400 000' to refer to a residual surplus. However, later in his evidence, Mr Stewart conceded that it must have meant a residual debt. They took comfort from the fact that Mr Rivett's companies could provide interest coverage from trading profits and from the strong asset position of Mr Rivett and Project Results. They understood the figure of $640 000, representing Project Results' assets, to be included in the amount of $1 790 000 attributed to Mr Rivett. They understood that the units were to be sold for $85 000 each, in Australian dollars. They had never heard of trade dollars. They decided to invest $50 000 in the Yandina project. 251. In oral evidence-in-chief Mr Stewart said that had he been told that Mr Rivett had assets of less than $100 000, it would probably have influenced his decision. He probably would not have proceeded with the investment. In cross-examination, Mr Stewart agreed that he was aware that there was a risk that the investment might fail. For that reason he had spread his investments. As to the LVR, the witness seemed to agree that at the time of the initial advance, up to 70 per cent of the value of the land was to be advanced and that as development costs were incurred, no more than 70 per cent of those costs was to be advanced. He understood that MDRN would have assessed the loan application in the manner of a reasonably prudent lender and that, in particular, in examining Mr Rivett's assets, they would have made an assessment of the sort that a reasonably prudent lender would have made. 252. Mr Stewart accepted that Mr Rivett's contribution to the project comprised the land rather than actual cash, and building work to the estimated value. When he read the investment summary, he understood that the building works were to be completed within the first six months. He considered that there was always the possibility of over-run. He understood the reference to sales of the manger's accommodation and units to mean that people had indicated willingness or intention to buy. He understood that there were to be six pre-sale contracts. He thought that he had read that there were offers on others. He agreed that there was a reference to trade dollars in the investment summary and that he must previously have heard of them. It was clear that Mr Rivett controlled Barter Pacific Property and Finance which specialized in property and finance, using trade dollars. He said in re-examination that he did not understand that the purchase prices of the units would be paid partially in trade dollars. Mr and Mrs Trotman were first introduced to MDRN in 1997/98. They spoke to Mr Gill on several occasions. He explained the services offered by MDRN. As a result they invested money in a scheme. In about June 1999 they received an investment summary for the Yandina project. They noted that it involved a registered first mortgage over five adjoining allotments, a registered mortgage debenture and a director's guarantee. Interest was to be pre-paid for the initial six month period. The trading profits of Mr Rivett's companies were to be available to provide interest coverage. Mr and Mrs Trotman assumed that MDRN had verified documents supporting the statement concerning interest coverage. They noted the information concerning the asset positions of Mr Rivett and Project Results and assumed that it had been verified by MDRN, that there was a valuation by Mr Ludlow, recognized as one of the most experienced valuers of this type of development in Queensland, and that he reported positively on the project. Mr Trotman understood the valuation to be as at the completion of Stage 1. He considered that 9.25 per cent was a moderate level of return, reflecting a low to medium level of risk. He noted the LVR of 70 per cent and the reference to a 'residual' of $400 000. He interpreted this as a reference to a surplus. He noted also that the units were being sold for $85 000 each, and that Mr Rivett had advised that all had been sold. He took this to mean that each had been sold for $85 000 in Australian dollars. 254. Mr and Mrs Trotman invested $133 000 in the name of their superannuation fund and $80 000 in the name of Mrs Trotman. There is reference in pars 27 and 28 of the affidavit to a sum of $141 000, but its significance is not clear. Subsequently, the investment of $80 000 was transferred into the name of the superannuation fund, so that its total investment was $213 000. In April 2000, $50 000 of the investment was put elsewhere, thereby reducing the total investment to $163 000. 256. When Project Results defaulted, Mr Trotman requested information concerning Mr Rivett's financial position. He also requested a copy of the valuation. He asked Mr Blackadder why Mr Rivett could not put in $260 000 to finish the project. Mr Blackadder said that he did not have the money. Mr Trotman asked if Mr Blackadder had checked to see if Mr Rivett and his companies had the assets shown. Mr Blackadder said that they had only checked some. Mr Trotman then asked why MDRN did not put in the $260 000. Mr Blackadder said that it was not his responsibility to put that to the partners. Mr Trotman asked what backgrounds checks had been done on Mr Rivett. Mr Blackadder said that one of the partners' wives knew him. Mr Trotman said 'That was it? ' and Mr Blackadder said 'Yes' . At a later stage Mr Trotman saw Mr Rivett at his office in Mooloolaba. He asked him why he would not pay to finish the project. Mr Rivett said that he had experienced a bad year and that he didn't have any money. He was also separating from his wife. At a later meeting at Mooloolaba Mr Rivett said that he was '... close to obtaining the money required to finish the job' and '... that the cavalry was coming to the rescue' . 258. If only three or four units had been sold, it may have influenced Mr and Mrs Trotman, but 'not overwhelmingly' . By 'sold' Mr Trotman understood that contracts were held. Mr Trotman was not then aware of trade dollars. Had he known that about 40 per cent of the purchase price of each unit was payable in trade dollars, it would have caused concern. Had he known that Mr Rivett had assets of less than $100 000, he would not have gone into the project. Mr Trotman said in cross-examination that he had discussed the Yandina project with Mr Gill and Mr Blackadder and that 'They reassured us that the information provided was correct. On one occasion prior to the Trotmans deciding to invest, Mr Gill asked him by telephone whether he had met Mr Rivett. When Mr Trotman said that he had not, Mr Gill said that he was an impressive character. As a result Mr Trotman asked Mr Ryan if he could meet Mr Rivett to discuss his competence in this sort of work. He inspected the site and met Mr Rivett for about twenty minutes. Mr Trotman was impressed by Mr Rivett. 261. Mr Trotman knew that the pre-payment of interest was to come from loan funds. He also understood that there was to be a surplus of $400 000 at the end of Stage 1, but accepted in cross-examination that it was a residual debt. He was influenced by the fact that there had been pre-sale of twelve contracts and seemed not to think that the provision for production of six contracts detracted from that. He understood from the investment summary that there was a prospect that trade dollars would be used to pay for the units, but he did not fully understand the meaning of the expression 'trade dollars' . In re-examination he said that he felt that some of the purchase prices might be paid in trade dollars, but he considered that Mr Rivett would have to pay $85 000 because 'trade dollars wouldn't be any use to us' . Mr Luke had first contact with MDRN in 1995 when he purchased a home. In 1996 he saw an advertisement for their mortgage investment business. At that time he had funds available for investment and spoke to Mr Ryan. His first investment was made in April 1996. After that he placed a number of investments with them. Most of his contact was with Mr Gill. He rarely visited MDRN's offices. Ms Pimpenella has been his main contact since Mr Gill left, about a year prior to Mr Luke swearing his affidavit on 6 May 2004. He enjoyed a good working relationship with MDRN. In July 1999 he received a letter from them, together with an investment summary. He did not retain a copy of the investment summary. Mr Luke recalled that the loan was for a period of twelve months, with an LVR of 70 per cent, and that Mr Rivett had a suitable background for property development. Based on what he saw in the investment summary and the letter, he decided to invest $30 000. 263. Had he been told that the $400 000 contribution was borrowed, he would not have invested. Had he been told that the $238 677 to be invested in construction and sale was not in Australian currency but trade dollars or barter, he would not have invested. Had he been told that in 1984, Mr Rivett entered into an arrangement with his creditors, he would not have invested, nor if he had known that only three or four units had been sold. However, had he been told that Mr Rivett and Project Results had assets significantly less than those disclosed, he would not have invested. 265. In cross-examination, he said that he had assumed that MDRN had checked the assets of the borrower and the guarantor. His evidence is a little unclear on this point. He seems to have meant that he would never have received the investment summary had the checks not been done, presumably meaning that MDRN would not have sent it had they not done the checks. In about 1997 or early 1998 Mr Watt saw an advertisement in a local newspaper for MDRN's mortgage investment business. He telephoned and spoke to Mr Gill. He and his wife later invested in a number of first mortgage loans. On or about 30 June 1999 they received a letter from MDRN, together with a copy of the investment summary. Mr Watt read the statement. He was particularly impressed by the information concerning Mr Rivett's property development experience and his personal and company assets which were to be available as security. He concluded that Mr Rivett was connected with the well-known company Bartercard. On re-reading the summary he realized that this was not the case. He understood Mr Rivett's personal assets to be $1.79 million and that Project Results had nett assets of $640 000. He was also impressed by the fact that there was to be a fixed-price building contract and that twelve units had already been sold for $85 000 each. He understood this to mean that there were signed contracts of sale. He inferred that the building costs had been checked. 267. The fact that there was to be first mortgage security was important to him, as was his belief that the valuation had been performed by a reputable valuer. He may not have thought so highly of the project had he known that all twelve units had not been sold. However he would have entered into the contract even if only six or, maybe, three had been sold. Had he been told that about 40 per cent of the purchase price for the units which had been sold was to be paid in barter dollars, he would not have invested. He considered that the process of investigation carried out by MDRN was significant to his decision to invest. Had he been told that Mr Rivett had entered into an arrangement with his creditors in 1984, it would have affected his decision. Had he been told that Mr Rivett' assets were substantially less than $100 000, he would not have invested. He understood the valuation to be of the five titles. He did not understand it to be a notional valuation of the land with the proposed buildings erected. 268. The bases of the recommendation on p 5 of the investment summary were also relevant to his decision. Had he been told that MDRN had taken Mr Rivett's statement of assets at face value without checking it, he would not have invested. Had he known that they had not obtained copies of the contracts for sale of units, he would not have invested. Had he known that MDRN had not made checks to see that all units had been sold, he would still have invested. He understood that the project might take more than six months to build. He considered that MDRN would investigate the matter as a bank would, making sure that the figures were right. However he did not know how a bank would go about it. He assumed that MDRN would have checked Mr Rivett's assets and those of Project Results. He would not know how to go about that process. He said that MDRN were always very diligent in checking those sorts of things. He was aware of the possibility of a shortfall. Ms Webb sues as executor of her deceased husband's estate. She said that he made numerous investments through MDRN, the first in 1998. He would study the material provided by MDRN before deciding whether to invest. Mr and Mrs Holman (now deceased) first dealt with MDRN in February 1997 and subsequently made several investments with them. In late April 2002 Mr Holman was telephoned by Mr Gill who had been introduced to them as the person responsible for dealing with investing clients. Shortly thereafter, a prospectus, advisory services guide and an investment summary were sent to them. Mr Holman believed that MDRN had conducted their own quality control checks to verify that all statements were correct. He had no reason to believe otherwise. He would not have made the decision to invest if it were not for the statements in the investment summary. In the prospectus, evaluation procedures were discussed. He believed that such discussion was also relevant to the investment summary. Where MDRN determines that the potential loan is suitable for investment (using the criteria set out in Section 4) then a Mortgage Investment Summary is sent to registered investors. Mr Holman considered that this showed that detailed checks were performed in assessing the quality of loans before offering them to potential investors. He understood that this process had been carried out in the case of the Yandina project. The expertise and experience of Mr Ryan and Mr Blackadder were also discussed. Mr Holman considered that they had levels of experience upon which he could rely. It was of particular importance that there was a process for evaluation of applications and ongoing monitoring of loans. 273. They examine the debt service capacity and good credit history of each applicant and obtain a valuation of a security property to ascertain that the loan/security ratio does not exceed 70%. In oral evidence-in-chief Mr Holman said that it was significant to his decision to invest that applications were professionally evaluated and that a valuation was obtained from a panel of registered valuers. He understood that evaluation of applications was carried out by experienced professionals who had extensive banking experience. He took comfort from the fact that Mr Rivett had a strong asset position. Had he known that this was not the case, he would not have invested. Had he known that Project Results did not have substantial assets, he would not have invested. Had he known that the loan was in default at the time that he invested, he would not have done so. It was of importance to him that all units were said to have been sold. Had he been told that only three or four had been sold, he would not have invested. 275. In cross-examination he conceded that in a letter dated 19 April 2000 (ex 22), he had been told, prior to investing, that interest for the period from 23 February to 22 March 2000 remained unpaid, that it was to be paid in the immediate future and that a notice of default had been issued. It is of some concern that this letter emerged only in cross-examination. Mr Tangey died on 27 September 2003. His wife, Mrs Tangey is executor of his estate. Mr Tangey died before swearing an affidavit in this matter. Mr Turner, an officer of ASIC, drafted his affidavit and read it to him over the telephone before he died. He affirmed its contents by telephone. The affidavit is received pursuant to s 63(2)(b) of the Evidence Act 1995 (Cth). There was no objection. 277. Mr Tangey first heard of MDRN in or about late 1999 or early 2000. He saw an advertisement. In or about March 2000 he saw another advertisement and contacted MDRN by telephone to discuss investment schemes. He spoke to Mr Gill, saying that he was interested in investing $60 000. Soon after that, he received a letter from Mr Gill, together with an investment summary. He was told that he could invest for only three months in the Yandina project as the loan expired on 22 July 2000. It seemed like a good opportunity to invest quickly. He perused the investment summary and the letter and satisfied himself that the investment was worthwhile. He was attracted by the high interest rate and the security offered by Project Results and Mr Rivett. He was also impressed by the investment summary and said that MDRN seemed to be a very professional operation. He felt confidence in Mr Rivett. The investment summary gave a glowing recommendation of him as a successful businessman with a law degree. 278. At the time of making the investment he did not know that Project Results was already in default, although he had been informed by Mr Gill that there had been a delay in payment of interest. In view of the explanation contained in Mr Gill's letter of 7 April 2000, it did not occur to him that the loan was actually in default. The letter suggested that the delay had been caused by postponement of a settlement which was to have occurred at the end of February. Mr Tangey would not have proceeded with the investment had he known that it was not a sound investment. He had been assured by Mr Gill that it was sound, that everything was fine and that any delay in the payment of interest had been caused by the postponement of settlement. Having addressed the evidence of the applicants' complaints, it will be convenient now to consider the evidence of the respondent partners in MDRN and Mr Blackadder. Mr Ryan was admitted as a solicitor in 1983. He holds the degrees of a bachelor of laws and graduate diplomas in legal practice and applied finance and mortgage lending. He is an associate of the Securities Institute of Australia and a fellow of the Tax Institute of Australia. Prior to joining MDRN in 1988, he worked predominantly in the areas of tax law and financial planning. 281. Mr Ryan said that MDRN carried on the mortgage business as part of its legal practice. The trustee company operated as 'a bare trustee company utilized for the purpose of holding investment funds in the course of [MDRN's] practice. ' MDRN commenced its mortgage business in about 1995. Mr Ryan supervised it. He had 'limited direct contact' with investors in the Yandina project, usually referring any inquiries to staff, chiefly Mr Gill who was MDRN's client relations manager. Mr Ryan's affidavit filed on 1 April 2005 deals with the conduct of the mortgage business. He said that from 1998 until 2000 he and Bruce Campbell were the joint managing directors of MDRN Investments Limited. At the time of making the advance to Project Results, according to Mr Ryan, the '... business of MDRN Private Mortgages ran concurrently with the business of MDRN Investments Limited. ' It seems that MDRN Investments Ltd held a securities dealer's licence. Mr Campbell is a solicitor of considerable experience in the corporate, commercial and property areas and has had considerable involvement in transactions concerning matters such as retirement villages. 282. In September 1998 MDRN employed Mr Dale Blackadder as the general manager of finance, apparently to work in the mortgage business. Previously, loan proposals were assessed externally by a company called National Mortgage and Development Ltd. It prepared investment summaries for distribution to potential lenders. MDRN decided to undertake this procedure 'in house' and sought to employ somebody with the relevant banking (including commercial lending) experience. Mr Blackadder had extensive experience in commercial lending through his previous employment with Westpac and Metway. In the course of previous dealings with MDRN, the partners had been impressed by his honesty and competence. 283. Mr Ryan referred to one of Mr Blackadder's affidavits which has been filed in these proceedings, in which he set out what he described as two important aspects of assessing a loan application for commercial development. Mr Blackadder identified firstly the "commercial aspect" '... which involved primarily assessing the viability of the transaction in which the funds were sought, the level of security being offered and the like' ; and secondly, the 'transactional aspect' which involved 'performing appropriate searches to ensure that the corporate borrower was controlled by the persons actually making the loan application, that the proposed borrower in fact was the registered proprietor of the land being offered as security and the subject of the valuation, and that there were not encumbrances on the titles of that land which were not accounted for in the valuation' . Mr Blackadder said that the two aspects could not, in a practical sense, be divorced from each other. To my mind, the distinction is between the commercial decision to lend and the necessary legal formalities. 284. Mr Ryan agreed with Mr Blackadder's analysis and asserted that it reflected the practice of all established lenders for commercial development. He said that assessment was performed by either himself or Mr Blackadder under his supervision. The work was divided up according to each's respective expertise. Mr Blackadder assessed loan applications in the first instance, including the borrower's financial ability, the valuation, financial searches and assessment of the loan from a commercial perspective. Mr Ryan was primarily responsible for assessing loan applications from the transactional perspective, including the conduct of relevant searches and preparation of relevant legal documents. He also supervised Mr Blackadder's work. He said that Mr Blackadder would discuss loans with himself, Mr Campbell, Mr Gill and/or the other partners. In discussion they would address the nature of the project, the LVR and proposed interest rate. Mr Ryan regularly became involved in Mr Blackadder's assessment process, for example by participating in interviews with potential borrowers and conducting site inspections. Mr Campbell and Mr Gill would also assist from time to time. 285. Once Mr Blackadder had completed his assessment and recommended proceeding with a particular loan, he would provide a review to Mr Ryan and a facility letter to the potential borrower. The letter would indicate that finance was available subject to a series of criteria being met. This was not a formal letter of offer, but rather an identification of matters about which MDRN would require to be satisfied before it would make the loan. The letter sought the prospective borrower's confirmation that it was willing to proceed on that basis. At the time of preparation of the facility letter Mr Blackadder and Mr Ryan would typically have a further discussion concerning the commercial aspects of the loan assessment and the transactional aspects yet to be performed. Mr Ryan would then consider the legal searches still required and the documentation. Once the borrower had accepted such an offer 'the emphasis of the loan assessment process would shift from the commercial to the transactional aspect. Mr Blackadder would then prepare an investment summary, the first draft of which would be circulated to Mr Gill and Mr Ryan who would make suggestions concerning its content. A final draft of the investment summary would be circulated to MDRN partners, Mr Campbell and Mr Gill. Further suggestions and comments might be made and incorporated into the draft. If there were any concerns with the proposal, or if anybody thought that it should not go ahead, it would not proceed. Following this process the summary would be circulated to potential investors, and Mr Ryan would commence the necessary legal searches and preparation of the documents. If the legal searches were not satisfactory the proposed loan might not proceed. 287. Mr Ryan asserted that the partners had not delegated to Mr Blackadder the entire role of assessing applications and approving them. This was specifically the case in relation to the loan to Project Results. Although Mr Blackadder was primarily concerned with the commercial aspects of the assessment, he performed that task in consultation with others. The loan would only be settled after the commercial and transactional aspects were completed. Assessment of the loan and preparation and distribution of the investment summary were all performed under the supervision of the partners. 288. Mr Ryan also dealt with specific allegations made by various applicants. However I do not understand any of those matters to be relevant, given rulings made in the course of the trial and/or the way in which counsel dealt with the case in their final submissions. 289. Mr Gill was employed in August 1992 as a "paralegal". He had extensive conveyancing experience. He was subsequently employed as 'Client Relations Manager' to liaise with investors and potential investors regarding investment opportunities. In late 1994, Mr Gill began to suffer mental health problems. He took six weeks' leave, returning on 2 January 1995. He continued to demonstrate mental anxiety and nervous stress which affected his work and his workmates. In 1997 he suffered a relapse, resulting in further time off work. Mr Gill was insubordinate towards the partners and senior staff members, particularly the practice manager and in-house accountant. His employment was terminated on 24 November 2000. 290. On 4 April 2000 MDRN gave notice of default to Project Results after it failed to pay the interest due on 22 March 2000. At the same time notice of default was given to Mr Rivett as guarantor. Prior to the issue of these notices Mr Blackadder and Mr Ryan had been in constant contact with Mr Rivett, the quantity surveyor and other parties as a result of construction difficulties. Various possible options for completing the project had been discussed. Mr Ryan nonetheless believed, on the strength of the representations made by Mr Rivett and advice from Mr Carey, the quantity surveyor, that the project could be successfully completed on time. Prior to default he had no real concern in that regard. Following notice of default Mr Blackadder and Mr Ryan 'communicated more intensely' with Project Results and Mr Rivett concerning the available options. Refinancing appears to have been a prospect. Eventually, a meeting of investors was called for 13 October 2000. About 30 of the investors attended. Mr Ryan circulated a summary of the position, including apparent reasons for default. Mr Ryan has no recollection of any complaint by investors at the meeting concerning the investment summary. The meeting was amicable and focused on seeking solutions. Mr Mitchell suggested that he might finish the project. Mr Trotman also made 'substantive comments' . 291. Mr Ryan concluded that it was unlikely that they could obtain unanimous approval for any one course of action. In early September 2000, MDRN had sought marketing appraisals from numerous qualified real estate agents. After the meeting MDRN engaged Mr Weir of PRD Real Estate in Maroochydore to market the property pursuant to the notice of exercise of power of sale. Mr Weir was a local agent who knew the property and Mr Rivett. MDRN believed that he was the best person to undertake the marketing and sale of the property. He was instructed to conduct a tender programme but to be alert to the possibility of selling the parcels of land in total or piecemeal. On 15 May 2001 the firm sent a circular to investors advising of progress. At this stage a sale was imminent. Mr Rivett was also trying to arrange alternative finance. On 13 September 2001, Mr Jessup was appointed to wind-up the scheme. Mr Ryan reported to him by letter dated 13 September concerning outstanding offers for the property. 292. Mr Ryan was referred to numerous documents and letters connected with the implementation of the loan to Project Results, apparently in order to demonstrate his close supervision of the loan. I am not sure that this evidence goes very far. 293. Mr Ryan's attention was drawn to the autumn 1999 newsletter and to the ten point assessment plan of which much was heard in the course of the trial. He said that in the period from May to September 1999 the assessment of a proposed loan involved an interview with the proposed borrower to establish his, her or its credibility. Such interview would be with Mr Blackadder and/or Mr Ryan, Mr Campbell or Mr Gill. The application would be assessed to determine whether it contained a resumé, a statement of assets and liabilities and background. MDRN would obtain a valuation. So in general terms if that's what you're after that would be required in terms of assessing. After the first interview either Mr Blackadder or Mr Ryan would seek extra information. They would ensure that any valuation was obtained by MDRN, presumably as opposed to being obtained by the potential borrower. I infer that this was to ensure that the valuer would be liable to the investors in the event of any error in the valuation. In some cases there would be 'a check report typically from a real estate agent or from another valuer. ' They would talk to the building contractor, a quantity surveyor and the valuer. 295. Mr Ryan said that he would speak with Mr Blackadder daily, their offices were nearby. Mr McCarthy, Mr Campbell and Mr Gill were also located nearby. Generally, Mr Blackadder looked after commercial assessment and Mr Ryan was involved in the assessment 'from a transactional basis' . He would be doing searches, preparing legal documents and 'processing loans through to completion. ' He said it was very much a team atmosphere with the commercial and transactional aspects overlapping. Mr Ryan was often involved in site visits, usually with Mr Blackadder. He would usually interview borrowers with Mr Blackadder and be involved in discussions with valuers, quantity surveyors and real estate agents. 296. Mr Ryan discussed the Yandina project with Mr Blackadder and with Mr Campbell. Mr Ryan had previous experience in pensioner accommodation lending and considered that the site had to be relatively cheap, but close to amenities. He did not know much about Yandina and wanted Mr Blackadder to satisfy him that it had the amenities which would attract tenants. He said that 'The crucial point in pensioner unit accommodation is getting the tenant, because if you can get the tenant there is no problem ... in seeking ultimate sales. ... the reason for that is that the tenants are essentially government guaranteed. ' Mr Ryan also asked Mr Blackadder about comparative sites. He had been unable to find any in Nambour which was the closest town. It is very hilly and presumably unsuitable for older people. 297. Mr Ryan was impressed by Mr Campbell's comment that he considered Mr Rivett to be a 'blue chip' character. He understood that Mr Rivett had previously been a director of Forrester Parker which operated retirement villages. He had also been a solicitor and barrister. 298. At that time credit checks could be done using the services of an organization called Credit Reference Association of Australia ("CRAA"). Such checks were done "on line". MDRN's service company, Hisfield, had an account with CRAA. Mr Blackadder was responsible for conducting such checks. As to valuation, 'we' would seek someone who is appropriate in each case. Mr Ryan knew Mr Ludlow from previous experience with other pensioner accommodation. He was a reputable valuer and 'appropriate' . 299. As to capacity to repay, Mr Ryan said that it depended on the type of loan. In the case of residential premises, it was a question of looking at income. If it was a commercial property then it was a question of ensuring that leases were in place. If there was no guaranteed income flow, it would be necessary to look at the viability of the project itself, in order to see whether it was likely to provide a return. As to assessing the asset position of borrowers, the practice was to obtain a statement of assets and look at it 'from a comparative point of view' . If there were assets which were inconsistent with expectations as to the particular person 'then that would ring alarm bells' . If assets comprised expensive art, furniture or intangibles, again 'that would ring alarm bells' . Mr Blackadder was responsible for this aspect of the business. Mr Ryan had no direct involvement in it. However he and Mr Blackadder would meet every day and discuss each loan in detail. Mr Ryan always wanted to know the identity of each borrower and his or her asset position. They would discuss the type of assets held by a borrower. Assessment of character was carried out at the interviews. In some cases information would come from other partners. From time to time brokers or other lawyers were contacted. There was also substantial feedback from investors. 300. In the period from June to September 1999 Mr Blackadder was responsible for preparing investment summaries. Mr Ryan and Mr Gill would then review them and provide feedback. Once they were satisfied, they were sent to the other partners for feedback. Mr Blackadder had no authority to issue an investment summary without consultation. 301. Once circulation of the investment summary was complete, Mr Blackadder would prepare a facility letter in Mr Ryan's name. It was a conditional letter. In particular, it was conditional upon the respondents being able to raise the money from investors. Mr Ryan's understanding was that a proposed loan was never finally approved until the advance was actually made. 302. Mr Blackadder's remuneration was by way of salary. He was not remunerated in proportion to the amount of money lent. Mr Ryan was asked whether he had given Mr Blackadder any instructions as to the attitude he was to take to lending. Mr Ryan responded that MDRN wanted him to be 'conservative' and 'not to asset lend , or ... equity lend on the strength of a valuation only. ' There were occasions when there was money available to invest but no proposed loan. In those circumstances the money would be kept in the bank and interest paid to investors. 303. In cross-examination Mr Ryan was referred to a letter dated 27 July 1998 (ex 44) from him to Mr Blackadder. Mr Ryan was cross-examined concerning the benefits to MDRN of involvement in the mortgage business. They derived fees from acting for the borrower in relation to the transaction and a loan application fee which, at the relevant time, was about $3 000. Other fees were charged, including an application fee and an administration or monitoring fee. A letter dated 2 June 1999 (tab 22 in ex 1) demonstrates the fees payable with respect to the Yandina project. Mr Ryan agreed that fees totalled about 1.5 per cent of the amount of the loan, or at least that is my understanding of the evidence at TS 1962. 305. Referring to the ten point plan identified in the autumn 1999 newsletter, Mr Ryan said that he had authorized its issue. The emphasis to be given to each point might vary from loan to loan. Mr Ryan's attention was drawn to ex 52, a letter dated 26 September 2000 from Mr Trotman to Mr Durie, and to Mr Durie's response dated 4 October 2000, which is ex 51. These documents are of some importance as indications of the steps taken by the first and second respondents in connection with the making of the advance to Project Results. In ex 52, Mr Trotman made a number of inquiries as to various aspects of the transaction and as to steps being taken, given that it was, by the time of the letter, in default. However Mr Durie's response is important to the extent that it deals with MDRN's method of considering loan applications. Was a valuation undertaken with respect to the security property and if so would you please provide me with a copy? A valuation was undertaken with respect to the security property and adjoining lands at Stephens and Lowe Streets, Yandina by Stanton Hillier Parker (Qld) Pty Ltd. Was the valuation on the project property done on the basis of an "as is" and on completion value? Are there any assets in John Rivett's name on which the guarantee may be in force? I understand it is possible to undertake a search of property owned by persons in Queensland and I would suggest that this be undertaken. We enclose for your reference copies of signed statements of position for Mr John Rivett, a group structure for Rivett and his associated companies, assets of Rivett Project Results Pty Ltd, Oakwill Pty Ltd (an associated company), Robinson Rivett Trading Pty Ltd (an associated company), and Barlake Pty Ltd (an associated company). You will note that these statements are dated March 1999. Certain checks will be undertaken to confirm the validity of these assets and to determine in fact they are still retained by Rivett. Were any real estate agents checks undertaken prior to the advance to confirm the values placed on the security property, in terms of the initial land content, and on completion of Stage 1. Further were any real estate agents' opinions obtained as to the viability of the development as a whole? During the course of investigations prior to approval of the loan checks were undertaken to ensure the validity of the valuation. You will also note that as part of the comprehensive valuation prepared by Stanton Hillier Parker significant sales evidence is provided in the report in support of the values of the units. A significant proportion of the sales highlighted in the report and the sales prices achieved were known to be factual. Therefore the assessment made by the valuer and as a result of the supporting sales evidence provided, in this report, it was our opinion that the assumptions made by the valuer were reasonable and did in fact support the stated value. Questions to the valuer with respect to the suitability and feasibility of a retirement pensioner accommodation at Yandina were raised. The valuer was in support of the overall project. We have also sighted assessments from various other bodies (Herron Todd White Pty Ltd, Prime Life Pty Ltd, QCC Limited) supporting the overall pensioner accommodation industry as a whole. In summary these reports indicated a growing need for pensioner accommodation and the demand for the of this accommodation provision by private enterprises. We do note however that a directly comparable sale, within the 12 months, of an adjoining block of land was provided in support by Stanton Hillier Parker. Was the condition precedent that pre-sale contracts for at least six units were to be provided prior to the first draw satisfied and more particularly did MDRN view these pre-sale contracts and were they unconditional? We enclose copies of Contracts and letters from agents confirming at least seven units were under contract prior to the advance. The units under contract in Stage one included in these contracts were Lots 1, 2, 5, 6, 7, 8 and 16. In addition to these, another 13 units were under contract for the latter stages of the development. Was a quantity surveyor's costings for the project obtained and if so what was the cost of development ascertained by the quantity surveyor? We enclose copies of correspondence and certifications from the Quantity Surveyor together with his background and his consent to act on MDRN's behalf with respect to the project at Yandina. We confirm that the costs of construction were confirmed and certified by the Quantity Surveyor. Was a fixed building contract provided and if so what was the amount of the building contract and did it correspond with a quantity surveyor's estimate of the cost of construction? A fixed-price building contract was provided prior to the advance and this is enclosed for your reference together with the certifications and breakdowns with respect to stage 1. This builder was Lenkbray Constructions Pty Ltd, the initial builder. Was a thorough check made of John Rivett's business background particularly in regard to his direct or indirect involvement with other companies prior to the loan being approved? The usual checks were undertaken by MDRN on Mr Rivett. CRA reports were completed and found to be clear and in order. Mr Rivett was known to an associate and his background confirmed. Phone calls to local people on the Sunshine Coast did not reveal anything adverse with respect to Mr Rivett and his background. Mr Ryan said that he had, in consultation with Mr Blackadder, provided the information contained in Mr Durie's response. Mr Ryan agreed that MDRN obtained check reports on valuations where it appeared to be 'particularly relevant' , if the development was in some way unusual, or if there were concerns about the valuation. There was no system in place for checking Mr Blackadder's work. However Mr Ryan worked with him on a daily basis. There seems to have been no record of steps taken by Mr Blackadder in assessing any particular application. Some form of checklist was introduced in November 1999. It appears to have been a statutory requirement. Mr Ryan said that a borrower's balance sheet was required as part of the assessment process. 307. In the course of cross-examination Mr Ryan was referred to a letter dated 23 October 2000, apparently sent by MDRN to investors following the meeting of 13 October 2000. The letter (ex 65) provided information concerning the circumstances surrounding the advance. The first advance was $434,000.00 towards the land purchase at a 57% valuation. Our first and foremost is the valuer and in this project we used Allan Ludlow of Stanton Hillier Parker who is considered reputable and most experienced in assessing retirement and pensioner unit accommodation. In assessing his valuation, Allan examined acquisition costs of the property, construction costs and marketability of the final product. Additionally the Quantity Surveyor was also engaged to report on the project regularly and to comment on the performance of the builder, engineers and contractors. In this case we used Lloyd Carey Consultants who was a Quantity Surveyor with ten years experience specialising in certification of costs for development projects and tax depreciation work. They had acted previously as Quantity Surveyors for private lending groups and banks such as Westpac Banking Corporation, Metway Bank Ltd and National Australia Bank Ltd. They advised that they had been appointed by Project Services as an approved Quantity Surveyor for Queensland Government and were also involved in developments in the Asia-Pacific area including Indonesia, Solomon Islands, Vanuatu and Singapore. . Numerous problems are then listed including soil condition, drainage and water issues, problems with the builder, roadworks, GST issues, kitchen upgrade and other building issues. We have been disappointed that he has not used his own resources to supply funds for the shortfall. To get some understanding of his current position, we are conducting searches on ASIC records to ascertain which companies he is a shareholder and director in and also from valuer-general's records to ascertain what property he owns himself. Public records however do not provide an estimate of value for any of his assets nor do they show the amount of debt that might attach to these. This will only become evident after legal proceedings have been instituted judgment obtained against Rivett where he is either orally examined or bankrupted. The builder is unlikely to have professional indemnity insurance and therefore showed little prospect of recovery. At the commencement of the project the quantity surveyor and valuer advised that they had professional indemnity insurance in the amount of $1 million each and every claim. If we were to make up the shortfall on this loan then investors in any other loan which had a similar problem might consider that a precedent has been set and that they too would have a capital guarantee. Mr Ryan understood that Mr Blackadder would check the statement of assets and liabilities of a potential borrower to see whether or not he or she had assets appropriate to his or her age and experience. He would also 'make comparisons as to anything which might allude him to be suspicious. ' He was asked whether he thought that the fact that funds were held in a discretionary trust would be a basis for inquiry. He said that was a matter for Mr Blackadder as a banker. In 1999 he did not know whether Mr Blackadder knew what a discretionary trust was. He said that the statement of assets and liabilities was a 'make-weight' . It was more a question of looking at the viability of the project in order to ensure that the loan was going to perform than of looking at the asset position. The primary source of repayment would be the proceeds from the project rather than any assets made available by way of security. 311. Mr Ryan said that the ten point plan 'came from our marketing manager wanting to provide investors in a newsletter a guide as to what things [Mr Blackadder] considers, and in fact what the mortgage department considers, when we actually assess a loan. ' It was apparently only an item used in the newsletter. There was no policy document in the office which prescribed it. Mr Blackadder may have provided its content. He was qualified to assess whether or not proper care had been exercised by a valuer in preparing a valuation. To my mind, that is a reasonable and sensible approach. Mr Ryan considered that the quantity surveyor was responsible for the failure of the Yandina project. The site had been a sawmill. This posed construction problems, partly because of previous earth works and partly because of logs which remained on the site. Mr Ryan was concerned that these matters would lead to a massive cost overrun, but the quantity surveyor advised that any additional costs could be 'overcome'. He also recommended that a commercial kitchen be installed at a cost of $10 000. It actually cost $30 000. 313. Mr Ryan was cross-examined concerning his view that a loan was not approved until the funds were advanced. He said that the partners were responsible for the decision to advance moneys and had overall responsibility. He agreed, nonetheless, that the word "approval" is commonly used to describe an advance indication of the availability of funds. He considered that the so-called facility letters sent to borrowers were "conditional". He agreed that in his ASIC examination he had said that 'The approval [of a loan] at the end of the day would have been evidenced by the facility letter which would have gone to the borrower. ' He said in cross-examination that this statement was 'from a commercial assessment point of view' , and that he had been 'guilty of using that parlance interchangeably' himself. However he claimed not to believe that there had been approval 'from a legal point of view' . 314. He agreed that there was no check on Mr Blackadder's work to see if he was making misrepresentations. He said, concerning the finance application for the Yandina project, that he expected Mr Blackadder to 'dissect it to ascertain what was Mr Rivett's personal assets and what was not. ' As to Mr Rivett's interest in the Fritton Trust, which was a trust of which Mr Rivett's father was the trustee, Mr Ryan agreed that given such an "asset", it would be possible to ask for a guarantee from the trustee or alternatively, exclude the assets of the trust from the statement of assets and liabilities. Mr Ryan was not concerned that some assets were in the joint names of Mr Rivett and his wife. He was disappointed that Mr Blackadder had not checked the pre-sale contracts. He was surprised that they provided for payment in trade dollars. 315. Mr Ryan was cross-examined at some length concerning Mr Blackadder's authority to approve loans. In his ASIC examination (pp 18-19) he agreed that Mr Blackadder essentially approved loan applications. He said, however, that if he, Gill or another partner saw something 'materially wrong' in the synopsis of the loan, he would raise it with Mr Blackadder. This seems to mean that he considered himself to be jointly responsible with Mr Blackadder for issuing the facility letter. He said, with respect to the Yandina project, that he and Mr Blackadder were responsible for assessing it. It seems that Mr Blackadder primarily attended to the commercial assessment whilst Mr Ryan attended to the transactional assessment. 317. Mr Ryan was referred to a letter dated 26 May 2004, from Clayton Utz (ex 67), the solicitors for the second cross-respondent. That firm enquired as to the way in which the mortgage business was conducted. These statements seem to be correct, having regard to the evidence but seem to be inconsistent with the admissions in par 8 of the defence of certain matters pleaded in the statement of claim. 319. According to ex 67 Mr Blackadder assessed applications, checked details of same, organized external valuations and on-site visits, checked CRA details, 'etc' . He was also responsible in the first instance for issuing facility letters. Such letters would require that specified terms be satisfied in order that the loan be 'progressed' . He would subsequently prepare the investment summary for circulation. 320. Mr Blackadder was the highest paid employee in the firm, on a salary more than double that of any of the employed professional staff. He had been "headhunted" from his position as a commercial lending manager with Suncorp Metway Bank. He had the authority to approve each loan and typically, once an investment summary was prepared, he would distribute it by email to partners and relevant staff. At the same time it would be distributed to potential investors for their consideration. Mr Gill was responsible for liaising with investors and distributing the summary to potential investors. Mr Ryan was in charge of the mortgage business. Mr Gill and Mr Blackadder were answerable to him. Mr Ryan's role included preparation, stamping and registration of security documents including undertaking appropriate searches. He was responsible for administering any defaults including preparation of notices of exercise of power of sale and any selling programmes. Mr Blackadder reported regularly to the partners, usually monthly, as to the status of loans and management of the overall portfolio. 321. According to ex 67, the brochure referred to in the statement of claim was prepared by an outside marketing consultant after consultation with Mr Ryan. It was superseded by another brochure distributed to investors after Mr Blackadder was appointed. Mr Johnson, who was the office marketing manager, appointed in December 1998, retained an outside marketing consultant to prepare the latter brochure. 322. Newsletters were prepared by Mr Johnson from time to time. The ten point assessment plan was prepared by Mr Johnson in consultation with Mr Blackadder. Mr Ryan recalled Mr Johnson showing him the newsletter which outlined the ten point plan. Mr Blackadder confirmed to Mr Ryan that the plan accurately reflected his work. Usually, each newsletter would be discussed at a partners' meeting. 323. The letter (ex 67) stated that no part of the Yandina project application, valuation or pre-sale contracts was read by the partners prior to settlement of the loan. Mr Ryan read this material some time after the loan went into default and discussed the file with other partners. The various brochures, newsletters and investment summaries were read by them at, or after, publication and distribution. 324. I am inclined to accept ex 67 as representing the MDRN partners' collective recollection of the way in which the mortgage business was conducted. It seems most unlikely that MDRN would be foolhardy enough to provide inaccurate information to their insurers, given the position in which they found themselves at the time at which the letter was written. As concerns Mr Blackadder's role, Mr Ryan's evidence at the ASIC examination was to similar effect. I accept that Mr Blackadder was primarily responsible for approving loans and preparing facility letters and investment summaries. Of course, he worked for MDRN, and the partners no doubt retained the power to overrule any decision which he took. This matter will be of more importance in considering the cross-claims than for present purposes. 325. Mr Ryan made it clear in the ASIC hearing that he did not believe that Mr Rivett's assets were of particular materiality to the loan. He considered that the loan was viable 'in terms of itself' . This view appears to have been based on the sale price of the units, costs, the building contract, comments by the quantity surveyor and the valuation. He thought that Mr Blackadder would have looked at those items and Mr Rivett's assets and liabilities. However he did not know whether this was so. Mr Ryan himself had certainly not done so. 326. The newsletter was aimed at current investors rather than prospective investors. It was 'a general information document rather a marketing document' . It went out on a quarterly basis to keep investors informed generally about the practice. In the winter 1999 newsletter MDRN emphasized the fact that it did not merely 'equity lend' up to 70 per cent of the valuation of the property. They wanted to demonstrate that they were doing something more. The document asserted that other firms 'don't examine the financial history of the borrowers, their current financial capacity, nor their commitments, nor do they run credit checks against the borrower and guarantors' . Mr Ryan was asked whether this implied that MDRN undertook such checks. Mr Ryan conceded that it implied that they followed the ten point plan, although on an 'holistic basis' . That seems to have meant that different weight or emphasis was given to different points, depending upon the loan in question. 327. It was pointed out to Mr Ryan that Mr Ludlow had valued the property on instructions from Project Results rather than from MDRN on behalf of investors. He said that Stanton Hillier Parker had indicated their willingness to 'to assign and extend our responsibility to the extent of our valuation report and this letter to Lawyers Private Mortgages Pty Ltd for mortgage security purposes. ' Mr Ryan was asked why there had been no other independent valuation. He said that Mr Ludlow's standing was such in connection with pensioner accommodation that he did not think it was necessary. He considered him to be relevantly independent. He had no idea who had paid for the valuation. He was questioned concerning the extent to which Project Results had demonstrated its capacity to service the loan and responded that it had done so 'through the viability of the project' . 328. In the course of the ASIC examination, Mr Ryan conceded that it would not have been possible, on the projected figures for all investors to have been repaid at the end of Stage 1. He agreed that MDRN must have been relying upon a certain percentage of investors allowing their investments to be extended to subsequent stages. This typically occurred. He believed that the statement concerning the "residual" sufficiently disclosed that prospect to investors. 329. Mr Ryan offered a number of other reasons for the failure of the project. It was an extraordinarily wet period. This substantially delayed completion. The timing of the project coincided with the introduction of the goods and services tax. This made it difficult to find contractors and materials. That tax also increased the cost of the project. He was asked whether he was aware that following default in payment of interest, new investors were introduced in substitution for former investors. He said that there was a policy that any incoming investor be made aware of default. He also understood that any substitution had to be 'between related parties' . He probably meant that it was permissible to substitute a related party or an unrelated party, provided that the incoming investor was made aware of any default. 330. Mr Ryan conceded that in choosing to invest, Mrs Blackwell probably relied upon the investment summary. Mr Durie was admitted to practise in December 1977. He practises principally in the areas of commercial law, estate planning and administration and conveyancing. The private mortgage business was under the day-to-day supervision of Mr Ryan. Mr Blackadder was employed by MDRN in or about September 1998. He became known to Mr Durie whilst he was employed as a commercial lending manager with Metway Bank. Mr Durie's knowledge of the operation of the mortgage business was derived from information provided by Mr Ryan at partners' meetings and in other conversations. Investment summaries for proposed loans were circulated to the partners for information and comment. Mr Durie could not remember reading the investment summary. He knew virtually nothing about the assessment of Mr Rivett's proposal. He denied that MDRN had delegated to Mr Blackadder the function of assessing and approving applications for finance. 332. In cross-examination Mr Durie was referred to exs 51 and 52, the correspondence between him and Mr Trotman. He said that he had derived the relevant information for his reply from Mr Ryan. Mr Durie was also referred to the correspondence between Clayton Utz, solicitors for the second cross-respondent, and MDRN, concerning the conduct of the mortgage business (ex 67). He said that he was not consulted about the contents of the response which was written by either Mr Ryan or Mr Neil. He agreed with the account of the way in which applications for finance were assessed. He disagreed with the assertion in the letter that investment summaries were distributed to potential investors at the same time as they were distributed to partners. The partners had resolved that they should see them before they were distributed. They would then have an opportunity to intervene if anything concerned them, or if they had some particular knowledge which might affect the transaction. Mr Durie had not seen the source material upon which the investment summary for the Yandina project was based. He had not read the loan application. As he understood MDRN's practice, no partner would have read the application prior to settlement of the loan. Mr McCarthy is a partner in MDRN. He was admitted to practise in February 1976. He practises primarily in the areas of property and commercial law. He was not involved in the day-to-day assessment of individual loans. However he was aware of activities in that area of the practice as a result of almost daily meetings with Mr Ryan and discussion of issues arising, including the progress of various loans. The partners would lunch together on at least three days each week for the express purpose of providing support and backup to Mr Ryan in his area of practice. Mr McCarthy's knowledge of the mortgage business was based upon information supplied by Mr Ryan at such meetings. Investment summaries were circulated to partners for review and comment. Mr McCarthy often spoke to staff, including Mr Blackadder, Mr Campbell and Mr Gill. He recalled speaking to Mr Campbell about the Yandina project. Mr Campbell said that Mr Rivett was known to him and, to Mr Campbell's knowledge, had a sound reputation. Mr McCarthy recalled seeing the investment summary for the Yandina project at the time it was issued. He was not involved in the assessment of loans and had no knowledge of what was done in connection with such assessment. He denied, as did Mr Durie, that the firm had delegated responsibility for assessing and approving loans to Mr Blackadder. His attention was directed to ex 67. To the extent that the matters there addressed were within his knowledge, he did not dispute them. However he said that in mid-1999 he thought that partners' meetings might have been fortnightly rather monthly. Mr Neil was admitted to practise in 1989. He practises principally in the areas of litigation and town planning. He had no direct involvement in the day-to-day operation of the mortgage business. However he was generally aware of the operation of the business as a result of information derived from Mr Ryan at partners' meetings. Investment summaries would be circulated to him for review and comment. He cannot recall ever raising any concern about a particular proposal, which concern resulted in the loan not proceeding. He did, however, contact Mr Ryan and Mr Blackadder from time to time to make general comments about proposals. He also reviewed most of the summaries for his own purposes. He occasionally invested in private mortgages. He recalled seeing the investment summary for the Yandina project. 335. Mr Blackadder was well-known to him in 1999. He knew him in his capacity as a branch manager with the Metway Bank at Capalaba. He understood him to be experienced in commercial and financial matters. He had a high regard for his integrity. 336. After seeing the investment summary, Mr Neil made some comments concerning the Yandina project. He said that Mr Rivett seemed to be a reasonably impressive person, that he knew the Yandina area and that it would suit a 'pensioner-type' development. He had made comments on other investment summaries. On occasions he attended site inspections. He drafted at least part of the MDRN letter, ex 67, having discussed the matter with Mr Ryan. Mr Ryan may have drafted part of it. The letter was based in large part upon a previous statement provided to the solicitors for MDRN. The second last paragraph on p 2 (in which it is said that the loan application, valuation and pre-sale contracts were not read by the partners prior to settlement) was a little imprecise in that it failed to reflect the fact that they had seen the investment summary. Mr Blackadder was first employed by MDRN on 1 September 1998. He had worked with Westpac from 1980 to 1989, which employment included consumer credit assessment, small-business lending and accounts management and control. From 1987 to 1989 he worked as assistant to the commercial lending manager in the North Sydney branch, in which role he assessed commercial, business and construction loans. In 1989 he moved to Queensland and worked for Metway bank until 1998. He was initially employed as a branch manager, which position he held until 1995. In that capacity he initially had lending authority for small-business facilities up to $100 000 and subsequently, up to $300 000. He both assessed loans himself and supervised loan assessments by his two assistant managers. 338. In 1993 he was seconded to the Metway credit department where he worked as lending manager. His responsibilities included the assessment of consumer, small business and housing loans. He had a lending authority of $500 000 and supervised 25 managers who would submit loan applications to him for approval. Some proposals involved amounts in excess of $500 000. Mr Blackadder would assess such applications and then forward them for further consideration at a higher level. During his time in that position he was a member of a committee which prepared 'a structured format for loan assessment' , presumably for use by other employees in assessing loan applications. From 1995 until 1998 he worked as property finance manager for Metway. His responsibilities included the supervision of a portfolio of existing clients and the writing of new business for the bank. He continued to have lending authority up to $500 000 and was responsible for the assessment of commercial property finance applications. He also assessed construction loans. The average size of the loan applications which he assessed was between $2 and $3 million. He would assess the application and prepare a submission. After 1997 Metway reduced the lending authority of all managers. 339. He considered that in his work with MDRN, he was responsible for assessing and approving all loan applications. At the time of swearing his affidavit filed on 4 October 2004, he was working for MDRN Investments Ltd, a company which is, as I understand it, not directly relevant to the present case. I take the references in pars 13 and 14 of the affidavit to be to his employment with the firm rather than with MDRN Investments Ltd. I also take him to be referring to the practices which obtained at times relevant to the present proceedings. 340. In assessing loan applications Mr Blackadder would consider a number of factors in determining 'at the initial stage' whether the application was worth considering. However, this type of security can only ever be regarded as make-weight security. The purpose of this security is primarily to ensure that the borrower is committed to the project and personally tied into the deal. This last passage is of some concern. It seems to confuse the position of borrower and that of a guarantor. Obviously, anybody described as a 'borrower' will be personally responsible for repayment of the borrowing. This seems not to be the position to which Mr Blackadder was referring. The reference to 'make-weight security' appears to be in anticipation of the applicants' complaints concerning the discrepancy between Mr Rivett's actual asset position and that asserted in the investment summary. 343. MDRN only approved loan applications which offered registered mortgage security. The feasibility of the project was also of key importance. Collateral securities were obtained as a matter of practice. These were known as 'make-weight' securities, that is 'secondary security' or the 'icing on the cake' . The primary purpose in obtaining this type of security was to commit the borrower to the deal. Other relevant matters were the type of project, its suitability and appropriateness, the type of person borrowing, repayment plan, exit strategy for the investors, site inspection, amount of the loan and availability of funds for investment. Only one in ten loan applications was successful. 344. Having decided that a loan should proceed, or 'was worth proceeding with' , Mr Blackadder would prepare a proposal and circulate it to the partners. They might suggest changes. If everything was satisfactory the loan would proceed, and solicitors would conduct appropriate searches. 346. Concerning the Yandina project Mr Blackadder said that in early May 1999 the Project Results application was sent to Mr Ryan by Mr Rivett's finance broker, Mr Bob Quinn. Mr Quinn telephoned Mr Blackadder to elaborate on the proposal. Mr Blackadder believed Mr Quinn to be an experienced finance broker. On 10 May 1999 he received the loan application, together with copies of a valuation, development plans, a statement of feasibility, Mr Rivett's resumé, memorandum and articles of association of Project Results, initial report from the quantity surveyor, Lloyd Carey, an extract from the building contract and Mr Rivett's statement of assets and liabilities. 347. Mr Blackadder considered the application to be comprehensive. On 27 May 1999 he met with Mr Quinn and Mr Rivett to discuss the proposed development, Mr Rivett's background and experience, the funding structure and pricing of the loan. Mr Rivett identified the site and said that the demographics of the area demonstrated that there was a need for this type of development. Other information was given concerning the project. MDRN had previously been involved in funding retirement villages. They had all been successful. 348. Mr Rivett told him that the valuer was presently undertaking a review of his initial valuation as an adjoining parcel had recently been sold and units erected thereon. Mr Rivett said that the valuer had indicated that as a result he was prepared to revalue the blocks at $90 000 each. Mr Blackadder noticed that the proposal incorporated 'a portion of trade dollars' . He was concerned by this as he considered them to be of limited value and essentially worthless. He asked Mr Rivett to demonstrate how he could add value to them. Mr Rivett said that Barter Pacific acted as a clearing house to convert trade dollars. By coincidence Mr Blackadder later spoke to a person called Lance Gibney who was employed by Barter Pacific. He more or less confirmed the information derived from Mr Rivett. 349. The project seemed to be worth considering, but a number of matters required further consideration, including the value of the property. Mr Blackadder also required further information concerning the sale price of the units, the proposed amount of the loan, how the project was to be funded and its feasibility, Mr Rivett's background and his financial position. He subsequently obtained further details from Mr Quinn and Mr Carey. He also obtained satisfactory details concerning Mr Rivett from Mr Campbell, a consultant to the firm. Mr Campbell knew of Mr Rivett's experience in property development. He had known him whilst he was practising in Townsville. The matters contained in Mr Rivett's curriculum vitae were true to the best of Mr Campbell's knowledge. 350. Mr Blackadder saw the valuation from Mr Ludlow whom he knew to be well-respected as an independent valuer with experience in the area of retirement villages. He considered the valuation to be in keeping with others that he had seen in connection with similar types of projects. It was of both the vacant allotments in Lowe Street and the land in Stephen Street. The Stephen Street land alone was valued at $400 000, subject to the pre-sale of all units. The Lowe Street land was valued at $360 000. He considered that the initial advance to be made would result in a lower LVR than 70 per cent 'so that there would be in the early stages a contingency amount in the loan. ' He considered that Mr Rivett's contribution by way of vendor finance was 'good, being 50% essentially and was all being contributed upfront. ' I am not sure what that means. Mr Blackadder understood that the debt owed to the vendor of the land was not repayable during the term of the proposed loan, nor during the following year. For this reason Mr Blackadder was not concerned that Mr Rivett's contribution was not from his own funds. He considered vendor finance to be commercially more desirable because it meant that there was no drain on Mr Rivett's funds. From a security point of view it was irrelevant as there was to be a first mortgage to protect the interests of the investors. 351. He was shown contracts for the sale of units. He understood that all units in Stage 1 had been sold. He remembered seeing 'many contracts of sale (or at least the relevant pages thereof)'. He took copies of these contracts and kept them on file. The sale price of each unit was $85 000. He was aware that there was a trade dollar component in that price. He considered that the price was consistent with the market value assessed by Mr Ludlow although, as Mr Blackadder conceded, Mr Ludlow had made no provision for trade dollars. The price was also equivalent to the price obtained in another development of the same kind with which MDRN had been involved. It was an attractive selling point that units in the Yandina project were slightly larger than the average for such units. 352. In May 1999 Mr Blackadder spoke to Mr Ludlow with a view to having the valuation 'assigned to Lawyers Private Mortgages Pty Ltd' . He had a general discussion with Mr Ludlow concerning the valuation. He seemed 'supportive of the project and of Mr Rivett' . He considered the project to be well located. Mr Ludlow confirmed that he was updating his valuation, having regard to the sale of the adjacent land. 353. Mr Blackadder then conducted various searches. The land was noted on the contaminated land register but there were no adverse notations made against it. He was aware that soil tests had been conducted. Prior to settlement of the loan he conducted further searches. Some of his colleagues knew Mr Carey who was the quantity surveyor for the project. This gave Mr Blackadder some comfort. 354. He first spoke to Mr Carey by telephone in May 1999, asking for more detail concerning costings. He subsequently received detailed costings. He asked Mr Carey if he would certify the costs and the project draws on a "cost-to-complete" basis. Mr Carey said that he would. He discussed the use of trade dollars in paying construction costs and raised the need to ensure that cash was available to complete the project. Mr Carey said that Mr Rivett was a major player in trade dollars and that if anyone could utilize trade dollars he could. They discussed the amount of cash available to pay for building works, assessed at about $900,000. Mr Carey confirmed that such a sum would be sufficient to meet the cash component of the building contract. On the basis of that assurance, Mr Blackadder understood that there was a fixed-price contract in place for construction, and that adequate cash was available. Mr Carey knew the builder and considered that he was capable of doing the work. The project was not overly complex. 355. Mr Blackadder saw a copy of the soil report prepared by Mr Gribble. It was satisfactory. He first made contact with the builder, Mr Glen Brady of Leknbray, in June 1999. Mr Brady was satisfied with the costing of the project and happy to do the work. He was ready to commence. 356. On 2 June 1999 Mr Blackadder conducted a site inspection with Mr Campbell and Mr Rivett. Mr Carey was also present. Mr Carey had previously been involved in a number of retirement village developments in the Cleveland area. He also knew Mr Rivett. They inspected the general area and, in particular, looked for other suitable sites in Nambour. They identified none. They saw some other 'retirement-oriented sites' between Nambour and Yandina, primarily caravan parks, which apparently had similar zoning requirements. They saw no other suitable sites at comparable prices. 357. Mr Blackadder considered that the arrangement for the pre-payment of interest from the amount of the advance was an 'accepted norm in construction finance' . It allows the developer to fund interest payments until completion. The period of six months was chosen because Mr Carey considered that Stage 1 would be completed and sold within that period. Mr Blackadder ensured that the LVR at the end of Stage 1 would comply with the 70 per cent requirement. He noted that from Mr Ludlow's valuation of 14 July 1999, the market value of Lots 2 to 5 was $360 000. Mr Ludlow assessed the value of the remainder of the land on Lot 6, after completion of Stage 1, at $300 000. At that time there would be other land to the value of $660 000, of which 70 per cent was $462 000. Mr Blackadder was concerned to ensure that at the end of Stage 1, the residual debt did not exceed that figure. He said that it was not unusual for there to be a residual debt at the end of the first stage of a project. The first stage may be disproportionately expensive as a result of the need to install infrastructure for the development, the cost of which is not replicated in subsequent stages, or at least not to the same extent. Given that there was more risk involved in the early stages, it was appropriate that the LVR at the end of Stage 1 be of the order of 60 per cent. He therefore fixed the figure of $400 000 as the permissible residual debt. This was also designed to ensure that in the event that MDRN did not wish to finance Stages 2 and 3, there would be no difficulty in obtaining other finance. 358. Mr Rivett proposed that during Stage 1, repayment be made from the proceeds of sale of the units. To do so, it would be necessary that cash, as opposed to trade dollars, be derived from the sale of units. He initially indicated that ten of the units would be sold for 60 per cent cash and 40 per cent trade dollars and two units, for 80 per cent cash and 20 per cent trade dollars. Mr Blackadder calculated that this would yield $646 000 in cash. Mr Rivett said that sale of the management unit and management rights would yield $240 000 and $200 000 respectively. Mr Ludlow had valued the unit and rights at $325 000 in total. Although Mr Blackadder considered Mr Rivett's figure to be reasonable, he chose to rely on Mr Ludlow's figure. This meant that total proceeds for the sale of Stage 1, using Mr Rivett's proposal, would be $971 000, leaving a residual of $429 000. This represented an LVR of 65 per cent, comfortably within the 70 per cent limit. However Mr Blackadder was not willing to recommend the loan on that basis. He considered that in the early stages of the development, repayment should be at the rate of 80 per cent of the market value of security being released. I understand this to mean that he required 80 per cent of the nett proceeds of sale of any one unit. 359. On 27 May 1999 he discussed the matter with Mr Quinn and Mr Rivett, indicating that he would only be interested if the balance of the loan, after completion and sale of Stage 1 and the manager's unit and management rights, did not exceed $400 000. They discussed the "split" on the various unit contracts, that is the proportion of trade dollars in each sale price. Mr Blackadder favoured a maximum of 20 per cent in trade dollars. Mr Rivett wanted 40 per cent. Given a loan of $1.4 million, this would show a residual debt of $361,000. Mr Rivett agreed to this approach. Mr Blackadder said that he would require that at settlement there be six contracts, each with a cash component of 80 per cent. This was the genesis of the requirement in the contract for evidence of six sales. He saw such contracts prior to settlement. He would not have settled without having seen them. 361. Mr Rivett advised that trading profits from his companies could cover interest payments. Mr Blackadder did not consider this to be of importance because of the other arrangements to which I have referred. He considered that the director's guarantee and registered mortgage debenture over the assets and undertaking of Project Results were 'make-weight securities' , different from the mortgage over the land which was part of the development. The value of Mr Rivett's assets might alter from time to time. Mr Blackadder examined them to see whether they appeared reasonable for a person of his age and background. He then checked the level of gearing against those assets to identify the lenders and the amounts of the loans. He considered that there was nothing in Mr Rivett's statement of assets and liabilities which appeared adverse. Nothing appeared unreasonable. He had no reason to doubt that the position was reasonably accurately reflected in the statement. He was concerned to establish only that there were some assets and funds available to Mr Rivett at the time of the application. He considered this to be the standard practice in commercial lending. It was the approach which a prudent and reasonable lender would take. 362. Mr Rivett also provided him with statements of assets and liabilities for a number of companies in which he had controlling interests. Mr Blackadder examined them to determine whether or not they appeared reasonable. He considered the gearing of any liability against assets. His primary interest was to see that Mr Rivett had some other assets and had demonstrated a level of financial acumen. He also regarded these assets as 'make-weight security' . It was not MDRN's standard practice or standard industry practice to undertake detailed checks of the asset position of an applicant or associated company. The primary security was the first mortgage. Mr Blackadder's main concern was to satisfy himself as to the value of that security. 363. Mr Blackadder said that he had conducted a credit check. He never approved a loan or submitted it for approval without having done so. The credit checks were undertaken with CRA. He also conducted an ASIC search in respect of Project Results. He did not recall anything adverse arising from the credit check or the ASIC search. Having conducted these checks Mr Blackadder was prepared to submit the loan application for approval by the partners, and accordingly prepared the investment summary. The summary was then circulated to the partners, particularly Mr Ryan, and to Mr Campbell and Mr Gill. There were various comments and suggestions which he adopted where appropriate. He then circulated the final document to potential investors. 364. Mr Rivett struck him as an experienced and responsible property developer, knowledgeable about the issues which might arise in a development of this nature. 365. As to the ten point plan, Mr Blackadder said that prior to August 1999 Mr Johnson asked for an article explaining the process by which loans were assessed. He wished to use it for marketing purposes. In conjunction with Mr Johnson and Mr Ryan, Mr Blackadder drafted the ten point plan. It depicted 'a textbook process of loan assessment procedures as I learned them at Metway and Westpac' . Whilst the ten points represented various matters to which Mr Blackadder turned his mind in the assessment of a proposal, the weight given to each aspect would vary from proposal to proposal. 366. The loan was approved on 11 June 1999. Prior to the first advance, Mr Blackadder discussed with Mr Rivett the conditions precedent to the loan, including Mr Carey's certification, provision of the six pre-sale contracts and the assignment of the valuation. Mr Carey's certificate arrived in late June and the six pre-sale contracts were sighted prior to settlement. There were also negotiations regarding the building contract. At some stage Mr Blackadder received a telephone call from Mr Trotman who asked if he and his wife could meet Mr Rivett. Mr Blackadder arranged the meeting. After the meeting Mr Trotman telephoned to say that they had been very impressed by Mr Rivett and supported him and the project wholeheartedly. 367. On 23 July 1999 the loan was settled and the first cheque issued to fund the purchase of land. In mid to late August Mr Carey telephoned, saying that there were some issues with the subsoil at the site. In particular, large tree trunks and debris had been uncovered during the initial excavation. There was also some concrete. Mr Carey was concerned that there might be a cost blowout. Mr Blackadder telephoned Mr Rivett and, on 25 August 1999, met with Mr Rivett, Mr Carey, Mr Ryan and the soil tester, Mr Gribble, on site. Various solutions were discussed. Mr Carey indicated that he considered that the costs could be contained. At worst he thought that there would be a $10,000 escalation. Mr Carey recommended that the project proceed. It was agreed that he should complete a fresh costing. Mr Ryan and Mr Blackadder made it clear that the firm would not agree to proceed until they had reviewed that costing. Construction therefore stopped pending receipt of the costing. It was received in the week commencing 6 September 1999. Mr Blackadder discussed it with Mr Carey and with Mr Ryan. They decided to proceed. 368. In late September Mr Carey advised that the builder was not on site, and that Mr Rivett had released it from the contract. Mr Blackadder telephoned Mr Rivett who confirmed that he had released the builder and appointed a new builder, Mr Moore. Mr Rivett said that there had been a dispute between the partners of Leknbray, the previous builder, as to whether to proceed with the project, primarily because of variations to the contract. Mr Blackadder expressed concern about the release of the builder. Mr Rivett said that Mr Carey supported Mr Moore as the new builder. Mr Blackadder telephoned Mr Carey. He indicated that he was supportive of Mr Moore, and that because Mr Moore would be the on-site builder and supervisor, there would be cost savings. Mr Moore commenced work in late September or early October. Mr Blackadder undertook regular inspections and was in regular telephone contact with Mr Rivett and Mr Carey. Progress was slow. Mr Rivett and Mr Carey attributed this to weather conditions. Labour and supplies were also difficult to obtain due to the imminent onset of the GST system. 369. On 22 October 1999 Mr Blackadder met with Mr Rivett, Mr Moore and Mr Carey. He received an assurance that the development would be finished early in January 2000. In January 2000 Mr Blackadder met with Mr Rivett to discuss delays in construction and any consequential cost overruns. He was told that there had been no overruns. They discussed completion and sale. Mr Rivett said that he had some sales involving 60 per cent cash components. Mr Blackadder said that MDRN would not accept sale contracts where a large proportion of the sale price was to be paid in trade dollars. Interest payments were also discussed. Mr Rivett said that he could meet the interest payments and that the development would be finished within six weeks. Mr Blackadder confirmed these matters with Mr Carey. Mr Carey recommended that construction continue. He said that costs were containable. Any cost escalation would not exceed $20,000. In February and March 2000, Mr Blackadder expressed concerns to Mr Rivett and Mr Carey about the slow rate of progress, suggesting that Mr Moore was not the appropriate builder to complete it. By the end of March Mr Carey indicated that he tended to agree. 370. Mr Rivett failed to make the February interest payment. Mr Ryan and Mr Blackadder telephoned him on numerous occasions. Mr Rivett said that he had various schemes for paying the interest and any shortfall in funding. MDRN issued default notices, including notice of exercise of power of sale. In April the builder was dismissed because of lack of progress. Mr Carey and Mr Rivett appointed Lee Murphy as replacement builder. Mr Carey indicated that costs were still 'contained' . In May 2000 Mr Carey telephoned Mr Blackadder and informed him of a cost escalation of $230 000. Mr Blackadder called a site meeting which was held on 31 May 2000. Mr Blackadder, Mr Rivett, Mr Carey, the builder and Mr Ryan attended. Somebody said that there were defects in Mr Moore's construction work, and that extra cost would be incurred in finishing construction. Mr Blackadder or Mr Ryan pointed out that there would be a shortfall in funding as a result of such escalation, and that the project could not be finished. Possible solutions were discussed. The new builder, Mr Murphy, indicated that he represented a group which might be interested in assuming ownership in exchange for finishing the construction. Mr Rivett was agreeable to this proposal and indicated that he was also considering other proposals, including alternative funding sources. Mr Carey and Mr Murphy recommended that work proceed to lock-up stage on eight units and the manager's unit. 371. Some days later Mr Ryan and Mr Blackadder met with Mr Murphy at his office. They discussed possible contributions towards completion costs and the reasons for the cost escalation. Mr Murphy said that such escalation had been caused by the initial footing and subsoil issues, and that although there were some defects in the building work, he also suspected some theft from the site. He considered that Mr Rivett's lack of day-to-day attention to the project was also a contributing factor. Mr Murphy suggested that whatever money was needed to complete eight units to lock-up stage should be spent for security reasons, and it should otherwise be left to Mr Rivett to find the money to finish the project. This suggestion was supported by Mr Carey. After the eight units reached lock-up stage, work stopped. The builder and the subcontractors declined to proceed. Various options were suggested, but none adopted. In May and June 2000 Mr Ryan and Mr Blackadder spoke to Mr Witt who was the second mortgagee, having provided vendor finance. He was a builder in his own right and indicated that he was prepared to assist. Nothing came of this. 372. At a meeting of investors on 13 October 2000, it was decided to list the property for sale. MDRN engaged Mr Weir of PRD Maroochydore to market it. They received other submissions, but Mr Weir's was the best. He undertook a marketing programme over four to six weeks, commencing in January 2001. Several offers were received but none was acceptable. The firm negotiated with various other parties regarding sale, including Messrs Rolls and Burke, to whom it was eventually sold by Mr Jessup as liquidator. In September or October 2001 Mr Blackadder took Mr Jessup on a site inspection and gave him a detailed summary of the works. 373. As did Mr Ryan, Mr Blackadder distinguished between the commercial aspect of the assessment of a proposed loan and the transactional aspect. He said that Mr Ryan supervised him in his work. Mr Ryan also performed the transactional aspects of the loan assessment. He and Mr Ryan would regularly discuss loan applications. Mr Blackadder also frequently discussed loan applications with Mr McCarthy, Mr Campbell and Mr Gill. He was not authorized to approve loans at the time of the Yandina project. Once he had formed the view that the commercial aspect of a proposal indicated that it was worth proceeding he would draft the letter of offer or facility letter. That letter was never in a form capable of acceptance. It rather set out steps to be taken before it would make the loan and sought confirmation that the potential borrower was willing to enter into a loan on those terms. This was said to be an industry practice. 374. Mr Blackadder understood that such offers only became unconditional at the time of settlement. In other words MDRN reserved the right, until settlement, to refuse to make the advance. Before the letter of offer was sent, Mr Blackadder would give it to Mr Ryan for review. 'At that point the emphasis of the requirements of the loan assessment shifted from the commercial aspect to the transactional aspect. ' He and Mr Ryan would have a further discussion, reviewing the commercial aspect and discussing the transactional aspect. If a borrower accepted the letter of offer, Mr Blackadder would commence to draft the investment summary. A first draft would be circulated to Mr Ryan and Mr Gill for their comments and feedback. Any suggestions would be incorporated. The final draft would then be sent to each of the partners, Mr Gill and Mr Campbell, for their comments and feedback. Any suggestions or comments would be incorporated into the document. If any of the partners had any concerns about the deal or thought it should not proceed, it would not proceed. This happened on a number of occasions. Once each partner had been given an opportunity to respond to the draft investment summary, it would be sent to potential investors. Even at that stage there was a prospect that Mr Ryan, in carrying out the transactional aspects of the matter, might discover something of concern, in which case the deal might not proceed. 375. Mr Blackadder said that it was his practice to assess any proposal in terms of its viability as well as having regard to available security. In the case of a development such as the Yandina project, success depended primarily on the commercial viability of the project. 376. In a subsequent affidavit Mr Blackadder said something more about the meeting on 13 October 2000. He also said that he had maintained diary notes concerning the performance of his duties. However none of those matters seems to be directly relevant. He also referred to the affidavit of Mr Trotman and in particular, to pars 46 and 48 thereof. These paragraphs relate to Mr Trotman's meeting with Mr Rivett. He denied certain matters asserted by Mr Trotman, in particular that he had said that MDRN had checked only some of Mr Rivett's companies. He denied having said that one of MDRN's partners knew Mr Rivett. As to par 48 of the affidavit, he said that even before the notice of exercise of power of sale, both MDRN and Mr Rivett were making extensive enquiries with a view to finding a joint venture partner for the project or other alternative funding. Mr Ryan or Mr Blackadder had discussions with persons who had expressed interest in taking over the project, including persons identified in the affidavit. 377. In his oral evidence-in-chief Mr Blackadder's attention was drawn to the document which is at tab 22 of ex 1. This is a letter dated 2 June 1999 to Project Results, advising of the approval of loan application, subject to conditions, presumably the so-called "facility letter" relevant to the Yandina project. It largely supports the view expressed by Mr Ryan and Mr Blackadder that there was no binding commitment to make an advance until the advance was actually made. It expressly says so. This matter is of some importance to the cross-claims. On an attached schedule a number of ticks have been placed against some of the lender's requirements. Mr Blackadder said that he may have ticked them to indicate that he thought that they were fair, reasonable and appropriate. He said that similar ticks on the document at tab 30 of ex 1 (a letter dated 14 July 1999 from MDRN to Project Results listing certain outstanding requirements) indicated that the various conditions had been satisfied. 378. In the course of cross-examination Mr Blackadder was questioned concerning his approach to calculating the LVR of 70 per cent. He said that he had adopted estimated gross amounts to be realized on the sale of units at $1.645 million and added the revised value of lots 2 to 5, yielding a total of $2 005 000. The amount of the loan was $1.4 million, showing an LVR of 69.8 per cent. (See TS 1533. ) This evidence may be compared with the evidence in his affidavit, to which I have referred above, concerning the way in which he calculated the residual debt of $400 000. 379. Mr Blackadder was cross-examined at length about his failure to check the information contained in Mr Rivett's statement of assets and liabilities. Clearly, there was little or no checking. It is the respondents' case (and Mr Blackadder's opinion) that extensive checking was unnecessary because of the "make-weight" nature of the personal guarantee and floating charge. He was also cross-examined at length about his use, in the investment summary, of the information provided in the statement of assets and liabilities. I will address that matter at a later stage. 380. Mr Blackadder agreed in cross-examination that he had no knowledge as to whether Mr Rivett's companies had the capacity to pay the interest from trading profits. He did not investigate that matter. He was cross-examined at length concerning the quantity surveyor's report (tab 7 of ex 1), particularly in connection with a cash flow document. In the course of cross-examination Mr Blackadder accepted that no search was carried out with CRAA, the relevant credit agency. Such a search would not have revealed Mr Rivett's previous arrangements with his creditors. A search with the Insolvency and Trustee Service Australia ("ITSA") would have done so. 381. A matter of significant concern emerged from the cross-examination. It was a condition of the loan that evidence of six contracts be produced prior to the advance being made. Mr Blackadder claimed to have seen six contracts for sale with payment of 80 per cent in cash and the balance in trade dollars. However no such contracts have been produced. Six contracts have been produced but only three of them relate to Stage 1. All showed a 60/40 split. No satisfactory explanation has been given for the absence of the six contracts to which Mr Blackadder referred. It is possible, but unlikely that they have been lost. It is also possible that Mr Blackadder was dishonest in asserting that he had seen six such contracts. Mr Blackadder was not an impressive witness. His recollection of the circumstances surrounding the transaction was disconcertingly imprecise. Despite his claim to have kept notes, they were not produced. Although the trial took place many years after the relevant negotiations, the project failed very shortly after the advance was made, at a time when, according to Mr Blackadder, he was closely involved in supervision. In those circumstances, one might reasonably have expected that he would have taken steps to record his actions at a time when his recollection was quite fresh. I am unable to accept his evidence that he sighted six contracts for the sale of units in Stage 1 with an 80/20 apportionment of each purchase price. 382. I also have difficulty with Mr Blackadder's attitude to Mr Rivett's statement of assets and liabilities. I accept that it was appropriate to look to the proceeds of sale of the development as the primary source of repayment. If it were unlikely that the project would succeed so as to make such repayment possible, there would be no justification for lending the funds. Similarly, it is understandable that he saw the first mortgage as being a more important assurance of repayment than either Mr Rivett's guarantee or the floating charge over the assets and undertaking of Project Results. As was observed in the course of the trial, unsecured assets can be sold or otherwise lost. The rights of other creditors may intervene. However the value of such assets is still of some importance. Further, Mr Blackadder included such information in the investment summary, suggesting that he thought it likely to be of some interest to potential investors. 383. A professional investor, risking his or her own money or that of his or her employer, might treat such matters as being of little importance compared to other sources of repayment, but MDRN and Mr Blackadder were providing information to potential investors in order that they might decide on the worth of the proposed investment. It was almost inevitable that at least some potential investors would treat this information as relevant to their decisions. To some extent, MDRN recommended the project to such investors. If they were not taking responsibility for the accuracy of such information, one would have expected them to have said so in clear terms. I will return to this matter at a later stage. A number of other witnesses were called on behalf of the applicants. Only some need be discussed. Mervyn John Moloney is an employee of ITSA. ITSA keeps a record described as the "National Personal Insolvency Index". In it are entered names of persons who have been made bankrupt, persons who have presented their own petitions in bankruptcy and persons who have entered into Part X arrangements. The index has been in existence since at least 1996. I infer that prior to that date, a similar record was kept by this Court in its bankruptcy jurisdiction. On 27 September 2004 Mr Moloney conducted a search against Mr Rivett's name. It revealed that a file was commenced on 21 February 1984 and entered on the National Personal Insolvency Index on 18 December 1996. This record was available for public search in June 1999. Mr Hellen is an accountant. His evidence goes to two issues. One is prudent lending practice. The other is the nett worth of Mr Rivett and associated companies and trusts. As to the first matter, Mr Hellen said that a prudent lender would be sceptical about the claimed values of assets offered as security in the absence of valuation evidence. Likely difficulty in realization should also be kept in mind. Assets must be clearly described and the borrower's claims to them identified. 387. Mr Hellen assessed Mr Rivett's nett asset position as, at 11 June 1999, as $21 989 and Projects Results, a deficiency of $77 710. I have not found those figures to be of much use largely because Mr Hellen made numerous assumptions which have not been justified by the evidence. However some of Mr Hellen's evidence was helpful. It will be more convenient to deal with it in detail at a later stage. Ms Carter is an accountant and partner in the firm of Jessup and Partners who were appointed to wind-up the mortgage business, including the advance to Project Results. She took possession of the relevant books of account and handed them to ASIC. 389. Ms Carter was also involved in the decision to sell the Yandina property. Her affidavit demonstrates, as far as it goes, an appropriate and responsible approach to the question of sale. Ms Carter's evidence was primarily directed to complaints made by the respondents concerning the sale of the property. I will discuss these matters in more detail in considering Mr Jessup's evidence. On 13 September 2001, the Supreme Court appointed Mr Jessup to wind up the mortgage business. His firm took possession of the books and records relating to the Yandina project and subsequently forwarded them to ASIC. The site was sold and the proceeds distributed to investors. A total of 59.497 per cent of invested capital was returned. Mr Jessup concluded that Mr Rivett did not have sufficient assets to justify seeking to enforce the guarantee. 391. The site was sold for a purchase price of $1 million plus $103 624.64, the estimated liability of Project Results for GST. Making allowance for interest on the purchase price and settlement adjustments, the nett proceeds of sale were $1 142 653.90. The sale was effected in reliance upon a valuation of $850 000 as at 25 February 2002. Prior to the sale Mr Jessup had inquired concerning any movement in the market since the date of the valuation. Having so enquired, he did not consider that there was any need to remarket the property before sale. 392. At some stage the purchaser sought an extension of the date for settlement in order to enable it to review certain declarations made by Mr Jessup in connection with the sale. Mr Jessup agreed to an extension until 31 March 2003, acting upon advice from his solicitors. The respondents inferred that Mr Jessup could have rescinded the contract and resold at, as they allege, a higher price. A right to rescind could only have arisen if the purchaser had evinced an intention not to perform the contract or an inability to do so. There is no evidence of either occurrence. That is really an end of the matter. For the sake of clarity, I should say a little more. 393. The respondents asserted that Mr Jessup had extended the time for settlement by almost a month, based upon the fact that the contract was apparently dated 2 August 2002. However Mr Jessup said, and it has not been contradicted, that the parties agreed that the date of execution was actually 12 August 2002. It allowed 30 working days from that date until the so-called "due diligence" date. During this period the purchaser was given the opportunity of conducting certain investigations. The expression '30 working days' is a little difficult to interpret. One infers that it means days upon which offices are normally open, that is Monday to Friday. However 14 August 2002 was the Brisbane Exhibition holiday. As I understand it, not all of Queensland had a gazetted holiday on that day. Mr Jessup was in Townsville, the purchaser was in Sydney and the property was in Yandina. Pursuant to cl 25.1, in the absence of any agreement to the contrary, settlement was to take place at the place specified in Item R, namely Townsville. The due diligence date was either 23 or 24 September 2002, depending upon whether or not the Brisbane Exhibition holiday was to be included. Pursuant to special condition 8, settlement was to occur on the earlier of a day 30 days after the date on which the purchaser advised the vendor in writing that it required settlement or six months after the due diligence date. In the event the latter was the operative provision, so that settlement was due on either 23 or 24 March 2003. Thus, as Mr Jessup correctly observed, the extension was for a period of one week or eight days, depending upon the status of the Exhibition holiday. Under the terms of the contract interest was payable from 24 September 2002 at 7 per cent per annum. 394. In cross-examination Mr Jessup's attention was drawn to the fact that at the time of his giving evidence, his firm retained a sum in excess of $47 000 from the proceeds of sale. In a subsequent affidavit he explained that there was little chance that any of that money would become available to investors because of other outstanding debts and claimed debts. In re-examination Mr Jessup said that he had a 'fairly poor view' of the Yandina property market at the time of sale. Mr Rivett was called by the applicants. As a result, counsel for the applicants could not cross-examine him, whilst counsel for the respondents were able to do so. This difficulty, from the applicants' point of view, was alleviated to some extent by the fact that counsel for the cross-respondents thought it appropriate to cross-examine him in a way which may have been of assistance to the applicants and to the respondents' detriment. He identified profit and loss statements and balance sheets for Project Results and for other relevant companies and trusts. Financial statements for years prior to 1998-1999 were in existence at the time of his dealings with MDRN in June 1999. Mr Rivett said that at that time, he had figures for the 1998/1999 financial year and could have produced them if requested. Some of these creditors have obtained judgments for the debts and are in a position to proceed to bankrupt me at any time. [Project Results] has nothing and has not traded in the past few years. Barter Pacific Realty Pty Ltd, Barter Pacific Pty Ltd, Oakwill Pty Ltd and Barlake Pty Ltd are in the process of being deregistered. They have nothing. In cross-examination Mr Rivett said that he had been willing to accept trade dollars in the purchase of units because they were easier to sell on that basis. He was also trying to build up a real estate marketing business specializing in trade dollars. In mid-1999 six or eight brokers in his office were 'doing property' and a couple were 'doing finance as well' , 'basically specialising in trying to sell properties using trade dollars. When he provided the statement of assets and liabilities to MDRN, he believed it to be true. He was examined concerning its content. The valuation of the Alexandra Headlands house at $220 000 was based on a written valuation of $190 000 given six months earlier. The market had risen substantially. As to the Maroochydore units, he said he purchased them at $65 000 each upon the basis of a written valuation and had subsequently renovated them at a cost of about $10 000 each. Thus he valued the two of them at $140 000. The valuation of the shares in Barlake at $100 000 reflected its ownership of four vacant residential blocks in Nambour. They were bought for $55 000 each, using trade dollars. Mr Rivett subsequently borrowed against them, reducing his "equity" to $100 000. One must wonder about the effect on the price of the use of trade dollars. 398. Project Results, in its own right, owned the management rights in connection with a building called Sun Coast Resort, which rights had been valued at $180 000. Of the balance of $100 000, $80 000 was the discounted value of certain tax losses. The latter business may or may not have been operating in mid 1999. At TS 1142 Mr Rivett said that it was 'new' ; at TS 1143, he said that it may not have opened at that time. Valuation of the business at $100 00 may have been based on a forecast of the value of a twenty-year management agreement. 400. As to the interest in the NJT Trust valued at $200 000, this figure was said to represent a half-interest in land held with another person for the purposes of a development which had not yet commenced. 401. The valuation of the Fritton Trust was based upon information derived from Mr Rivett's father who controlled it. Mr Rivett conceded that he could only access assets of that trust if his father agreed. 402. Mr Rivett also gave evidence concerning the reasons for failure of the Yandina project, which reasons were substantially similar to those given by Mr Ryan. He thought that he had shown MDRN a CRAA check relating to himself. He had possibly shown it to Mr Blackadder. Mr Rivett gave hazy evidence concerning the extent of his compliance with the requirement to produce evidence of six contracts prior to the advance. He had a 'feeling of complying with it' . I am unpersuaded by that evidence. Such absence of persuasion would not normally lead me to conclude that such contracts were not provided. However, taken with the absence from the records of Project Results and the trustee company of evidence of such contracts, I so infer. 403. In cross-examination Mr Rivett was unable to disagree with the suggestion that on 30 June 1999 Barter Pacific Realty was about to report an annual loss of $64 710. He seems to have asserted that some part of the business of the company made a profit whilst other parts made losses, and that the losses were of value for tax reasons. At 30 June 1999 the company had accumulated tax losses of $421 280. It made a trading loss in 1998-1999. 404. Mr Rivett's attention was directed to tab 18 of ex 1, a cash flow statement for the Yandina project prepared by Mr Carey. Mr Rivett said that he expected a negative cash flow throughout Stage 1, Stage 2 and well into Stage 3. It is not presently necessary that I discuss other matters canvassed with Mr Rivett in his evidence. 405. Mr Rivett appears to have had a very optimistic attitude to his financial position in 1999. Such documentary evidence as there is concerning that position offers no support for such optimism or for the statement of assets and liabilities. This company was incorporated on 18 January 1999. On 13 May 1999 a charge was registered with ASIC in favour of Stay-Dry Pty Ltd. This may relate to the debt of $120 000 which Mr Rivett disclosed in his statement of assets and liabilities. There is also a bank statement showing a debit balance of $8 826.68 as at 22 June 1999. None of this necessarily detracts from Mr Rivett's claim that the company's assets were valued at $100 000. There is no apparent reason to reject Mr Rivett's claim that the company owns land, although I would be a little unwilling to attribute substantial weight to Mr Rivett's estimated valuation. This is particularly so, given his claim that he purchased the relevant land using trade dollars. The evidence suggests that there would have been some degree of discounting of such trade dollars. There are no accounts for this company. A bank statement as at 30 June 1999 shows a credit of $1.87. The balance sheet for 1998-99 shows a nett loss for the year of $1 442. There were, however, substantial profits in earlier years. The balance sheet as at 30 June 1999 shows nett assets of $26 319 as against the nett value of $170 000 claimed in Mr Rivett's statement of assets and liabilities. Its primary asset is said to be shares in Barter Pacific Pty Ltd valued (at cost) at $85 003. Its major liability is a loan to that company of $57 956. 408. The balance sheet for Barter Pacific Pty Ltd as at 30 June 1999 shows a nett deficiency of $16 919. Its primary asset is shown as shares in Barter Pacific Realty Pty Ltd valued at $82 002, 'less provision for diminution' at $82 002. I do not pretend to understand the meaning of that statement. It suggests that the total value of assets attributable to the shares is nil. Liabilities include a loan from Barter Pacific Realty Pty Ltd in the amount of $15 460. The balance sheet for Barter Pacific Realty Pty Ltd as at 30 June 1999 shows a nett deficiency of $316 973. Its primary assets appear to be loans to Barter Pacific Pty Ltd and to Project Results, together with goodwill at cost of $120 000 'Less Accumulated Amortization' in the amount of $92 537, giving a nett value of $27 463. Again I do not claim to understand the meaning of that statement. The liabilities are primarily amounts owed to banks totalling more than $270 000, with another $87 000 owed to creditors and $62 000 owed to Western Pacific Property Trust. 409. One readily accepts that a balance sheet may not tell the whole story. A company may be conducting a valuable and profitable business which value and profitability are not necessarily reflected in its balance sheet. Nonetheless one would have thought that given Mr Rivett's position as a potential borrower, the balance of convenience may well have lain with having a balance sheet which maximized, rather than minimized, the value of his assets. It is not necessary to speculate about that matter. The profit and loss account for the year ended 30 June 1999 shows a nett loss of $64 710 and accumulated losses as at that date of $421 280. Total income was $7 417 and expenses $72 127. The major "expenses" appear to have been for 'amortization' of $17 143, interest of $22,451, motor vehicle leasing expenses of $11 562 and other motor vehicle expenses of $6 041. None of that suggests the operation of a business having a substantial value. In the circumstances I am not willing to accept Mr Rivett's evidence as to the value of his interest in Project Results. On balance I conclude that the company had no nett assets of any value held in its own right. The balance sheet for the John Rivett Family Trust as at 30 June 1999 showed a total deficiency of $2 165, and a nett loss for the year of $394. Income received was $51. The assets were shares in unlisted companies at cost, and units in the ISC Unit Trust and the Western Pacific Property Trust, all of which were of nominal value. The primary liability was a loan from Barter Pacific Realty in the amount of $4 532. 411. The balance sheet for Western Pacific Property Trust shows a nett deficiency as at 30 June 1999 of $15 091. Its primary assets were freehold land at cost, said to be valued at $92 155, and an industrial building at cost, said to be valued at $154 242. Current liabilities totalled $264 235, most of which was represented by a bank loan and a tax debt. There is no balance sheet as at 30 June 1999 for this trust. The statement for the year ended 30 June 1998 shows a nett profit for the year of $201 993 and total assets of $861 971 against total liabilities of $659 968. Of the assets $276 217 was in short-term deposit. Goodwill 'at costs' was said to be worth $419 559. Current liabilities included $57 622 owed to trade creditors and for accrued expenses, almost $15 000 owed to Esanda and unit-holders' loans totalling $576 568. This financial statement was apparently prepared in support of an application for a loan by Mr and Mrs Rivett. 413. It seems likely that the ISC Unit Trust was generating a substantial income from its "Holiday Mooloolaba" business. There is no reason to reject Mr Rivett's estimate of its value at $250 000. However, as to the Mooloolaba Backpackers Resort, Mr Rivett's uncertainty as to whether the business had commenced at any relevant time and his assertion that the estimated value of $100 000 was a forecast, cause me to have substantial doubts about the reliability of his evidence concerning such value. There is good reason to doubt that Mr Rivett or his family trust owned the whole beneficial interest in the trust. 414. There is one other entity which must be considered in this regard. Mr Hellen indicated that corporate searches suggest that Mr Rivett was only one of two directors, each of whom was also an equal shareholder. The other director was Mr Bruce Robinson. The records of the company show loans to unit holders, C Rivett and B S and J A Robinson, and to beneficiaries, including the BS Robinson Family Trust and the Rivett Family Trust. All of this suggests that Mr Rivett was not in sole control of the trust or the trustee, nor was his family trust the sole beneficiary. In cross-examination at TS 1170, he seems to have conceded that his interest was only 50 per cent. In the course of preparing these reasons, I requested further submissions concerning the matter, but it seems that the evidence discloses nothing more of relevance. I proceed upon the basis that Mr Rivett and/or his family had, at most, a 50 per cent interest in the trust assets. The balance sheet for the year ended 30 June 1999 shows a nett loss of $1 017 and a deficiency of assets over liabilities of $2 311, with nett assets of $78 025, made up of about $40 000 being the 'Global Trade Exchange - trade a/c' , over $23 000 attributed to the Riverview Greens project and over $12 000 attributed to the Yandina Greens project. There is no reference to real estate of the value to which Mr Rivett referred. He said that his claim was based on 'somebody's valuation' . He said 'I'm not sure whose it was at that time, but we did have it valued, because we had to borrow some money. ' However the only apparent loans were a bank overdraft for $2 988 and a loan, apparently from Mr and Mrs Rivett, in the amount of $34 523. Mr Rivett's evidence appears to be completely inconsistent with the balance sheet. In those circumstances I reject it. This case is not concerned with Mr Rivett's conduct but with the conduct of MDRN in its preparation and distribution of the investment summary. However the cause of action pursuant to s 995 requires consideration of the difference between the relevant representations in the investment summary and the facts. It is therefore necessary to determine those facts as at June 1999. Out of fairness to Mr Rivett, I observe that at least some of the statements in the investment summary misrepresented the information which he had supplied in the statement of assets and liabilities. Although he claimed interests in trust assets which were not, in a legal sense his, he at least disclosed the fact that he had done so. He also identified assets owned jointly with his wife. Mr Blackadder did not make similar disclosures in the investment summary. That leaves for consideration only the value of the interests in the trusts. 418. Accepting Mr Rivett's valuation of the Holiday Mooloolaba business at $250 000, of which Mr Rivett or his family owned half, and treating the Western Pacific Property Trust as being worth nothing, the total value of the trust assets of the John Rivett Family Trust seems to be less than $300 000. Accepting that figure at face value, and adding the value of his own assets ($165 000), his nett worth was something less than $500 000. I attribute no value to the as assets in the NJT Trust. As to the Fritton Trust, Mr Rivett has agreed that he had no direct access to its assets. There was no basis upon which it could be other than misleading to include the claim for the whole of the corpus of the trust in any valuation of Mr Rivett's asset position. Of course, there is no real justification for including any trust assets in his estimated nett worth. There is no real reason to believe that he could deal with them as if they were his own. Thus his real nett worth was, at most, $165 000. In my view the statement in the investment summary that he had a 'net surplus of $1,790,000.00' was misleading. 419. As to the claim that Project Results had a nett asset position of $640 000, it should be noted that it applied for the loan as trustee of the NJT Trust as appears from the investment summary. In that capacity it had the assets of that trust which I have found are probably worth nothing. Project Results' own assets were also worth nothing. Mr Blackadder conceded at TS 1514 that he had derived the figure attributed to Project Results by adding together the asset position for the NJT Trust and that for the John Rivett Family Trust. On any view of it, the outcome was misleading. Ms Barbour is public access manager for Baycorp Advantage Business Information Services Ltd. That company was previously Credit Reference Association of Australia. It changed its name in 1998. It maintains a data base of information concerning both natural persons and corporations in Australia. This includes writs issued against such persons and judgments entered against them. It also has bankruptcy information and some information concerning overdue accounts, ownership of shares and directorships of companies. 421. In 1999 subscribers had access to the data base through computer contact or by telephone. In 1999 MDRN was a subscriber. It was possible to obtain a hard copy of any search by printing the online search. In the event of a telephone search, a hard copy could be faxed to the subscriber. Records are kept of inquiries made by subscribers or other persons. The only record of any enquiry by MDRN for information concerning Mr Rivett was of an enquiry made on 26 November 2003. Although the evidence is a little confusing, it seems that a search conducted in 1999 would not have disclosed Mr Rivett's arrangement with creditors in 1984. Mr McIvor is the solicitor and chief executive officer of Equity Trust Ltd, his duties being the oversight of the lending business of that company. It is now a merchant bank but began as the mortgage investment division of a solicitor's firm of which Mr McIvor was a partner. Mr McIvor said that an LVR of 65-70 per cent should be the maximum. He also said that, 'The equity provided by the borrower ought not have been less than 20 % of the total development cost. This equity must be real and exist or be contributed at the commencement of the project. Mr McIvor considered that a strata-titled retirement home was a 'special use property' , not commonly encountered. It would require specific expertise in development, sale and ongoing management. Because of these "special use" characteristics, there was additional risk inherent in any delay in completion and sale. The inherent value of the project was linked to the management of the facility. It represented an unwarranted risk unless both lender and developer were specialists in the field of residential retirement development sales and ongoing management. 425. Mr McIvor considered that aspects of Mr Ludlow's valuation should have caused a lender to refrain from placing particular reliance upon it. It is not for the moment necessary to refer to those matters. He considered that the acceptance of trade dollars for the purchase of units represented an unacceptable risk to a prudent lender. The trade dollar industry lacked credibility in the private finance industry. Prudence dictated that trade dollars not be treated as representing equity in any purchase contract or an acceptable medium of exchange. The use of trade dollars would mean that the vendor would have to release certificates of title to purchasers without receiving full payment. Payment in trade dollars was virtually worthless to the lender. He considered that prudent private mortgage practice required the identification of the nett asset position of a borrower or guarantor in cash assets, real property or liquid securities. He considered that a prudent mortgage lender would not have advanced funds on the security of beneficial interests in trusts or treated them as part of a valuable security package. 426. As to the LVR, Mr McIvor considered that in this case, the management rights of the completed project had been taken into account in the valuation 'when they did not exist and would not do so until project completion. ' They ought to have been ignored, in which case the LVR would not have been acceptable. He also said that lots 2, 3, 4 and 5 in Stephen Street valued at $380 000 were incorrectly shown as 'borrower equity' . He considered that this was incorrect in view of the fact that the purchaser held a second mortgage for payment of the purchase price. 427. Although I accept his evidence as fairly reflecting his own experience and as being well-founded in common sense, I considered that Mr Wild, who was called by the respondents, was better able to explain the underlying principles based upon his academic training and extensive practical experience. Similarly, Mr Miller's evidence was based on broader experience than was Mr McIvor's. Mr Walsh valued the property as at 25 February 2002 at $850 000 (ex 39). He considered that a sale price in excess of $1 million as at 2 August 2002 reflected market value. He agreed that the market rose in 2003 and that the difference between his own valuation in February 2002 and the actual sale price in August of that year indicated a substantial increase in that six month period. This trend would have continued into 2003. However he considered that the acceleration may only have become evident in mid-2002. I accept Mr Walsh's evidence. Mr Kendt is a broker with Service Alternative Pty Ltd, trading as Currency Alternative, a trade exchange which acts as a third-party record keeper to facilitate trading between its members and other trade exchanges. He has had substantial experience in facilitating trade transactions between members and between trade exchanges for combined cash and trade dollar consideration. Trade exchanges operate by facilitating the exchange of goods and services between members and between different trade exchanges. Members sell their goods and services to other members of the exchange and thereby receive trade dollar credits in their accounts. They are then able to purchase goods and services from other members, using such credits. 430. A potential seller will telephone the trade exchange to obtain an authorization number, so ensuring that the potential purchaser has sufficient trade dollars. The seller then completes a voucher, itemizing the transaction details and stating the authorization number. The purchaser signs this. After completion of the voucher the seller delivers the product or service and forwards the voucher to the trade exchange. It debits the purchaser's account and credits the seller's account. The trade exchange charges a fee on the transaction, which fee supports its operation. It also charges a monthly account-keeping fee. 431. In 1999 the trade exchanges operating in Queensland included Bartercard, BBX, IBEX and Global. Global was the smallest and had approximately 1000 to 1500 members, with approximately 800 of them trading actively. 432. Trade dollars are designed specifically for trading between members of a particular exchange. They are not readily convertible to cash. The rules of trade exchanges stipulate that they are not so convertible. In practice, a member may wish to convert trade dollars to currency, perhaps because he or she has accumulated a very large credit which cannot be readily utilized by way of exchange. The Australian Tax Office treats trade dollars as being the same as Australian currency. Tax liability may be reduced by selling them at a discount to another member who is seeking to accumulate more trade dollars to facilitate a particular transaction. In 1999 Global trade dollars were being sold or converted to cash at the average rate of $0.15 to $0.18 per trade dollar and occasionally, as high as $0.23 per trade dollar. By comparison Bartercard trade dollars were being sold for between $0.45 and $0.50 per trade dollar. 433. Mr Kendt said in cross-examination that the price at which trade dollars were traded for cash was not the same as the price at which they were traded for goods and services. In the latter cases, their value would be higher. The use of trade dollars is widespread in the building industry, in which industry they attract something approaching a 'dollar for dollar' value. The transaction fee would keep them below parity. Mr Ludlow is a licensed valuer. He has substantial experience in valuing hotels, motels, resorts, licensed clubs, health and fitness centres, golf courses, caravan parks, mobile home parks, management rights, nursing homes and retirement villages. He claims particular expertise in the area of retirement villages and pensioner accommodation. In 1999 no other valuer in Queensland had similar experience in that area. Mr Ludlow had no dealings with Mr Rivett prior to being asked to value the Yandina project in 1999. In January of that year he inspected the Yandina site and the proposed plans. He initially recommended to Mr Rivett that the design be reworked to reflect aspects of Mr Ludlow's experience. Mr Rivett, at least to some extent, incorporated Mr Ludlow's suggestions into his proposal. In April 1999 Mr Ludlow saw revised plans for the project. He considered it to be viable. 435. He amended his original valuation in July 1999. Since preparing the valuation he had become aware of a directly comparable sale of which he was not aware in April 1999. The valuation is at tab 23 of ex 1. 436. In his valuation, Mr Ludlow's assumed that all 42 units and the management rights were sold prior to the commencement of the development. Mr Rivett asked Mr Ludlow to make that assumption. Mr Ludlow valued the manager's unit and rights at $325 000. He agreed that having a good manager was important to the success of such a project. The manager undertakes responsibility for providing meals to pensioner residents. The amount which the management rights will fetch depends upon the number of units in the "pool". It would be unlikely that a buyer would pay $325 000 for such rights unless all units had been sold. 437. Mr Ludlow conceded that his valuation necessarily assumed completion of the project and that there was a market for the units. At TS 1433 Mr Ludlow appears to have agreed that his valuation of the management rights also depended upon the assumption that all 42 units would be available for letting, and that the value would be less if some units were not yet available for letting. He agreed that his valuation ought only be treated as reliable upon the basis that all units had been sold. He did not recall telling Mr Blackadder or anybody else at MDRN that the project was likely to be successful. Mr Sergiacomi is a valuer. He valued the subject land as at March 2003 at $1 580 000. Mr Quinn practised as a real estate agent between 1969 and 2002 and conducted finance broking as an adjunct to his real estate agent's business. He put Mr Rivett's loan application to MDRN. In considering a proposal for finance he would first ensure that the potential borrower was a person of acceptable character and that the proposal appeared to be viable. It would not otherwise be worth his while to spend time on it. He would usually make discreet inquiries about the potential borrower. If his first impression was that the proposal was sensible and the borrower reasonable, then he would develop the project to a stage where he could submit it to potential financiers. At that stage he would ensure that there was an appropriate valuation, proper explanation of the project and sufficient information to demonstrate that the loan made commercial sense and that the borrower would be in position to answer the sorts of question which the lender would have. 440. Mr Quinn knew Mr Rivett. Mr Rivett approached him, seeking finance for the Yandina project. He considered the proposal to be both professional and thorough. The statement of Mr Rivett's assets and liabilities was not of great relevance 'given security over these assets was not being proposed' . He thought it unlikely that any lender would have considered Mr Rivett and Project Results' asset positions other than to determine whether they seemed reasonable in the circumstances. Mr Quinn considered that Mr Ludlow's valuation would have been acceptable to lenders generally. He approached MDRN and spoke to Mr Blackadder. Mr Blackadder was thorough in his questioning of the proposal. He asked the questions, and required the clarifications and confirmations that Mr Quinn would have expected from a competent, reasonable loan assessor. Mr Quinn believed that had MDRN not approved the loan, he would have been able to obtain finance from other sources. 441. In cross-examination Mr Quinn said that he had brokered hundreds of loan applications and had declined to take on as many. If the lender were taking security over assets, there would have been a complete investigation of them, including valuations. This would have included verifying the extent of any claimed liability. 442. Given that Mr Quinn facilitated the proposal to MDRN, it would be a little surprising if he thought that it lacked relevant detail or that Mr Blackadder was other than searching in his examination of it. To my mind his evidence was more a matter of personal opinion than of practice in the marketplace. Mr Wild holds the degrees of Master of Laws in Deakin University and Bachelor of Commerce and Bachelor of Laws in the University of Queensland. He is completing a PhD in finance at the Queensland University of Technology and is an associate lecturer in the School of Economics and Finance in that university. Until 2001 he was Vice-President of the Bank of America NA, based in Hong Kong and Australia. It is one of the world's largest commercial banks. From 1999 until 2001 he was responsible for the origination and distribution of syndicated corporate loans in Australasia. In 1997 and 1998 he was responsible for the origination and distribution of project finance loans in Asia. In 1998 he was responsible for developing an Asian loan research capability for the bank. He has wide experience in corporate and structured loans in Australasia and Asia. In his view, '... the vast majority of loans made by financial institutions in Australia would be described as speculative by the standard criteria. He gave evidence concerning the relationship between interest rates and risk, including the mechanism by which financial institutions seek to spread risk by incorporating provision for it in interest rates and by diversifying their portfolio of lending. He considered that lending practice would be considered prudent so long as the credit risk of the loan was commensurate with the credit spread. Credit spread is the amount by which the rate of return on any debt instrument exceeds the risk-free rate of return for an investment of equal time to maturity. 445. He considered that the term 'imprudent lending practice' described entry into a loan which had a credit risk materially greater than the credit risk of alternative debt instruments which offered a comparable credit spread for the same investment period. At higher levels of lending, a lender bases the assessment of credit risk on public debt ratings such as those granted by Moody's or Standard and Poors. At a lower level, financial institutions undertake their own assessment of credit risks, directed to generating a credit rating according to some internal scale. This can then be translated into an estimate of the expected loss which is used as the basis for determining the credit loss provision, and thus the required credit spread on the loan. In a competitive market for debt capital there is a positive relationship between the credit risk of a debt instrument and the credit spread demanded by lenders and investors to provide or hold it. In the witness's experience sophisticated financial institutions often draw different, but equally defensible, conclusions as to the credit risk of a given loan proposal. 446. In many cases it will be contemplated that should the primary source fail, there will be secondary or tertiary sources of repayment. Where a subsequent source of repayment is assessed to be stronger than the primary source and independent of it, the credit risk of the loan is usually taken as the credit risk of that source. An example of this is where a lender has a guarantee from a third party which is financially stronger than, and unrelated to, the borrower. Where the strength of the subsequent source is weaker than the primary source, or not independent of it, then the credit risk is usually taken as the credit risk of the primary source. 448. In Mr Wild's view it is reasonable to assume, in a competitive market, that the average borrower seeks more expensive private finance because it cannot meet a bank lender's lower credit risk tolerance threshold. This may be attributable to the private borrower's unwillingness to accept bank loan conditions, to its own underlying circumstances or to its unwillingness or inability to provide the information required to reduce the bank lender's uncertainty as to its underlying circumstances. 449. Mr Wild said that in mid-1999 the twelve month Australian dollar LIBOR was 5.315 per cent. 'LIBOR' is the London Interbank Offered Rate. It is the rate at which one strong international bank will accept a deposit from another and is a widely accepted benchmark for a risk-free rate of return. In the present case the loan (at 9.25%) offered a credit spread of 3.935 per cent per annum for a term of one year. This credit spread implies a market estimate of the rate of credit loss on that security of up to 3.6 per cent per annum. The credit rating agency, Moody's, has estimated that for investments rated by them as "rate B", the average loss rate is 4.14 per cent. Their next highest category "Ba" has an average annual loss rate of .77 per cent per annum. Thus the Yandina project loan was at a rate appropriate to a loan rated somewhere between "B" and "Ba" on the Moody's scale. These are described as 'speculative grade ratings' . Assurance of interest and principal payments or of maintenance of the other terms of the contract over any long period of time may be small. ... Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Research by the Reserve Bank of Australia shows that in December 1998 the average credit spread on bank loans to small business in the amount of $500 000 to $2 million was 3.3 per cent per annum. In Mr Wild's opinion the average loan to a small business could, in 1999, only reasonably have been considered as speculative. The credit spread of the present loan was higher, suggesting a higher risk. 451. In April 1999 the Reserve Bank reported that credit spreads on housing loans secured by residential real estate were in the range of 1.25 to 1.5 per cent per annum. Housing loans are usually long-term. There is said to be a 'positive relationship' between the credit risk and time to maturity of any debt instrument. Loans of shorter maturity have, all else being equal, lower credit spreads than loans of longer maturity. The present loan had a credit spread substantially higher than that for housing loans when one might normally have expected it to be less, given its short term. That can only have indicated a relatively high risk. 452. It is not valid to draw conclusions as to the validity of a credit assessment methodology based on the adverse outcome of a single loan. It is my further opinion that the guarantee of John Rivett was a tertiary source of repayment for the loan which was neither strong nor independent of the primary source, and in a prudent loan assessment would have borne little weight in determining the credit risk of the loan. I would identify the primary source of repayment of the loan as twofold, cashflow from the proceeds of unit sales and the proceeds of loan refinancing after 12 months. The secondary source of repayment I would consider to be the proceeds from the sale of the mortgaged assets. The proceeds of enforcement of the John Rivett guarantee I would thus consider to have been a subsidiary source of repayment. I would have considered the John Rivett guarantee to be an inherently weak source of repayment compared with the primary and secondary source because it was a claim over the net assets of small business operations, subject to what I assume were the claims of commercial bank lenders, and over residential property but only after what I assume to be the prior secured claims of commercial bank lenders. In addition there was no restriction on John Rivett dealing with the assets, which I would have expected were this source of repayment considered by the lender as integral to the credit risk of the loan. I would also consider the John Rivett guarantee lacked independence from the primary source of repayment. It would have seemed reasonable to anticipate that, should the Yandina Greens project have come into difficulty, John Rivett would contribute additional amounts of capital to remedy the situation prior to reaching the point of default under the loan. At the point of default under the loan, representing a failure of the primary source of repayment, it would be reasonable to expect that the net asset position of John Rivett to have deteriorated from that existing at the time the loan was entered into. A particular criticism of Mr Wild's evidence was that it was at too high a level to be applicable to loans of this kind. I accept that Mr McIvor's evidence was couched in terms which were more familiar in the private mortgage market than was Mr Wild's, but I prefer Mr Wild's evidence. My primary reason for this is that it was based on principles distilled from extensive academic and practical experience and had statistical underpinning. It recognized that lending takes place in a market, and that the interest rate will reflect the level of risk as it is perceived and valued in that market. A lender who seeks too high a credit spread, having regard to the risk, will lose the business to another lender. In particular, I accept Mr Wild's assessment that loans to small businesses are speculative, and that the interest rate offered in the present case reflected that speculative quality. 455. I also accept Mr Wild's views concerning Mr Rivett's asset position. There is much merit in the observation that by the time the project had failed, Mr Rivett's asset position would probably have deteriorated. Similar comments apply to the charge given by Project Results and its assets. That does not necessarily lead me to conclude that a prudent lender would take no step to ascertain the reliability of information concerning a borrower's assets and liabilities and those of a guarantor. However those matters would not have been as important as the applicants and Mr McIvor have suggested. Of course that does not undermine the strength of their case pursuant to s 995. Mr Miller has had substantial experience as a bank officer, including experience in various managerial positions, and substantial experience in lending. Since 2001 he has been employed by Brisbane Mortgage Finance Pty Ltd, a finance broker dealing in consumer and business lending activities. Lending money is an inherently risky business. The lender must assess the risk and make a decision as to whether the risk is acceptable. If it is, then the lender must seek a return which recognizes the risk involved. This is the process described by Mr Wild. Most lending proposals offer two sources for repayment. A prudent lender will identify a primary source of repayment and, in case it fails, an alternative source or sources. The focus should be on the primary source of repayment. Where one lends to a developer, the primary source will generally be sale of the completed project. A prudent assessment of that primary source will involve an assessment of the market price for the finished product, expected costs and the likelihood of sufficient sales being achieved in an acceptable timeframe. 457. Lending is a highly competitive market. Return reflects the risk. In the present case, in Mr Miller's view, investors were exposed to an enhanced level of risk and were being rewarded with an enhanced return. Because lenders are in competition, it may not be possible for a lender to take all of the steps which might be necessary in order to ensure that no borrower ever defaults and that there can never be a loss. These views reflect Mr Wild's theoretical, but also very practical, explanation. The alternative or secondary source of repayment also requires prudent and reasonable consideration by a lender, but the main focus will be on the primary source of repayment. 458. In assessing a loan application, one of the first things addressed is the asset position of the borrower. This will give the potential lender some initial impression of whether the applicant has a reasonable surplus of assets over liabilities for his age and type of employment, and whether he is 'over geared' , with a higher than normal level of debt. If the surplus is lower than would be expected, it would indicate to a prudent lender a need for further investigation. There may be an explanation, for example a divorce or a period of unemployment which has diluted assets, or the applicant may have a poor history of business activities which has prevented asset accumulation. The nature of the assets and liabilities may also trigger the need for further investigation. In Mr Miller's view it would be unusual to investigate the strength or 'realism' of the assets disclosed in a statement of assets. However it is not unusual for a discussion of assets and liabilities to take place between the representative of the lender and the potential borrower at the time that the statement of assets and liabilities is compiled. 459. In Mr Miller's view, the private mortgage finance market is 'somewhat more focused' on the alternative or secondary source of repayment than it is on the cash that the project will generate. He did not agree with Mr McIvor's view that the special nature of a strata-titled retirement home made it unsuitable for private mortgage financing. In Mr Miller's experience, any such concern could be addressed by giving particular attention to the viability of the project and, if necessary, adopting a lower LVR ratio than would otherwise be the case. 460. Mr Miller considered that Mr Rivett's resumé suggested that he was well-educated, with a background in the law. Having been the managing partner of a large legal firm, he might be thought to have a highly developed level of commercial expertise. He also had experience as a project manager with a highly regarded organization and had been involved in a number of successful projects. The fact that Mr Ludlow revised his valuation would not have caused Mr Miller to doubt its accuracy. A reasonably prudent lender would accept a revised valuation from a reputable firm. Mr Miller addressed other aspects of the valuation, but it is not necessary that I consider them at this stage. As to Mr McIvor's concern that some of Mr Rivett's assets were held in trust, Mr Miller considered that if such assets were to be relied upon as part of the overall security package, then individual charges should have been taken over them. To place reliance upon assets over which no security is held is to distort the assessment process. I understand this to mean that such a process would distract attention from an analysis of the viability of the project which should be the primary source of repayment. It also invites reliance on assets which may not be available when repayment falls due. Mr Miller agreed with Mr Wild that a guarantor's assets and floating charges are likely to be worth little because they are likely to be lost in the early stages of financial difficulty. He considered that a director's guarantee 'is as much about connecting the human element of the borrower to the borrowing entity and therefore ensuring his commitment to the successful outcome of the project' as it is about securing repayment. 461. Mr Miller referred to Mr McIvor's criticism concerning the inclusion of lots 2, 3, 4 and 5 as 'borrower's equity' , that as they were subject to vendor's finance, they were the vendor's assets. Mr Miller considered that the terms of such finance made this a favourable aspect of the loan application rather than a deficiency. It meant that the developer's assets were not unduly tied up and provided a cheap form of funding. 462. Mr Miller considered Mr Hellen's focus on the asset position of Mr Rivett and Project Results to be unhelpful. As these assets were not being made available as security, a detailed valuation was not called for in the circumstances of this loan, although it may have been of some value in assessing the loan. Mr Miller had never seen an analysis in such depth as Mr Hellen's assessment of the likely value of Mr Rivett's guarantee, given that the guarantee was unsupported. In this context, 'unsupported' seems to mean "unsecured". 463. In Mr Miller's view, Project Results' application would have been successful elsewhere in the industry in 1999, the focus being on the likelihood of repayment from the sale of the completed units and the value of residual land at the end of Stage 1. He noted also that Mr Blackadder appeared to have a sound background in commercial lending. 465. In cross-examination he said that in considering the asset position of a company you would seek access to the relevant balance sheets and/or financial statements. If a fixed and floating charge was to be taken, then it would be appropriate to ascertain the assets of the relevant company. Mr Miller seemed to agree that in considering Mr Rivett's assets, a potential lender would have inquired as to the basis of valuation of the various corporate and trust interests and as to the terms of the trust arrangements. He also agreed that in valuing property upon the basis that proposed improvements would be completed, it would be necessary to keep in mind the 'as is' value. He considered the assumption made in the valuation that 42 units had been pre-sold was a little unrealistic. Developers tend not to pre-sell more than a handful of units because it is usually necessary to discount the price in order to do so. He said that given the unrealistic nature of the condition, it would be necessary for a lender to make his or her own assessment based upon the reliable number of pre-sales actually made. 466. Mr Miller said that the number of pre-sales was particularly important in assessing such an application. He would be looking for formal contracts of sale, not merely offers to purchase or expressions of interest. He would want to see the contracts. Sale of the manager's unit and management rights was also important. It was not so much the number of units sold which was important, but that there be several contracts. Mr Miller agreed that in assessing the project, you would ascertain whether the developer had the resources necessary to complete the development to the extent that resources in addition to loan funds were necessary. 467. Mr Miller had no experience with trade dollars. Had he been assessing a loan in which part of the proceeds of sale of the development was to be received in trade dollars, the main consideration would be whether or not there was sufficient cash coming out of the proceeds of sale to repay the debt. It would be necessary to investigate the trade dollars to assess their value. 468. Mr Miller thought that the project had merit in itself, but he had not really assessed the impact of trade dollars upon it. His favourable view was based upon his acceptance at face value of many other matters such as Mr Rivett's asset position. Although his opinion of the project may not be persuasive because of doubts concerning his acceptance of such matters, I accept his more general evidence concerning prudent lending practice. Much of it re-inforces Mr Wild's views which I have also accepted. To the extent of any divergence of opinion, I prefer Mr Wild's evidence and that of Mr Miller to other evidence, especially that of Mr McIvor. This preference is based upon the wide experience of both Mr Wild and Mr Miller and Mr Wild's substantial academic background. Both described an objective approach to a business issue, recognizing the competitive nature of the lending market. Mr McIvor seemed to be more concerned with avoiding risk than evaluating it. Such an approach might lead a lender to become uncompetitive in the market. Mr Leck is a builder by trade and has extensive experience as a project manager on large projects on the Sunshine Coast. He has owned a house in Yandina and was aware that the Yandina site had been a sawmill. In 1999 he was in partnership with Mr Glenn Brady, trading under the name of Lekenbry Builders. Mr Brady was an estimator, experienced in costing building jobs and finding building work. Mr Brady told Mr Leck that he could obtain the building work for the Yandina project. Mr Leck knew that Mr Witt had obtained development approval for the site and undertaken filling and leveling on the land. Mr Leck checked the development approval to satisfy himself as to council requirements but left it to Mr Brady to cost the project and submit a contract to Mr Rivett. He obtained an engineer's report from Mr Rivett, the report being by David Gribble. Mr Leck inquired of Mr Witt whether or not the site had been cleaned up after the sawmill operation. Mr Witt said that it had been cleared of any contamination and filled with good clean fill. He had used a lot of sand from a building project which he had undertaken on the coast. 470. Lekenbry Builders were engaged as builders on a set-price contract. The contract was flexible with regard to fit-out but rigid with regard to earthworks and site preparation. The builders obtained the site approval from the council and when building approval was obtained, they took possession of the site. Mr Leck then undertook the usual preliminary work, ordering and engaging material and tradesmen. He had been on the site for about a week when he became concerned about the subsoil. Upon further testing and excavation it became apparent that the subsoil conditions were different from, and less satisfactory than, those predicted by the Gribble report. In mid-August the contract was terminated. I find that MDRN engaged in the business alleged in par 4 of the statement of claim and sought funds to advance to Project Results for the purposes of the Yandina project. Exhibit 67 provides a sufficient basis for these findings. In my view the mortgage business was conducted by MDRN. The trustee company was simply a nominee company, appointed to hold securities on behalf of investors and to take appropriate action to enforce such securities where necessary. The scheme for lending pooled funds was a managed investment scheme as defined in s 9 of the Corporations Law. The allegations contained in subpars 6(a), 6(b) and 6(d) are admitted. Subparagraph 6(c) is not admitted. I am not persuaded that a mortgage business conducted by a solicitor from his or her office is necessarily part of his or her legal practice. I doubt whether it matters. I will address the matter again if any party seeks further findings for the purposes of these proceedings. 473. Paragraph 7 is effectively admitted. In par 8 it is alleged that both respondents compiled and produced the brochure, the autumn 1999 newsletter and the winter 1999 newsletter. In par 9 it is alleged that they compiled and produced the investment summary. Paragraph 9 is admitted, but par 8 is admitted only as against the trustee company. Given my findings as to par 4, it follows that I am satisfied that MDRN also produced the documents identified in par 8 in the course of the mortgage business. The alleged content of each document is pleaded in pars 10-14. It is not necessary to make findings concerning all of those allegations. At a later stage I shall make such findings as are necessary. 474. Paragraph 15 pleads that in or about June 1999 the investment summary was supplied to each of the first to nineteenth and twenty-second to thirty-seventh applicants. This is not formally admitted but, with one exception, I do not understand there to be any challenge to the evidence that each of those applicants received it. As to the thirty-seventh applicant, Mrs Webb, the evidence establishes that her husband was a client of the MDRN mortgage business from some time in 1998. Thereafter, he received promotional material. MDRN's practice was to distribute investment summaries to existing clients. Mrs Webb recalled that her husband had invested in the retirement village at Yandina. I infer on the balance of probabilities that he received a copy of the investment summary. I find that the first to nineteenth and twenty-second to thirty-seventh applicants all received that document. 475. Some applicants rely on documents other than the investment summary. In par 16, the applicants plead that the respondents provided to certain of them the brochure and/or the autumn 1999 newsletter and/or the winter 1999 newsletter. In some cases, those applicants claim to have relied upon aspects of those documents as well as the investment summary. Given the approach taken by the applicants in their final address, only the autumn 1999 newsletter is now relevant to their claims. However the winter 1999 newsletter may have some peripheral relevance to the cross-claim against QBE. 476. The twentieth and twenty-first applicants rely solely upon statements by Mr Gill and their prior dealings with MDRN. The thirty-eighth and thirty-ninth applicants received copies of the investment summary. The thirty-eighth applicant also received the MDRN Select Mortgage Fund No 1 Prospectus, an advisory services guide and a brochure inviting completion of an investment authority. It will not be necessary to deal with those documents in detail. The thirty-eighth and thirty-ninth respondents also rely upon letters received by them from MDRN on 14 and 7 April 2000 respectively. It is alleged that the respondents failed to communicate certain information to them, in particular that the loan was in default at the time at which favourable representations concerning it were made to them. I will first deal with the claims based on the investment summary and then with these other bases of claim. 477. As alleged in par 28 of the statement of claim, on or about 23 July 1999 MDRN paid $1.4 million to the trustee company to facilitate the making of a loan to Project Results. This is admitted. Paragraph 29 alleges that, but for the conduct of the respondents as particularized in the pleading, the applicants would not have made their respective contributions to the sum advanced. This is denied. Paragraph 30 pleads certain duties allegedly owed by the trustee company to all thirty-nine applicants. . The "Authorities" were documents executed by investors. They prescribed the terms upon which they were placing money with MDRN. They were not addressed in detail in the course of final submissions. It is therefore not necessary to deal with them in detail. 479. Whilst par 30 deals with the duty of the trustee company, par 31 deals with the duty of MDRN. It is admitted that MDRN acted as solicitor for the applicants with respect to the making of the loan and that it owed to the applicants a duty to exercise reasonable skill and care in so acting. It otherwise denies the allegations contained in par 31. 480. The respondents now admit this allegation to the extent that it relates to the matters referred to in subpars 14(b) and (i), namely the financial positions of Mr Rivett and Project Results. For reasons already given, the applicants' interests were interests in a managed investment scheme and therefore securities. See s 92. As I understand it, the only question is whether or not the conduct of either respondent was misleading or deceptive. It should be noted that at the relevant time, s 765 did not contain a provision analogous to s 51A(2) of the Trade Practices Act 1974 (Cth) (the " Trade Practices Act "). 485. I have avoided reference to certain statutory amendments which complicate the matter. As I understand it, they are not presently relevant. I turn to the alleged misrepresentations relied upon by the applicants in their final submissions. I have previously set out the table which appears on pp 1 and 2 of the investment summary, under the heading 'Loan Details and Highlights' . It is said that the table was misleading in that it suggested that $400 000 had already been invested in the project by Project Results (or Mr Rivett) in acquiring land when, in fact, that sum (or, more precisely, $398 000) was owing and secured by a second mortgage. It is also said that the suggestion that Project Results would contribute $238 677 towards development and sale costs was misleading, given that Mr Rivett intended to use trade dollars. This intention appears from the quantity surveyor's report which was submitted to MDRN in support of Project Results' loan application. 488. As I understand the applicants' submissions the complaint is that the table gave a false impression of the assets available to the borrower. It is clear from subpar 14(k) and par 54 of the statement of claim that the allegation is as to a present fact, namely the arrangements then existing as to funding. It has not been suggested that the table contained a prediction. Thus there is no reliance on s 765. 489. To my mind, the table showed how the loan was to be applied and how the project was otherwise to be funded. The sum of $1 400 000 was to come from loan funds and the balance, from the borrower. The table certainly indicated that the borrower was to contribute $238 677 towards the project, in addition to the funds to be borrowed through MDRN. However the document says nothing about how Project Results was to meet this commitment. It was for Project Results and/or Mr Rivett to provide the funds. The investment summary said only that they would do so; not how they would do so. It was not a statement about ability to pay, but about responsibility for payment. This complaint is really another way of expressing the complaint concerning the information provided as to the asset positions of Mr Rivett and Project Results. It is possible that individual applicants misunderstood the table, but I do not consider that it was in any way misleading or deceptive. Paragraph 10 pleads representations in the brochure and newsletters concerning steps taken in assessing loan applications. Thus it is claimed on behalf of those applicants who received the brochure and/or either or both of the newsletters that they understood the investment summary as referring to one or more of those other documents. See par 39 of the applicants' written submissions. As I understood the applicants' final submissions only those applicants who received the autumn 1999 newsletter now rely on this alleged misrepresentation in the investment summary. It will be convenient to deal with this aspect after I have dealt with the other, more commonly shared, complaints. On pp 3 and 5 of the investment summary there are statements which suggest that all units (ex 54A) or all units in Stage 1 (ex 54B) have been sold. I have previously set out relevant passages from pp 2, 3, 4 and 5 and given my reasons for concluding that a reader would take the statements in ex 54A as referring to pre-sale of all units in Stage 1. See [38]-[46]. The difference in wording between ex 54A and ex 54B is of no consequence in this regard. 494. In submissions, the applicants focused upon the statement on p 3, that Mr Rivett had secured contracts to sell all units, and that on p 5, that the proposed loan was 'supported on the basis of [inter alia] presale of all units ... (with clear evidence of six sales prior to the first drawn down). ' One cannot look at those paragraphs in isolation from the rest of the document, particularly the other references to sales, pre-sales, contracts and pre-sale contracts. In particular, on p 2 there is a reference to 'presale contracts of the units' . On p 4 it is said that Mr Rivett had stated that all units had been sold. 495. The meaning of the word 'presale' is not clear. I have found no relevant dictionary definition. The word "pre-sale" is apparently a French word meaning a salt meadow. That is clearly not the present meaning. The prefix "pre-" usually means "before". This suggests that the word 'presale' refers to an event occurring prior to a sale. However it is more likely in the present context that the expression implies a transaction prior to some other event. What that other event may be is not clear. It may be commencement of construction, or completion of such construction, or registration of an appropriate plan which would enable the transfer of legal title to each unit. The term describes some arrangement concerning purchase of a unit in the proposed development, which arrangement was in place as at the date of the investment summary, or perhaps, at the date of its distribution. The use of the expression "sale" suggests a binding commitment to buy. However the expression "pre-sale contract" suggests something different from that. The distinction on p 5 between pre-sale of all units and the provision of evidence of sale of six units also suggests that "pre-sale" implies something less than a binding commitment to purchase. On the other hand, references to contracts to sell and the statement that all units have been sold are unequivocal. Perhaps one can say little more than that the investment summary conveyed the impression that persons had at least conditionally committed themselves to buy, or had indicated interest in buying. 496. Exhibit 37 contains a number of contracts. One is a sale to Pearlyn Pty Ltd which appears to have predated the investment summary. There is correspondence dated 1 June 1999 dealing with such a contract. It seems to have related to unit 19. However there is also a contract dated 22 June 1999 for the sale of 'lot 19' to Pearlyn. In any event unit 19 was not in Stage 1. There is also a contract with Frank and Carmel Lowe, apparently relating to 'lots 14 and 16' . Lot 14 was not in Stage 1. Lot 16 was the manager's unit. There is correspondence dated April 1999 concerning contracts for sale to Elliott of units 5 and 6. Those units were in Stage 1. I understand that there are other contracts in a bundle of documents which was marked 'E' for identification. However they are not in evidence before me. 497. At tab 25 of ex 1 there are a number of contracts which seem to have been produced from the records of Project Results. One relates to the sale of lot 19 to Pearlyn. Another is for the sale of units 5 and 6 to Elliott. Those units were in Stage 1. The sale to Medhurst of lots 11, 12, 13, 23 and 24 dated 21 May 1999 involved two lots in Stage 1, lots 11 and 12. The sale to Lowe of lot 16 dated 22 March 1999 was of the manager's unit. There is a memorandum to Mr Rivett from a Mark Curchin dated 28 June 1999 which confirms that units 1, 2, 7 and 8 have been sold. Thus the evidence suggests a basis for suspecting that lots 1, 2, 5, 6, 7, 8, 11, 12 and 16 had been "sold" prior to the first advance, but it does not demonstrate that all twelve units in Stage 1 and the manager's unit had been sold as at the date of the investment summary or distribution thereof. 498. There is also unsatisfactory evidence from Mr Rivett and Mr Blackadder concerning this matter. Mr Blackadder said that he recalled seeing six contracts in 'an acceptable form' prior to settlement of the loan, and that he would not have settled without having done so. The first advance was made on 23 July 1999. The apparent absence of any such documents from the records of Project Results and of the respondents suggests otherwise. In any event the question is whether or not all units in Stage 1 had been sold as at the date of the investment summary or distribution thereof. Mr Blackadder said that he had seen 'many presale contracts' , including contracts other than those which satisfied the requirement that there be evidence of six sales prior to the advance. 499. In Mr Durie's letter to Mr Trotman dated 4 October 2000 (ex 51) he said that units 1, 2, 5, 6, 7, 8 and 16 were under contract, unit 16 being the manager's unit, suggesting that the condition of the loan requiring evidence of six contracts had been satisfied. Copies of these contracts were provided to Mr Trotman in response to his inquiry concerning satisfaction of the condition precedent. Mr Durie also referred to sales of units in 'the latter stages of the development' . However there was no suggestion that the balance of units in Stage 1 had been sold. Mr Trotman had enquired only as to the contracts sighted prior to the advance as provided for in the investment summary, but one would have expected Mr Durie to give the full picture concerning sales of Stage 1 units. 500. Mr Rivett's evidence concerning this aspect of the matter was not at all convincing. He said that he remembered having 'the feeling of complying with' the requirement to produce evidence of six sales. Mr Rivett was asked at TS 1163 how many signed contracts he held in mid-1999. So we would sign people up on an offer to purchase-type document and then later on have them complete the full contract. So my recollection was some of the units were at the stage of offer to purchase, some of them were at full contract stage, but my practice was to send the contracts to the solicitor as late as possible if they were subject to something because I didn't like running up the costs if the finance failed or if a condition failed. He was then asked where the contracts were and said that he had thrown them away. It was in 2001 I moved all of my filing cabinets and files from Mooloolaba office up to a house that I rented at Maleny and I got them all taken - all my files and filing cabinets taken up there and I cleared a lot of what was then junk out. And I had these contracts in a two-drawer filing cabinet and I cleared them all out because they had all expired. If you didn't complete the project by a certain time the contracts were voided or - and in this case we hadn't completed so I just cleared everything out. He was asked how many he had thrown out and said that it was a dozen or fifteen 'or something like that' . He thought twelve or fifteen had been signed. 504. This evidence is a little curious given that Mr Jessup was appointed on 13 September 2001. Mr Rivett's evidence was given in October 2004, so that the disposal of the contracts 'three and a bit years' earlier would have been at about the time of such appointment. Mr Durie's letter (ex 51) demonstrates that by late in the year 2000 MDRN were exploring ways of recouping moneys lost by applicants as a result of the loan to Project Results. The debt was substantial, and Mr Rivett had given a guarantee. He must have at least sensed the possibility of litigation. In all of those circumstances it is difficult to accept that Mr Rivett, a lawyer, would have disposed of documents which could only have assisted in demonstrating his own good faith. 505. In cross-examination Mr Rivett was referred to a statement in the loan application to the effect that all units had been 'committed to purchasers on offers to purchase' . He said that this meant that there was no binding contract. Such a document was designed 'to feel out the market as much as anything, to see whether people are prepared to sign one of those and put up a deposit. You get a feeling that they will go to contract, so you can test the demand. ' There was further cross-examination of Mr Rivett concerning this matter, but I did not find it of particular assistance. I reject Mr Rivett's evidence concerning this matter as unreliable. 506. The evidence as to sale or pre-sale of units is, at best, confused and, to some extent, contradictory. Whether or not Mr Blackadder saw documents which looked like contracts for the sale of six units prior to the drawdown of the loan, I am unable to conclude that all twelve units had been sold at the time of the investment summary or at any time thereafter. There may have been some offers of the kind described by Mr Rivett in cross-examination. They might accurately be described as "pre-sales", but they were not "contracts" or "sales". In any event there is no document evidencing expressions of interest in the purchase of all units in Stage 1. I would have expected, at the very least, a list. On balance, I infer that such documents as have been located in the records of Project Results and the respondents are probably the only documents concerning this matter which were brought into existence. 507. The applicants bear the onus of establishing the falsity of these representations. In the circumstances of this case it is not easy for them to do so. However the absence of documentary evidence strongly suggests that all units in Stage 1 had not been "pre-sold", whatever that expression might mean. I do not accept Mr Rivett's assertion that he disposed of contracts. I infer, on the balance of probabilities, that although there were contracts of sale and pre-sale offers for some of the twelve units in Stage 1, there were not sales of, offers for or expressions of interest in, all twelve units. It follows that the investment summary was misleading in this respect. 508. I turn to the question of reliance. As I have said there is a difficulty with the meaning of the expression "pre-sale". A "pre-sale contract" can hardly be the same thing as a "contract to sell". The former expression implies an arrangement not yet constituting a sale, while the latter conveys the idea of a concluded agreement for sale. It is difficult to know how a potential investor would have understood the overall effect of the investment summary in this respect. If, as some applicants considered, it conveyed the idea of something less than a sale, then it is less likely that the applicants would have relied upon it than if the overall meaning was that there were binding contracts of sale. 509. The overall effect of the investment summary was to represent that any arrangements concerning sales of the units were something less than binding. The subject is first addressed on p 2 where the expression used is 'presale contracts of the units' . References to sale and contracts of sale thereafter should be read as qualified by that earlier statement. The most prominent reference is on p 5 where the distinction between "pre-sale" and "sale" is clearly drawn. I have difficulty in accepting that investors would rely on such equivocal statements. If an applicant considered the matter important, he or she would have sought clarification. As some applicants suggest, the statement may have indicated demand for the product. Each decision to invest was no doubt based upon numerous considerations including, as many applicants claim, the available security and alleged assets of Mr Rivett and Project Results. On Mr Wild's approach demand for the product might well be an important consideration. However, in this case, I must assess the effect of the representation that all units had been "pre-sold", with all the inherent ambiguity of that term. In general, I doubt whether an investor would rely on such equivocal statements without clarifying their meaning. For reasons which I will give at a later stage, I take a different view of the position of Mr Bengston, the seventh applicant. 510. I do not understand the applicants, in this aspect of the case, to rely on the requirement that there be six contracts in place prior to the advance. That was a requirement of the loan rather than a representation. If the advance was made other than in accordance with that requirement, then the applicants may have remedies accordingly, but those remedies do not arise out of any statutory cause of action based upon misleading or deceptive conduct. The applicants complain of the absence from the investment summary of any disclosure concerning the proposed use of trade dollars. This relates to two aspects of the transaction. Firstly, it is said that as Project Results proposed to fund its contribution of $238 677 towards construction costs using trade dollars, this should have been disclosed. For reasons given in connection with the complaint about the borrower's contribution, I consider the complaint to be misconceived. 512. The second aspect of this complaint concerns the statement on p 4 of the investment summary that, 'The units are being sold for $85 000 each with Mr Rivett advising that all units in Stage 1 have been sold. ' . This statement is said to have been misleading in that such contracts provided for part of each sale price to be paid in trade dollars. It is also said that the failure to disclose this matter rendered the statement as to sales at $85 000 misleading. I have previously given brief reasons for rejecting this complaint. This was a statement as to present capacity, asserting that the companies were then in a position to pay interest as it fell due from their trading profits. The applicants submit that it was also a representation as to future capacity. However no attempt has been made to identify with precision the exact nature of that alleged meaning. The argument might be that it was a prediction as to the future capacity of the companies to provide interest coverage or that they would meet interest payments in the future. I think it unlikely that a reader would have understood the statement as a prediction by MDRN as to the future profitability of the companies. This would imply a detailed examination of the affairs of, possibly unidentified, companies which were completely unconnected to the transaction. The statement also could not have been read as predicting that such unidentified companies would pay the interest. The statement addressed current profitability and capacity to pay. I will proceed accordingly. 515. There was no legal obligation upon any company other than Project Results to meet interest payments. The statement really concerned Mr Rivett's (and, through him, Project Results') access to cash, the implication being that there were profitable companies which could lend to Project Results or Mr Rivett. Whether such money would be made available in any particular situation was a different matter. This again raises the question of the extent to which it is likely that an investor would have relied on such a statement. A further problem is to identify the companies in question. When can a company be described as "Mr Rivett's"? 516. Setting aside those problems, the capacity of any company to meet interest payments would depend in part upon the amount falling due. The loan was for twelve months, but interest for six months was to be pre-paid. The cash flows provided indicate construction and sales to occur within 4 to 5 months. Costs and timing of the project has been confirmed by a qualified Quantity Surveyor. The project budgets are reasonable. The expectation seems to have been that the loan would be repaid within six months, but the term of the loan was twelve months. See p 1 of the investment summary. Theoretically, the maximum amount of interest to be paid (other than that which was to be pre-paid) would be for six months at 9.25 per cent. That is about $65 000, or something under $11 000 a month. Assuming that the relevant companies were those identified in the course of the trial, it is necessary to look at their available trading profits to see if they had the capacity to meet that obligation from such profits. The relevant profit and loss accounts are exhibits to the affidavit of Mr Glynn, although their admissibility was established by Mr Rivett. Project Results showed nett losses for 1996 of $1 066, for 1997, of $68, for 1998, of $264 and for 1999, of $1 442. It seems that in none of those four years was there any income. Project Results as trustee of the NJT Trust showed no income and losses of $116 for 1998 and $1 017 for 1999. For 1997 there was a profit of $11 925, the bulk of which was derived from the sale of assets. In its capacity as trustee of the John Rivett Family Trust, Project Results made a nett profit of $4 in 1998 and a nett loss of $394 in 1999. In 1997 it made a nett loss of $39. Barter Pacific Realty Pty Ltd showed a nett profit for 1997 of $31 137 and for 1998, of $13 918. For the year ended 30 June 1999, it showed a nett loss of $64 710. Barter Pacific Pty Ltd showed a nett loss for the year 1998 of $264 and for 1999, of $1 976. For 1997 there was a loss of $99. For Oakwill Pty Ltd, as trustee of the Western Pacific Property Trust, there was a nett loss for 1998 of $3 412 and for 1999, of $11 688. 520. As to the ISC Trust, in which Mr Rivett's company had a 50 per cent interest, it made an operating profit of $201 993 in 1997-98. However the trustee was wound up by a petitioning creditor in the year 2000. Mr Rivett said that this occurred because of one large bad debt. There are no financial statements for 1998-99. Mr Rivett said that the "Holiday Mooloolaba" business conducted by the trustee had a 'cash flow' of $8 000 - $10 000 a month and up to $16 000 a month in peak months. Cash flow is not the same thing as trading profit. The business in question involved the management of accommodation units. Even accepting Mr Rivett's evidence, it seems unlikely that after making allowance for its own outgoing, it would have had sufficient profit in each month to meet the monthly interest payment of almost $11 000. However accumulated trading profits may have been sufficient to discharge the total interest debt. Interest for the period from July 1999 to January 2000 had been pre-paid. Thus no interest payment would have been payable until January or February. By that stage Robinson Rivett would presumably have accumulated some amount by way of trading profits for July-January which, with profits derived thereafter, may have been sufficient to meet interest due for the period from February until June or July. 521. The applicants bear the onus of establishing misleading effect. Assuming access to half of the nett profits, it is quite possible that the Rivett share of profits for one year would have been sufficient to pay interest for six months. I am not satisfied on the balance of probabilities that the statement was misleading or deceptive. At p 3 of the investment summary it was said that Mr Rivett had a 'strong asset position, evidencing a net surplus of $1,790,000.00. The applicant company also shows a net asset position of $640,000.00. These are clear statements of fact. I reject the suggestion that an investor might have understood that Project Results had assets to a value of $640 000 which formed no part of the $1 790 000 claimed for Mr Rivett. Anybody reading the investment summary would have inferred that Mr Rivett had a financial interest in Project Results, although not necessarily extending to the whole worth of that company. It is inconceivable that a reader would have assumed that Mr Rivett had no interest whatsoever in that company. It follows that there was nothing misleading about use of the word "also" in the above statement. 524. I have previously given my reasons for concluding that Mr Rivett's nett assets were probably substantially less than $500 000 and that Project Results had no nett worth. It follows that the statement was misleading. The respondents admit that all applicants other than the seventh, eleventh, twentieth, twenty-first, thirty-eighth and thirty-ninth applicants, in deciding to invest in the Yandina project, relied upon the misleading statement in the investment summary concerning the asset positions of Mr Rivett and Project Results. Accordingly, each is entitled to judgment on that basis. 526. The seventh applicant, Mr Bengston, said that a number of aspects of the investment summary 'encouraged' him to invest in the Yandina project. However I cannot find that he relied on the statement concerning the assets of Mr Rivett and Project Results. It had everything going for it, and when asked the question about Mr Rivett I read his assets and suchforth, but I didn't place any importance on the amount of his assets. This is very much the approach urged by Mr Wild. I infer that Mr Bengston took a similar attitude to the statement concerning the asset position of Project Results. However, in assessing the project, Mr Bengston placed weight upon the statement that all the units had been sold. It is clear that he understood the position to be that all units in Stage 1 had been sold. See par 19 of his affidavit and TS 599. He understood that this meant that 'somebody had put their name down on a list for a particular unit' . He considered that it showed that there was sufficient demand for the product. Had he known that only three or four "sales" had been made, it would have made a difference to his decision to invest. I have found that the effect of statements in the investment summary concerning "pre-sales" was misleading. I have also indicated my reservations concerning the likelihood of reliance by investors upon those statements, given their ambiguous overall effect. However Mr Bengston is in a special category. He attributed to the investment summary the best possible meaning from the point of view of the respondents, namely that people had indicated an interest in purchasing each of the twelve units without committing themselves legally to doing so. He said that he relied on that understanding and explained why. 528. It is true that in the course of oral evidence-in-chief, he said that had he known that 'perhaps three or four of them at most out of the 12 in Stage 1 ... had been sold ...' , it would have affected his decision. Presumably, the question reflected counsel's understanding of the evidence, or the evidence as he then expected it to be. My findings suggest that there may well have been expressions of interest or contracts for more than three or four units. It might be argued that in those circumstances, the evidence does not establish a misrepresentation upon which Mr Bengston relied. However the question and answer should not be taken as limiting the extent to which Mr Bengston relied upon such representations. He made his primary statement concerning these matters in par 19 of his affidavit. 529. Mr Bengston's willingness to eschew reliance upon various other aspects of the investment summary, in particular Mr Rivett's asset position, leads me to conclude that he was an honest and reliable witness. For that reason I accept his assertion that the representations concerning pre-sale contracts significantly influenced his decision to invest. 530. As to the eleventh applicant, Mr McIntyre said in his affidavit that he was looking for an investment with directors' guarantees and with assets sufficient to save the investment in the event of financial difficulty. He claimed to have relied upon the total asset position of $2 430 000, representing the combined nett worth of Mr Rivett and Project Results as shown in the investment summary. In his oral evidence he said that had he been told that Mr Rivett had assets of less than $100 000, 'the figures wouldn't stack up if that was the case. ' In cross-examination he said that he knew that MDRN had not guaranteed the accuracy of information provided to them by Mr Rivett. However he thought that they would have assessed the information provided in the manner that a reasonably prudent lender would have done. Had the statements in the investment summary accurately reflected the information provided to Mr Blackadder, that evidence may have been fatal to the claim. However those statements did not accurately reflect that information. Mr McIntyre understood and accepted that MDRN had not checked the accuracy of the information provided in support of the loan application. He did not know or accept that the statements in the investment summary did not reflect that information. Implicit in his evidence is the assertion that he understood the investment summary to reflect information provided to MDRN in support of the loan application. That is the interpretation which is urged by the respondents. Even on that view it was misleading. 531. In cross-examination Mr McIntyre agreed that he understood that Project Results was a company owned by Mr Rivett and that the reference to Mr Rivett's assets included the value of Project Results' assets. He eventually agreed that his statement in par 39 as to the aggregate value of the assets of both was incorrect. Mr McIntyre also conceded in cross-examination that other statements in his affidavit were wrong, particularly statements concerning his understanding of the investment summary. He attributed this to erroneous drafting of his affidavit, combined with a failure by him to detect errors which had occurred prior to signing. In some cases, Mr McIntyre readily conceded the errors. In others he conceded them only after he had been significantly pressed. I am inclined to think that there was probably some truth in his explanation that the affidavit was drafted in a way which did not reflect the instructions which he had given, and that he either failed to detect the errors or chose not to correct them. 532. Counsel for the respondents urged me to reject his evidence in its entirety on that basis. However I did not form the view that Mr McIntyre was dishonest. The problems with his evidence highlight the difficulties inherent in asking any person to remember specifically the aspects of a document which led to a particular decision. Where the decision is based on oral representations, the relevant person is likely to recollect the aspects which were important to the decision in question, simply because he or she will have remembered the important things and forgotten the unimportant. There will be little external inducement to reconstruct after the event. Where, as in this case, an applicant relies upon a written document, the temptation to read it carefully after the event and to claim reliance upon every conceivable aspect must be difficult to resist. From time to time throughout the trial, I formed the view that this was occurring. Indeed, to some extent, counsel encouraged the applicants by inviting them to refer to the investment summary in their evidence-in-chief. 533. Where, as here, legal advisers are presenting numerous cases which have some common, and some unique, features, there will be a tendency to stress common features. That process may result in unconscious encouragement to some applicants to broaden their claims to include reliance on statements other than those which actually prompted their decision-making. Understandable as that phenomenon may be, it is neither desirable nor permissible. It may well be that the risk of contamination of a witness's evidence, particularly on a question such as reliance, is so great that litigation of this kind, involving claims on behalf of a large number of unrelated applicants whose cases share only some common features, should not readily be instituted. Such proceedings may seem to assist applicants of limited means to pursue small claims, but they may well have a potential capacity to undermine legitimate claims. 534. In the present case I accept that Mr McIntyre relied upon the availability of a guarantee from Mr Rivett and the statements concerning Mr Rivett and Project Results' assets in the sense which I have explained. In those circumstances I conclude that Mr McIntyre acted upon the misrepresentation in the investment summary as to such assets. 535. The thirty-eighth applicant, Mr Holman, is in a somewhat different position from the other applicants to whom I have so far referred. He and his wife (who is now deceased, and of whose estate he is executor) received the investment summary in late April 2000. They also received other documents which do not otherwise feature in these proceedings. I do not understand counsel for the applicants ultimately to have relied on those other documents. Mr Holman said that he relied on the information in the investment summary concerning the asset positions of Mr Rivett and Project Results. I accept that evidence. 536. Mr Holman also said that he and his wife were not informed that the loan was in default at the time at which they were invited to invest. In this regard we advise that interest for the period 23 February 2000 to 22 March 2000 remains unpaid at this point in time and we have been advised by the Borrower that outstanding interest will be paid to our Trust Account in the immediate future. The delay in the payment of interest has been caused by the postponement of a settlement which was to be completed in mid-March and from which considerable funds were to be received by the Borrower. We are led to believe that settlement of that matter will be completed in the near future and delay in settlement has placed a strain on the cash flow of [Project Results] in the short-term. As a precaution and in terms of our usual practice default notices have been issued on the Borrower to protect the interests of investors in the loan. Due to the previous excellent conduct of the loan we believe that it is unlikely that a similar breach in loan conditions will occur in the future. It seems quite clear that the Holmans were told of the default. The only case pleaded in the statement of claim arising out of the letter is the alleged failure to inform them of default in interest payments. In submissions counsel sought to mount a broader case arising out of the statement, 'Due to the previous excellent conduct of the loan we believe that it is unlikely that a similar breach in loan conditions will occur in the future' . However that is not the case pleaded. This aspect of the claim must fail. 538. The thirty-ninth applicant, Alice Joy Tangey, sues in her own right and as executor of the estate of Kevin Herbert Tangey, her husband. An unsworn statement by Mr Tangey is in evidence. The Tangeys received the investment summary. Mr Gill told Mr Tangey that he could only invest in the Yandina project for three months as the loan was due to expire on 22 July 2000. This conversation took place in late March or early April 2000. Mr and Mrs Tangey received a letter dated 7 April 2000 which contained a paragraph concerning default in payment of interest. That paragraph was similar to that which appeared in Mr Holman's letter of 19 April 2000. I have quoted the latter paragraph above. Mr Tangey said that 'It did not occur to me that the loan was actually in default' I find this difficult to accept. It appears to be based on a distinction between delay in payment of interest and default. Mr Tangey claimed to have relied upon advice given by Mr Gill and upon the investment summary. He was attracted to the investment by the higher rate of interest offered, and the security provided by the borrower and Mr Rivett. I infer from that statement that Mr Tangey relied upon Mr Rivett's guarantee and the assets apparently available to support it. I am, however, unable to accept that he was unaware that the loan was in default, given the content of the letter of 7 April 2000. As I have said, some initial investors also claim to have relied on other documents in addition to the investment summary. As appears from par 16 of the statement of claim the sixth, eighth, twelfth, twenty-fourth and twenty-sixth applicants claim to have relied on the brochure, the eighth, twelfth, thirteenth, eighteenth, seventeenth and twenty-fourth applicants claim to have relied on the autumn 1999 newsletter and the eighth, twelfth, eighteenth, thirty-second, second, thirteenth, seventeenth, twenty-fourth and thirtieth applicants claim to have relied on the winter 1999 newsletter. In the applicants' submissions, only the autumn 1999 newsletter was addressed. The investigation takes place right up to settlement to ensure that the loan is going to perform and that investors are fully secured. Character, personal wealth and asset position, background and experience are all checked. Availability of first mortgage, guarantees and company charges. We also seek check reports. In most cases we personally inspect the property. The applicant must demonstrate a clear ability to meet the loan commitment. It is possible that those applicants who received both the autumn 1999 newsletter and the investment summary understood the passage on p 2 of the latter document to refer to the ten point plan outlined in the former document. However it seems a little unlikely that they would have referred back to the newsletter as some sort of supplement to the investment summary. 542. It is then submitted that the investment summary, read with the autumn newsletter, was misleading in numerous respects. The case depends upon the assumption that the newsletter should be read as asserting that each step in the ten point plan was carried out in the case of every loan. I have some difficulty with that interpretation. Mr Blackadder provided the information upon which the ten point plan was based. He said that he applied the points in each case to the extent that they were appropriate. In my view that is how a reader would have understood the document. It is not difficult to imagine circumstances in which it would be absurd to take some of these steps. If a borrower were a company, recently incorporated for the purposes of a particular venture, it may well have no assets and no balance sheet. A loan proposal might, nonetheless, be attractive because of secured guarantees or because assets were to be acquired at a favourable price and, when acquired, provide adequate security for the loan. In such a case, there could be no question of "checking" character, personal wealth, asset position, background or experience of the applicant, nor of reference to balance sheet or credit history. Other aspects of the ten point plan were also unlikely to be applicable in the case of every loan application. In many, perhaps most, cases it would be simply a waste of money to obtain a "check report" on a valuation. Not every loan application would involve a company charge or guarantee. A reading of the newsletter as a whole reveals that it represented that applications were 'thoroughly evaluated before approval' . The ten point plan should be read as explaining that process rather than asserting that all steps would be taken in connection with all loan applications. 543. I turn to the particular complaints arising out of a combined reading of the two documents. Firstly, it is submitted that the investment summary, read in light of the newsletter, implied falsely that MDRN had checked the personal wealth and asset position of Mr Rivett. However the newsletter did not assert that MDRN checked the character, personal wealth and asset position, background and experience of principals of applicant companies, only that it checked those matters in connection with applicants for loans. In the present case the applicant was Project Results. It is alleged that its asset position was not checked, that there was no check to ensure that Project Results had demonstrated a clear ability to meet the loan commitment and that the balance sheet was not inspected. It seems to me that these allegations do not go beyond the allegation that the statements concerning the asset positions of Mr Rivett and Project Results were misleading. 544. It is also alleged that Mr Blackadder did not consider the terms of, and qualifications to, the valuation provided by Mr Ludlow, nor did he seek a check report. The ten point plan said that MDRN would satisfy itself that the valuation 'has been properly done and meets the security requirements for the loan. ' It also required that the valuer be independent and stated that, 'We also seek check reports' . There is no apparently misleading statement concerning the valuation in the investment summary itself. The only possibly misleading effect is that it represented that the procedure identified in the ten point plan as outlined in the newsletter had been followed. 545. In the end, there was no challenge to the qualifications and experience of the valuer or to the methodology of the valuation. There was a faint challenge to the valuer's independence. The valuation was originally obtained on the instructions of Mr Rivett or Project Results. However the valuer indicated that it would agree to "assignment" of it. This seems to have meant that it was aware that borrowers might rely on it, and that it would stand behind it in that context. I see no reason to treat the valuation as other than independent. 546. Although the newsletter asserted that in the assessment process, check reports were obtained, it is unlikely that potential investors would have understood that to mean that this step was taken in all cases. They would rather have understood it to mean that check reports were obtained if thought necessary. Such a view is reinforced by the fact that there was no reference to a check report in the investment summary, although there were references to the valuation. It is unlikely that an applicant would infer that a check valuation had been completed but not mentioned in the investment summary. 547. The only other statement in the newsletter concerning valuations was that MDRN would be satisfied that each valuation 'meets the security requirements for the loan' . The suggested deficiency in this regard seems to be that the value of the property was not sufficient to meet the 70 per cent LVR requirement. However I do not discern in the applicants' submissions any explanation as to how they demonstrate this. At its highest the statement concerning the LVR must have meant that at each stage of the project, total lending would not exceed 70 per cent of the current value of the property, taking into account the development works performed to date. The initial advance would have been in the amount necessary to fund the purchase of land at $400 000 and the advance interest payment of $75 250, a total of $475 250. In order to provide an LVR of 70 per cent at that point, the value of the properties offered by way of security would have had to be something slightly under $679 000. The two blocks had been purchased for $800 00, or perhaps a little under that sum. However the valuer assessed them as being worth, in the case of the development site, $400 000 and in the case of the other four allotments, $360 000. The valuation of the development site was conditional upon appropriate approvals being in place and was said to be 'subject to all units being presold' . Other aspects of the valuation indicate that the reference to 'other units' was to all 42 units in the overall development. Clearly, that condition was not met. There seems to be no evidence as to the effect upon the valuation of that fact, but one assumes that such effect can only have been negative. Nonetheless I am unable to conclude that either at the date of the investment summary or at the date of the first advance, the value of the land was insufficient to satisfy the 70 per cent LVR requirement as it applied to that advance. 548. Thereafter, as I understand it, moneys were to be advanced for building works, with the quantity surveyor ensuring that the total amount of the advances did not exceed 70 per cent of the increasing value of the property. As to the position at the end of the transaction, that is at the completion of Stage 1, the applicants' allegation seems to be that pleaded in par 51 of the statement of claim. It is there alleged that the cash cost of the development would be $1 324 318 and the sale proceeds, $1 086 000. It is said that in those circumstances it would not be possible for there to be a surplus of $400 000 as asserted in the investment summary. However, as I have pointed out, in my view it is clear that the reference to $400 000 is to an outstanding debt and not to a surplus. Secondly it is alleged that the LVR at the end of Stage 1 could not be below 70 per cent. On the figures cited above, there would be a cash shortfall of $238 318 secured against nett assets valued at $660 000, $360 000 attributable to lots 2, 3, 4 and 5 and $300 000 attributable to the balance of the land not yet developed. This shows an LVR of just over 36 per cent. As Mr Blackadder demonstrated in evidence, if the shortfall at that stage were $400 000 the LVR would still be only just over 60 per cent. I should say that the valuation of the balance of the development site may to some extent, have been affected by the assumption that all units had been pre-sold. However the valuer does not say that. As far as I can see it is only par (i) of the valuation which is so qualified. 549. I do not fully understand the way in which the applicants put this aspect of the case. It seems to be asserted that Mr Blackadder did not consider the terms of, or the qualifications to, the valuation. I infer that this means that he did not satisfy himself that the valuation met the security requirements for the loan. He gave evidence as to how he had taken the valuation into account in negotiations with Mr Rivett. I see no reason to reject that evidence. There is no substance in this complaint. 550. In any event the applicants who received the newsletter will all recover on another basis. The twentieth and twenty-first applicants, Mr Michael Mellish and Mr Wade Mellish, also make claims pursuant to s 995. MDRN had previously acted for various family members and their business entities. Some had also invested money through the mortgage business. Mr Michael Mellish said that in or about July 1999 Mr Gill telephoned him concerning the Yandina project. He did not receive an investment summary but 'relied upon the due diligence that MDRN had undertaken in assessing the merits of the proposed loan and the general comments David Gill made regarding the loan. ' Mr Mellish recalled Mr Gill telling him 'that there was sufficient security over the assets of the borrower and the guarantor, and that the loan was "a good one" ' . 552. In cross-examination he agreed that he had relied upon the fact that he had been told that the investment was a good one and upon his previous dealings with MDRN. In subsequent cross-examination he was again asked whether he had been told only that the investment was a good one. He said that this was correct. 553. Mr Mellish's claim poses certain problems. He claims to have relied on three things. The first is his previous dealings with MDRN. That does not give rise to a cause of action under s 995. The second is that he was told that the loan was 'a good one' . In cross-examination he said that this was the only statement upon which he relied. In his affidavit, however, he said that Mr Gill also told him that there was 'sufficient security over the assets of the borrower and guarantor' . Although it was not specifically put to him that such representation was not made, counsel for the respondents put to him that the basis of his investment was his history with MDRN and the statement that the investment was a good one. He agreed. In cross-examination Mr Barlow for the second cross-respondent suggested that he had been told only that 'the investment was a good one' . He agreed, adding the words 'a good place to put our money in order to get a high return' . In the circumstances I am not satisfied that any representation was made to him concerning the adequacy of the securities. It is possible that he so understood the statement that 'the loan was good one' . In the end, I conclude that he relied upon the assertion that the investment was a good one and upon his previous dealings with MDRN. 554. The statement that the investment was 'a good one' cannot be construed as a guarantee of performance. Once that proposition is accepted, it is difficult to give the statement any clear meaning. The most likely meaning is that the investment offered a good return for the risk involved. In view of Mr Mellish's desire for a higher return, he probably so understood it. In assessing the accuracy of such a statement, it is necessary to take account of Mr Wild's evidence that this was a speculative investment, yielding a rate of interest appropriate to such an investment. Further, with varying degrees of enthusiasm, Mr Wild, Mr Miller and Mr Quinn indicated that they would have expected funding to be available for the Yandina project. No real attempt was made in argument to demonstrate any factual basis upon which I could conclude that this was not a good investment in the sense to which I have referred. In those circumstances I am unpersuaded that the statement that it was 'a good investment' was misleading. Mr Mellish's claim under s 995 must fail. 555. Mr Wade Mellish was also aware of the previous association between MDRN and his family and had also made previous investments with MDRN. Mr Mellish seems to have used MDRN as a source of short-term deposit opportunities. MDRN, in turn, used him as a source of short-term finance. MDRN would seek deposits from him if funds were needed to complete loans. He understood that his money would be returned in less than the twelve month nominal period of each loan. He 'relied on MDRN's word that they had done the research and on word-of-mouth mainly by David Gill. ' He recalled Mr Gill saying words to the effect that 'the development was a retirement village with a great site and a great population --- it "stacks up" ' . He said that there was a good valuation; Mr Rivett was a solicitor on the coast with 'heaps of money and heaps of property' ; there was a director's guarantee and security over assets; and it was a 'good loan' . Well, with anything in a commercial transaction, we'll ask questions. "Well what's its about" or they'd offer some information. It's a retirement village at Yandina. We've done all the checks. We've gone through the proposal that's been put to us. We've verified it with the information. Its short-term. We can't get you anything else, but this is the facts of what's in the summary document. MDRN has investigated the loan, further looked through the credentials, and it's a good proposition. It's a good proposition for you. Done development before, it's a good loan, it's a good proposition. It's been - had a bank valuation. And it stacks up in terms of sort of the investments that's in there. I find it difficult to escape the conclusion that the vast bulk of Mr Wade Mellish's evidence was reconstruction. I am unpersuaded that he was told anything more than that the loan was 'a good one' . His relatively short-term interest would not have required much more, particularly in light of his previous experience with MDRN. For the reasons which I have given I am not satisfied that the statement that the loan was a good one was misleading. In those circumstances Mr Wade Mellish's claim under s 995 must also fail. I turn to the question of damages. Exhibit 81 is an agreed schedule of loss, in the sense that the arithmetic is conceded to be correct. It identifies the principal advanced by each applicant (including, for the sale of completeness, Messrs Mellish), interest paid to February 2000, amounts received from the liquidator in April and December 2003 and the outstanding balance. All applicants other than the seventh, twentieth and twenty-first applicants, have established cases based upon representations as to the asset position of Mr Rivett and/or Project Results, which representations were misleading. The seventh applicant has made out a case based on misleading statements concerning the pre-sale of units. Subject to two matters, the respondents have not disputed causation of damage. 561. The first matter is that the respondents submit that the calculation of damages must take into account the possibility that Mr Rivett or Project Results have, or had, assets which should have been pursued, and that there is no satisfactory evidence that they are insolvent. It is said that Mr Jessup ought to have obtained a judgment against them and 'at least orally examine [d] Mr Rivett as to what assets he might have. ' This submission overlooks the fact that Mr Rivett said on oath that neither he nor Project Results had any assets. He claimed to owe creditors over one and a half million dollars, excluding the Yandina loan. Counsel for the respondents did not challenge this or put to Mr Rivett that he had other assets, although it was obliquely suggested that he may have tailored his evidence to benefit himself. At TS 1168, he was asked whether he had been told why he was required to provide information as to his asset position and those of Project Results and other companies. He said that he knew that it went to the question of whether applicants would be able to recover from him. Whilst this may have given Mr Rivett a motive for asserting that he has no assets, it did not demonstrate that he had assets. It may be that counsel would not have been permitted, in effect, to conduct an oral examination in these proceedings, but there is still no reason to reject Mr Rivett's assertion that neither he nor Project Results has any assets. The evidence as to his actual asset position at the time of the project and as to its history is consistent with his evidence. Whilst the applicants may bear the onus of establishing the absence of assets, the onus has been discharged. I am so satisfied. 562. The respondents' second point is that any loss suffered by the applicants was to some extent occasioned by supervening events for which they are not liable, the first event being Mr Jessup's failure to obtain a valuation prior to sale of the property. The second is his failure to terminate the contract in March 2003 in light of the rising market. To my mind, these aspects were not fully investigated. There was no attempt to identify the duty imposed upon Mr Jessup in connection with the sale of the premises, nor the powers which he acquired as a result of his appointment by the Supreme Court. I infer that he sold as mortgagee in possession rather than pursuant to any statutory power that he may have acquired as a result of such appointment. If Mr Jessup properly discharged the duty imposed upon him by the Supreme Court and/or as mortgagee in possession, then it would be difficult to see how his conduct could have compromised the applicants' claims. Similarly, the legal entitlement of the applicants to guide or direct Mr Jessup in the performance of his functions was not canvassed. Some applicants were cross-examined as to their knowledge of, and participation in, decisions relating to sale of the subject property. However the matter was not addressed in written submissions. 563. In any event, I am of the view that these complaints fail for factual reasons. The property was valued at $850 000 as at 25 February 2002. On or about 12 August 2002, Mr Jessup sold the property for $1 103 624.64. The contract provided for settlement six months after the due diligence date, which date was 30 days after the date of the contract. Interest was payable on the amount of the unpaid purchase price at 7 per cent per annum from the due diligence date. 564. The only possible reason for getting another valuation would have been the possibility that, as at August 2002, prices had risen substantially since February 2002. There is general agreement that throughout 2003, land prices in the area were increasing. Mr Walsh, who performed the valuation in February 2002, said that in August 2002 it was very much a seller's market, suggesting that by that time prices were rising. However he said that the upward trend probably first appeared in mid-2002. In those circumstances it is difficult to see how it can be said that there was any culpable conduct in Mr Jessup's selling the property in August 2002 at a price which reflected a substantial increase over the valuation obtained in February of that year. 565. Just prior to settlement, the purchaser sought a short extension of time. The respondents say that Mr Jessup was therefore entitled to rescind. The respondents assert that Mr Jessup could, and should, have rescinded the contract. I have already demonstrated that this argument is based upon a misconception. Firstly, it is by no means clear that the purchaser would have been in default had it refused to settle. Mr Jessup's legal advice was that he should consent. Secondly, had the extension been refused, the purchaser may have settled. There is simply no evidence that Mr Jessup was entitled to rescind the contract. 566. Although, at the trial, the respondents disputed certain of Mr Jessup's outgoings, which have been deducted from the proceeds of sale of the property, these matters were not addressed in final submissions. I assume that such complaints were abandoned. 567. The starting point in assessing damages is to identify the difference in value between the benefit acquired by each applicant and the price paid for that benefit. Each applicant acquired the right to be repaid the amount of his or her deposit, together with interest at the specified rate for the period of the loan. Assuming competence in the way in which the matter was handled by the respondents and, subsequently, by Mr Jessup, and assuming no operative intervening circumstances, one would readily infer that the value of the benefit received by each applicant was the amount eventually received. For such benefit each applicant paid the amount of his or her deposit and gave up the opportunity to earn interest from some other investment during the period of the loan. Such an approach requires identification of the rate of interest which would have been received had each applicant not made this investment but invested elsewhere. One might select the interest rate being offered by MDRN at the time, presumably the rate payable by Project Results, 9.25 per cent. However ex 75 demonstrates that until 1999 banks were offering 4 per cent per annum on twelve month fixed deposits. By July 2000, the rate was 5.65 per cent. The difference between these rates and the MDRN rate is, presumably, largely, if not entirely, attributable to risk. MDRN's rate of 9.25 per cent was, as Mr Wild said, a rate appropriate to a speculative investment. A fixed deposit with an Australian bank would usually be considered to be anything but speculative. 568. If I were to award interest to the applicants at 9.25 per cent, I would then have to discount the award to recognize the risk that any alternative investment at that rate would also have been speculative and might also have failed. On the other hand, if the bank deposit rate is used, there will be no need for further discounting for contingencies. The better course is to use the bank deposit rate as at July 1999, 4 per cent. Implicit in this approach is my understanding that the measure of damages does not aim to compensate the applicants for the lost benefit of their investments, but rather to place them, as far as possible, in the positions in which they would have been had the misrepresentations not occurred. The above calculation includes interest for the twelve months of the loan. The award will bear interest from 23 July 2000 until judgment. There should also be a further allowance of interest to reflect the delayed receipt of the two distributions paid in April and December 2003. 570. The applicants seek compound interest. They submit that the decision of the High Court in Hungerfords v Walker [1989] HCA 8 ; (1988-1989) 171 CLR 125 is authority for the proposition that compound interest may be awarded by way of damages. The decision is certainly authority for that proposition. Such an award is distinct from an award of interest pursuant to the statutory power conferred upon this Court by s 51A of the Federal Court of Australia Act 1976 (Cth) (the "Federal Court Act"). It is clear from the reasons of Mason CJ and Wilson J at 149 (Brennan and Deane JJ concurring) that an award of compound interest must be for 'a foreseeable loss, necessarily within the contemplation of the parties, which is directly related to the defendant's breach of contract or tort' . In that case, the plaintiff conducted a business and had borrowed substantial amounts for that purpose. The award was designed to compensate the plaintiff for specifically identifiable losses. Compound interest was not allowed by way of damages on amounts which would have been spent for private purposes. 571. As far as I am aware, none of the applicants has asserted a case of the kind considered in Hungerfords . Given the relatively small amounts of most investments and the personal circumstances of many of the applicants, it is likely that many would have expended any interest on living expenses and other private outgoings. The loss of interest may have caused them a degree of hardship or discomfort, but they cannot be compensated for that in dollar terms. It is not appropriate, in this case, to award compound interest as damages. 572. As to the rate at which the awards should bear interest pursuant to s 51A, ex 74 contains information as to bank deposit rates for the period from July 1999 until September 2004. The table shows monthly fluctuations in interest rates for various types of deposit and for various periods. Given that the applicants have been out of their funds since 23 July 2000 it seems appropriate to adopt the rate payable for the longest available term which is five years. The average rate over the period from 23 July 2000 until September 2004 is 4.9 per cent. The awards will bear interest at that rate from 23 July 2000 until the date of judgment. To this sum will be added, in the case of each applicant, interest at the same rate on the amount of the first distribution for the period of 2.75 years and on the amount of the second distribution for 3.8 years. There may have to be further adjustments in the cases of the thirty-eighth and thirty-ninth applicants. I will hear further submissions after publication of these reasons. 573. It might be thought that this approach involves the award of interest upon interest, which approach is not permitted by s 51A. I refer to my inclusion of an amount for interest in calculating the award of damages and then allowing interest on the amount of the award. However I do not understand s 51A to regulate the calculation of damages. It rather addresses the award of interest after such calculation. It does not authorize compound interest on an award. 574. After publishing these reasons I will adjourn the matter so that the parties can calculate the amounts in which judgment should be entered in favour of each successful applicant. The findings made in connection with the statutory cause of action (largely based upon the respondents' late admissions) will lead to judgments in favour of all applicants other than the twentieth and twenty-first applicants. There is no suggestion that the measure of damages in the cause of action for breach of duty should differ from that for the statutory cause of action. However there may be some possibility of a different outcome in the event of an appeal, and so I must deal with the alleged breaches of duty for that reason. I must, in any event, deal with the twentieth and twenty-first applicants' cases in connection with that cause of action. 576. This aspect of the applicants' case is somewhat difficult to understand. The difficulty may spring from uncertainty on their part as to the role of each respondent in the conduct of the mortgage business and their failure to distinguish between the duties of the MDRN partners as solicitors and their duties (if any) as facilitators of lending transactions. This confusion seems to have led to an attempt to establish a duty of care on their part as promoters of mortgage transactions. It seems, too, that the respondents' attitudes to these matters may have changed since the commencement of the proceedings, particularly as concerns the role of the trustee company. 577. The applicants submit that the relationship between each applicant and each respondent gave rise to a duty to take positive steps to ensure that the Yandina project was "good", or "prudent", in effect to guard against any loss by an applicant. The respondents admit that the trustee company had a duty to take reasonable care not to recommend or make an imprudent investment, whatever that may mean. They also admit that the MDRN partners owed each applicant a duty to perform their professional services (as solicitors) with all due care and diligence in relation to the asset positions of Mr Rivett and Project Results 'and in the capacity as solicitors recommending a lending transaction' . I am not sure of the meaning to be attributed to the words in quotes. The only additional duty as a solicitor in that situation would be to avoid conflicts of interest. 578. The difficulty with all of this is that it seems to be an attempt to create a professional negligence case out of what is really a negligent misstatement case. The "profession" in question seems not to be that of solicitor. I am not aware of any general duty imposed upon a solicitor in connection with a client's business judgment to lend money, as opposed to his or her duty to document such a transaction. I am also unaware of any other profession of which either the trustee company or any of the MDRN partners is said to be a member, the recognized standards of which might be presently relevant. The distinction is important for this reason. The applicants seem to argue that there was a duty upon the respondents to make appropriate enquiries, which duty was independent of any duty not to make negligent misstatements. Save to the extent of the respondents' admissions, I am unable to identify any such duty. It is convenient to deal separately with the claims against the trustee company and the MDRN partners. The respondents concede that all applicants other than the seventh, eleventh, twentieth, twenty-first, thirty-eighth and thirty-ninth are entitled to judgment against the trustee company on this cause of action. In oral submissions, counsel for the respondents indicated that they understood the claim of breach of duty to be a claim for negligent misstatement. I infer that the admissions made at the end of the trial reflected that understanding. The duty admittedly owed by the trustee company to each applicant may offer some support for a broader claim of the type suggested by the applicants, but it should be kept in mind that the admission of that duty was made before the trial and not as part of the later admissions to which it was probably unrelated. Despite my uncertainty as to the basis of the admissions, I am content to enter judgment against the trustee company and in favour of those applicants, given that the respondents concede liability. The quantum of each of those claims will be the same as that awarded in connection with the respective statutory claims. 581. I turn to the claims made by the seventh, eleventh, twentieth, twenty-first, thirty-eighth and thirty-ninth applicants. The applicants' case is outlined in par 61 of their written submissions. It is said that the respondents were negligent in recommending the investment in the investment summary and, independent of the investment summary, in assessing and recommending the loan application. They go so far as to assert that the application should have been declined. This highlights the applicants' misunderstanding of their case. There can have been no duty to decline the application. The only duty can have been in connection with the statements made to the applicants and upon which they acted. Such statements may have been as to facts or as to opinions, including recommendations. No doubt the investment summary spoke positively of the proposed loan. On p 5, it was said that MDRN 'supported' it. That cannot be transformed into actionable investment advice. The case is properly understood as a claim of negligent misstatement. 582. However there is the admission of a duty not to recommend, or make, an imprudent investment. I am not satisfied that this investment was imprudent. Mr Wild suggested that the interest rate was appropriate to a speculative investment. In other words, the potential risk matched the potential return. Mr Quinn considered that he could have obtained funding elsewhere, suggesting that the market would have seen the proposal as viable. Mr Miller, to some extent, supported that view. I accept their evidence in that regard. It follows that the applicants cannot recover on the basis of a breach of the admitted duty. 583. I turn to the question of negligent misstatement. I have some doubts as to whether such a cause of action has been pleaded, but there is no doubt that the parties understood the case to be framed in that way. Some of this language is more appropriate to a case involving alleged breach of a positive duty, reflecting the misconception to which I have referred. It will be necessary to identify aspects of the investment summary which deal with these matters in order to identify any negligent misrepresentation. 585. I have already dealt with the statements in the investment summary concerning the asset position of Mr Rivett and Project Results. There was no justification for those statements in the information provided by Mr Rivett to MDRN. It was certainly negligent to make such statements in those circumstances. For reasons I have given in connection with the statutory cause of action, it follows that as Mr McIntyre relied upon those statements, he is also entitled to judgment for damages for breach of duty as against the trustee company. The measure of damages will be the same as that for the statutory cause of action. It also follows that the thirty-eighth and thirty-ninth respondents should recover judgment for breach of duty. They, too, acted in reliance upon those statements. The twentieth and twenty-first applicants did not so rely. 586. The seventh applicant (Mr Bengston) did not rely on the relevant statements. However the statement that all units in Stage 1 had been pre-sold was also misleading. For present purposes, it is necessary to show that it was also made negligently. That raises the question of the enquiries which Mr Blackadder ought to have made in order to verify the assertion in the loan application. Considering the prominence given to the matter in the investment summary, it is reasonable to infer that he considered it to be of some importance. The pre-sale of units was also a significant issue in connection with the valuation. Further, Project Results' application included copies of the then existing contracts for the sale of units, suggesting that Mr Rivett and/or Mr Quinn thought it important to any decision by MDRN to market the proposal. 587. In those circumstances I infer that it was negligent to represent that all units had been "pre-sold" without ascertaining the actual position by enquiries of Project Results and, where possible, by reference to existing documents. It is relatively clear that Mr Blackadder made no enquiries, although he saw some contracts. As I have observed in connection with the statutory cause of action, in view of the very vague and inconsistent statements made concerning pre-sale of the units, it is difficult to understand how anybody could sensibly have acted upon those representations without at least making some enquiry with a view to clarifying their meaning. However, as I have also said, Mr Bengston was in a special position in this regard. He recognized the probability that the representations meant only that there had been expressions of interest or something similar, but nonetheless chose to act upon that understanding. I have no reason to believe to the contrary. In the circumstances, I consider that he, too, is entitled to judgment for damages for breach of duty. 588. As to the other matters relied upon in support of this cause of action and identified above, many are not the subject of any identifiable misstatement in the investment summary. Of the balance, I have already explained why I consider them to be misconceived. In any event, only the Mellishes have failed to recover judgment on some other ground. As they did not receive the investment summary, there is no basis upon which they can recover for any negligent misstatement contained therein. The applicants put their claim for breach of duty against MDRN in the same way as against the trustee company. However the respondents have not admitted that MDRN owed a duty not to recommend or make an imprudent investment. In this discussion I will continue to refer to the individual second respondents collectively as "MDRN", and to their individual duties as solicitors, and any duties in connection with the mortgage business, as being, collectively, those of MDRN. However it is important to keep in mind that I am discussing the individual duties of each partner. 590. For reasons previously given, I do not consider that MDRN bore any duty to check the accuracy of the information contained in the investment summary other than in connection with the avoidance of negligent misstatements. This claim must therefore be seen as a claim for negligent misstatement. As the respondents' final position was that both the trustee company and MDRN distributed the investment summary, it follows that, for the reasons given in connection with the claim against the trustee company, each applicant, other than the twentieth and twenty-first also succeeds on the basis of negligent misstatement. On this claim, the twentieth and twenty-first applicants also fail for the reasons which I have given in connection with the claim against the trustee company. MDRN pleads a contract of indemnity insurance between it and St Paul for the period from 1 July 2000 to 30 June 2001 (the "St Paul policy"), and that each MDRN partner was an assured person within the meaning of that policy. It was originally effected pursuant to an arrangement fostered by the Queensland Law Society (Inc) but for present purposes, it is accepted that St Paul was the insurer. The Assured shall also give notice in writing as soon as is practicable to the Insurer of any circumstances of which the Assured is or shall become aware during the Period of Insurance which may give rise to a claim. If the Assured shall give notice to the Insurer during the Period of Insurance of circumstances which may give rise to a claim any claim subsequently made arising from the circumstances so notified shall be deemed to have been made during the Period of Insurance. MDRN pleads that in the course of its practice, it acted for the applicants in respect of investments in a private mortgage lending transaction and, in June 2001, was aware of circumstances which might give rise to a claim by such investors. It accordingly gave notice by letter dated 20 June 2001 and claimed indemnity. On 12 January 2004, St Paul declined to indemnify MDRN, alleging that it had breached its obligations under the St Paul policy. MDRN seeks indemnity and/or damages. 594. It is appropriate that I say a little concerning the case as a whole. The applicants' case has suffered because those conducting it have failed to identify appropriately its relevant strengths and weaknesses. Many aspects of the case were, in my view, either unarguable or difficult to argue. I have referred to some of them. Similar comments apply to St Paul's case. Such an approach is unfortunate. Firstly, it results in a great waste of time and money. Secondly, it makes it difficult for the parties to form realistic and objective assessments of their prospects. Thirdly, in this case, it has generated an emotional approach to issues which has almost assumed dishonesty, or at least gross incompetence, on the part of MDRN and/or its employees. 598. In the end the investment summary is the primary source of the applicants' complaints. Reading it again, with the benefit of all of the evidence, all of the arguments and my own reflections upon it, I find that only two matters emerge as clearly causing concern. They are the two matters in respect of which findings favourable to the applicants have been made, namely statements concerning the asset positions of Mr Rivett and Project Results and the representation concerning pre-sale of units. 599. Many of the allegations against the respondents were misconceived. Some assumed obligations which did not exist. The applicants have attempted to treat the respondents as insurers against loss. Whilst the investment summary supported investment in the Yandina project, it did not warrant that there would be no loss in any circumstances. For one reason or another, individual applicants may have concluded that there was no risk of loss but, if so, that was a business judgment. The investment summary did not say that. I have, on a number of occasions, indicated that I do not accept that the evidence establishes, on the balance of probabilities, that the proposal was one which no reasonable lender could ever have accepted. In this regard I have relied upon the evidence of Messrs Wild, Miller and Quinn. 600. There is no doubt that the investment summary was misleading in the aspects which I have identified. The question is whether such misleading effect was created fraudulently or dishonestly. MDRN sought to define narrowly the words "dishonest" and "fraudulent", particularly so as to exclude recklessness, and to stipulate that such conduct must be motivated by personal interest in order that it be so described. Conduct found to be dishonest or fraudulent must be wilfully so. The term "reckless" is sometimes used to describe conduct by a person who refuses to see what must be obvious. In some circumstances, that will be fraudulent, but only if it is actually dishonest. I doubt whether the question of recklessness is relevant for present purposes. As to the question of motivation, it cannot be the law that in order to demonstrate dishonesty or fraud, one must prove motive. Even in criminal proceedings it is not generally necessary to do so. Evidence of motive is often part of the evidence offered to prove fraud or dishonesty. Such evidence may tend to exclude an innocent explanation of the relevant conduct. However it does not follow that in order to prove dishonesty or fraud, one has to prove that the conduct in question advanced, or was expected to advance, some interest of the alleged perpetrator. I do not consider that matter to be a major issue in this case. 601. I turn to the asset positions of Mr Rivett and Project Results. The relevant statement was that Mr Rivett had 'a net surplus of $1,790,000.00 and that [Project Results] had a net asset position of $640,000.00' . This information was apparently based upon the statement of assets and liabilities provided by Mr Rivett with the loan application. I have previously set out various parts of it. I have also demonstrated why I consider it to be inaccurate. However, for present purposes, the significant point is that Mr Blackadder did not accurately incorporate its contents into the investment summary. Mr Rivett had identified the assets which were held in trust and those which he held jointly with his wife. He did not claim to control the Fritton Trust. He said that his father controlled it. Its assets represented $750 000 of the claimed value of Mr Rivett's assets. Assets allegedly worth $640 000 were disclosed as being in other trusts. Mr Blackadder made no enquiries about the terms of the trusts, but included the amounts in the total of Mr Rivett's nett worth. 602. Accepting that Mr Blackadder is not a lawyer, I nonetheless cannot accept that a person with his banking experience would not have understood that there were likely to be limitations upon the rights to the assets of trusts exercisable by a person who claimed to "control" it. I did not understand him to assert such lack of understanding. In any event he clearly knew that Mr Rivett did not claim to 'control' the assets of the Fritton Trust. It was therefore misleading to say that they were Mr Rivett's assets. Similarly, it was clear that the house at Alexandra Headlands, with a nett value of $80 000, the units at Maroochydore, with a nett value of $50 000 and the shares in Project Results were jointly owned by Mr Rivett and his wife. To include the values of those assets in the total value of Mr Rivett's sole property was a substantial deviation from the truth. 603. I am unable to identify any way in which Mr Blackadder could honestly have made such errors. His evidence offered no assistance in that regard. I have taken into account the view expressed by Mr Blackadder, and to some extent supported by other witnesses, that the asset position of Mr Rivett and Project Results may not have been as fundamental to the project as the applicants have sought to establish. However Mr Blackadder, in preparing the investment summary, was deliberately providing information to potential investors. He can only have included the information concerning Mr Rivett's asset position because he thought that it would be of some relevance to decisions to invest. I cannot accept that in compiling the investment summary, a person in Mr Blackadder's position could conceivably have simply looked at the "bottom line" of the statement of assets. Even the most cursory examination of the document would have identified the fact that Mr Rivett did not "own" the assets of the Fritton Trust and that other assets were held jointly with Mrs Rivett. Mr Blackadder must have noticed those matters and deliberately chosen not to include that information in the investment summary. He must also have known that the effect was misleading in connection with any decision to invest. I have no doubt that Mr Blackadder deliberately created a false picture of Mr Rivett's asset position in order to induce investment in the project. 604. In coming to that conclusion I have kept in mind the seriousness of the allegations and the need for convincing evidence of dishonesty or fraud. Mr Blackadder did not strike me as being dishonest. However the facts speak for themselves. If I were to speculate about why he may have gone so far in order to induce investment in the project, I would suggest that he was under pressure to ensure that the mortgage business performed at a level which would justify its continued operation. However it is not necessary for me to speculate. My view is based upon the documents and the absence of any satisfactory explanation as to how Mr Blackadder came to represent that Mr Rivett had the asset position which appears in the investment summary. 605. Similar comments apply to the statement concerning the asset position of Project Results. The figure of $640 000 appears to be the total value of assets which, as Mr Rivett claimed, were owned by Project Results as trustee of the John Rivett Family Trust and the NJT Trust. Project Results was acting as trustee of the latter trust in connection with the Yandina project. The claimed value of the assets of that trust was $200 000. The claimed value of the assets of the John Rivett Family Trust was $440 000. The shares in Project Results were said to be worth $170 000 nett, presumably reflecting their nett asset backing. In the absence of any satisfactory explanation by Mr Blackadder of the way in which he chose the figure of $640 000, I infer that he simply added the amounts claimed as the asset values of the two trusts. Of course, in the case of NJT Trust, Project Results would have been entitled to an indemnity out of its assets to meet obligations incurred in connection with the Yandina project. However the figure of $640 000 is still well in excess of the value of those assets and the other beneficially owned assets of Project Results excluding the assets of the John Rivett Family Trust. I am unable to see any honest way in which Mr Blackadder could have derived the figure of $640 000. In those circumstances I infer dishonesty. 606. I should add that in considering the question of fraud, I have accepted at face value, Mr Rivett's claims concerning his asset position and that of Project Results. However, as I have demonstrated, those claims were incorrect. 607. I turn to the question of pre-sale of units. I have previously given my reasons for concluding that the investment summary should be read as representing that there had been pre-sales of all units in Stage 1. In the loan application, Project Results claimed that all units had been committed to purchasers on 'Offers to Purchase' , that it was 'presently signing up contracts' and that it would accept that as a condition of the loan, ten of the twelve Stage 1 units be on contract and that Stages 2 and 3 'go ahead subject to satisfactory presales' . I consider that Mr Blackadder should have checked this information before making any representation concerning it, but his failure to do so does not necessarily mean that he was dishonest. Acting honestly, he might well have accepted the information at face value and included it in the investment summary. I am not satisfied to the requisite standard that Mr Blackadder was dishonest in this regard. 609. Two other matters require comment. MDRN submits that it was not dishonesty on the part of Mr Blackadder which brought about MDRN's liability but rather the issue of the investment summary. That may be so, but St Paul's case is that the relevant misrepresentations in the investment summary were representations made to potential investors by the respondents, and that Mr Blackadder included those representations in the investment summary knowing that it was to be so distributed. He was primarily responsible for the content of the investment summary, although the partners may have had some opportunity to review that content. He was a senior employee, and they seem to have had no reason to doubt his competence or honesty. I have no difficulty in concluding that it was his conduct in including the misrepresentations in the investment summary, and in failing to draw the partners' attention to the various inaccuracies of which he must have been aware, which caused them to be communicated to potential investors and the subsequent liability incurred by MDRN. 610. MDRN seeks to narrow the construction of cl 5(e)(v) of the St Paul policy, submitting that it does not operate to deprive an innocent partner of indemnity where loss is the result of the dishonest or fraudulent act of an employee. The point is clearly unarguable. Clause 5(e)(v) specifically excludes indemnity where the loss occurs in those circumstances. The argument would result in the clause having no effect whatsoever. MDRN sought to rely upon the decision of the Full Court of South Australia in Gilmour v AMP General Insurance (1997) 9 ANZIC 61-372. However it is relatively clear that the case did not involve a clause such as cl 5(e)(v). There is nothing in this argument. 611. As I understand it, my findings lead to the conclusion that St Paul is obliged to indemnify MDRN only in the amount of Mr Bengston's claim. However I will invite the parties to make further submissions should they wish to do so. 612. One other matter requires comment. St Paul submits that the fees charged by Mr Jessup are not recoverable by the applicants. The applicants do not claim them as damages. However they were deducted from moneys received by Mr Jessup and so the amount thereof was not passed on to investors. The amount of each claim has been increased as a result of such deduction. 613. St Paul submits that incurrence of those fees was not a reasonably foreseeable consequence of MDRN's conduct, did not flow naturally from such conduct and was not reasonably within MDRN's contemplation 'when it accepted the applicants' retainer' . The reference to the retainer is irrelevant in view of my approach to the applicants' claims. 614. I have previously observed that the circumstances surrounding the appointment of Mr Jessup as liquidator, the statutory provisions which regulated such appointment and his conduct of the liquidation have not been canvassed in great detail in these proceedings. For that reason I find it difficult to address this question. 615. As a result of a change in the regime for regulating this aspect of the finance industry, mortgage schemes administered by solicitors' firms were no longer permissible, save where ASIC chose to apply a particular exempting provision. It had done so in connection with MDRN's mortgage business, but the exemption was to continue only until 31 October 2001 in order to enable existing schemes to be completed. Until Mr Jessup's appointment MDRN and the trustee company were attending to that process in connection with the Yandina project. When legal proceedings were threatened, the trustee company and MDRN were concerned that a conflict of interest might arise. Mr Ryan asked ASIC to revoke the exemption. It did so with effect from 6 September 2001. The Queensland Law Society (Inc) had previously agreed to the appointment of a liquidator of the scheme, and so the trustee company and MDRN applied for Mr Jessup's appointment as liquidator. On 13 September 2001 Mr Jessup was appointed accordingly. It seems that the only step to be taken in connection with the loan to Project Results was to realize the available securities, including Mr Rivett's guarantee. So we say that the suggested distinction, that in Bells case it was one brought on the eve of the, or after the, exemption from ASIC expired, isn't a material difference. The writing was on the wall here. There would have had to have been a liquidator put in, in any event. The reference to 'Bells case' is to the decision of Chesterman J in Moloney & Anor v Bells Securities Pty Ltd & Ors [2005] QSC 013. In that case his Honour declined to allow as damages the costs of a liquidator appointed in circumstances similar to those in the present case. St Paul's argument seems to be that as the period of the ASIC exemption was to expire on 31 October 2001, a liquidator would have been appointed in any event. It is said to follow that the costs incurred by Mr Jessup were not a consequence, or perhaps a foreseeable consequence, of any conduct on the part of the respondents, particularly MDRN. The applicants did not take this point in argument, but it addresses the measure of damages in their claims against MDRN. 618. In causes of action for misleading and deceptive conduct and negligent misstatement, the relevant measure of damages is designed to put the applicant in the position in which he or she would have been, had the relevant conduct not occurred. That is often achieved by awarding the difference between the value of the property acquired as a result of the relevant conduct and the price paid for it. However there are limits upon the extent of permissible recovery. I accept that for present purposes, the test of reasonable foreseeability provides such limit. Had Project Results discharged its obligation, the loan would have been repaid in 2000. At the time of the relevant conduct it was reasonably foreseeable that the applicants would suffer loss as a result of Project Results failing to meet such obligations. It was also reasonably foreseeable that in that event, the applicants would have to resort to available securities, including Mr Rivett's guarantee, in order to recover their investments and interest. It was similarly foreseeable that, as a result of their conduct, MDRN and the trustee company would be unable to attend to such realization, and that somebody else would have to do so. That was likely to cost money. 619. In my view it was reasonably foreseeable that as a result of the conduct of the trustee company and MDRN, additional costs would be incurred in realizing the securities. That is sufficient to permit recovery by the applicants from MDRN of the reasonable costs so incurred. See South Australia v Johnson (1982) 42 ALR 161. The prospective expiry of the ASIC exemption played no causal role in the incurrence by the applicants of their costs, nor did it render them too remote to be recoverable in these proceedings. MDRN pleads professional indemnity policies with QBE for the periods from 6 September 1998 to 6 September 1999 (the "1998 policy"), 6 September 1999 to 6 September 2000 (the "1999 policy") and 6 September 2000 to 6 September 2001 (the "2000 policy"). Pursuant to cl 5.1 the period for notification of a claim was extended to include the period of 28 days after the end of the period of cover. For the moment it will be convenient to consider only the 1999 and 2000 policies. MDRN claims to have notified QBE of the circumstances out of which the applicants' claims arose in its proposal for the 2000 policy, (which proposal was dated 24 August 2000) or to have notified the claim and/or such circumstances by a letter dated 4 July 2001. The proposal is part of exhibit "H" to the affidavit of Sarah Hume filed on 8 March 2005. It is relevant for numerous purposes. I will summarize its content. 624. Mortgage investment management accounted for 24.3 per cent of its business, syndication management for 3.2 per cent and the legal practice for 72.5 per cent. MDRN disclosed that it provided reports to clients identified as 'newsletters, brochures, etc' . Fees for the five largest contracts undertaken during the preceding five years were $60 000, $65 000, $75 000 and $90 000 in respect of four loans and fees of $150 000 in respect of a property syndication. In the course of its business it engaged valuers, engineers and quantity surveyors. MDRN provided copies of brochures describing its activities which it issued in the course of its business. 628. Questions 23 and 24 in the proposal are of particular importance. In reply MDRN identified three claims in 1996, 1999 and 2000, none apparently relating to the present proceedings. 630. MDRN answered 'yes' and provided particulars in an attached document which summarized various projects. It is anticipated that in the event of a loss, that a claim in the first instance would be taken against the valuer of each property. We attach current letter which is being dispatched to investors outlining solutions. In the event of an unsatisfactory outcome we envisage a claim against the Quantity Surveyor on the project. The attached letter is a circular sent to investors in the Yandina project. It is dated 21 August 2000. At that stage Mr Rivett was apparently still seeking to complete the project. The letter stated that he had been assured that other funds would be available within 10 to 14 days 'to enable the completion of construction works for Stage 1 of the Yandina Greens Village'. The writer assured investors that MDRN believed that they would recover their investments with interest and penalties. However it said nothing about the conduct of MDRN in connection with the soliciting of funds for the project. 634. We have acknowledged receipt of same to the investors concerned. Attached was a copy of a facsimile transmission from Mr Wade Mellish. The cover under both the 1999 and 2000 policies was for liability for claims made during the relevant period of insurance, including claims arising out of circumstances notified to the insurer during such period. Such notice had to be given within the period of cover or within 28 days after its expiry. The proposal dated 24 August 2000 was given to QBE prior to the commencement of the period of cover for the 2000 policy and during the period of cover of the 1999 policy. Prima facie , it may have been notification for the purposes of the 1999 policy, but not for those of the 2000 policy. The letter dated 4 July 2001 was within the period of cover of the 2000 policy. I have previously referred to cll 23 and 24 of the proposal form and the answers given by MDRN. MDRN has, itself, asserted that those answers constituted notification of circumstances out of which the present claims arose. Whether QBE relies on the Additional Exclusions clause or cl 4.1 of the policy, the result is that the present claims are not covered by the 2000 policy. I did not understand MDRN to contend to the contrary. It is therefore not necessary to consider the application of cl 4.2 in this respect. However I will, at least indirectly, do so in dealing with other aspects of this matter. I have previously mentioned the 1998 policy. MDRN does not assert that it gave notice of a claim, or of circumstances which might give rise to a claim, during the period of cover or the following 28 days. Rather, it purports to do so by par 19 of its cross-claim, relying on s 54 of the Insurance Contracts Act 1984 (Cth) (the " Insurance Contracts Act "). 640. The decision of the High Court in FAI General Insurance Co Limited v Australian Hospital Care Pty Limited [2001] HCA 38 ; (2001) 204 CLR 641 at [40] --- [46] (per McHugh, Gummow and Hayne JJ) demonstrates that QBE is not entitled to avoid payment pursuant to the policy upon the basis of MDRN's failure to notify this claim during the period of cover, save to the extent permitted by s 54. Although MDRN's pleading does not say so, the relevant "act" for the purposes of s 54 is that failure. It may be that the decision in FAI v Australian Hospital Care can be distinguished for present purposes. I say that in view of the language of "election" contained in cl 5.2 of the present policy. The language of the policy in that case seems not to have contained that concept. It may be arguable that the High Court was not addressing a situation in which the parties had stipulated for an election, and that an election may not accurately be described as an "omission". However the contrary is also arguable. In any event, I proceed upon the basis that the decision is relevant to MDRN's claim to indemnity under the 1998 policy. 642. The cross-claim was amended to add the claim under the 1998 policy and reliance on s 54. The amendment was provoked by QBE's plea of non-disclosure and misrepresentation in connection with the 1999 policy. This method of pleading is unsatisfactory. The matters so alleged by QBE are numerous. They relate to MDRN's system for loan approval and particular aspects of its conduct concerning the Yandina project, in particular, compilation of the investment summary. It would have been helpful had MDRN specified the precise matters which it claims to have omitted to notify. In any event, QBE denies that such matters could have given rise to a claim under the 1998 policy. It also denies that during the term of that policy, MDRN became aware of such matters. It is said to follow that MDRN 'are not, and were not during the term of the (1998) policy, entitled to give notice' of such matters, and that cl 5.2 of the 1998 policy therefore does not apply so as to deem there to be a claim under that policy, regardless of any question of late notification. As it is MDRN's primary position that it is entitled to indemnity pursuant to the 1999 policy, it will be best to leave consideration of the argument concerning the 1998 policy and the application of s 54 until the issue of liability under the 1999 policy has been determined. In submissions, MDRN sought to advance a second basis for reliance upon the 1998 policy. Words appear to have been omitted from the introductory paragraph, but the intention was to allow notification, under a current policy, of a claim or circumstances which should, or could, have been notified during a prior period of cover. Such a claim was to be treated as a claim under the current policy, but upon the terms which would have applied had the earlier policy still been in force and applicable to the claim. 646. QBE correctly submits that no such case has been pleaded. MDRN seems to assert that such a case arose out of its pleaded reliance on s 54. However that section, in effect, extends the time within which a claim may be made under, in this case, the 1998 policy. As I have observed, the effect of cl 2.1 is to permit claims which ought to have been notified in an earlier year to be made under a current policy, as if it were in the form of the relevant earlier policy. Paragraphs 16 to 22 of the cross-claim raise no such claim. Firstly, the language of pars 18 and 19 clearly raises a claim under the 1998 policy rather than any current policy. Secondly, the reference in par 21 to s 54 would be completely irrelevant to a claim under cl 2.1. Thirdly, those paragraphs were added to the cross-claim in 2005, but there is no pleading of any extant policy with QBE as at that date. Finally, there is no reference to cl 2.1. In my view reliance on cl 2.1 has not been pleaded. QBE asserts that had such reliance been raised at the trial, further factual issues would have been addressed. It is impossible to discount that possibility. I will not permit reliance on cl 2.1 at this late stage. QBE disputes liability under the 1999 policy on the grounds of non disclosure and misrepresentation. 649. Sections 23 to 27 deal with misrepresentations, but they seem to assume an existing duty not to misrepresent, rather than create such a duty. It is not necessary to refer to them. QBE's case is that, but for the alleged non-disclosure and misrepresentations, it would not have extended cover for 1999-2000. In other words it seeks to establish that MDRN's non-disclosure and/or misrepresentations led to its decision to insure. 651. In considering this aspect of the case, it is necessary to address a further body of evidence. Ms Hume is an employee of QBE. She holds the degree of Bachelor of Commerce in the University of Queensland and has completed some law subjects in that university. Following a period of training with QBE, Ms Hume commenced work as an underwriter in the professional liability division. By August 1998 she had been promoted to the position of senior underwriter and was, in 1998, appointed to manage the professional liability division in Queensland. She moved to Brisbane in early 1999. At the end of 1999 she resigned from QBE and travelled to London where she again worked for QBE in establishing a professional liability division. She has since returned to Australia and continues to work for QBE. 652. Ms Hume first became involved with MDRN in late August or early September 1998 through MDRN's insurance broker, AON Risk Services Australia Ltd. QBE had carried MDRN's professional indemnity insurance in connection with its mortgage business since 1998. It did not otherwise insure the firm. Ms Hume assessed MDRN's proposal for insurance for the 1998-1999 year. MDRN's proposal was made on a broker's proposal form rather than the form generally used by QBE at that time. The QBE form sought details of the precise nature of the insured's activities or business, advice given in relation to such activities or business, any envisaged substantial changes in such activities, and whether any brochures or other promotional material were issued, in which case copies would be requested. I understand this evidence to have been led in support of the evidence from Ms Hume that such matters were relevant to her decision to insure MDRN. 654. In assessing the quality of the risk, Ms Hume considered that any changes or proposed changes were of some importance, primarily because they might affect the relevance of the past claims record. In this case she concluded that there had been a substantial change in the risk since the 1997-1998 renewal in that MDRN had established MDRN Investments Ltd to manage property syndication. That company was not insured by QBE. MDRN anticipated a 32 per cent increase in fee income and an increase in the percentage of its business which related to mortgages. Ms Hume recommended a 10 per cent increase in the premium. Ms Hume then referred the proposal and her recommendations to the national underwriting manager, Mr Hunter. He approved Ms Hume's recommendations, with some variations. On 24 September 1998 the policy issued, ' limited to cover mortgage assessment, mortgage management/origination work and property syndication only'. This cover was slightly broader than that recommended by Ms Hume and extended to other entities which are not presently relevant. 656. Ms Hume also considered MDRN's proposal for the 1999-2000 year. By that time she had moved to Brisbane and had authority to accept the proposal. MDRN indicated that from 1 November 1999, ASIC was to assume responsibility for the regulation of solicitors' mortgage practices, which activities had previously been regulated by the Queensland Law Society (Inc). Ms Hume concluded that the risk remained substantially unchanged. The premium was increased by 15 per cent to reflect an increase in fee income. The 1998 endorsements were applied to the 1999 policy. There were also exclusions in relation to the partners' family trusts. Renewal was effected on that basis. 657. Ms Hume considered that the business practices of an applicant for professional indemnity insurance were directly relevant to the decision to insure. This was because such insurance was in connection with the conduct of professional business practices. In assessing MDRN's proposals, Ms Hume relied on information provided by MDRN regarding such business practices, including brochures and other promotional material used by it in the mortgage business. The fact that such business was conducted in conjunction with the MDRN legal practice was relevant to her considerations. She noted that MDRN had 'aggressively promoted itself' , by which she meant that it had promoted its mortgage business as an adjunct to its legal practice. Her decision to accept the proposal for the 1999 policy was 'significantly influenced by the fact that the mortgage lending business was backed up by an apparently reputable firm of solicitors and, particularly, the experienced partners of the firm. ' To her mind, the understanding of legal risks brought to the business 'additional knowledge that comes from a legal understanding of these types of transactions' . Ms Hume considered that lawyers would generally exercise more diligence, be more likely to structure the arrangements appropriately and comply with the requirements of the law, thus reducing the risk to QBE. 659. Ms Hume noted that MDRN's promotional material described the risk minimisation strategies employed by MDRN to safeguard investors' funds. As lawyers, MDRN would have known that representations made to the public in promotional material could lead to consequences in the event of any misleading or deceptive conduct. She accepted at face value representations made by MDRN regarding its business activities. She considered that the promotional material stressed the involvement of the legal practice and the partners in assessing proposed loans. Ms Hume identified a number of 'scenarios' , apparently to demonstrate the ways in which knowledge of various matters may have affected her decision to insure MDRN for 1999-2000. He was their employee. The responsibility for the loan recommendations rested with the partners and in my view they could not have verified the information contained in the Investment Summary and ought not have endorsed the strength of the recommendation to investors without at least one of the partners reading and understanding the loan application source material. This absence of review would give a distorted picture of the assessment and it would have been unacceptable to me for the partners to just look at the Investment Summary as the sole basis for ascertaining the virtues of each loan. The lack of partner involvement would have been unacceptable to me notwithstanding Mr Blackadder's level of experience as a banker. Mr Blackadder's experience did not derogate from the limitations, namely that Mr Blackadder did not have a financial stake in the business and had no legal qualifications. Had the information ... been disclosed to me, I would have been very concerned that MDRN had misrepresented to investors the role played by the law firm and, in particular, Mr Ryan, in the loan assessment process. Not only does this go to the nature of the risk that QBE was underwriting, but also the moral risk in terms of MDRN's ethics and integrity. I would not have been prepared to underwrite an insured that appeared to misrepresent their business practices in this fashion to potential clients. These statements are, to some extent, difficult to accept. Generally speaking, I cannot see that legal training has much to do with considering and approving a loan application. After all, one knows from common experience, and can infer from Mr Blackadder's evidence, that loans are regularly approved by financial institutions using the services of persons who are not legally qualified. The primary role for a legally qualified person in connection with such matters is to attend to the security documentation. Mr Ryan was responsible for that. The only necessary legal knowledge in assessing this loan application was in connection with the concepts of joint ownership of assets and trusts. In my view, few people with rudimentary business experience would lack an understanding of those concepts. I have previously indicated that I consider that Mr Blackadder must have understood them. 663. Ms Hume also seems to have thought that solicitors would have a better understanding than an experienced banker of the dangers of misrepresentation. Such dangers must be well-known to most people in business. The argument would lead to the conclusion that all commercial public relations must be checked by lawyers. I do not accept that basic questions of factual accuracy and honesty are matters with which lawyers enjoy any peculiar affinity. I also reject the suggestion that lawyers are more likely to be aware of the importance of being truthful and accurate in promotional material. It was reasonable for the partners to rely upon Mr Blackadder to compile the investment summary. In business it is common for senior personnel to rely upon executive summaries provided by subordinate employees whom they trust. There were good reasons for their trusting Mr Blackadder. He was a senior employee with substantial relevant experience. 664. It is not really correct to assert that Mr Blackadder was not supervised. Mr Ryan said that he had regular, virtually daily, discussions with him. He saw investment summaries before they were distributed. He had adequate opportunity to check them against information sources if he considered that necessary. I have no doubt that Mr Ryan and Mr Blackadder both understood that the former was supervising the latter. Mr Blackadder was, in a practical sense, responsible for deciding whether to proceed with loan proposals, but Mr Ryan had the authority and opportunity to overrule him. 665. There has been a tendency in this case to treat MDRN (and Mr Blackadder) as having the responsibility for deciding whether or not to lend to potential borrowers. In fact MDRN, through Mr Blackadder, decided only to market a particular loan proposal. Mr Ryan and Mr Blackadder's evidence and the letter approving this proposal (ex 1, tab 22) demonstrate that there was no commitment to lend at the time at which the investment summary was issued. In fact, individual investors decided whether to lend. This tendency has, to some extent, unduly influenced the conduct of the case. It is really about how MDRN canvassed for funds, not about how it decided whether to lend. That does not detract from the seriousness of Mr Blackadder's misconduct, but it is an important aspect of the relationship between Mr Ryan and Mr Blackadder. 666. Had Mr Ryan been asked whether he supervised Mr Blackadder's work, he would have said that he did. That would have been an honest answer. Ms Hume, with the benefit of hindsight, may consider that such supervision was inadequate, but the question is whether there was relevant non-disclosure or misrepresentation. People are usually unaware of their own neglect, at least until it produces unfavourable results. 667. I do not fully understand Ms Hume's concern about the fact that investors would only be shown loan application source material if they asked to see it. That would hardly be a matter of concern if the information in the relevant investment summary was accurate. Perhaps the relevance of this matter depends upon acceptance of the assertion of lack of supervision. 668. In scenario 2, Ms Hume dealt specifically with the ten point plan contained in the autumn 1999 newsletter, the winter 1999 newsletter and alleged differences between the content of these documents and Mr Blackadder's actual practice. Although the applicants plead reliance on the winter 1999 newsletter, they did not ultimately rely on it. I have therefore not previously outlined its content. As far as I am aware, it is only relevant to this aspect of the case. There is also a derogatory reference to other organizations which 'don't examine the financial history of the borrower, their current financial capacity, nor their commitments. Nor do they run credit checks against the borrower and guarantors. My earlier comments concerning the descriptive effect of the autumn 1999 newsletter (as opposed to the prescriptive effect urged by the applicants and cross-respondents) apply to the winter 1999 newsletter. 671. Ms Hume observed that there was no system in place for reviewing documents prepared and issued by Mr Blackadder. She considered that MDRN should have reviewed a cross-section of loans, checking compliance with the ten point plan. She said that had MDRN disclosed the absence of such an audit system, QBE would not have issued the 1999 policy. She said that such a practice was followed in QBE's office. However that can hardly be a basis for assuming that all businesses followed it. It is difficult to see any reason for disclosing the absence of such a system unless there was some reason to believe that QBE understood that it existed. I see no reason why Ms Hume would have assumed the existence of such a practice. If it were so important, one might have expected an appropriate question in the proposal form. Ms Hume did not suggest that QBE's proposal form contained such an inquiry. There was no evidence that such a practice was common in the finance industry. In any event, in such a small undertaking, Mr Ryan's ongoing contact with Mr Blackadder could have been as effective a means of supervision as that proposed by Ms Hume. 672. Scenario 3 related specifically to the Yandina project and the contents of the investment summary. I have already identified the aspects of the investment summary about which valid complaint might be made by the applicants. Such matters, if known to MDRN, should have been disclosed. Mr Hume claimed that QBE would not have accepted the 1999 proposal if these matters had been disclosed. I accept that non-compliance with the ten point plan, as previously notified to some investors, was a matter which may have been relevant to the risk to be undertaken by QBE. However, for reasons which I have given, I consider that the effect of the ten point plan has been greatly overstated by the applicants. QBE's reliance on it for present purposes also depends upon a certain degree of over-statement. I will return to this matter at a later stage. 675. I have given my reasons for rejecting the applicants' complaints concerning the valuation, the use of trade dollars and Project Results' ability to meet interest payments. Those reasons lead to the conclusion that no question of disclosure arose in connection with those matters. As to the alleged negative cash flow for Stage 1, the borrower was to meet loan repayments from the proceeds of sale of units, with an expected shortfall of $400 000. This was disclosed. The point concerning the borrower's contribution of funds is part of the trade dollar complaint. The only other point is the suggestion that units were sold for less than $85 000. To the extent that this allegation concerns some issue other than the acceptance of trade dollars, I do not understand its factual basis to have been ventilated during the trial. It was not addressed in submissions. I take it to be abandoned. 676. Ms Hume was cross-examined concerning her knowledge of the activities undertaken by MDRN in connection with the mortgage business. This seems to assume a "free-standing" duty of care rather than a duty not to engage in misleading or deceptive conduct or make negligent statements. At 2251-2 she was asked whether she understood such activities to be of a 'banking nature' ; and whether she understood that people with the skills of a banker or 'allied skills' would perform them. She agreed. It was pointed out to Ms Hume that in a proposal for insurance made in 1996, MDRN had informed QBE that proposed loans were evaluated externally by 'the Finance Division of the Brannelly Group (Brannelly Finance Pty Ltd), a long established and highly respected superannuation and estate planning consultancy who also act as managers of lawyers private mortgages. ' It was said that Brannelly examined the debt-servicing capacity and good credit history of each applicant and obtained a valuation of the security property to ensure that that the loan/security ratio did not exceed 70 per cent. Ms Hume referred to the 1996 proposal in fixing the premiums for the 1998 and 1999 policies and noted the reference to external evaluations. It seems unlikely in that context that she would have assumed that assessment of proposed loans was done by lawyers. See ex 77. Similar information was supplied to QBE in 1997. See ex 78. This is set by the Queensland Law Society. Ms Hume said that the change from external to internal assessment did not lead her to vary the premium for 1998 and following years. Exhibit A to Ms Hume's affidavit is the 1998 proposal. Attached were documents sent to investors. Ms Hume agreed that she was not concerned about whether a valuation was performed internally or externally, provided that there was a proper evaluation process. I believe elsewhere it also states legal experience, in one of the other documents. You thought that was a matter properly performed by people with banking skills. Correct? So you were certainly content to recommend underwriting the risk on the basis that loan applications were evaluated by people with banking experience? No. Correct? In the course of her cross-examination, Ms Hume said that she understood that Brannelly was part-owned by MDRN. She was asked if she expected 'legal involvement' in respect of documents such as the loan agreement and said that she would have expected the partners to have been involved 'more so than just on the agreement side' . Correct? They may have been involved. They - I mean, I would expect them to be involved in part of the process, if not from the assessment side. But in relation to reference to legal and banking experience, you agreed with me earlier that there's a distinction between those commercial aspects of the loan assessment, and the transactional aspects. Correct? And legal experience to look after the transactional. Correct? Although Ms Hume asserted to the contrary, I am inclined to think that this evidence supports my view that the involvement of lawyers in the assessment process was not a matter of importance, and that Ms Hume did not, at the time, consider that it was. 686. A significant amount of time was taken in cross-examining Ms Hume concerning ex 80. This is a proposal and policy issued by QBE to another client company conducting a solicitor's mortgage business. The proposal was accepted by Ms Hume. QBE had not previously insured the relevant company. Ms Hume assessed the proposal at "3", which was rated as moderate/average, to be quoted only with caution. In the proposal it was asserted that the business had suffered no capital loss in six years. An "audit certificate" was enclosed. Counsel's intention in connection with this cross-examination seems to have been to demonstrate that Ms Hume was willing to accept the proposal, notwithstanding the fact that on at least one view, it was less attractive than that on behalf of MDRN. It seems that this proposal was the only other proposal in connection with a solicitor's mortgage business considered by Ms Hume at the relevant time. 687. QBE also called another employee, Stephen Robert Keith. He is the senior underwriter (financial institutions) within the professional liability division. He first became involved with MDRN in September 2003 when he considered a proposal for renewal of its cover. Mr Keith's superior had requested further financial documentation and résumés for external compliance committee members. In the proposal MDRN disclosed that in the 2001-2002 proposal it had notified QBE of certain claims. Mr Keith spoke to the QBE claims officer concerning the claims arising out of the Yandina project. It was not to be covered by the prospective 2003 policy. He also noted that the proposals for renewal in 2001 and in 2002 had been generally positive and not indicative of any apprehension that a formal claim would result, or that there would be any loss. He noted that in the 2001 renewal proposal MDRN had noted that a loss to investors was possible but had indicated that action would be commenced against the quantity surveyor and the valuer. Investors had been advised that they could still recover principal and some interest. Mr Keith therefore concluded that any claim would not be significant. He also understood from MDRN's prior disclosure that most run-out loans were likely to have been resolved by 31 October 2001. As a result of this he eventually accepted the proposal. 688. He considered a further proposal in October 2004. In the course of his assessment he discovered that in addition to the Rivett claim, proceedings had been initiated against MDRN in connection with two other loans and that there was notice of a third possible claim. The total of the three actual claims was in the order of $5.8 million. Mr Keith also learned that ASIC had been investigating the Rivett loan for some time, and that this had not previously been disclosed to QBE in connection with earlier renewals. Mr Keith considered that there were significant flaws in MDRN's loan assessment and approval process. These matters had not been disclosed in connection with the 2001 and 2002 renewal proposals. Mr Keith considered that they should have been disclosed. In the end cover for 2004/2005 was declined. 690. MDRN also called evidence on this issue. Mr Ryan said that from 1996 until 2004, he was primarily responsible for effecting MDRN's cover with QBE. In cross-examination Mr Ryan said that had he realized that in assessing the Yandina project, MDRN had not adhered strictly to the statements made in marketing brochures as to the process for approving such proposals, he would have drawn it to the attention of QBE in the 1999 proposal (TS 1984). 691. He spoke to Mr Blackadder on a daily basis. Their offices were adjoining. He had not fully examined the Rivett application until 'we were in the recovery process' . He said that he understood 'that Mr Blackadder would look at the assets of a borrower in light of what you would expect a borrower of that standing or age to have and he would make comparisons as to anything which might alert him to be suspicious. For example, if there is a lot of, for want of a better expression, art work or intangibles or something like that. I mean, he's a --- he's the banker and he'd be the appropriate person to answer that. Mr Ryan was somewhat equivocal in his answers concerning this matter (at TS 1991 and 1992) but I understood the general thrust of his evidence to be that he did not expect Mr Blackadder to check a borrower's asset position other than in the general way outlined above. Further checking was unnecessary because, in Mr Ryan's view, it was appropriate to look to the project itself as the source of repayment rather than to the assets of the borrower. He said that the ten point plan set out in the autumn 1999 newsletter was based upon his understanding of what Mr Blackadder normally did in assessing a loan proposal, which information he checked with Mr Blackadder. 696. Concerning the letter to investors dated 23 October 2000 (ex 65), Mr Ryan was asked why he had not identified the possibility of proceedings against MDRN by investors. He said that he did not believe that they had been at fault. He considered that, for reasons which I have given, the quantity surveyor was primarily responsible for the failure. 697. In the course of his cross-examination Mr Ryan made it clear that he did not consider that loans were approved until such time as the funds were advanced. As I have previously indicated, this view is consistent with the letter concerning the proposed advance in this case (ex 1, tab 22). He was ultimately responsible for determining whether or not to make the advance. 698. Mr Ryan was cross-examined at some length concerning the statements of assets and liabilities provided by Mr Rivett for himself and for Project Results, particularly as to whether they constituted balance sheets. This seems to me to have been little more than a matter of terminology. I doubt that anything hangs on it. The more important question is the adequacy and accuracy of the information supplied and included in the investment summary. Mr Ryan also said in cross-examination that in the period from May to October 1999 he would generally read valuations submitted in support of loan applications. He did not do so in the case of the Yandina project. Mr Ryan agreed that he may have indicated, in the course of the ASIC inquiry, that he did not recall discussing the content of the autumn 1999 newsletter with Mr Blackadder. However I accept his evidence that he subsequently recalled such conversation. 699. In the course of cross-examination Mr Ryan also said that although he had not been involved in assessment of the Rivett application, he had, in connection with other transactions, interviewed the prospective borrowers and attended to other aspects of such transactions. He and Mr Blackadder had a "team" approach. However his major role was in connection with the preparation of legal documents, recovery work and loan management. 700. Perhaps unfortunately, counsel chose to cross-examine Mr Ryan in great detail concerning the process for assessment and approval of loan applications. Much of the cross-examination was, in my view, largely semantic. It is quite clear that the primary role, both in assessing each application, and in making the decision as to whether or not it was worth taking forward (to use a neutral term), was Mr Blackadder's. On the other hand Mr Ryan worked closely with him and would read any investment summary prior to its distribution to potential investors. He understood that the other partners also did so, but they clearly had a subordinate role in the process. No doubt it was relatively unusual for either Mr Ryan or any of the other partners to intervene once Mr Blackadder had decided that the proposal was worth pursuing. However, equally clearly, Mr Ryan and the other partners could, if they wished, intervene. There is nothing very unusual in such an arrangement. Once it is accepted that Mr Blackadder was well versed in lending, there was no reason why such an arrangement should not have been effective. 701. Messrs Durie, McCarthy and Neil all gave evidence. However Mr Ryan was primarily responsible for dealing with insurance matters concerning the mortgage business. Little of relevance appears from their evidence. Each appears to have been aware of ex 67 (the letter written by Mr Neil to the solicitors for the second respondent). Mr Neil said that he obtained the information contained in that letter from Mr Ryan. I will refer in more detail to the evidence of the other partners should it be necessary. 702. MDRN called Frank Leopold Gaston Hoffman, an insurance consultant. He conducted an insurance broking business from 1952 until the early 1970s. From that time until the early 1990s, he managed a broking company. He has been the national president of the Corporation of Insurance Brokers of Australia, president of the Insurance Institute of New South Wales, an honorary consultant to the Australian Law Reform Commission, a nominee of the Commonwealth Government to the claims panel of Insurance Enquiries and Complaints Ltd and national president of the Australian Insurance Law Association. In 1997, he was appointed by the Attorney-General of Victoria to make recommendations in relation to the Victorian Solicitors' Compulsory Professional Indemnity Scheme. He has lectured and written extensively on insurance-related matters, including good broking practice and the avoidance of professional indemnity claims. He has given technical and claims advice to insurers and brokers. 703. (b) How many mortgages have been effected in the last twelve months? Does the mortgage broker check that their professional indemnity insurance is for sums greater than any valuation required of them? (d) Are there levels of lending authority for various officers? Mr Hoffman considered that in 1999-2000 the 'relatively onerous risks involved in mortgage generation and syndication' were well known to experienced professional indemnity underwriters and insurers. At that time insurers were 'less conservative in accepting risks than at other times, particularly since that time' . This was the most competitive time in the professional liability market. It was not long before the collapse of HIH, which company had introduced fierce premium competition into the market. As it was the largest insurer of general professional liability in the Australian market, that market was an 'insured's market' in terms of premium and terms. This evidence is of some importance in assessing Ms Hume's evidence. 705. Regarding Ms Hume's concern that Mr Blackadder was not a lawyer, Mr Hoffman pointed out that the risks covered by the policy were not those of a legal practitioner, but 'rather the commercial risks and consequences of this particular business which is mortgage lending and syndication of such mortgages to investors. The key skills in this business are commercial skills. ' At the relevant time insurers did not require that lawyers be involved in approving loans, as opposed to preparing documentation and conducting searches. Mr Blackadder's background made him 'eminently more qualified than a lawyer to discharge loan assessment duties' . Mr Hoffman did not accept that a lawyer who is subject to review by his or her professional association is more reliable in promoting mortgages than a non-lawyer. A professional indemnity underwriter with an understanding of the processes involved in mortgage evaluation would not have been concerned by the fact that Mr Blackadder was not a lawyer. The underwriter would have regarded Mr Blackadder's appointment 'as a sound progression for a lending institution' . 706. As to Ms Hume's concern that Mr Blackadder was an employee and had no financial stake in the business, Mr Hoffman considered that this was not material to the risk accepted by QBE. He pointed out that many corporations, including government corporations, carry professional indemnity insurance, with not one person being a stakeholder in the relevant sense. In his view there is no criterion relevant to this form of insurance which would suggest that there is a greater risk where no stakeholder is involved as compared to the situation in which a person with a direct pecuniary interest is involved. 707. In a commercial sense, an insurer would not expect a company, employing a general manager finance of sound experience and background, to have a partner or director sign off a transaction by de novo examining all the source documentation provided to the general manager finance, but rather could rely on a summary and recommendation by the general manager finance. Ms Hume notes that the investors were entitled to ask for source material ...and it follows that the partners could do the same. If the partners received only investment summaries and not source documentation, I do not consider that that was a fact material to the risk QBE was being asked to accept, provided the author was a person of appropriate background and experience. More particularly, this is borne out by the fact that it was not a matter that QBE considered germane to the risk by asking questions in the proposal and then later, on learning the appointment of a general manager finance, seeking no clarification as to the extent of his authority. It is not a matter of ethics or integrity per se, or something which an insurer would normally consider in relation to sales material. In my experience, insurers reading such sales material would anticipate a level of "puff" which they would not consider to be relevant to moral risk. As to non-compliance with the ten point plan, Mr Hoffman understood that the autumn 1999 and winter 1999 newsletters were not part of the proposal, and that compliance or otherwise therewith played no part in Ms Hume's decision to accept the risk. He also did not consider that the existence of those documents was itself a matter requiring disclosure, particularly as QBE 'did not ask any questions about the actual workings of the lending business and it was sales type material' (par 35). Mr Hoffman considered that had it been disclosed that Mr Blackadder had not complied with the ten point plan in relation to the Rivett loan assessment, an insurer would not have declined cover but would have increased the premium and required to be satisfied that steps had been taken to prevent future similar occurrences. In cross-examination Mr Hoffman said that promotional material distributed by MDRN was not a reliable or relevant basis for assessing risk. He considered that it would be a poor underwriter who acted on such information. I take this to mean that Mr Hoffman would not assess the risk upon the assumption that such material was accurate. However I did not understand him to mean that an underwriter would treat as irrelevant the fact that the practice followed by the insured diverged from the procedures identified in that material. He dealt with that matter at a later stage. 710. He said that insurers may have been less conservative in accepting risks in 1999. They were 'not terribly fussy about how they accepted a risk ... . ' He agreed that an underwriter might react to competition in the marketplace by reducing premiums rather than by accepting increased risk, but both approaches were available. He said that it was not a matter of accepting greater risks, but rather of accepting risks that were not fully understood. 711. It was suggested to Mr Hoffman that lawyers might have expertise in checking the accuracy of information against sources. I have some difficulty in accepting that as being a skill typical of lawyers. No doubt it is a desirable legal skill. Mr Hoffman also said that he would expect 'some auditing' of the performance of a person in Mr Blackadder's position. In my view it is at least feasible that such "auditing" might have been provided by the close day-to-day relationship that Mr Ryan had with Mr Blackadder. Mr Hoffman said that absence of such auditing would be material to the risk. However, as far as I am aware, there is no evidence that such a system of auditing was an established feature of the mortgage finance industry at the relevant time. I am therefore unable to see that there was any relevant non-disclosure. Mr Hoffman did not consider it relevant to moral risk that a partner might be aware that assessment of loans was not done in accordance with a notified practice such as the ten point plan. However he considered it relevant to actual risk. It would be a matter of great concern and a reason for not granting cover. He agreed that misrepresentation or negligence in respect of a previous loan would be a relevant matter for disclosure, together with information as to steps taken to remedy the defect and to avoid repetition. 712. MDRN also called evidence from Mr Scott Willmot, who is the national manager of professional and consumer services at AON Risk Services Australia Ltd, the insurance broker in connection with MDRN's insurance. He submitted the 1996 proposal which was accepted. The policy was also renewed in 1997, 1998 and 1999. In the proposal for renewal of the policy for the year 2000-2001 MDRN notified QBE of circumstances which might give rise to a claim, namely the circumstances associated with the Yandina project and a number of other loans. This is the document attached to the proposal to which I have previously referred. QBE renewed the insurance for the 2000-2001 year. In 2001 MDRN gave notice of circumstances relevant to renewal for the 2001-2002 year, attaching the letter from Mr Wade Mellish to which I have previously referred. The policy was renewed for 2001-2002 and, in 2002, for 2002-2003. In August 2003 MDRN notified QBE that the present proceedings had been commenced. The policy was renewed for the 2003-2004 year. Mr Willmot was not subsequently involved in dealings between MDRN and QBE. 713. Mr Willmot's place was taken by Andrew MacKenzie who has also sworn an affidavit. He submitted a proposal for renewal on 17 October 2004 and was advised on 28 October that the proposal had been declined upon the basis that it fell outside underwriting guidelines. 714. Although the second cross-respondent's pleading raises a most complex network of facts and circumstances said to comprise either material non-disclosure or misrepresentation, and although their written submissions to some extent reflected that complex web, the case eventually put in oral submissions was much simpler. It really covers the same ground. They are, firstly, the non-disclosure of MDRN's practice as to how it went about checking or, you could say "non-checking", the assets and liabilities of borrowers. The second is the non-disclosure of the actual misrepresentation made in the Rivett investment summary. The third is what might be described as the lack of supervision or lawyer involvement. Unfortunately, the evidence has tended to focus on the third. I won't be saying any more about it in oral submissions, because the first two are really simpler and, we say, a very straight forward way to get there. As QBE has proceeded upon the basis of non-disclosure, it is not necessary to consider any case based on misrepresentation. 716. For present purposes, QBE must also establish that had the matter been disclosed, it would not have accepted the proposal for the 1999-2000 year. It is convenient first to consider this matter. It is primarily addressed in the evidence of Ms Hume and Mr Hoffman. 718. I have a clear preference for the evidence of Mr Hoffman over that of Ms Hume. This preference is based upon three considerations. Firstly, Mr Hofmann has substantially more experience than Ms Hume had at the relevant time and has now. Secondly, her evidence had the ring of ex post facto justification about it. In particular, her view that legal skills were relevant to the assessment of a loan proposal seemed to me to border on the irrational. Her evidence concerning supervision of Mr Blackadder was also somewhat unrealistic. I much preferred Mr Hoffman's approach. Thirdly, Mr Hoffman is clearly independent. Ms Hume does not enjoy that luxury. I do not mean to imply that Ms Hume's evidence was of no use or was in any sense dishonest, but her own involvement in the transaction cannot be overlooked. I suspect that it has affected her objectivity. 719. I reject Ms Hume's evidence concerning the significance to her of legal involvement in approving loan proposals. That function did not call for legal qualifications. Ms Hume seems not to have been concerned by the fact that in earlier years, assessment was conducted externally by a company which was not apparently providing legal services. Whoever accepted those proposals apparently saw no difficulty in doing so. As to supervision of Mr Blackadder, there is no evidence that it was an established practice in the mortgage investment industry to audit the files of senior employees such as Mr Blackadder to ensure compliance with prescribed procedures. I have some difficulty in seeing how, in those circumstances, QBE could have expected that such a system was in place. If there was no such reasonably based expectation, then I cannot see that there was any failure to disclose the absence of such a system. In other words there is no basis for inferring that MDRN knew that the matter was relevant to QBE's decision or that a reasonable person, in the circumstances, could be taken to know that such matter was relevant. The absence of an audit system could only be known to be relevant if it were known that QBE believed that there was such a system. It is true that Mr Hoffman also expected some system of that kind. However, in the absence of evidence that it was usual in the finance industry or any part of it, that insurers might think such a practice to be desirable does not entitle them to assume that it occurs, nor does it mean that a potential insured must be aware of such belief. 720. I am satisfied that a reasonable person, in the circumstances, could have been expected to know that such matters would be relevant to QBE's decision. 722. The question, then, is whether any of the three matters mentioned above was known to MDRN, and if so, whether it knew that any such matter was relevant to QBE's decision to accept the proposal, or whether a reasonable person, in the circumstances, could have been expected to know that such matter was relevant. It is appropriate to consider the meaning of each of the words "known", "knows" and "know" in s 21. Two questions arise for consideration. The first is whether the required knowledge must be actual, or whether it is sufficient that it can be inferred from other matters known to the insured. The second is the extent to which the knowledge of some person other than the insured is to be imputed to him or her. The Insurance Contracts Act seems not to deal with either question other than in the bald terms of s 21. However the cases establish, with respect to the first question, that it is actual knowledge which must be disclosed. What is required is that the matter should be the subject of a true belief, held with sufficient assurance to justify the term "known". However, it must be remembered that a belief may sometimes itself be a matter relevant to the decision of an insurer. An insured may know that it has a particular belief, and know that its having that belief is relevant to the decision of an insurer, in which case that belief itself is a matter which must be disclosed. The problem of defining, for legal purposes, the boundary between belief and knowledge did not arise for the first time in this case. The problem has been considered in a number of legal contexts, and in general it may be said that, for legal purposes, our knowledge includes the facts, apart from matters of religious faith, that we believe to be true. Thus out of court admissions are receivable in evidence against a party if they disclose an intention to affirm or acknowledge the existence of a fact whatever the party's source of information or belief; see Lustre Hosiery Ltd v York [1935] HCA 71 ; (1935) 54 CLR 134 at 143. ... When a person, on the basis of some information, holds a belief on which that person is prepared to act in the world of practical affairs, he or she knows that fact for most legal purposes, and certainly for the purposes of s 21. In Midaz Pty Ltd v Peter McCarthy Insurance Brokers Pty Ltd [1999] 1 Qd R 279, the Court of Appeal of Queensland addressed the question of whether a person who was aware of certain facts should be taken to have knowledge of a reasonably available inference from those facts. This construction is in practical terms little different from reading the introductory part of section 21(1) as if it included the expression "... every matter that is known to or should be inferred by the insured". However, the insured must have actual knowledge of the thing, the mere fact that he ought in the ordinary course of business to have known is insufficient. Nonetheless, in some cases, knowledge of an agent will be imputed to the principal. If such an agent owes a duty to communicate information which is relevant to the insurance, but fails to do so, the assured is deemed to know what in the ordinary routine of his business he should have been told if the agent had performed his duty, but he will not be deemed to know facts which, whether or not owing to the deficient organization of the business, no agent was responsible for communicating to him. 728. McNair J discussed the matter at length in Australia and New Zealand Bank Limited v Colonial and Eagles Wharves Limited (1960) 2 Lloyd's Rep. 241. In that case his Lordship assumed that at common law, rules derived from the Marine Insurance Act 1906 (Imp) applied to non-marine insurance. " On the facts of the present case, Henderson was not within that limited class. Though, in a sense, the key man in the sense that a mistake by him would mean the failure of the system his duties were almost entirely clerical; it was not established that he had any discretion or executive authority; he was not superior to the head clerks in the warehouses but co-ordinate with them. He was not, in my judgment, a person within the class of those who were under a duty to report to the company. It seems to be generally accepted that the position under the Insurance Contracts Act reflects the common law position. 729. Mr Ryan was responsible for MDRN's mortgage business. Mr Blackadder was employed as the General Manager (Finance) or "Lending Manager". To assist our Property Syndication Department in finding suitable investment properties and to perform due diligence in respect of same and to negotiate lending terms with financial institutions. MDRN has been at pains to point out that Mr Blackadder was a senior employee, receiving a high salary relative to other employees, including employed solicitors. Clearly, he was expected to assume substantial responsibility in connection with the assessment of loan proposals. According to ex 44 his contact with potential investors was limited to liaison 'concerning queries' . However his duties also included the preparation of investment summaries for distribution to potential investors. His responsibility for assessing loan proposals and drafting investment summaries placed him at the centre of the mortgage business. I infer that he had an implied duty to report to the partners as to strengths and weaknesses of each proposal and as to the content of any investment summary. The applicants and the cross-respondents assert the absence of any system of accountability or supervision. However I reject that assertion. Mr Ryan had daily contact with Mr Blackadder. He read investment summaries before they were distributed. The other partners also saw copies, although at a later stage. I infer that Mr Blackadder also had an implied duty to report to the partners concerning any serious irregularity in his area of responsibility, including any matter which might lead to litigation against MDRN or the trustee company. His knowledge of such matters should be imputed to each of them, subject only to one qualification which is discussed below. As to the relationship between Mr Ryan and the other partners, Mr Ryan supervised the mortgage business and was responsible for negotiating the cover for it. In those circumstances it follows that the other partners had imputed knowledge of relevant matters known to Mr Ryan, again subject to one qualification. 731. The general principles to which I have referred are subject to a critical qualification. The servant owes a duty not to steal, but, having stolen, is there super-added a duty to confess that he has stolen? I am satisfied that to imply such a duty would be a departure from the well established usage of mankind and would be to create obligations entirely outside the contemplation of the parties concerned ...". Thus another reason for the decision in Australia and New Zealand Bank v Colonial and Eagle Wharves that the knowledge of the assured's chief entry clerk concerning the company's delivery systems was not to be imputed to the assured was that it would have revealed his own misconduct and he had no duty to report that to his superiors. As the duty to disclose extends only to matters which the insured knows, only matters actually known to a relevant agent will be imputed to him or her. Their primary denotation refers to that which is actually known; but it would be wrong to import the word "actually" into a provision such as section 21. The section does not use it. The terms "known" and "knows" are used in their ordinary sense. Whether a matter is known is a question of fact for the judge or jury. The obligation to disclose something "known" can attach only to something which, at the time for disclosure, a person actually has in his or her consciousness or else something which exists in some record or other source of information which the person actually knows about and to which the person has access. So, for example, I "know" my driving licence number for the purposes of s 21(1) ... even though I cannot recite it off hand because I actually know that it is to be found in the plastic card in my wallet. I return to the three matters which may have required disclosure. I am satisfied that a reasonable person, in the circumstances, could be expected to know that each of those matters would be relevant to QBE's decision. I have indicated with respect to the third of those matters, divergence between contents of the newsletters and actual practice, that I am not satisfied that there was any significant divergence. However, for reasons which appear below, it is not necessary finally to decide that question. 737. QBE asserts that Mr Ryan was familiar with the content of the investment summary and knew that Mr Blackadder did not carry out detailed checks of the asset positions of applicants for loans as allegedly asserted in the newsletters, or credit checks against guarantors as asserted in the winter 1999 newsletter. It is said to follow that he had knowledge which should have been disclosed. In my view unless asked, Mr Ryan had no duty to disclose either the content of the newsletters or the actual practice which was adopted. At least for present purposes, neither matter, by itself, exposed either MDRN or QBE to risk. The relevant matter was the alleged divergence between the two. As I have said, I do not necessarily accept that there was a significant divergence. It is at least arguable that the practice as described by Mr Blackadder and Mr Ryan was a form of checking in the sense in which the term was used in the newsletters. Potential investors may have understood the newsletters to imply something more, but for present purposes we are looking at the subjective states of mind of Mr Blackadder and Mr Ryan. 738. Once it is accepted that the language of the newsletters is not as precise in meaning as is submitted by QBE (and the applicants), and that Mr Blackadder's practice varied, depending upon the exigencies of a particular application, it becomes very difficult to identify the point at which divergence between statement and practice may have occurred. If the fact in issue were whether or not there was such a divergence, it would be necessary to determine that question. However, for present purposes, it is only necessary to determine whether or not either Mr Ryan or Mr Blackadder knew that there was a divergence. Whilst I have no doubt that Mr Blackadder was conscious of his own fraud, I am not satisfied that the practice which he otherwise followed, or claimed to have followed, was, to his knowledge, inconsistent with the statements in the newsletters. It is probable that in providing information for the autumn 1999 newsletter, he used the expression "checking" (or whatever expression he used to convey that idea) to describe the approach which he described in evidence. Nothing in his evidence suggested to me that he was aware at the time of any divergence between those statements and the practice which he actually followed. Whilst it may be arguable that the interpretation placed by QBE (and the applicants) upon the newsletters, particularly the autumn 1999 newsletter, is correct, it does not follow that Mr Blackadder held that view. It also does not follow that he was aware of any divergence between such statements and his practice. I am similarly not satisfied that Mr Ryan was aware of any such divergence. In explaining this view I should say something about certain assumptions which appear to underlie much of the applicants' case and also those of both cross-respondents. 739. From time to time in this case, it has been suggested or assumed that the respondents were simply unconcerned about the investors' interests, that they were concerned only to make a profit for themselves. No doubt such a short-term view often guides the actions of those who attract the attention of ASIC. However it is quite unlikely that these respondents had that attitude. MDRN is a firm of solicitors practising in the suburbs of Brisbane. They have done so for some years and, as far as can be seen, propose to continue doing so. No doubt the firm's reputation is an important asset. The mortgage business was primarily marketed to clients of the legal practice. The evidence discloses that numerous investors participated in loans on more than one occasion, reflecting a degree of satisfaction with their previous investments. It is most unlikely that the MDRN partners intended to throw away both their professional reputation and their mortgage business for short-term gains derived from careless assessment of proposed loans. It cannot be seriously suggested that they expected Mr Blackadder to do anything other than ensure that investments would be secure, and that investors would continue to be clients of both the legal practice and the mortgage business. 740. I am not saying that lawyers are presumptively incapable of fraud or recklessness. I am rather saying that it is unlikely that the MDRN partners would have seen it as being in their interests to take a quick profit at the expense of their clients and investors. Mr Ryan's evidence must be understood in that context. No doubt he expected Mr Blackadder to assess loan applications in a way which would minimize the risk of loss to investors who were, almost by definition, making speculative loans. Mr Ryan understood the ten point plan to be an explanation of Mr Blackadder's general approach. I see no reason to conclude that he was conscious of any departure from his understanding of it or other aspects of the newsletters. It follows that I am not satisfied that he was aware that the statements concerning the asset positions of Mr Rivett and Project Results had not been checked (as he understood the practice) or that he was aware of the inaccuracies in the investment summary concerning those matters and the pre-sale of units. He was certainly not aware of Mr Blackadder's fraud. I therefore conclude that Mr Ryan possessed no knowledge which he failed to communicate to QBE. It follows that no such knowledge can be imputed to the other partners. 741. As to Mr Blackadder's knowledge, for reasons which I have given, I am also not satisfied that, save for his fraud, he was aware of any divergence between statements in the newsletters and his practice. As to his fraud, his knowledge of it cannot be imputed to the MDRN partners. I consider that his negligence in connection with the statements about the pre-sale of units was sufficiently serious to be described as serious misconduct. As I have said, it was obviously an important topic in the loan application, the investment summary and for the purposes of the valuation. Knowledge of that matter is also not to be imputed to the MDRN partners. 742. It follows that there was no failure to disclose or misrepresentation for the purposes of s 28 of the Insurance Contracts Act . I should say something about the alternative claim under the 1998 policy, relying on s 54 of the Insurance Contracts Act . The 1998 policy covered claims notified during the relevant period of cover or circumstances which might give rise to such a claim, of which circumstances the insured became aware during the relevant period of cover, and of which notice was given. Section 54 might operate to excuse non-notification, but the cover will only extend to circumstances of which the insured became aware during the period of cover. I am not persuaded that any matter came to the knowledge of any of the partners during the period of cover of the 1998 policy, of which they could have given notice to QBE. It therefore follows that cl 5.2 of the policy was not engaged so as to extend cover under the 1998 policy to claims arising out of any such matter. Section 54 has no relevant operation. I should also say something about cl 2.2 of the policy. MDRN submits that the clause exempts the partners, other than Mr Ryan, from the consequences of non-disclosure by them of information known to him. My conclusions as to the state of his knowledge mean that I need not consider that argument. However I should say a little about the clause. No doubt it would excuse the other partners from the consequences of any non-disclosure or misrepresentation by Mr Ryan. However each of the other partners had his own duty to disclose and not misrepresent. The question is whether cl 2.2 excused them from disclosing a matter known to Mr Ryan but not disclosed to them. 746. Prima facie I am inclined to think that the clause would not operate to protect the other partners from their own failure to disclose such information, knowledge of which was imputed to them by virtue of its being within Mr Ryan's knowledge. However use of the expression 'non-imputation' in the side note might suggest to the contrary. As with Mr Blackadder, knowledge of fraud or serious breach of duty by Mr Ryan would not be imputed to the other partners. As I have said, it is not necessary to decide the question. I have previously referred to s 4 of the policy which deals with "Exclusions". This aspect of the case has taken different forms at different times. In QBE's defence it pleaded that it was not obliged to indemnify MDRN because it had been reckless, relying on cl 4.2 without regard to the extension clause, cl 2.3. In reply MDRN pleaded the latter clause. In its submissions QBE apparently accepted this difficulty and abandoned any allegation of recklessness, other than as against Mr Ryan. It is said that he condoned 'reckless acts and omissions that gave rise to the applicants' claims so that MDRN are not assisted by cl 2.3. There are two difficulties with this approach. Firstly, it seems to revert to the pleaded case of reliance on cl 4.2 against all MDRN partners. However the heading of that part of the submissions and other aspects of them, including par 77, suggest that the defence is only relied upon against Mr Ryan. Secondly, the argument seems to be that Mr Ryan condoned conduct by MDRN, implying that he condoned his own conduct, particularly as he was the partner primarily responsible for the mortgage business. A third difficulty emerges from the written submissions. In some places, it seems to be asserted that Mr Ryan's condonation was reckless. Clause 2.3 of the policy deals relevantly with condonation of recklessness, not reckless condonation of other conduct. The best that I can do with this aspect of the case is to treat it as an allegation that Mr Ryan condoned recklessness by Mr Blackadder, although such a case is probably not pleaded and is only obliquely raised in QBE's submissions. It may also be intended to allege actual recklessness by Mr Ryan. If proven, such conduct would lead to exclusion of cover pursuant to cl 4.2(b). Clause 2.3 would not extend cover to Mr Ryan to the extent that his own conduct was reckless. No question of condonation would arise in that context. I should point out that in the context of cll 2.3 and 4.2, the words 'Fraud and Dishonesty' seem to include recklessness. 751. It is necessary to say something about condonation. The word previously had a particular legal meaning in connection with matrimonial proceedings. It concerned the attitude of one spouse to the other's adultery or other matrimonial offence. The term also has a specialized meaning in the law concerning the relationship of master and servant. According to the Shorter Oxford Dictionary , to condone is to 'Forgive or overlook' , 'Make appear forgiveable' , 'Approve, sanction, esp reluctantly; acquiesce in' . Clearly, mere knowledge of relevant misconduct will not constitute condonation, but knowledge will be necessary in order that there be condonation. 752. In its written submissions, QBE purports to rely upon the factual matters referred to in pars 22, 25, 26, 28, 29, 34 and 35 of its submissions. Once again that comprehensive reference to multiple allegations raises many possible ways of arguing the case. However the submission seems to be limited to the allegation that loans were not assessed in the way outlined in the newsletters. As the applicants eventually relied only upon the autumn 1999 newsletter, it is not necessary, in this regard, to refer to the winter 1999 newsletter. No relevant claim arises out of its contents. It seems to be alleged that Mr Ryan condoned Mr Blackadder's recklessness in adopting assessment practices which were inconsistent with statements in the newsletter. I have previously concluded that Mr Ryan was not aware of any such inconsistency. There can therefore be no question of condonation. Of course, I am also not persuaded that there was any inconsistency. 753. As to the question of Mr Ryan's own recklessness, concerning inconsistent practices, I have found that he was not aware of them (if there were any). Mr Ryan could only have been reckless if his lack of knowledge was itself reckless. I see no basis for such a conclusion. It may be arguable that his supervision of Mr Blackadder was inadequate, but given the latter's experience and background, he was not reckless. There will be judgment for damages in favour of each of the applicants, other than the twentieth and twenty-first applicants, both on the statutory cause of action and for negligent misstatement. The damages should be calculated in accordance with the method identified in my reasons. After delivering these reasons I will adjourn the matter to enable the parties to carry out the appropriate calculations. 755. As to the cross-claims, my understanding is that MDRN should recover judgment against St Paul in the amount of the seventh applicant's claim. It should recover judgment against QBE in respect of all of the amounts recovered against it by the applicants. In the case of the cross-claims there may be outstanding issues concerning limits on the amount of the cover and/or excesses. Some such issues were raised in the pleadings but not addressed in argument. I will receive further submissions if necessary. It may also be necessary to receive further submissions concerning orders to be made as between St Paul and QBE. 756. The claims and cross-claims are multi-faceted. I may have overlooked some aspects. It is important that the parties identify any further findings of fact which they require so that, to the extent that I think it appropriate, I can address them at this stage, whilst the evidence is relatively fresh in my memory. I wish to avoid the situation in which further findings are necessary at some time in the future. The question of costs will also have to be addressed. I suspect that it will be necessary to receive further submissions in that regard. 757. In those circumstances it is my intention to publish these reasons and then to adjourn the matter. This will enable the parties to calculate the quantum of damages for each successful applicant, identify any requirements for further findings, otherwise consider the forms of order to be made and address the question of costs. I certify that the preceding seven hundred and fifty-seven (757) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | solicitor's private mortgage lending business where investment failed nature of duty of care owed by trustee company nature of duty of care owed by solicitors whether duty to enquire as to accuracy of statements made in the loan application duty owed by trustee company duty to take reasonable care not to recommend an imprudent investment duty to act bona fide and in the interests of the investors where failure to check accuracy of asset statement of developer whether investment was imprudent duty owed by solicitors duty to act with all due care and diligence in recommending lending transactions whether duty not to recommend imprudent investments whether duty to make appropriate enquiries whether statements were misleading or deceptive whether statements were likely to mislead or deceive where statements contained in an "investment summary", and "newsletters" extent to which a reasonable investor would rely on those statements professional indemnity insurance dishonest, fraudulent or reckless misstatement meaning of "dishonest" and "fraudulent" whether motivation is necessary to prove dishonesty non-disclosure whether if the circumstances were disclosed, insurance would have been refused meaning of "know", "known" and "knows" pursuant to s 21 insurance contracts act 1984 (cth) whether compound damages can be awarded calculation of interest quantum of damages 'practitioner nominee company' , 'pre-sale' , 'pre-sale contract' , 'trade dollars' , 'trustee company' private mortgage lending negligent misstatement duty of care duty of care deceptive and misleading conduct insurance damages words and phrases |
Smith FM dismissed the applicant's application, holding that it did not raise an arguable case for the relief claimed. 2 On 30 June 2006, this application for leave to appeal was filed. Leave is required because the judgment of Smith FM is an interlocutory decision. The test as to whether leave to appeal from an interlocutory decision should be granted is that enumerated in the Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397: first, whether in all the circumstances the decision is attended with sufficient doubt to warrant it being reconsidered by an appeal court; and secondly whether substantial injustice would result if leave were refused, supposing the decision were to be wrong. In this particular case, neither test is satisfied. The appellant contended in the FMC that the Tribunal fell into jurisdictional error in relying upon historical country information, rather than up to date information, in relation to the discrimination against and persecution of Chinese in Malaysia. The FMC held that the Tribunal did not fall into jurisdictional error in relation to this matter. The FMC erred in making this finding. The appellant contended in the FMC that the Tribunal based its decision on country information which it did not put to the appellant. The FMC held that the Tribunal did not fall into jurisdictional error in relation to this matter. The FMC erred in making this finding. The fact is the Tribunal did not refer to, let alone rely upon, any country information in its decision to affirm the decision of the delegate. The grounds in the Draft Notice of Appeal were not pleaded in the application by the applicant to the Federal Magistrates Court, nor raised in the hearing before Smith FM. 5 In any event, if there had been reliance on independent country information it falls within the exception contained in s 424A(3)(a) of the Migration Act 1958 (Cth) ('the Act'), being information that is not specifically about the applicant. At the worst it is information about a class of persons of which the applicant is a member. What was argued before Smith FM was a claim of a breach of s 424A(1) of the Act. The rejection of any breach of that provision by the Federal Magistrate was correct. 6 The reasoning of the Tribunal was of the kind referred to by Allsop J in SZEZI v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1195. Allsop J at par 11 said that the Tribunal's reasons in that case ' were related to the insufficiency of the material placed before it by the appellant and its express state of lack of satisfaction '. That case involved the same factual circumstances as apply here. 7 The Federal Magistrate was right to conclude that there was no arguable case for the relief which the applicant claimed. 8 The application for leave is refused with costs. 9 I will amend the name of the respondent to Minister for Immigration and Multicultural Affairs. I will not add or delete any further party. | no point of principle migration |
Suntory claims that it is not liable for and it is unlawful for the respondent, the Commissioner of Taxation (the Commissioner), to collect these excise duties. The excise duties in issue relate to "other excisable beverages" under item 2 of the Schedule to the Excise Tariff Act 1921 (Cth) at the rate set out in Schedule 1 of the Excise Tariff Proposal (No 1) 2008 on and from 19 March 2009. On 26 April 2008 the Commissioner published a notice of intention to propose an Excise Tariff alteration increasing the duty payable on "other excisable beverages" (the Excise Tariff Proposal (No 1) 2008). The notice said that "the alterations operate on and from 27 April 2008". On and from that date the Commissioner collected excise duties at the higher rate specified in the Excise Tariff Proposal (No 1) 2008. On 13 May 2008 the proposed Excise Tariff alteration was moved by motion in the House of Representatives. On 11 February 2009 the Government introduced into the House of Representatives the Excise Tariff Amendment (2009 Measures No 1) Bill 2009 (Cth) containing the Excise Tariff alteration. The House of Representatives passed the Bill on 25 February 2009. The Senate rejected the Bill on 18 March 2009. The Commissioner continues to collect the excise duties at the higher rate. Suntory has permission under s 61C of the Excise Act 1901 (Cth) to deliver goods for home consumption without entry, including "other excisable beverages". The liability arises on the day of delivery and is a tax-related liability for the purposes of Division 255 of the Taxation Administration Act 1953 . The rates for excisable goods are set down in the Schedule to the Excise Tariff Act 1921 . (c) Notwithstanding the provisions of subsection (b), where any Excise Tariff or Excise Tariff alteration is proposed in the Parliament or by the Commissioner of Taxation subject to section 160B of the Excise Act (tariff proposal) which, if ratified by legislation, will affect the rate of duty imposed on the excisable goods which you deliver for home consumption, then from the day on which the tariff proposal is proposed, the rate of duty you are required to pay is the rate specified in the tariff proposal. (d) If the liability for excise duty remains unpaid after it has become due and payable, then under the authority provided by section 255- 5 of the Taxation Administration Act 1953 , a Deputy Commissioner of Taxation may sue you in a court of competent jurisdiction to recover the amount unpaid after it has become due and payable. The Commissioner claims that the applicable legislative scheme requires this proceeding to be stayed until after midnight on 13 May 2009. The competing claims of Suntory and the Commissioner must be resolved by reference to the legislation. Section 2 of the Excise Tariff Act requires certain Acts, including the Excise Act , to be read as one with it. Section 5 of the Excise Tariff Act specifies "Duties of Excise" by reference to the Schedule to that Act. Section 5(2)(b) contemplates amendments to the Schedule deemed to have come into force on a date earlier or later than the amendment. Section 6A of the Excise Tariff Act relates to indexation of rates of duty. Under s 6A(4D) the indexation provisions apply to an Excise Tariff alteration proposal which Parliament adopts with effect from the date of the proposal (rather than with effect from the later date of Parliament's adoption of the proposal). Section 4(1) of the Excise Act defines "Excisable goods" to mean "goods in respect of which excise duty is imposed by the Parliament, and includes goods the subject of an Excise Tariff or Excise Tariff alteration proposed in the Parliament". Section 160B(1) provides that, in certain circumstances, the Commissioner may publish in the Gazette a notice intended to propose in the Parliament an Excise Tariff or Excise Tariff alteration. Section 58 regulates the entry and removal of excisable goods. However, s 61C(1) authorises the grant of a permission to a person to deliver for home consumption goods notwithstanding that an entry of the goods for home consumption has not been made and passed under s 58 of the Excise Act . In that event, the goods are deemed to be entered for home consumption on the day on which they are delivered (s 61C(2)). Such a permission may be subject to conditions (s 61C(3)). Section 59 requires payment on excisable goods at the rate in force when the goods are delivered into home consumption under s 61C(2) (s 59 (a)) or when payment is made (s 59(b)) , whichever is the earlier. The Commissioner is such a person. The Commissioner noted that the period of 12 months after the Excise Tariff alteration for "other excisable beverages" was proposed in the Parliament expires at midnight on 13 May 2009. Suntory disputed the application of s 114 but not the calculation of this period. In that case, the Supreme Court of New South Wales observed that "many Parliaments have given their sanction to the practice by passing statutes with a clause having a retrospective effect so as to legalise taxation which in the first instance was imposed without full Parliamentary authority" (at 9). Accordingly, the owner of goods who sought an order for their release without paying duty on the ground that the Bill proposing the duty had not yet become law could not enforce his strict legal right to the goods. The Court (at 9) said that making an order in the owner's favour would involve exercising a discretion "of a most pernicious and mischievous kind, tending to subvert" the invariable practice and (at 10) that "no one can have a legal right the giving effect to which is opposed to public policy or to the public weal". (2) The practice of collecting duties of customs and excise in advance is in anticipation of subsequent ratification by Parliament ( Sargood Brothers v The Commonwealth [1910] HCA 45 ; (1910) 11 CLR 258 at 263). (3) Nevertheless, the collection in these circumstances remains unlawful ( Alexander Cowan & Sons Ltd v Lockyer [1904] HCA 19 ; (1904) 1 CLR 460 at 466, Bowles v Bank of England [1913] 1 Ch 57 , Mason v State of New South Wales [1959] HCA 5 ; (1959) 102 CLR 108 at 139, and Sargood Brothers at 263 --- 264). (4) Section 114 of the Excise Act does not render lawful the collection of duties under an Excise Tariff alteration. (5) It is an undisputed principle that a taxpayer can recover the duty paid if the Parliament does not adopt retrospective legislation validating the proposal ( Sargood Brothers at 263 --- 264). (6) Section 109 of the Excise Act is not an answer to Suntory's claims. The proceedings are not against an "officer" in a personal capacity. The proceedings are not commenced for "anything done" because they concern the Commissioner continuing to collect duty at the increased rate. To the extent that s 109 purports to limit this Court's jurisdiction, s 39B of the Judiciary Act 1903 (Cth) prevails. In any event, s 4(2) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) enables this Court to grant leave as contemplated by s 109. Suntory seeks that grant of leave if necessary. (7) Section 114 of the Excise Act is also not an answer. This section, like s 109 , relates only to "anything done" and thus does not prevent proceedings for prospective relief. The Commissioner's actions cannot be considered to be done for the protection of the revenue. The Senate rejected the relevant enabling legislation on 18 March 2009 so there is no revenue to protect. Suntory does not submit that s 114 is inconsistent with Chapter III of the Constitution . But if construed as the Commissioner proposed, s 114 would impermissibly restrict this Court's original jurisdiction under s 39B(1A) of the Judiciary Act to prevent unlawful action by the Executive. Section 39B(1A) , as the later provision, would prevail. In any event, legislative provisions are not construed so as to oust the jurisdiction of the courts if possible. Otherwise questions of validity would arise ( Glennan v Commissioner of Taxation (2003) 198 ALR 250 ; [2003] HCA 31 at [13] , Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 ; [2007] HCA 14 at [53] ). (8) Section 114 does not operate as the Commissioner advocated. As the discussion in Ex parte Wallace discloses, the discretion of the Court is adequate to protect the revenue. If...the session of Parliament came to an end without an Act having been passed affirming the resolution, or still more if Parliament, having been applied to to affirm the resolution, had thrown out the Bill introduced by the Government, the matter, of course, would have stood upon an entirely different footing. Even if a new proposal were submitted that would not be the same Excise Tariff alteration as proposed. First, and as the Commissioner submitted, nothing in the Excise Act indicates that s 114 is excluded if the Senate declines to pass a Bill giving effect to an Excise Tariff alteration. If a motion has been moved in the House of Representatives there is an Excise Tariff alteration for the purposes of the Excise Act (s 4(3)). This is the ordinary meaning of the definition of Excise Tariff alteration in s 4(3) and is consistent with the terms of s 114. It is also consistent with s 57 of the Constitution which regulates disagreements between the House of Representatives and the Senate. Section 57 of the Constitution contemplates that the proposed law may be re-introduced and makes such a re-introduction a condition precedent to a double dissolution. With that being the case, the applicant would have to satisfy the Court that rejection of a Bill in the House of Representatives or the Senate did, in fact, constitute the end of Parliament's attempts to pass the legislation, notwithstanding the period in s 114 had not yet expired. This would inevitably require the Court to inquire into the actions and intentions of Parliament. Consistent with the terms of s 4(3) of the Excise Act , the Excise Tariff alteration retains its status as such and, thereby, the protection of s 114 in accordance with the terms of that section. Suntory's submission that any new Bill introduced into Parliament would be a different Excise Tariff alteration cannot be sustained in the face of ss 4(3) and 114 of the Excise Act and against the background of s 57 of the Constitution . These considerations support the Commissioner's submission that Suntory's application, before the expiry of the period in s 114 , impermissibly calls for the Court to attempt to second guess what might occur in Parliament before midnight on 13 May 2009. That cannot be done (s 49 of the Constitution and s 16 of the Parliamentary Privileges Act 1987 (Cth)). Second, and again as the Commissioner submitted, reading s 114 to apply only to past conduct because of the words "anything done" in the section would defeat the purpose of s 114. I do not accept Suntory's submission that the Court's discretion to refuse relief (as disclosed by the discussion in Ex parte Wallace ) means that s 114 cannot operate as the Commissioner advocated. To the contrary, it seems clear that s 114 is a critical part of Parliament's recognition of the invariable practice of collecting duties "immediately on the introduction of any change in the tariff, and in anticipation of the measure affecting the change passing into law" ( Ex parte Wallace at 7). If Suntory were correct about the meaning of "anything done" then any person subject to increased duty because of an Excise Tariff alteration could seek an injunction immediately to restrain the Commissioner from collecting the increased duty. Such an injunction, on Suntory's case, would be prospective and thus outside the scope of s 114. The section would thus, on this approach, permit proceedings for a type of relief the courts have long recognised as contrary to the public interest. The words "anything done" in s 114 are part of a reference to "anything done for the protection of the revenue" in relation to any Excise Tariff or Excise Tariff alteration. The fact that "done" is a past participle and ordinarily would be read as referring to a past act does not determine the meaning of the section. The words "anything done" cannot be read in isolation from the context. As the High Court observed in Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 ; [2005] HCA 46 at [27] "(m)uch must depend upon the subject, scope and purpose of" the section. Section 114 precludes the commencement of proceedings for specified periods. The section defines the beginning and the end of those periods. In this context, construing "anything done" as applying only to past conduct would have the effect of terminating the operation of the section from that prescribed by Parliament to some earlier date dictated by the commencement of proceedings. Further, the Excise Tariff alteration is itself a thing "done", as is the imposition of condition 3(b) on Suntory's permission under s 61C of the Excise Act . The continued collection of duties at the increased rate specified in the Excise Tariff alteration arises directly from these things that have been done. Finally, past participles may extend to future conduct if the context requires (see, for example, Currey v Sutherland Shire Council and Russell (2003) 129 LGERA 223 ; [2003] NSWCA 300 at [27] --- [29]). In this context, s 114 should be understood as Parliament's expression of the reasonable time to affirm (or refuse) an Excise Tariff alteration. The section thus supports the "invariable practice" which other sections (including ss 5 and 6A of the Excise Tariff Act and ss 61C of the Excise Act ) also recognise. Section 115 , with its reference to the giving of security to abide the result of proceedings, also indicates that s 114 operates over the whole of the period which the section specifies. Third, I do not accept Suntory's submission that the collection of duties at the increased rate for "other excisable beverages" is not "for the protection of the revenue in relation to an...Excise Tariff alteration". This is the same purpose the Supreme Court of New South Wales protected in Ex parte Wallace by refusing relief in deference to the invariable practice of immediately collecting increased duties in anticipation of retrospective Parliamentary authority. In the present case the fact that the Senate rejected the Bill does not render nugatory the Excise Tariff alteration. Collecting duty at the increased rate for the period which Parliament has prescribed in s 114 is the very action the section contemplates for the protection of the revenue. Fourth, s 114 does not oust the jurisdiction of the courts (noting that the Commissioner agreed with Suntory about the operation of the Jurisdiction of Courts (Cross Vesting) Act). The section provides a period before the expiry of which a proceeding may not be commenced. Even within that period the section provides for an exception in s 115. When ss 114 and 115 are read together (as they should be) I cannot discern any inconsistency between those sections and s 39B of the Judiciary Act . Fifth, and insofar as Suntory made this submission with respect to s 114, I do not accept that the reference to "officer" in that section (or in s 109) is intended to refer to officers in their personal capacity only. The definition of "officer" in s 4(1) of the Excise Act includes the Commissioner in his or her capacity as a "collector" of duties also as defined in s 4(1). Sixth, the fact that the Commissioner accepted that the increased duty would need to be re-payed if Parliament did not validate the Excise Tariff alteration does not lead to any different construction of s 114. Further, Suntory's reference to the Commissioner's collection of the duty at the increased rate as a form of extortion of an interest free loan ( Mason v New South Wales at 139), exacted under the colour of office ( Sargood Brothers at 264) is not of assistance. The collection accords with the "invariable practice" long seen by Parliament and the courts as necessary in the public interest. Parliament has recognised and effectively codified the "invariable practice" in the provisions of the Excise Act and Excise Tariff Act . While s 114 does not deem the collection of duties in accordance with an Excise Tariff alteration to be lawful (presumably because that would be inconsistent with any subsequent obligation for repayment), the capacity to grant permissions under s 61C subject to conditions is relevant to these claims. The reference to Excise Tariff alteration in condition 3(c) of Suntory's permission under s 61C of the Excise Act takes the same meaning as the definition of that term in the Excise Act (s 46 of the Acts Interpretation Act 1901 (Cth)). The condition is presumed to be valid unless and until declared void by a court of competent jurisdiction. Conditions requiring the payment of increased duty at the rate specified in an Excise Tariff alteration are consistent with the scheme of the legislation. For so long as the condition remains on Suntory's permission, it authorises the collection of duty on "other excisable beverages" at the increased rate. The undisputed fact that the Commissioner may become subject to an obligation for repayment if there is a total failure of consideration (in accordance with the principles in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 ; [2001] HCA 68) is a separate issue. It does not undermine the operation of the statutory scheme protecting the revenue until the period in s 114 expires. For these reasons Suntory's submissions must be rejected and those of the Commissioner accepted. Section 114 applies to preclude the commencement of the present proceeding. As Suntory made no submissions seeking to engage s 115 of the Excise Act , the proceeding should be stayed until after midnight on 13 May 2009, consistent with the position advocated by the Commissioner. The parties may be heard on costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | excise duties excise tariff alteration increasing duties payable on certain beverages bill rejected in senate whether excise duties can continue to be collected ss 4, 54, 58, 59, 61c, 160b, 109, 114 and 115 excise act 1901 (cth) effect of statutory scheme whether proceeding precluded from being commenced until expiry of period specified in s 114 excise act taxation statutes |
He was retrenched involuntarily on 8 September 1997. Since that time, he has engaged in prolonged, and at times sporadic, attempts to gain access to documents concerning him, held by the respondent, pursuant to the Freedom of Information Act 1982 (Cth) ("the FOI Act"). On 10 September 2007, the Administrative Appeals Tribunal ("the Tribunal") made a decision, affirming a decision of the respondent, refusing to give the appellant access to any documents other than those it had already given him. The Tribunal determined, pursuant to s 24A of the FOI Act, that all reasonable steps had been taken to find further documents and that the Tribunal was satisfied that further documents may be in the respondent's possession, but could not be found or did not exist. Unless this finding could be set aside on appeal, it is fatal to the appellant's attempts to obtain access to further documents. The appellant appealed from the Tribunal's decision to this Court, pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"). By that subsection, such an appeal is limited to a question of law. Pursuant to s 44AA of the AAT Act, the appeal was transferred to the Federal Magistrates Court. On 15 August 2008, the learned federal magistrate dismissed the appeal with costs. Her Honour's reasons for judgment are published as Chu v Telstra Corporation Ltd [2008] FMCA 645. The appellant then appealed to this Court from that judgment. The appellant remains convinced that the respondent has further documents that fall within his request under the FOI Act. He maintains that there are further searches that could be carried out to locate those documents, and that it would be reasonable for Telstra to conduct those searches. He is unable to accept that the Tribunal's decision concluded this issue against him, and that its decision was essentially one of fact. The appellant has had difficulty arguing his appeal by reference to questions of law. The appellant's employment history with the respondent goes back to 1989, when the respondent was Telecom Australia. After the appellant had been retrenched on 8 September 1997, solicitors acting on his behalf made a request, by letter dated 13 November 1997, pursuant to the FOI Act, for access to all of the files held by the respondent in relation to the appellant. The appellant did not pay the required application fee until 13 February 1998, after which the respondent began to process the request. By letter dated 20 April 1998, the respondent advised the appellant that it had decided to grant full access to all the documents that had been found. The appellant's solicitors wrote again on 9 March 1999, requesting a reply to their letter of 6 July 1998. By letter also dated 9 March 1999, the respondent advised that it had not received the letter dated 6 July 1998. It also advised that a comprehensive search had taken place, involving the appellant's business managers, the personnel area and the legal area, and that the existence of any other personnel documents could not be established. Almost five years later, on 24 March 2003, the appellant sent a fax to the respondent requesting an internal review of the decision to refuse access to his personnel records. By fax dated 7 November 2003, the respondent advised the appellant that the period in which he could seek internal review had been extended. By letter dated 26 November 2003, the respondent released to the appellant additional documents that had been found. On 28 January 2004, the appellant applied to the Tribunal for review of the decision on internal review. The respondent then conducted further searches prior to the Tribunal hearing. On 9 June 2004, the respondent gave the appellant access to an occupational health medical file relating to him. On 28 October 2004, the Tribunal affirmed the respondent's decision. The appellant appealed to this Court. On 1 December 2005, Finn J set aside the Tribunal's decision and remitted the matter to the Tribunal for re-determination. See Chu v Telstra Corporation Ltd [2005] FCA 1730 (2005) 147 FCR 505. At [34] , his Honour found that the Tribunal did not address itself to the express terms of s 24A of the FOI Act, by asking itself whether reasonable steps had been taken, rather than whether all reasonable steps had been taken. A person requesting access to a document that has been in that agency's or Minister's possession should only be able to be denied on the s 24A ground when the agency (or the Minister) is properly satisfied that it has done all that could reasonably be required of it to find the document in question. Taking the steps necessary to do this may in some circumstances require the agency or Minister to confront and overcome inadequacies in its investigative processes. Section 24A is not meant to be a refuge for the disordered or disorganised. In consequence I am not satisfied that the Tribunal properly understood the critical evaluation it was required to make of the steps taken by Telstra. It identified 10 questions, said to be questions of law. A substantial amount of the 20 pages of the document devoted to the grounds of appeal was taken up by detailed comments on the facts, including suggestions that the Tribunal ought to have mentioned in its reasons for decision details which the appellant said were in the evidence before it. When he turned to dealing with his questions of law, in some cases the appellant also took issue with the Tribunal about the facts. In her reasons for judgment, the federal magistrate dealt with all ten of the questions raised by the appellant. In addition, her Honour dealt with six additional questions and with an attempt by the appellant to provide the Court with further submissions after the hearing of the appeal. The first question raised again the issue dealt with by Finn J, whether the Tribunal had failed to appreciate the significance of the word "all" in s 24A of the FOI Act and had failed to understand properly, and to carry out a critical evaluation of, the steps taken by the respondent. Her Honour concluded from the Tribunal's reasons that it understood the nature of the task it was required to perform. The appellant had relied on an earlier Tribunal decision in Khoh v Telstra Corporation Ltd [1998] AATA 45 and had attempted to argue that the search carried out in his case was less than that carried out in Khoh . The federal magistrate held that Khoh could not be taken as a precedent that all filing cabinets had to be searched to prove that all reasonable steps had been taken. Her Honour also rejected the proposition that the search in Khoh's case was more intensive than the search in the present case. Her Honour also rejected an argument based on the adequacy of the inquiries made by the particular officer in the present case, when compared with the same officer's inquiries in Khoh . Her Honour reminded herself that the essential question was whether all reasonable steps were taken to locate the relevant documents. Her Honour concluded that it was open to the Tribunal to reach the conclusion that all reasonable steps had been taken. Her Honour did make some remarks critical of the respondent's document storage and retrieval system. These were based on findings of the Tribunal. The second and third questions in the appeal suggested error and ambivalence on the part of the Tribunal in relation to events prior to 13 February 1998. The Tribunal had characterised the appellant's evidence and contentions relating to events prior to that date as not directly relevant to the Tribunal's decision-making process. The appellant contended that this was an error, and that it was inconsistent with the Tribunal's reliance on the respondent's documents that preceded that date. The federal magistrate pointed out that the Tribunal in fact referred to a number of events that preceded 13 February 1998. Her Honour held that the Tribunal had not failed to have regard to events prior to 13 February 1998, but had concluded that those events were not directly relevant to what it had to decide. The appellant had complied with s 15A of the FOI Act, by making a request in accordance with the respondent's established procedure for requesting personnel records, so there was no issue about his being barred by s 15A from making his request pursuant to the FOI Act. The provision of some documents to the appellant in 1997 left open the question whether all reasonable steps had been taken since then to find the documents the appellant sought. As her Honour said, this was the question the Tribunal had to determine. Her Honour characterised the appellant's real complaint as being that there should have been an internal review of a particular decision. As her Honour said, once the matter reached the Tribunal, the internal decisions of the respondent were irrelevant, because the Tribunal was required to make the correct or preferable decision on the material before it. What had been done by the respondent's officers was relevant in determining whether all reasonable steps had been taken, but the views of those officers about that issue were immaterial. Her Honour concluded that the Tribunal had taken into account events prior to 13 February 1998, to the extent that they were relevant. Her Honour then distinguished the material provided by the respondent from that on which the appellant had intended to rely, by saying that the respondent's material was relevant to where documents might have gone. The fourth question challenged a conclusion of fact by the Tribunal as involving extinguishing the significance of a particular document in evidence before it apparently on a whim. The federal magistrate concluded that the Tribunal had simply reconciled two pieces of conflicting evidence. Even though it had reached a different conclusion on that issue from the decision that was set aside by Finn J, the Tribunal was entitled to take a different view of the facts when it considered the matter again, and was obliged to do so if it realised it had made a mistake previously or had seen the matter more clearly the second time. The fifth question concerned submissions the appellant had made about the earlier Tribunal proceeding. The appellant suggested that the Tribunal had accepted the respondent's argument that those submissions were irrelevant. The federal magistrate pointed out that, on the face of it, it did not appear that the Tribunal had ruled expressly on the respondent's argument. The Tribunal did say that the appellant's submissions should have been made at the earlier hearing, but went on to summarise them and expressly accepted one of the submissions, concerning a mistake about the date of release of the occupational health medical file. The Tribunal also acknowledged that it had been remiss in not explaining in the earlier decision what it had meant by the notion of "exhaustive searches". Her Honour concluded that it could not be said that the Tribunal acceded to the respondent's argument as to the irrelevance of the appellant's submissions about the earlier proceeding. To the extent that those submissions were relevant, the Tribunal took them into account. The sixth question asked whether the Tribunal had acted improperly by depriving the respondent's witnesses of the opportunity to answer questions freely on their own upon being examined or cross-examined. The appellant referred to three instances where he said the Tribunal had intervened improperly during the cross-examination of witnesses. In the first case, her Honour concluded that it was appropriate for the Tribunal to stop the appellant questioning a witness about speculative matters. The second case concerned an exchange about whether one officer had sought advice from another. The advocate appearing for the respondent objected because of the possibility that legal advice had been involved in the exchange between the two officers. The Tribunal clarified the evidence that had been given. The federal magistrate found that the Tribunal might have been wrong about whether the officer giving evidence had no recollection of speaking to the other officer about the appellant's application, but held that this was nevertheless irrelevant to the question the Tribunal had to determine. The third case concerned the Tribunal's intervention in an exchange about the degree of formality in requests by one officer to another to make searches. The federal magistrate regarded this as a proper intervention by the Tribunal to clarify a question. Her Honour concluded that the Tribunal's approach was fair, focusing on relevant matters while allowing the appellant to elicit the appropriate evidence. In his seventh question, the appellant fastened on Finn J's statement that s 24A of the FOI Act is "not meant to be a refuge for the disordered or disorganised. " The appellant asked whether the Tribunal had appreciated this. In fact, as the federal magistrate pointed out, the Tribunal had referred specifically to Finn J's comment, indicating that the Tribunal had taken the comment into account. The federal magistrate referred to the Tribunal's findings of fact about the respondent's record management. Her Honour concluded that the Tribunal did appreciate that s 24A of the FOI Act is not intended to be a refuge for the disordered or the disorganised. At the same time, the Tribunal recognised that the respondent's system imposed severe limitations on its ability to retrieve the appellant's document. Section 24A can demand that logical and thorough investigations be undertaken, but it cannot change the historical fact that a particular document storage and retrieval "system" is disordered and disorganised. In her Honour's view that finding was open on the evidence. Her Honour then dealt with arguments the appellant put forward in relation to the facts, concluding that the Court could not disturb the Tribunal's findings of fact. Her Honour then dealt with an argument that the Tribunal had not indicated how much weight it had given to hearsay evidence. Her Honour held that it was unnecessary for the Tribunal to itemise the weight it gave to each aspect of the evidence. The Tribunal was entitled to give the evidence such weight as it deemed fit. The appellant's question eight raised the issue whether the Tribunal had made a decision that no reasonable decision-maker would have made. This question turned on whether the Tribunal's interpretation of one of the appellant's email requests was unreasonable. The issue was whether, in seeking access to a file "at a future time to be nominated", the appellant was indicating (as the Tribunal thought) that he would nominate the time, or was indicating (as the appellant said he thought) that the recipient of the email would nominate the time. The federal magistrate did not consider the Tribunal's interpretation of the email to be unreasonable. The appellant also relied on a series of complaints about the Tribunal's treatment of various factual issues as evidence of the unreasonableness of its decision. The federal magistrate did not consider that any of the Tribunal's conclusions on those issues, or any of the omissions the appellant complained of, were unreasonable. Her Honour then pointed out that the ground of unreasonableness does not apply to unreasonable interpretations of evidence, but to decisions that are themselves so unreasonable that no reasonable decision-maker could have made them. Her Honour was not persuaded that the matters identified by the appellant, whether singly or in combination, demonstrated that the Tribunal's decision was unreasonable to the requisite degree, or at all. The appellant's ninth question concerned whether he was entitled to a refund of his application fee. As the appellant did not suggest that he had asked the Tribunal for a refund of that fee and the Tribunal had refused to give it to him, the federal magistrate could not see how the question could raise an error of law on the part of the Tribunal. The appellant's tenth question asked whether the Tribunal had taken the right approach for the rehearing. The appellant argued that the Tribunal had failed to evaluate critically the steps taken by the respondent, but had concentrated on the fact that almost everything requested by the appellant had been supplied. The federal magistrate acknowledged that the Tribunal had observed that the only documents the appellant sought that had not been received were his annual performance reports and an entry in his occupational health medical file concerning the events of 2 September 1994. Her Honour was not persuaded that the Tribunal failed to evaluate critically the steps taken by the respondent. Her Honour referred to correspondence after the Tribunal hearing, in which the Tribunal wrote to the respondent's solicitors, referring to the respondent's Adelaide site, and asking if any of the required documents were held there. This demonstrated the active consideration of the Tribunal as to whether there were gaps in the respondent's investigation. The appellant's first additional question concerned this post-hearing correspondence. The appellant asked whether it amounted to a denial of procedural fairness. The appellant received copies of the letter from the Tribunal to the respondent and the respondent's reply. He then had some three months to make any further submission or invite the Tribunal to hear any further evidence. He did not do so. The federal magistrate concluded there was no denial of procedural fairness, because the appellant had had ample time to put to the Tribunal whatever he wished to say about the correspondence. The appellant's second additional question raised the issue of bias on the part of the Tribunal. The appellant argued that the Tribunal had prejudged his case, by carrying over its mind-set from its earlier decision to the second decision. The federal magistrate was not persuaded that the Tribunal carried over its mind-set. Her Honour was not persuaded that an informed lay observer would reasonably have apprehended that the Tribunal had carried over its mind-set. Her Honour held that it was not compulsory for the Tribunal to be constituted differently after remittal from the Court. The nature of the error that had been identified did not make it necessary or desirable that the Tribunal be reconstituted to avoid actual or apprehended bias. In her Honour's view, nothing the Tribunal did could lead to a conclusion that it was actually biased, or could have given rise to apprehended bias. The appellant's additional question three was whether the Tribunal disregarded the appellant's submission based on Khoh that a formal search request was not issued and the search did not go down to the filing cabinets level. In her Honour's view, the submission based on Khoh was dealt with sufficiently by the Tribunal. In his fourth additional question, the appellant referred to procedural fairness. He raised a question of fact about the Tribunal's understanding of the evidence. The federal magistrate held that the Tribunal's task was to determine whether all reasonable steps had been taken to find the relevant files. Even if there had been a denial of procedural fairness in relation to the Tribunal's conclusion on the particular item of evidence, it could not have made a difference to the decision. The appellant then raised in his fifth additional question the issue whether the Tribunal had denied him procedural fairness by revoking a summons to give evidence issued to a Mr Atkins. The appellant told the Tribunal on 7 March 2007 that the summons had not been served on Mr Atkins. He did not know the address of Mr Atkins. He asked the Tribunal to take steps to ensure the attendance of Mr Atkins. He told the Tribunal that Mr Atkins would tell it that he had taken no action in relation to the appellant's request for access to documents dated 24 December 1996. The Tribunal said that Mr Atkins and the respondent were not required to take any action until a valid request was received on 13 February 1998. The Tribunal considered that the evidence proposed to be adduced from Mr Atkins was not relevant to any issue in dispute and rescinded the summons. The federal magistrate held that the Tribunal was correct to rescind the summons to Mr Atkins. It was not material that Mr Atkins did not act on the request of 24 December 1996. The Tribunal accepted as a matter of fact that he did not act on that request. The question for the Tribunal was whether all reasonable steps had been taken by the time of the Tribunal's decision. The evidence proposed to be adduced from Mr Atkins was not probative as to this question. The file held by Mr Atkins had been provided to the appellant in any event. The appellant attempted to raise as a sixth additional question the issue whether the respondent had failed to search particular areas. The federal magistrate held that the Tribunal had considered the evidence before it and concluded that all reasonable steps had been taken to locate the relevant documents. Her Honour was unable to go behind that finding unless there was error of law leading to it. The appellant had not demonstrated any error of law. In an addendum to her reasons for judgment, the federal magistrate dealt with two emails, sent by the appellant to her Honour's associate, after the hearing of the appeal. Her Honour was unaware of the existence of those two emails until some time after her associate had received them. Her Honour then caused her associate to advise the appellant that the court could not look at the emails unless leave to rely on post-hearing submissions were granted. The appellant then filed an application seeking leave to rely on those submissions. Her Honour rejected that application, principally on the basis that the submissions dealt with matters that the appellant could and should have been aware of prior to the commencement of the hearing of the appeal. He could have made submissions about them at the hearing. To a large extent, he has been able to do so because of the manner in which the federal magistrate dealt with the questions raised in the appeal dealt with by her. Her Honour did not insist strictly upon addressing only questions of law, but expressed conclusions about the appropriateness of the Tribunal making the findings that it made on various issues. This approach was no doubt well-intentioned. It was no doubt the hope of the federal magistrate that her view would assist in satisfying the appellant that the Tribunal had dealt with his case properly. Instead, the approach has formed the basis of the appeal that the appellant has made, by encouraging him to challenge the federal magistrate's reasons in almost all respects. In making that kind of appeal, however, the appellant has not grappled with the crucial problem confronting him in this proceeding. That problem is that the Tribunal's ultimate finding was that all reasonable steps had been taken, and that further documents sought by the appellant either did not exist or could not be found. If the appellant could not and cannot have this finding overturned on the basis of error of law, his appeal heard by the Federal Magistrates Court could not succeed and his appeal to this Court cannot succeed. It does not matter that the federal magistrate expressed views about the facts. It does not matter whether those views were right or wrong. What matters is whether the appellant can succeed on a question of law in relation to the Tribunal's decision. For this reason, a number of grounds of appeal in the appellant's notice of appeal must be disregarded. Ground 1.1 challenged a finding by the Tribunal that, with one or two exceptions, all documents wanted by the appellant had been provided to him. Ground 2 suggested that the federal magistrate had made assumptions not consistent with the facts or the evidence in the case. The first of these assumptions, in ground 2.1, concerned the inadequacies of the respondent's document storage and retrieval system in the past. The second, in ground 2.2, was the assumption that the PAB file held by Mr Atkins had been provided to the appellant as part of the legal file. Ground 3.2 was concerned with the manner in which the appellant alleged that the respondent had compiled the files made available to him and with what searches had and had not been made and what documents had and had not been produced. Ground 3.3 suggested that there must have been fraud on the part of the respondent, because documents had been released selectively, mislaid or even destroyed in order to compile the files that were released. Ground 3.4 contained an allegation that certain specified source files could have been released. Ground 3.5 asserted that the Federal Magistrates Court should have considered the steps that were not taken as well as the steps that were taken. In ground 5, the appellant attempted to reargue the question of misinterpretation of a record of a telephone conversation. In ground 6, the appellant again sought to argue directly the adequacy of the searches made by the respondent. Ground 8 again sought to agitate questions about the manner in which the Tribunal had found, or failed to find, facts as the appellant would have wished it to find them. Ground 9 concerned an alleged failure of the respondent to follow an audit trail in relation to a particular file. Ground 10 suggested that there was no evidence from the respondent that reasonable steps were taken to find a number of files from areas nominated by the appellant. Ground 11 raised again the question of compilation of files from other source files and raised matters concerning a conversation between two officers of the respondent. Ground 12 challenged the federal magistrate's statement that errors and oversights earlier in the investigative process were of no significance if they have been corrected by the time of the Tribunal's decision, by asserting that not all errors and oversights had been corrected. Ground 13 constituted a detailed argument in support of the proposition that no search had been done for several specific source files. Ground 14 raised again the allegation that there was a lack of evidence about searches on the part of the respondent. All of these grounds can be disregarded. They raise matters on which the appellant would not have been entitled to succeed in the Federal Magistrates Court and on which he is not entitled to succeed in this Court. The appeal heard by the Federal Magistrates Court, and the appeal to this Court, are limited to questions of law. Any question whether the Tribunal or the federal magistrate mistook the facts, and any question whether there might be searches that the respondent could have undertaken or could now undertake, are not questions of law. In ground 1.2 of his amended notice of appeal to this Court, the appellant challenged the federal magistrate's conclusion that the Tribunal had understood the nature of the task it was required to perform. The appellant said that the Tribunal had merely paraphrased part of what Finn J had said and had merely cited another passage from his Honour's judgment. The appellant asserted that this was not indicative that the Tribunal had informed itself of the task it was required to perform. He pointed to a passage in the Tribunal's reasons, at [104], in which the Tribunal appeared to justify its approach in its earlier decision, by referring to its use of the word "exhaustive". The appellant characterised the Tribunal as defiant, unrepentant or recalcitrant, and said that it had failed to appreciate the significance of the word "all" in s 24A of the FOI Act. The appellant also pointed to the Tribunal's description, recorded in the transcript of the Tribunal hearing, of Finn J's finding as to the error of law as being the difference between the Tribunal's description "exhaustive attempts" and the wording of s 24A of the FOI Act, "all reasonable steps". The appellant accused the Tribunal not only of a wrong understanding about the error of law but of a closed mind on the issue. He alleged that the Tribunal chose not to evaluate critically whether all reasonable steps had been taken, but to focus on whether any more files could be found. The appellant also criticised the Tribunal for paying scant heed to Finn J's statement that reasons are not required to be given for accessing personal files. He said that he had been asked by the Tribunal at the second hearing for his reasons for wanting to have copies of his personal files to be filed away at home. It is not legitimate for an appeal court to reach conclusions about the reasons behind a judgment or decision from which an appeal is brought by reference to exchanges in the course of the hearing of the proceeding in which the judgment or decision has been given. In the course of hearing a case, a judge or decision-maker will often ask questions or make statements, in order to seek a response, or for other reasons. If what is suggested in those questions or statements does not surface again in the reasons for judgment or reasons for decision, it is safe to assume that what was said in the course of the hearing is not part of the reasoning underlying the judgment or decision. This is an important principle. The judicial process, and the administrative decision-making process, are not to be undermined by the conduct of minute searches of the transcript for something that might be said to disclose a "real" reason about which the express reasons are silent. A judgment or decision stands or falls by the reasons that are given to support it. The Tribunal's characterisation of its error as a failure to use the precise words of s 24A of the FOI Act, but as the use of a synonym for those words, whether expressed in the Tribunal's reasons or in transcript, does not reveal an error of approach on the part of the Tribunal. Still less does it reveal a closed mind about the Tribunal's task. It does not demonstrate defiance, lack of repentance or recalcitrance on the part of the Tribunal. The Tribunal's lengthy reasons for decision reveal that it had a very clear understanding of the task it was required to perform. It was required to determine whether all reasonable steps had been taken by the respondent, and whether the documents to which access was sought could not be found or did not exist. After a full examination of the evidence before it, the Tribunal reached the conclusion that all reasonable steps had been taken and that the documents sought either could not be found or did not exist. Its approach cannot be faulted. As I have said, its conclusion on this factual issue is fatal to the appellant's case. The appellant's attempt to characterise the issue as one of either critical evaluation of the steps taken or focus on whether more files could be found constitutes a false dichotomy. The Tribunal had to ask itself whether all reasonable steps had been taken to find the documents (s 24A(a)). This necessitated evaluation of the steps taken, an evaluation carried out by the Tribunal. The Tribunal also had to ask itself whether any more files could be found (s 24A(b)(i)). This process necessitated looking at the documents that had been produced, which the Tribunal did. The Tribunal performed both of the tasks it was required to perform to reach a conclusion under s 24A. It is correct to say that the reasons for seeking access to documents under the FOI Act are irrelevant to a determination of a dispute about whether access should be given. Section 11(2) of the FOI Act says as much. There is nothing in the Tribunal's reasons for decision to suggest that the Tribunal regarded the appellant's reasons for seeking access to the respondent's files about him as relevant to the outcome of his request. If, in the course of the hearing, the Tribunal asks him about his reasons, it obviously did not approach the task of reaching its decision at the end of the process as involving any consideration of those reasons. The federal magistrate was correct to reject the appellant's argument that the Tribunal had misunderstood the task it had to perform. Her Honour was also correct to reject the argument that the way in which the Tribunal described its earlier error indicated that it had a closed mind and led to an apprehension of bias. Her Honour also was correct to reject the submission that the Tribunal failed to evaluate critically whether all reasonable steps had been taken by the respondent to find the files. The question of the appellant's reasons for his request does not appear to have surfaced in the Federal Magistrates Court. If it did not, leave would be required for it to be argued in this Court. Leave would be refused because the argument could not succeed. In ground 2.2, the appellant raised the argument that he should have been entitled to call Mr Atkins to give evidence in the course of the Tribunal hearing. The argument that the appellant ought to have been permitted to call Mr Atkins constituted a significant part of the argument on appeal to this Court, in support of the proposition that the Tribunal had denied the appellant procedural fairness by not permitting him to put the case that he wanted to put. From [46] of the Tribunal's reasons for decision, it appears that a summons had been issued to Mr Atkins to attend and give evidence, but had not been served on him. The Tribunal recorded in that paragraph that the appellant had spoken to Mr Atkins by telephone, prior to the issue of the summons. The appellant reported that, in this conversation, Mr Atkins said he had never been asked where the appellant's files were. At [47], the Tribunal said that this evidence (among other items of oral evidence) was not relevant to the question that the Tribunal had to determine. It is clear that the Tribunal was prepared to accept that, if called to give evidence, Mr Atkins would have said that he had never been asked where the appellant's files were. The fact that the Tribunal was prepared to accept that Mr Atkins would have given that evidence is significant. It means that the Tribunal did not deny the appellant the opportunity to put that item of evidence before it. That being so, it is of no significance that the evidence itself was not given by Mr Atkins personally. By s 33(1)(c) of the AAT Act, the Tribunal is not bound by the rules of evidence, but may inform itself on any matter in such manner as it thinks appropriate. This provision empowered the Tribunal to accept through the appellant what would otherwise have been hearsay evidence. Contrary to the submission of the appellant, through his son who addressed the Court on the hearing of this appeal, it was not a question whether Mr Atkins might have given more emphasis to the evidence by giving it personally. The Tribunal was prepared to accept that he would have given evidence in the terms stated. The question for the Tribunal was the consequence of the evidence it accepted. The Tribunal did not regard it as relevant to the question it had to determine. The involvement of Mr Atkins was a very long time before the Tribunal was considering the matter. The Tribunal was focusing instead on the situation as it was at the time of the Tribunal's hearing and decision. That was what the Tribunal was bound to do. The Tribunal did not deny the appellant procedural fairness by refusing to take on the function of serving the summons on Mr Atkins itself (not something the Tribunal would normally undertake) or by revoking the summons. The appellant attempted to argue on this appeal, by reference to s 40(1C) of the AAT Act, that the Tribunal did not have the power to revoke the summons. Even if the revocation of the summons were invalid, this would still not amount to a denial of procedural fairness to the appellant. The summons remained unserved on Mr Atkins. The Tribunal was not obliged to undertake service itself. The Tribunal accepted the evidence it was told Mr Atkins would give, if called. Any error in revoking the summons did not affect the Tribunal's decision. In ground 3, the appellant asserted that the Federal Magistrates Court should have concerned itself with how decisions were made by the respondent, and asked itself whether those decisions were made in accordance with the law in the context of s 24A of the FOI Act. In particular, in ground 3.1, the appellant referred to what Finn J said in Chu at [6]. Given that s 24A is a provision with a known provenance, the relevant principle to be applied was that stated by Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 in terms later reiterated in the majority judgment of the High Court in Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14 ; (2004) 218 CLR 273 at 280-281. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd (1986) 6 NSWLR 363 at 388, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent. He contended that the Federal Magistrates Court should have informed itself as to what mischief the word "all" is intended to cure in s 24A of the FOI Act. It was then required to inform itself on whether any "mischief" had in fact existed or had taken place in the steps taken by the respondent in the present case. This argument involves a misunderstanding of what was meant by the reference to "mischief" in the quote from McHugh JA. As the whole of [6] shows, Finn J was talking about the proper approach to the construction of statutes. A principle that can be used in relation to the construction of statutes is to identify the purpose of a legislative provision by ascertaining what Parliament regarded as the "mischief" the existence of which demonstrated the need for the legislative provision. If the nature of the mischief can be ascertained, then the legislative provision can be interpreted more accurately by reference to its purpose of doing away with the mischief. The principle is sometimes useful in statutory interpretation, but is certainly not of universal application. There are many statutory provisions not designed to overcome any identifiable mischief. When it is used, the principle is only a step towards ascertaining the legislative purpose, so that the Court can construe the relevant provision in accordance with that purpose. The principle certainly does not operate by requiring a court to identify whether something that might be described as a "mischief" has occurred in a particular case and to construe the relevant statutory provision by reference to that particular mischief. If either the Tribunal or the federal magistrate in the present case had given attention to the question whether something that might be described as a "mischief" had occurred, the Tribunal or the federal magistrate would have been in error. The task for the Tribunal was to determine whether the respondent had taken all reasonable steps to find the documents requested, and whether such documents did not exist or could not be found. The task of the federal magistrate was to determine any question of law properly arising from the Tribunal's decision. To search for any "mischief" in the facts of the case would have been a distraction from either process. Ground 4 of the notice of appeal focused on the way in which the Federal Magistrates Court had dealt with the appellant's attempt to make further submissions after the hearing of the appeal by that court. The federal magistrate dealt with this attempt in an addendum to her Honour's reasons for judgment. It did not come to my attention for some weeks that the applicant had purported to file post hearing submissions. When I learned of them, I asked my associate to email the applicant, advising him that post hearing submissions could not be received by the court without leave. I did not at that stage read the purported post hearing submissions. The applicant eventually decided to file an application seeking leave to rely on the purported post hearing submissions. The respondent filed material in response to that application, which was heard on 12 August 2008. He also said that the submissions merely highlighted aspects of the evidence, which the court should have been aware of in any event. Both these cases are authority for the proposition that a court cannot receive further submissions after a hearing without granting leave for such submissions. In the latter case at 179, Phillips JA spoke of certain exceptions to that general principle, "such as an unexpected change in the position of the parties which bears upon the disposition of the appeal or the discovery after argument concludes of relevant legislation or some further decision of authority to which the court should be referred. Nor is there any other circumstance that would warrant the reception of the applicant's purported post hearing submissions. Having now read them, it is clear that they deal with matters that the applicant could and should have been aware of prior to the commencement of the hearing. He should have made his submissions about them at the hearing. I refuse the applicant leave to rely on the post hearing submissions. The emails therefore concern the facts of the case, which were not a matter for the Federal Magistrates Court. The appellant complained about the delay prior to informing him that he should seek leave to rely on post-hearing submissions. He asked the rhetorical question, "Why call for submissions which wouldn't even be looked at? " The delay is explained by the federal magistrate in [94] of her Honour's reasons for judgment. She was unaware of the emails. The appellant's rhetorical question misses the point. The federal magistrate was not calling for submissions. The court was informing the appellant that he could not rely on his post-hearing submissions without leave and seeking information as to whether he would apply for leave. At the time of doing this, obviously the federal magistrate had not made a decision not to look at the submissions. If the appellant had been successful in his application for leave, her Honour would no doubt have taken the submissions into account, if she could. The appellant then drew a comparison between the Federal Magistrates Court's refusal to receive the appellant's post-hearing submissions and the Tribunal's action, after its hearing, of communicating with the respondent for the purpose of asking whether it had made particular searches. The two situations are entirely different. The law governing the Federal Magistrates Court is stated accurately in the two authorities cited by the federal magistrate at [96]-[97]. The Court could not take it upon itself to receive post-hearing submissions. It could only grant or refuse leave to make such submissions if such leave were sought. By contrast, the Tribunal's powers were more flexible. By s 33(1)(c) of the AAT Act, the Tribunal could inform itself on any matter in such manner as it thought appropriate. In order to make the correct or preferable decision, the Tribunal could seek information after the close of the hearing, subject to affording the appellant procedural fairness. The Tribunal afforded the appellant procedural fairness by ensuring that he had a copy of the Tribunal's letter to the respondent, requesting information about a particular line of searches, and the respondent's reply, and by allowing a suitable time to elapse before publishing its decision, so that the appellant could make any submissions he wished about the additional information. The refusal of the Federal Magistrates Court to receive the appellant's post-hearing submissions was proper. It did not disadvantage the appellant, in that he had been given a full opportunity to make whatever submissions he wished in the course of the hearing. It did not deny him procedural fairness. It was not inconsistent with the Tribunal seeking further information from the respondent after the Tribunal's hearing. Ground 7 of the notice of appeal raised the question whether the Tribunal had evaluated critically the steps taken by the respondent, rather than focusing on whether there were more files that could be discovered. In this ground, the appellant argued that the federal magistrate had not made it clear whether the court disapproved the approach taken by the Tribunal. The Tribunal's critical evaluation of the steps taken by Telstra is demonstrated by its request after the hearing that Telstra check the Adelaide site to see if any of the required documents were held there. This request shows that the Tribunal actively considered whether there were any gaps in the investigative process undertaken by Telstra. The Tribunal identified such a gap and alerted Telstra to it. As it happened, no relevant documents were found at the Adelaide site. The appellant then raised again the issue of his post-hearing submissions and the Tribunal's post-hearing request for further information. I have already dealt with this matter. The appellant then suggested that his post-hearing submissions to the Federal Magistrates Court did nothing more than to expose gaps in the steps taken by Telstra. He contended that it would not be prudent or fair to him to have those gaps ignored or overlooked. The answer to this is that the question whether there were gaps in the searches undertaken by the respondent was a question of fact for the Tribunal, not a question of law for the Federal Magistrates Court. The Tribunal had found that all reasonable steps had been taken by the respondent. To the extent that there could be said to have been any gaps in the respondent's searches, the Tribunal was of the view that it would not be reasonable to require the respondent to fill those gaps. That was not a question on which the Federal Magistrates Court could have overturned the Tribunal's decision. It was not a question of law. As I have said in [8], the appellant could not succeed in the Federal Magistrates Court by claiming that there were further searches that the respondent could have undertaken, and arguing that it would have been reasonable for the respondent to do so. Nor can he succeed in this Court by such an argument. Those propositions do not involve questions of law. It must be dismissed. No reason appears, and none was advanced, why the usual principle, that costs follow the event, should not be applied. The appellant will therefore be ordered to pay the respondent's costs of the appeal. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | appeal administrative appeals tribunal found that all reasonable steps had been taken and documents did not exist or could not be found whether appeal raised questions of law freedom of information |
The Tribunal affirmed a decision of a delegate of the first respondent ("the first respondent") to refuse to grant the appellant a protection visa under the Migration Act 1958 (Cth) ("the Act "). On 30 June 1997, the appellant applied for a protection visa, but that application was deemed invalid. On 4 June 2008, the appellant applied again for a protection visa. On 2 September 2008, the first respondent refused that application for a protection visa. On 25 September 2008, the appellant applied to the Tribunal for a review of that decision. A Tribunal hearing was conducted on 18 November 2008. The appellant appeared, gave evidence and presented argument. On 4 December 2008, the Tribunal affirmed the decision of the first respondent. The appellant then sought review of the Tribunal's decision and, on 15 September 2009, the Federal Magistrates Court dismissed that application for review. Before the Tribunal the appellant claimed fear of persecution in Sri Lanka for the following reasons: The appellant's father had strong political connections with the United National Party ("UNP"). When the UNP lost power, his father joined Janatha Vimukti Peramuna ("JVP"). The appellant's father's best friend, Wimal Weerawansa ("Mr Weerawansa"), a member of JVP, lost his electorate and his ministerial benefits. Mr Weerawansa was in the process of forming a new party and the appellant's father, a business owner, had become the main financial supporter. This led to the appellant's father becoming the subject of intimidation and threats to his life. The appellant claimed that his father had gone into hiding. The appellant feared for his safety because he alleged that it was common practice in Sri Lanka for political opponents to kidnap and murder family members of political figures. In particular, the Tribunal concluded that the appellant's claims lacked substance and plausibility and that the appellant would not face a real chance of persecution by reason of his imputed political opinion arising from his membership of a particular social group, namely his father's family. It requires the acceptance of the supposition that whoever might be looking for the [appellant's] father has, only after 13 or so years, hit upon the strategy of finding his [father's] whereabouts by harassing and threatening first his wife [who he separated from 13 years ago and later divorced] and son in Sri Lanka and, in the future, his other son [the appellant] who has been overseas since 1995 [and has not spoken to his father for over 12 years]. One ground of review was specified, namely, that "[t]he decision of the Tribunal was made without jurisdiction or [was] affected by an error of jurisdiction". Five particulars were specified. They are set out at para [4] of MZYDA v Minister for Immigration & Citizenship [2009] FMCA 859. The Federal Magistrate dismissed the application for review. The Notice of Appeal filed in this Court on 6 October 2009 was substantially a reproduction of the application filed in the Federal Magistrates Court (see [8] above). The ground of appeal, and the corresponding particulars, in this Court were: The decision of the Court / Tribunal was made without jurisdiction or is affected by an error of jurisdiction. The Court and the tribunal clearly has not understood the criterion for refugee status and applied the wrong test and thereby fell into jurisdictional error. The tribunal did not discuss how the degree of state protection available in Sri Lanka could make fear of persecution at the hands of the PA and JVP members / supporters an unfounded fear. There was no reference to any country information and the tribunal was duty bound to appraise itself of the situation and if it did refer to country information, there would have been detailed information about the violence that takes place at election time between the UNP and the PA and information specifically about the police force, reference to the police force being politicized and information about politicians who interfere with police activities and how politicians rampantly manipulate the police force. The Court and the tribunal have erred in that it did not take into account the fact that the [appellant's] mother and brother fear for their safety because it is common practice amongst political opponents in Sri Lanka to kidnap and murder family members in order to force the targeted person to cooperate with their demands. The tribunal did not properly consider the claim that the [appellant] would be persecuted on account of his membership of his father's family, being a particular social group. At the hearing of the appeal, the appellant requested an adjournment in order to seek legal assistance. The appellant submitted the adjournment was necessary for two reasons: so that the appellant could request that the first respondent to grant him working rights so that he could afford legal assistance; that the appellant was unable to make legal submissions without legal assistance. The appellant made no substantive oral submissions to the Court, notwithstanding that the first respondent had explained to the appellant that he would be expected to do so both in a letter dated 17 November 2009 and by telephone. The appellant informed the Court that he had been in Australia for 14 years and he could not return to Sri Lanka. For the reasons that follow, I cannot identify an appellable error. The appeal has no prospects of success. I will now consider each particular in turn. Having made that finding of fact, which is not open to review, the [Tribunal] was not required to make a finding as to whether the [appellant], owing to a well founded fear, is unwilling or unable to avail himself of the protection of his country. In any event, the [Tribunal] set out the correct test ... This particular is dismissed. This ground of complaint should be dismissed. The Federal Magistrate dealt with this complaint at [8] of his reasons. His Honour noted that the Tribunal referred to a large amount of country information provided by the appellant and that the Tribunal had regard to that country information in concluding that the appellant's stated fear of persecution for a convention reason was not well founded. I can identify no appellable error. This ground of complaint also should be dismissed. That is not the role of this Court: see Pt 8 of the Act and Abebe v Commonwealth of Australia (1999) 197 CLR 510 at [187]; SHJB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 303 ; (2003) 134 FCR 43 at [12] . I can identify no appellable error. This ground of complaint should also be dismissed. As summarised at [6] and [7] above, the Tribunal did consider the appellant's contention that he would be persecuted on account of his membership of his father's family and rejected such a contention. This finding was open to the Tribunal. I can identify no appellable error. This ground of complaint should also be dismissed. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | appeal protection visa whether jurisdictional error migration |
Unfortunately, those orders were made as a result of a misapprehension as to the procedural history of the matter. The debtors appeal. The creditor seeks to uphold the orders on other grounds. It is thus necessary to explain the matter in a little detail. 2 On 1 August 2005 the creditor, King Investment Solutions Pty Ltd, obtained judgment against the debtors, Fahmi Mustafa Hussain and Meraj Ather Hussain, in the Supreme Court of New South Wales for the sum of $151 430, that being the principal sum of $95 000 due under a mortgage plus interest due up to the date of judgment in accordance with the mortgage. The order was entered on 15 August 2005. Orders were also made as to possession of land the subject of the mortgage and an order for sale. 3 On 25 August 2005 the Office of the Sheriff issued a notice to vacate, requiring vacation no later than 10.00 am on Tuesday 6 September 2005. Then after two weeks I will pay you more. The notice claimed that the debtors owed the creditor a debt of $151 430 as shown in the schedule. Amount of judgments or orders $151,430.00 plus 2. Legal costs if ordered to be paid and a specific amount was not included in the judgments or orders (see Note 1, below) $N/A plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgments or orders (see Note 2, below) $N/A 4. Subtotal $151,430.00 less 5. Payments made and/or credits allowed since date of judgments or orders $N/A 6. On that day the debtors filed an application to set aside the bankruptcy notice returnable on Tuesday 17 January 2006 at 10.15 am. Pursuant to subsection 41(6A) of the Bankruptcy Act 1966 and rule 30.03 of the Federal Magistrates Court Rules 2001 , on condition that Bankruptcy Notice No. NN 4161 of 2005 was served on the Applicants on 22 November 2005, the time for compliance by the Applicants with the requirements of the Bankruptcy Notice is extended up to and including 17 January 2006. There be liberty to any party to apply to vary or discharge Order 1, on 24 hours notice. The Applicants serve a sealed copy of these orders on the Respondent at the time of service of the application. The solicitor for the creditor had become aware of the application on or about 20 December 2005 by virtue of a search following which he had a telephone conversation with the solicitor for the debtors who promised he would fax a copy of the documents that day. They were not received. Respondent to file and serve any evidence on which it relies on or by 31 January 2006. Applicant to file and serve any evidence in reply on or by 14 February 2006. Matter listed for hearing on 21 March 2006. Time for compliance with bankruptcy notice extended up to and including 21 March 2006. Costs reserved. Evidence was filed on behalf of the creditor. The amount of such items as at 5 September 2005 less the judgment debt totalled $20,322.42. Annexed hereto and marked with the letter "E" is a schedule of the Mortgage and Loan as at 5 September 2005. The substance of the applicant's submission was that as the mortgage debt had 'merged' in the judgment, the payment of $20 000 must be credited against the judgment debt. It was submitted that interest on the judgment had only been running (at 9 per cent per annum --- the judgment rate) for just over a month. It was submitted that notice pursuant to s 41(5) of the Bankruptcy Act 1966 (Cth) (the Act) had been given, either on 20 December 2005 by search or on or about 9 January 2006 by reason of service of the application to set aside the bankruptcy notice, within the time for compliance, being 21 March 2006. They tender [a] letter to the creditor's solicitors faxed yesterday and seek all necessary leave or amendment under Reg 7.01. It was also submitted that there had been no s 41(5) notice served and that the application to set aside the bankruptcy notice had been served late. The debtors contested each argument. 17 The Federal Magistrate accepted for the purposes of argument that notice given by an application to set aside the bankruptcy notice is sufficient to amount to notice within s 41(5). Although taken out on 13 December, it was not served until 9 January 2006. Mr Knaggs says that this does not alter the fact that the notice was served "within the time allowed for payment". He says this because he argues that the time for compliance with the bankruptcy notice is extended by virtue of the issue of the application to set the notice aside. The difficulty which I have with this argument put by Mr Knaggs is that the provisions of s.41(6)A give the court the power to extend the time for compliance with the bankruptcy notice, but in this case no request for such extension appears to have been made nor given by the Registry , which would normally happen. To that extent, it seems to me that the time for compliance with the bankruptcy notice expired, unless I was to exercise my discretion relying on Streimer v Tamas [1981] 54 FLR 253. I am not prepared to exercise any discretion that may be available to me in that regard as I consider that the failure to serve the application within the time limited by the Rules should not be excused in a case where no notice under s.41(5) is independently served. The issue was not raised by the parties before the Federal Magistrate and there was reference in the evidence to the existence of the first order, at least. 19 Counsel for the creditor seeks to maintain the orders on other bases. The first is that a separate notice is required under s 41(5). The application to set aside the bankruptcy notice was not such a notice. Counsel was not able to refer to any authority which establishes that proposition. The point of the notice is to draw to the creditor's attention the misstatement, thereby giving the creditor the opportunity to consider, for example, whether the bankruptcy notice should be withdrawn and a fresh notice, correcting the misstatement, issued. If the creditor is given no hint in the notice as to the nature of the misstatement, there is a considerable risk that the debtor will be able to take unmeritorious advantage of minor errors (such as the small mistake in the present case) and that unnecessary and wasteful litigation will eventuate. It is no answer to say that the creditor can ask for particulars, since the debtor would not be obliged to give any until after litigation had been instituted. Indeed, a debtor wishing to take advantage of the technicalities of the law of bankruptcy might be well-advised to say as little as possible for as long as possible about the true nature of the alleged misstatement in the bankruptcy notice. I can see no reason why it cannot be done by service of an application to set aside a bankruptcy notice in an appropriate form. It was faintly argued that this application was not in a form to give the necessary notice. I do not agree. Furthermore, it seems to me that the passage relied upon from Seovic Civil Engineering Pty Ltd v Groeneveld is neutral as to the point which arises here. As the application was served within the time allowed for payment, the subsection is satisfied. Failure to expressly advert to s 41(5) is not of any significance. It is true that 'notice' and 'application' are different words and that each is used in different parts of the Act. However, the two are not mutually exclusive. The section requires the giving of notice, not serving of a notice in any particular form. 21 Counsel for the creditor contends that the failure on the part of the debtors to serve the process within three days as required by r 30.02(4) was fatal to the application. That failure certainly weighed with the learned Federal Magistrate, although he described that rule as being 'almost mandatory' in the events which had happened. The point had been taken, albeit briefly, in the written submissions for the creditor at the hearing. It is submitted that the Act is silent as to the procedure for setting aside a bankruptcy notice. That procedure is found only in the Federal Magistrates Court Rules 2001 as they then stood. Rule 30.02(4) was undoubtedly not complied with. No explanation was proffered for the failure to comply with that rule. Counsel was unable to refer to any direct authority as to the effect of non-compliance with r 30.02(4) of the 2001 Rules or the later r 3.02(3) of the Federal Magistrates Court (Bankruptcy) Rules 2006 , which is in similar terms. Counsel pointed out that the provision was also in similar terms to the former Federal Court Rule O 77 r 13(4). Although not directly on point, counsel drew the Court's attention to the decision of the Full Court in Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385 ; (1999) 88 FCR 445 and the decision of Branson J in Crimmins v Glenview Home Units [1999] FCA 515 , dealing with other provisions of O 77 r 13. 23 The decision in Hubner v Australia and New Zealand Banking Group Ltd does not provide any real guidance as, in that case, the application to set aside the bankruptcy notice had not been filed within the time for compliance with it. The Full Court's agreement with the finding that the proceedings were defective, in that the applications were not accompanied by appropriate affidavits, does not decide the issue here. The decision of Branson J in Crimmins v Glenview Home Units appears to have something for both sides. It was found that the affidavits which accompanied the application did not comply strictly with O 77 r 13(3)(c) (corresponding to r 30.02(3)(c)) but nonetheless the Court gave such a dispensation. It was submitted that the approach to those provisions (exemplified by Centurian Constructions Pty Ltd v Beca Developments Pty Ltd (In Liq) (1996) 129 FLR 364 and David Grant & Co Pty Limited (Receiver Appointed) v Westpac Banking Corporation [1995] HCA 43 ; (1995) 184 CLR 265) would result in there being no effective proceeding unless the strict requirements of the Act are met. It would also follow that the defect could not be cured pursuant to s 306 of the Act because there is no effective proceeding as required by that section. 25 There is a critical difference between rules of court, on one hand, and statutory obligations on the other. As shown by the decision in Crimmins v Glenview Home Units there is always an overriding power in the Court to dispense with the effect of rules of court. The applicable provision here was r 1.06 of the Federal Magistrates Court Rules 2001 . Although the Federal Magistrate indicated a disinclination to extend any leeway concerning the failure to serve in time in this case, his decision in that respect miscarried because of his misunderstanding as to the procedure to that date. Apart from not being aware of the orders extending the time for compliance with the bankruptcy notice, his Honour did not advert to the fact that the parties had appeared at the first return of the proceeding and that directions were made on that occasion in contemplation that the application would be heard in the normal way. The debtors argue that the time to contend that the proceeding was a nullity was on the first return date on 17 January 2006 and that such a position was effectively waived by what took place. It is submitted for the creditor that no waiver as such took place. It was submitted that cooperation in relation to procedural directions did not abandon a point fatal to the application which was taken before the Federal Magistrate when the matter came on for hearing. 26 In my opinion, the proceeding was not a nullity, as the failure to abide by the rules as to service could have been excused. It is submitted for the debtors that the creditor has not been able to point to any prejudice that would arise if there were such dispensation. I am satisfied that the question as to whether there should be dispensation from failure to comply with the rule was not considered at first instance in the light of all of the relevant circumstances. 27 Lastly, it was contended for the creditor that it is clear that there was no misstatement in the bankruptcy notice, and that, as there could only be one conclusion, I should deal with the issue and not return the matter to the Federal Magistrate. I indicated to counsel during the course of argument that I would not take that course. The merits are not so clear that I should enter upon that issue. 28 Under the circumstances, there is no alternative but to allow the appeal, set aside the orders below and remit the matter to the Federal Magistrates Court for further hearing. It is a matter for the Federal Magistrates Court as to who hears the remitted proceedings. 29 The question of costs is troublesome. The matter has gone off because of a mistake by the Federal Magistrates Court. It does not appear that either party can be blamed for that mistake. I asked why the obvious error had not been corrected immediately after it became apparent during the oral delivery of reasons on the day of hearing. The solicitor for the debtor, who was present at the hearing, said that he had no recollection of the point having been made in the oral reasons and that, if it was, he had not appreciated it. Counsel who appeared for the creditor before me did not appear below. Only the revised judgment is available to me. Nonetheless, the creditor has sought to defend the orders and has failed. Costs must follow the event. The creditor must pay the costs of the debtors of the appeal. Any application pursuant to the provisions of the Federal Proceedings (Costs) Act 1981 (Cth) can be dealt with in Chambers through the Registry. The costs of the proceedings in the Federal Magistrates Court should be dealt with by that Court on remitter. | whether notice pursuant to s 41(5) can be given by service of application to set aside bankruptcy notice whether service in accordance with r 30.02(4) of federal magistrates court rules 2001 mandatory whether late served application a nullity ' gives notice ' bankruptcy practice and procedure words and phrases |
These orders were subsequently extended, by consent, to midnight on 12 March 2008. In the case of the fourth defendant, the current orders were extended to midnight on 25 March 2008. 2 In relation to the first and second defendants, Messrs Carey and Rundle, I excluded from the extension orders, those restraining them from leaving Australia. In the course of hearing I pointed out to senior counsel for the Australian Securities and Investments Commission (ASIC) that it would be a matter for ASIC to justify the extension of the travel restrictions and that if ASIC wanted to do something about it, it could do it urgently within the next few days. An order that the time for service and hearing of this Interlocutory Process be abridged. 2. Each of the First and Second Defendants (the Defendants ) are restrained until further order of the Court, from, without consent of the Court, leaving the jurisdiction of Australia. 3. Each of the Defendants deliver up, all passports held by them in their possession, custody or control until further order of the Court. 4 In seeking to extend the travel restraint and, alternatively, to require that the defendants give notice of any intention to travel outside Australia, ASIC has relied upon a variety of affidavits previously read in evidence which deal with transactions and events relevant to its investigations into the collapse of the Westpoint Property and Finance Group. 5 It is not necessary for present purposes to canvass all of the history which has been dealt with in many judgments given since these proceedings were initiated. 6 ASIC relies in particular upon an affidavit of Ms Jan Redfern sworn 30 January 2008. She is its Executive Director Enforcement. After referring to background facts and circumstances she described the status of ASIC's ongoing investigations into whether any criminal offences were committed in relation to the affairs of the Westpoint Group. She said that ASIC has recently presented briefs of evidence to the Commonwealth Director of Public Prosecutions (CDPP) for consideration in relation to various persons, including Messrs Carey and Rundle. The briefs are said to have arisen out of ASIC investigations previously designated the 'Fundraising Investigation' and the 'Asset Stripping Investigation'. She did not indicate what kind of conduct was under consideration. 8 Ms Redfern referred to ongoing investigations in respect of which ASIC has yet to provide the CDPP with briefs of evidence. These particularly concern transactions under examination in the Asset Stripping Investigation. These other investigations are likely to be substantially completed by 30 June 2008. She foreshadowed the further use of ASIC's compulsory powers requiring Mr Carey and Mr Rundle to attend an examination or examinations under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). 9 Ms Redfern referred to ASIC resolutions under s 50 of the ASIC Act to carry on pending proceedings commenced by the liquidators of Ann Street Mezzanine Pty Ltd in which Messrs Carey and Rundle have been named as defendants and by the liquidators of York Street Mezzanine Pty Ltd. It has also resolved to carry on other proceedings in the name of various mezzanine finance companies associated with the Westpoint Group. In the Ann Street Mezzanine proceedings allegations have been made against Messrs Carey and Rundle of negligence and breach of their duty as directors in connection with the raising of investor funds by promissory notes. The damages claimed in the proceedings are said to be of the order of $27.8 million. Recovery would no doubt be of assistance to creditors of companies in the Westpoint Group. 10 Ms Redfern stated that she has been informed by Senior Special Counsel in the Enforcement Directorate of ASIC, that ASIC is examining how the results of its investigations may sit with the claims made and to be made in the proceedings referred to in its s 50 resolution. She also said that she had been informed that there is a risk that ASIC's ability to effect service of any future compensation proceedings would be frustrated if any of the defendants named in those actions were not within the jurisdiction. Harking back to her first affidavit, she said that the liquidators of Westpoint Corporation had identified potential claims against Mr Carey which they may wish to pursue. Those claims appeared to be related to some of the matters the subject of ASIC's other investigations. If the liquidators do not pursue those claims, ASIC might consider doing so pursuant to s 50 of the ASIC Act. 11 Ms Redfern said that as a result of the matters referred to in her affidavit she believes there is a real prospect that further assistance that ASIC might require from Mr Carey and Mr Rundle in conducting its other investigations may enhance the recoveries which may be obtained for the benefit of Westpoint Corporation's creditors. There is a real prospect that the absence from the jurisdiction of either would impede ASIC's ability to seek assistance from them in a timely manner '... because it is not currently possible for ASIC to accurately identify when such assistance will be required'. 10.2 The scale and complexity of the ongoing investigations into the Westpoint Group generally --- not only those of ASIC, but also those of the liquidators appointed to various Westpoint Group companies. More time is required for completion of the investigations and both Mr Carey and Mr Rundle are significant persons of interest. That acceptance was proper as the evidence did not disclose any risk of imminent flight or other circumstance which would render continuing travel restraints 'necessary'. This evidently referred to settlement of legal proceedings which were seen to amount to the disposal of a chose in action. I place little weight on that matter. 11.3 [His] failure to disclose significant overseas assets and his unsatisfactory evidence given during his examinations. 11.4 The receiver's conclusion that, as to Mr Carey, although identifying assets or potential assets not disclosed by him, the receiver is not in a position to determine whether he has identified all of Mr Carey's assets. The receiver has identified further areas for investigation. 11.5 The claim brought against Mr Carey in respect of Ann Street Mezzanine Pty Ltd (In Liq) and the potential further claims against [him] and other defendants. The transaction relied upon involved the transfer to his wife of his interest in their matrimonial home. It was described in my reasons for judgment given on 9 November 2007 in connection with consent orders affecting Mr Rundle: Australian Securities & Investments Commission In the Matter of Richstar Enterprises Pty Ltd ACN 009 071 968 v Carey (No 18) [2007] FCA 1718. The process of identification of the property was complete. He had been generally cooperative with the receiver and ASIC expected that he would comply with the freezing orders then proposed. It placed particular emphasis on the disclosure, through the examination process and ancillary Court orders, of his involvement in overseas entities and the movement of certain funds overseas. He was said to have failed to disclose a significant involvement over many years with the entities under his control or acting on his behalf in relation to the movement of significant amounts of money at his direction into accounts under his control, located both in Australia and overseas. 17 ASIC pointed out that in proceedings in the Real Estate and Business Agents Supervisory Board Mr Carey deposed to having total assets with a current estimated value of $1,169,547. In disclosure affidavits in these proceedings he told the Court and the receiver that he had assets of a mere $69,457. One of the additional assets disclosed in the Real Estate and Business Agents Supervisory Board proceedings was an interest in the Westpoint Realty Pty Ltd (In Liq) rent roll said to have an estimated realisable value of $400,000. 18 ASIC submitted that in balancing public and private rights in this case, the Court pay close regard to the conduct of both Mr Carey and Mr Rundle in considering the risk that they might absent themselves from the jurisdiction and be unavailable to assist ASIC in further investigations it is currently undertaking. ASIC accepted that the risk is inevitably difficult to quantify but that it is nevertheless a real risk. 19 Mr Carey swore two affidavits in response on 30 and 31 January 2008. He said in the first of those affidavits that he has two children, aged 12 and 15 years, and that his immediate and extended family all lived in Perth and have lived here all of their lives. His children attend local private schools and rely upon his child support payments and other financial support which he has provided and has continued to provide since the orders in this proceeding were first put in place in March 2006. His employment is in Perth and he relies on his income to meet his child support payments and other expenditure for his children, as well as to provide funds on which to live. His academic and professional qualifications are Australian. 20 Mr Carey referred to the adverse public perception associated with ongoing travel restrictions. He pointed out that after nearly two years under the present orders made pursuant to s 1323 of the Act only one claim had been brought against him, that is the Ann Street Mezzanine claim. He denied that he had ever been a 'shadow director' of that company and claimed to have available to him a number of defences along with claims against other parties. 21 He said he was informed by his solicitors that although ASIC purportedly utilised its powers under s 50 on 26 October 2007, his solicitors were yet to receive a sworn copy of the Redfern affidavit announcing that resolution. They had not heard or received anything from ASIC advising what was being done in the Ann Street Mezzanine proceedings or in relation to any other mezzanine company. 22 Mr Carey said the financial accounts for Ann Street Mezzanine and Ann Street Development Pty Ltd were audited by KPMG and signed off on an unqualified basis. He said he had not been interviewed by ASIC since July 2005. He claimed to have volunteered to assist with their investigation. He also continued to provide substantial affidavit evidence in these proceedings to assist ASIC and the Court to understand the operations of the Westpoint Group. He had written to the receiver, Mr McMaster, regularly since the second extension of the orders offering to provide him with any additional information or documents with which he could assist him. 23 As to the ongoing criminal investigation, Mr Carey denied any wrong doing in the management of the Westpoint Group. He maintained and said he had always maintained that as a director he acted professionally in accordance with his duties and obligations. 24 Mr Carey said he has no intention of leaving the jurisdiction for the purpose of avoiding his responsibilities. As evidenced by his actions to date he will rigorously defend any action brought against him and seeks to bring to account those persons whom he regards as responsible for the collapse of the Westpoint Group and to endeavour to recover investors' money and reputation. 25 In relation to the overseas Hilton Trust, he has instructed his solicitors to terminate the trust and repatriate the funds to Australia. 26 In his second affidavit of 31 January 2008, Mr Carey said he had specifically offered to cooperate with the receivers' solicitors in their ongoing investigations. He referred to other recent correspondence with ASIC. 27 Mr Rundle in his affidavit filed 30 January 2008 said that he is 42 years of age and was born in Western Australia. Save for occasional holidays and short business trips, he has lived his entire life in this State. He is married with three children aged 14, 12 and 7, all of whom rely on his income as a contract engineer for their food, clothing, accommodation and education. They all attend school in Perth. 28 Mr Rundle is a member of the Institute of Chartered Accountants. He is currently employed by Insignia Contracts Pty Ltd as a Contracts Engineer based in Perth. He is entitled to four weeks annual leave and estimates that his current accrued leave entitlements are approximately one week. 29 Mr Rundle's parents were born in Australia and live in Perth. His wife's parents were born and live in Busselton. His brother and sister both live in Perth. He has no immediate or extended family outside Australia. He has no assets outside Australia. He has never been convicted of any criminal, civil or statutory misdemeanour. 30 Mr Rundle says he currently has no intention of travelling overseas, however he wishes to have his passport returned and his right to free travel restored in line with the rights of every other Australian citizen. He has no intention of moving to live overseas. 31 Mr Rundle also referred to recent exchanges between his solicitor, Mr Lemonis and the Australian Government Solicitor about the intentions of ASIC in relation to seeking an extension of the preservation orders made against him. Although inquiries were made in November and December 2007, he was not informed of ASIC's intention to seek an extension until 21 December 2007. He and his solicitor attended a without prejudice meeting at ASIC on 18 January 2008 to discuss continuing asset preservation orders and other matters. Those discussions are ongoing. Such authority as there is on the imposition of such restrictions under s 1323 of the Act mandates caution in imposing them: Corporate Affairs Commission v Price Commodities Pty Ltd (1987) 5 ACLC 787 at 789-790; Australian Securities and Investments Commission v Wiggins (1998) 30 ACSR 190; Australian Securities and Investments Commission v Ivey (1998) 29 ACSR 391; ASIC v Australian Investors Forum Pty Ltd [2001] NSWSC 1180 and ASIC v Mauer-Swisse Securities Ltd [2002] NSWSC 684. 33 The s 1323 orders were made and have been continued on the basis of ongoing investigations by ASIC and to protect the interests of parties who may have claims in relation to matters arising out of those investigations. The orders and the associated travel restrictions have been in place for nearly two years, having been first imposed on 20 April 2006. 34 In my opinion, ASIC has not made a case for the continuation of the travel restrictions by reference to any imminent risk of flight or disruption to its investigations. It has not been able to make a case of necessity. It has given reasons which are characterised by a degree of generality and uncertainty as to the precise stage of the current investigations and of any possible criminal prosecutions. It has relied in part upon transactions previously undertaken by both defendants and by Mr Carey's involvement with overseas entities and lack of cooperation. 35 If there be any concerns about travel by either of the defendants in the context of particular litigation such as the Ann Street Mezzanine proceedings, those concerns can be raised in those proceedings before a judge properly seized of them. If there be concerns about possible travel if and when criminal charges have been laid, those concerns can be raised before the appropriate Court. It is not for this Court to speculate upon such matters on the basis of the rather inchoate evidence before it today. 36 On the other hand, I do not consider it unreasonable, in light of the complexity and significance of the ongoing investigations that, for the duration of the general orders, Mr Carey and Mr Rundle give prior notice to ASIC of any intention to travel overseas. If ASIC seeks to prevent such travel it will have to do so on the basis of more concrete concerns than have been presented to the Court today. It will have to bear the onus of justifying any further order and paying the costs if it fails to do so. 37 Each defendant has been involved centrally in a major collapse of a large corporate group. Many investors have been left lamenting. It is a reasonable incident of the other orders made in reliance upon the ongoing investigations that they give notice of pending travel overseas so that if there be any aspect of the ongoing investigation that would be affected by such travel or any likely affect upon the interests of aggrieved persons, ASIC can take appropriate steps. The restraint orders made against the defendant be discharged. 2. The preceding order remains in force until midnight on 12 March 2008. There be no order as to the costs of the motion. | australian securities and investments commission investigations asset preservation orders travel restraint orders orders in place for almost two years whether travel restraint orders should be extended desirability rather than necessity of such orders asserted caution in imposing travel restrictions no imminent risk of flight demonstrated no imminent effect on ongoing investigations or interests of third party demonstrated travel restraint orders not extended prior notice of intended travel required corporations |
The first Clark Rubber store was opened in Melbourne in 1947 and at the present time there are approximately 70 stores operated by franchisees of Clark Rubber throughout Australia. Throughout that period Clark Rubber stores have used what the applicants call the "Clark Rubber colour scheme" on the exterior of the Clark Rubber stores. This colour scheme comprises a vivid yellow background with yellow, blue, red and white signage. There is also displayed on the exterior of Clark Rubber stores the "Clark Rubber" name and trademark. 2 The third applicant licences franchisees throughout Australia to operate franchise businesses advertising and selling a wide variety of products by reference to the Clark Rubber colour scheme and the Clark Rubber name and trademark. 3 The Clark Rubber stores sell a wide variety of products that include foam, rubber, swimming pools, swimming pool parts and accessories. 4 The first applicant acquired from the Pacific Dunlop group the ownership of, and reputation in, the Clark Rubber colour scheme and the Clark Rubber mark and intellectual property which has been used and sublicensed to franchisees by the third applicant. 5 The applicants and their predecessors in business have used the Clark Rubber colour scheme on the outside of Clark Rubber stores to attract the attention of customers. Although there is limited evidence before me at this early stage, there is evidence that the applicants and their predecessors in business have developed a recognisable store branding in the Australian retail market by reference to the Clark Rubber colour scheme and the Clark Rubber mark. According to Mr Christopher Malcolm, a director of each of the applicants, no less than 65 of the 70 Clark Rubber franchise stores currently in operation have the Clark Rubber colour scheme incorporated onto their exterior. 6 The applicants and their predecessors in business have spent substantial sums of money on advertising, promoting and marketing the Clark Rubber colour scheme and the Clark Rubber mark. On the evidence before me it is apparent that the Clark Rubber colour scheme has achieved a wide exposure within the business and retail community. It has been used for television advertising, in catalogues and on a Clark Rubber website. 7 The second respondent is a director of the first respondent which was incorporated on 10 October 2005. The first respondent has leased premises at Shop 4, 481-485 Cheltenham Road, Keysborough ("the first respondent's premises") and intends to open the store on the premises for business tomorrow, 24 January 2006. The first respondent proposes to carry on a retail business at those premises of selling foam and rubber products, spa and pool equipment under the name "Oasis Foam & Rubber". The first respondent has caused its premises in Cheltenham Road to be painted in a colour scheme which comprises, in general terms, a yellow background on which there appears at the top a horizontal blue strip and lettering in red and blue colours. The lettering in red relates to the products "Pools", "Foam", "Rubber products", "Latex Bedding", "Outdoor furniture" and "Trampolines". The blue lettering is used to describe a number of pool, foam and rubber products. The first respondent proposes to put a logo on the façade of the store above the entrance which displays the words "Oasis Foam & Rubber" against a light blue or aqua background to the word "Oasis". 8 The applicants claim that the manner in which the first respondent's store has been painted has been to use a colour scheme which is misleading or deceptively similar to the Clark Rubber colour scheme. The applicants seek an interlocutory injunction requiring the respondents to change the colour scheme of the respondents' premises to a colour scheme that is not the Clark Rubber colour scheme nor a colour scheme that is misleading or deceptively or confusingly similar thereto and which does not include yellow, red or blue. 9 In July 2005 the second respondent made an enquiry of the third applicant about commencing a Clark Rubber franchise business in Moorabbin. The second respondent had discussions thereafter with representatives of the third applicant but decided not to continue with her proposal to operate a Clark Rubber franchise store at a number of locations. There was evidence placed before me of discussions the second respondent and her fiancé, Mr Jay Locke, had with other persons about their business proposals and relating to Mr Jay Locke's departure from employment at Clark Rubber's Oakleigh store, but I place little weight upon that evidence for the purpose of this interlocutory application having regard to its hearsay upon hearsay nature. 10 As at 1 December 2005 the building on the first respondent's premises had not been painted and was still white in colour. On 10 January 2006 the building was in the process of being painted yellow and it was completed by the end of the day. By 17 January 2006 some signage in red and blue had been painted on the exterior of the building. On 20 January 2006 it appears that most, if not all, of the signage on the first respondent's building had been completed save for the erection of the "Oasis Foam & Rubber" logo. 11 On 19 January 2006 the respondents' solicitor told the applicants' solicitor that his clients plan to open the store and commence trading on either 24 or 25 January 2006. 12 The applicants are concerned that persons who see the outside of the respondents' store will mistake the store for a Clark Rubber store. The applicants contend, and have led evidence to the effect, that the Clark Rubber colour scheme has become a very strong brand, widely recognised and highly regarded by customers in Australia. The applicants contend that persons who see the outside of the store from a distance and close up will mistake the store for a Clark Rubber store. 13 The second respondent says that the first respondent intends that its store will use the company's registered business name "Oasis Foam & Rubber" as part of its store front logo. She asserts that the basic colour scheme of gold chosen by the first respondent was designed to be an attractive colour that related to the leisure and outdoors nature of the business and that the blue and red colours were chosen because they are colours which particularly complement the main colour. However, the second respondent did not elaborate on why it is said that the colour gold relates to the leisure and outdoors nature of the business or why the blue and red colours particularly complement the gold colour. She also asserts that the external appearance of the store was not designed as, and was never intended to be, similar to the appearance of the Clark Rubber stores which she says have a more yellow colour. These issues will need to be tested by cross-examination. For present purposes they are of little assistance in determining whether or not an interlocutory injunction should be granted. 14 The relevant legal principles applicable in this area were not in issue. The Court has to be satisfied that the applicants have raised a serious question to be tried and that the balance of convenience favours the grant of an injunction. The applicants rely on causes of action based on contravention of ss 52(1) and 53 (c) of the Trade Practices Act 1974 (Cth) and ss 9 and 12 (e) of the Fair Trading Act 1999 (Vic) and on the tort of passing off. Further, there was no challenge by the respondents to the fact that the name "Clark Rubber" had become distinctive and was capable of appropriate protection. However, this case is not about the appropriation of a name but rather about the appropriation of get up, albeit in the context of a colour scheme. 17 The respondents submitted that the first respondent's premises was sufficiently dissimilar in its appearance to the Clark Rubber stores and it did not an amount to an attempt to pass itself off as a Clark Rubber store. Further, the respondents contended that there was no proprietorial stake in the colour yellow per se which they contended was the yardstick of the applicants' claim. The respondents also contended that the use of the "Oasis Foam & Rubber" logo would be sufficient to enable customers not to be misled as to the identity or association of the first respondent's store. 18 I consider that there is a serious question to be tried that Clark Rubber stores are well known to the Australian public and Australian consumers by reference to the distinctive Clark Rubber colour scheme which they display and have displayed for many years. I also consider that there is a serious question to be tried that what the applicants have described as the Clark Rubber colour scheme, particularly its yellow background, has acquired a secondary meaning in relation to Clark Rubber stores and has become distinctive of Clark Rubber stores. In this respect it is significant to note that the colours adopted and used in Clark Rubber stores are not functional or utilitarian in their nature. They do not have an ornamental or economic function: see Philmac Pty Ltd v Registrar of Trade Marks [2002] FCA 1551 ; (2002) 126 FCR 525 at 546. There is no suggestion that the goods sold at Clark Rubber stores naturally bring to mind or suggest the colours of the Clark Rubber colour scheme. As Senior Counsel for the applicants submitted, the colours chosen, and their juxtaposition, is entirely idiosyncratic. It follows that there is a serious question to be tried that the Clark Rubber colour scheme indicates a distinctive connection in the course of trade between the colours in the Clark Rubber colour scheme and their relationship to Clark Rubber stores. 19 There is also a serious question to be tried that the first respondent by painting or causing to be painted the outside of its store in the manner in which it has, has passed off the first respondent's store as and for a business which is associated in some way with the Clark Rubber stores and that its conduct in so painting the outside of its store is misleading or deceptive or likely to mislead and deceive persons who see it before entering the store. 20 Although one can point to differences between the outside façade of the Clark Rubber stores and the first respondent's store in relation to the painting applied to them, and although the words "Clark Rubber" appear on the Clark Rubber stores and the words "Oasis" will appear on the first respondent's store, the critical issue will be the visual impression created by the façade of the first respondent's store on persons who see it and whether they will consider there is an association with Clark Rubber stores. This is not a case where the consumers will be able to undertake a side by side comparison as they might with products on the store's shelf. There is a serious question to be tried that the Clark Rubber colour scheme is quite distinctive and that it creates a strong impression with consumers who view it independently of the name "Clark Rubber". 21 The respondents have used the colour scheme on their building in a similar way to the Clark Rubber colour scheme. Yellow, blue and red colours are used, the shades of the colours are similar, yellow is the predominant background colour and blue and red are used as contrasting colours in the lettering. There is a serious question to be tried that consumers when confronted with the respondents' store will have an impression of a Clark Rubber store. 22 The impression created upon a consumer looking at the front of the first respondent's store will be exacerbated by the fact that the first respondent is offering for sale and selling products similar to the lines of products sold by Clark Rubber stores. Further, once the consumer enters the store there will be no situation which will arise whereby any misleading or deceptive impression can be cured. 23 I am also satisfied that the balance of convenience lies in favour of the grant of an interlocutory injunction. Particularly is this so where the first respondent has not yet commenced trading. Although the grant of any interlocutory injunction restraining the operation of the store with its present façade will have an effect and impact on the first respondent's turnover and trading activities, any ultimate loss to the first respondent in this respect can be protected by the usual undertaking as to damages. Further, any extra or additional costs incurred by the first respondent in changing the colour scheme and get up of the outside of the store can similarly be protected by the usual undertaking as to damages. 24 As against the damage to the first respondent, I consider that the balance of convenience is in favour of the grant of an injunction because of the potential impact and effect on the distinctiveness of the Clark Rubber colour scheme and the extent to which it identifies stores bearing that colour scheme as part of the Clark Rubber business. If no injunction is granted there will arguably be an appropriation of Clark Rubber's goodwill and reputation. 25 In all these circumstances, subject to the applicants offering the usual undertaking as to damages, I am disposed to grant an interlocutory injunction, not in mandatory terms requiring the first respondent to change the colour scheme on the front of the store but rather restraining it from trading at that store until such time as it changes the colour scheme on the front of the store to a colour scheme which arguably does not misrepresent or pass off itself in relation to the Clark Rubber colour scheme. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | application for interlocutory injunction claim for misleading and deceptive conduct and passing off whether get up and colour scheme of respondents' shop is misleading or deceptively similar to applicants' get up and colour scheme whether colour scheme has become distinctive of the applicants' stores interlocutory application |
The efficient progress of the pre-trial stages of the proceeding has been impeded by repeated failures of the respondents to comply with orders made by the Court and by the filing of defences and cross-claims which, for various reasons, were found to be deficient. Unsurprisingly, these shortcomings led to the filing of a series of notices of motion and the need for interlocutory hearings. Costs of three of those hearings were reserved. The applicants now seek orders in their favour for the costs (some on an indemnity basis) of and incidental to those hearings. They also seek indemnity costs generally in relation to a series of unsuccessful attempts by the first and second respondents/cross-claimants to obtain leave to file a revised cross-claim. • The cross-claimants pay the cross-respondents' costs of and incidental to the Notice of Motion dated 26 November 2007 filed on behalf of the cross-respondents on an indemnity basis, such costs to be taxed and paid forthwith upon taxation. • The cross-claimants pay the cross-respondents' costs of and incidental to the Notices of Motion dated 15, 22 and 28 November 2007 filed on behalf of the cross-claimants on an indemnity basis, such costs to be taxed and paid forthwith upon taxation. • The cross-claimants pay the cross-respondents' costs of the cross-claim on an indemnity basis, such costs to be taxed and paid forthwith upon taxation. 3 As indemnity costs are sought in a number of the proposed orders it will be convenient, before turning to the circumstances in which the various costs orders are sought, to outline the principles which govern the determination of applications for the award of indemnity costs. These principles are, conveniently, drawn together in the recent judgment of Gilmour J in Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823 at [3] and [4]. The discretion must be exercised judicially. In the normal course, costs are ordered to be paid on a party and party basis: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 232; Re Wilcox; Ex parte Ventura Industries Pty Ltd (No 2) (1996) 72 FCR [151] at 158 per Cooper and Merkel JJ. A costs order is not intended to punish the unsuccessful party but rather to compensate the successful party: Hurst v Education Queensland (No 2) [2005] FCA 793 at [5] . This is so even where the ordinary practice is departed from. The aim is not to punish or deter future litigants but simply to compensate a party fully for costs which normal party-party costs could not be expected to do, where it was unreasonable for that party to be subjected to any expenditure of costs, such as where a hopeless proceeding is brought: Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 at [4] - [5] . Any departure from this general rule requires a special reason: Access For All Alliance (Hervey Bay) Inc v Hervey Bay City Council [2007] FCA 974 at [10] ; Pacific Publications Pty Ltd v Next Publishing Pty Ltd [2005] FCA 971 at [5] . The categories in respect of which departure from the usual rule are contained are not closed: John S Hayes & Associates Pty Limited v [Kimberly-Clark] Australia Pty Limited (1994) 52 FCR [201]; Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 at [32] . In Colgate-Palmolive, (at p 233) Sheppard J identified various categories which might give rise to an award of indemnity costs. Those further and better particulars had been requested on 4 June 2007. They had not been provided despite consent orders having been made on three occasions (in June, July and August 2007) for them to be provided. 5 The notice of motion was returnable on 18 October 2007. On that day senior counsel for the respondents obtained leave to file and serve amended defences. He advised the Court that, having regard to the pleadings in those amended defences, it would be inappropriate and unnecessary to renew the orders for provision of further and better particulars of the defences. 6 I granted the respondents leave to file and serve further amended defences on or before 15 November 2007. 7 The applicants (as cross-respondents) also pressed for orders requiring the production of further and better particulars of the cross-claim. I made a self executing order requiring the provision of those further and better particulars on or before 15 November 2007 in default of which the cross-claims were to be struck out. This order was not complied with and it was vacated on 30 November 2007 because the particulars had been sought of claims which were no longer to be pressed. Leave was also given to apply to file and serve any amended cross-claim on or before 15 November 2007. 8 I reserved the costs of this notice of motion. 9 The respondents contend that each party should bear its own costs of the notice of motion. This is said to be an appropriate order because, so the respondents assert, they were frustrated in their attempts to respond to the requests for further and better particulars because the applicants declined to make discovery of material, sought in correspondence between solicitors, which would have furnished information necessary for the particulars to be provided. The particulars sought included particulars of allegations made in paragraph 84 of the cross-claim as it then stood. The allegations were that, sometime prior to the commencement of proceeding VID 750 of 2006, the solicitors for the applicant had sent one or more letters to RG International Pty Ltd which threatened legal proceedings "for infringement of the [a]pplicant's legal rights" unless RG International Pty Ltd undertook to cease selling products "under or by reference to the word marks "EUROTEL" and "EUROTEL DIGITAL"". The pleadings provided that particulars of the letters would be provided after discovery and inspection. 10 These requests for discovery were made in a desultory fashion very late in the day. They do not explain repeated failures to comply with orders made by the Court. The more likely explanation was that there was no foundation for the allegations. The allegations were subsequently varied. New allegations were made in revised versions of the draft cross-claim. These allegations were subsequently varied. New allegations were made in revised versions of the draft cross-claim. These allegations were subsequently withdrawn. The applicants should have their costs of and incidental to the notice of motion dated 4 October 2007. On 22 November 2007 the first and second respondents (as cross-claimants) filed an amended notice of motion to which was attached a revised version of a draft amended cross-claim. These versions of the cross-claim varied the contentious paragraph 84 and associated paragraphs about which requests for further and better particulars had been made. As varied, the paragraphs remained objectionable for a variety of reasons. The applicants (as cross-respondents), in their notice of motion dated 26 November 2007, sought an order that the cross-claimants' notices of motion and the attached pleadings be removed from the Court file. By consent it was ordered that the draft pleadings be removed from the Court file and returned to the respondents. Costs of the application were reserved. 12 At the hearing on 30 November 2007 counsel for the cross-claimants advised the Court that, having considered the objections raised to the versions of the draft cross-claim which had been filed on 15 and 22 November 2007 and a later version filed on 28 November 2007, further amendments to paragraph 84 and related paragraphs were being considered. 13 The respondents claim to be entitled to an indemnity costs order in their favour. They do so because their solicitors had advised the solicitors for the applicants, on 23 November 2007, that it was proposed to substitute a further version of the cross-claim for the versions filed on 15 and 22 November 2007. The applicants had, thereby, obtained the relief sought and the notice of motion was unnecessary. 14 I do not accept the respondents' submissions. Whilst the applicants had been advised that the versions of the cross-claim which had been attached to the notices of motion dated 15 and 22 November 2007 would be superseded, those documents remained on the Court file. They contained objectionable material. They could only be removed from the Court file by Court order. The orders sought were obtained by consent on 30 November 2007 without any waste of Court time. 15 The applicants were successful in obtaining the order which they sought. They should have their costs of and incidental to the notice of motion dated 26 November 2007. I do not consider that the applicants have made good their claim for indemnity costs. No special reason for departing from the general rule has been identified. They were successively a notice of motion, an amended notice of motion and a further amended notice of motion. The terms of the orders sought in each version of the notice of motion were the same. As already explained, the moving parties sought leave to file and serve an amended cross-claim in the terms of a draft which was attached to the notice of motion. The reason for there being successive notices of motion was that the terms of the draft pleading attached to the 15 November 2007 notice of motion were varied at least twice and the varied versions were attached to the subsequent notices of motion. 17 The notices of motion were made returnable on 30 November 2007. At the hearing on that day, senior counsel for the first and second respondents/cross-claimants advised the Court that, as a result of the submissions made on behalf of the applicants, the version of the draft cross-claim which was attached to the further amended notice of motion dated 28 November 2007 would be withdrawn and consideration would be given to making further amendments. 18 I granted the cross-claimants leave to apply for leave to file an amended cross-claim on or before 15 February 2008. I further ordered that the cross-claimants pay the applicants' costs thrown away in dealing with the cross-claimants' notices of motion dated 15 November, 22 November 2007 and 28 November 2007. This order was intended to compensate the applicants for the costs incurred in giving consideration to the versions of the cross-claim which were superseded by the version attached to the further amended notice of motion. Otherwise the costs of the motions were reserved. 19 The respondents submit that each party should bear its own costs of these notices of motion. Those costs were the costs of the hearing and, in particular, the applicants'/cross-respondents' costs occasioned by the cross-claimants' desire yet again to amend their cross-claim. 20 The applicants press their claim for their costs of these notices of motion to be paid on an indemnity basis. The opinion was accepted by the respondents. • The 28 November 2007 version of the cross-claim was also defective. Again, the applicants' solicitors had advised the solicitors for the respondent that this was the applicants' view and provided reasons for that view. Despite this, the further amended notice of motion was not withdrawn. • At the hearing on 30 November 2007, counsel for the respondents advised the Court that the respondents no longer sought leave to amend their cross-claim in the form proposed on 28 November 2007 and foreshadowed the making of further amendments. The applicants contend that these events justify the conclusion that the respondents persisted in pleading causes of action which were unsustainable and bad in law despite repeated and detailed warnings from the applicants' solicitors that the claims were fundamentally defective. The application for leave to amend, contained in the further amended notice of motion of 28 November 2007, was the fourth attempt at pleading a viable cross-claim. It was unsuccessful and the cross-claimants did not press their motion. Rather, they sought leave to replead yet again. 21 In my view the applicants have made out an exceptional case which warrants a departure from the normal rule that costs be paid on a party and party basis. The interlocutory stages of this proceeding have been unnecessarily delayed by the inability of the cross-claimants to plead viable causes of action. Groundless contentions have been pleaded and then withdrawn. Causes of action which were bad in law have been pleaded and then withdrawn. In the circumstances, I consider that the applicants'/cross-respondents' costs of the notice of motion of 28 November 2007 should be paid by the first and second respondents/cross-claimants on an indemnity basis. Any such order would overlap with the order which I have just indicated that I am disposed to make in relation to the further amended notice of motion of 28 November 2007. Whilst I consider that it is appropriate to award indemnity costs in respect of the cross-claimants' fourth unsuccessful attempt to plead a cross-claim, I do not consider that it is appropriate that the earlier unsuccessful attempts should be so treated. The original cross-claim was defective but this was eventually accepted by the cross-claimants. The second and third attempts at pleading the cross-claim foundered within a matter of days and no attempt was made to defend them. Orders have already been made on a party and party basis in respect of these earlier attempts and I do not consider it appropriate to vary those orders. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | indemnity costs where consent orders made for the respondents and cross-claimants to provide further and better particulars of their pleadings non-compliance with court orders where the applicants/cross-respondents filed motion for further and better particulars where the cross-claimants filed motions seeking leave to file revised cross-claims where the revised cross-claim pleaded causes of action which were subsequently withdrawn cross-claimants to pay the cross-respondents costs costs |
The application was filed in Court today by Lex Patrick Wotton ("the applicant"). Also filed was a statement in support of the application which states that the application is brought by the applicant as a representative party and that the group members to whom this proceeding relates are "the residents of Palm Island of aboriginal descent who were residents between 18 and 28 November 2004, including the applicant". 2 In terms, the application seeks to restrain the respondents from taking any further step in the prosecution or trial of the applicant pending the determination of the applicant's complaint with the Human Rights and Equal Opportunity Commission ("the Commission") lodged on 1 March 2007. Alternatively, the applicant seeks an injunction in the general jurisdiction of the Court in aid of the proceedings in the Commission. The trial of the applicant and four co-accused is scheduled to commence on 5 March 2007 in the District Court in Queensland, which is in three days' time. Counsel for Mr Wotton indicated, orally, that the injunction might appropriately be made to operate only for a few days until the respondents appeared and an application heard for a further interim injunction. 3 The background, in summary form, is that in November 2004 there was civil unrest on Palm Island arising from the death of a member of the local Aboriginal community while in police custody. The applicant was arrested on Palm Island on 27 November 2004. Charges against the applicant were then laid under s 65 of the Queensland Criminal Code 1899 in relation to his alleged involvement in that unrest. Those charges attract a maximum sentence of life imprisonment. There have been several applications in the District Court of Queensland incidental to the criminal proceedings. An application was made to have the matter transferred from Townsville to Brisbane, which was successful. More recently, there has been an application for a permanent or temporary stay of the indictment which was unsuccessful and in respect of which judgment was given on 28 February 2007. 4 The complaint lodged yesterday with the Commission alleges, at least principally, that in the circumstances, the arrest, charging, prosecuting and trial of the applicant contravened or would contravene the Racial Discrimination Act 1975 (Cth). It is against this background that an order is now sought under s 46PP of the Act . There has been considerable delay in lodging the complaint with the Commission. The complaint could have been lodged any time after the charges were laid, having regard to at least some of the grounds in the complaint. As a consequence of the delay, this application is being made on the eve of a trial in circumstances where the application could have been made and considered by the Court much earlier. It is true that, in form, this application is being made immediately after the complaint was lodged. It is the lodging of such complaint which enlivens the jurisdiction of this Court under s 46PP of the Act . However, in substance, the application is being made many months after such a complaint could have been made and the jurisdiction of the Court invoked. 5 In those circumstances, it is inappropriate to grant an ex parte interim injunction the effect of which would probably be to stop a criminal trial which is scheduled to commence in three days' time. Whilst there is no direct evidence about this, it is highly likely that witnesses have been marshalled for the trial. To make the order sought would be disruptive to the ordinary processes and procedures of the criminal justice system in Queensland. 6 It may ultimately be that the issues raised by the applicant in the complaint to the Commission prove to be of substance. It may ultimately be that the Court should act under s 46PP of the Act . However, that is said in circumstances where there has not been a contested hearing and in circumstances where the reach of s 46PP , in the context of the criminal justice system, has not been explored. 7 I should note that the application purports to be a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth). I express no view about whether such a proceeding can be brought in relation to a matter of this type, and if so, whether the proceedings have been regularly instituted having regard to the procedural constraints attending the operation of Pt IVA. 8 I propose to dismiss the ex parte application for an interim injunction. If the applicant is minded to do so the application for an interim injunction can be renewed. 9 The facts and circumstances giving rise to this application singularly relate to events in Queensland. The respondents are Queensland entities and the applicant is a Queensland resident. I further order that the matter be transferred to the Registry of this Court in Queensland. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | ex parte application for interim injunction under s 46pp of the human rights and equal opportunity act 1986 (cth) where complaint lodged with human rights and equal opportunity commission day before application to federal court where complaint to commission concerned criminal charges laid against applicant in context of palm island "riots" of 2004 where applicant seeks to restrain respondents from taking further steps in prosecution and trial pending finalisation of complaint by commission human rights |
At the time of giving judgment I indicated I would publish my reasons at an early date, and I now do so. 2 The matter was listed for first directions on 8 February 2008. On 2 January 2008 however, the applicant filed a notice of motion seeking to have the hearing expedited and the surrender warrant issued under s 23 of the Extradition Act 1988 (Cth) stayed, in light of an arrangement that he be extradited from Australia to the United States some time in the week commencing 7 January 2008. This arrangement was put in place after the applicant was placed on a commercial airline flight to the United States on 22 December 2007 in the custody of United States authorities, but, due to the pilot's refusal to carry him, was removed from the aircraft prior to its departure and returned to the custody of Australian authorities. 3 When the notice of motion came on for hearing before Tamberlin J on 3 January 2008, the applicant stated that he did not wish to press at that time either his application of 28 December 2007 or his notice of motion of 2 January 2008, despite the fact that he was well aware of the arrangement to remove him from Australia during the week commencing 7 January 2008. Instead, the applicant only sought a referral under O 80 r 4 of the Federal Court Rules 1979 (Cth) of his case to a legal practitioner on the Pro Bono Panel. He indicated that he would consider not pursuing either his application or notice of motion after he had obtained legal assistance. 4 Tamberlin J dismissed the applicant's application under O 80 r 4 with costs. In his Honour's view, the administration of justice did not require that the matter be referred to a Registrar to arrange pro bono legal representation or advice for the applicant because his application of 28 December 2007 disclosed no reasonable prospect of success, and the applicant had not adduced any evidence or provided any authority to indicate otherwise ([8]). 5 Nevertheless, the applicant was legally represented on the hearing of his application before me on 7 January 2008. (2) That, pursuant to subs 26(5) of the Extradition Act 1988 (Cth), he is retained in custody unlawfully because two months have elapsed since the day on which the surrender warrant in respect of his extradition was first liable to be executed. It seems to be common ground that the surrender warrant was first liable to be executed on 24 October 2007 when judicial review of the Minister's decision came to an end with the High Court's dismissal of the applicant's leave application. The first argument is not sustainable because the applicant's lawful custody by Australian authorities did not cease when he was placed in the custody of the escort. It did not cease at least until the second limb of the stated purpose of his detention in custody in para (b) of the s 23 surrender warrant was satisfied, namely, that he was transported out of Australia. To hold otherwise would lead to a farcical situation if the applicant was to escape from the custody of the escort prior to his transport out of Australia; on his detention, he could not be held in lawful custody by the Australian authorities. It may be that detention of the applicant in lawful custody by Australian authorities would not terminate until he was transported 'out of Australia to a place in the United States' (para (c) of the s 23 surrender warrant) a view to which his Honour, Tamberlin J, inclined, but it is not necessary that I come to any conclusion on that view. On my view, the authority of the s 23 surrender warrant did not cease because the applicant was not transported out of Australia; his re-transfer into the custody of Australian authorities on 22 December 2007 and his continued custody by them since that date is therefore lawful. 8 The second argument is equally unsustainable. Subsection 26(6) of the Extradition Act 1988 (Cth) provides that a court shall not order the cessation of a detention which has lasted more than two months if the delay is for 'any ... reasonable cause'. In an affidavit sworn by the applicant in support of his application, he disputes that it was behaviour within his control that lead to the pilot of the commercial aircraft refusing to carry him. Even if that be right, it was the pilot's refusal to carry the applicant and the consequential need for the United States authorities to find an alternative means of transport, that were the reasons for the delay beyond the two month period. Those reasons, on any view, provide a sound basis for reasonable cause within para (b) of subs 26(6) to mandate that the Court not order the applicant's release from custody. 9 The application must be dismissed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | application for writ of habeas corpus on basis that detention unlawful whether lawful custody ceases upon transfer to custody of foreign authorities in australia 'reasonable cause' under s 26(6) of extradition act 1988 extradition |
By order and direction of the Court written submissions were received on the question of costs, and these reasons address that issue. 2 In the ordinary course costs would follow the event and, accordingly, Hansen would pay Bickfords' costs of the claim and Bickfords would pay Hansen's costs of the cross-claim: see eg Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [10] . 4 It is contended by Hansen that a problem with adopting the ordinary course of costs following the event is that all of the evidence led by Hansen was referable both to the claim and the cross-claim. In other words, Hansen's evidence of exposure in Australia was relevant to the claim upon which it failed and also to the cross-claim upon which it succeeded, including evidence led by Hansen of reputation after April/May 2006. Of course, in relation to the evidence of reputation after April/May 2006, the evidence of reputation led by Hansen was irrelevant to its claim, although relevant to defending the cross-claim. 5 Accordingly, taking into account the overlapping evidence on the claim and cross-claim and the difficulties this would present for the taxing officer, Hansen submits that, subject to dealing with costs covering Bickfords' unsuccessful objections to evidence and failure to admit certain facts, the order should be that each party bears its own costs of the proceeding. Hansen then proposed that in view of these actions of Bickfords, the costs order should be that Bickfords pays 30% of Hansen's costs of the proceeding. 6 Bickfords accepts that costs would normally follow the event, but argues that such order would require the Registrar in taxation to reconsider all the evidence and submissions to determine which were attributable to the cross-claim, which would involve unnecessary expense. That the Respondents pay the Applicant's costs of reading the cross- claim and preparing the defence to cross-claim. 2. That the Respondents pay the Applicant's costs in relation to: (a) the affidavit of Rachel Tye; and (b) the affidavit of Angelo Kotses dated 7 February 2007. 3. That the Respondents pay the Applicant's costs of: (a) the Respondents' Supplementary Submissions dated 29 June 2007; and (b) the Applicant's Additional Submissions in Relation to Bickford's Cross Claim dated 29 June 2007. 4. That the Applicant otherwise pay the Respondents' costs of the proceeding. 8 The parties obviously desire a practical approach, avoiding if possible the incursion of further unnecessary costs in a taxation. Of course, the discretion in exercising costs must be exercised judicially. In my view, the important consideration in determining a fair, practical and commonsense way of dealing with this matter is to approach the issue of costs by reference to the substantive competing claims. 9 In essence this litigation concerned the establishment of a sufficient reputation in Australia by Hansen and/or Bickfords. Each party sought to establish its own reputation on the evidence. ... In essence, I have come to the conclusion that both Hansen and Bickfords, to a lesser or greater degree, have only just commenced the development of a reputation in Australia, and neither has reached the stage of development such that the Court should make the orders sought in this proceeding. 11 The dispute was therefore between the two competing claims to have a sufficient reputation in Australia, neither of which succeeded. 12 In commercial terms, the cross-claim was a significant part of the proceeding; as significant as the principal claim of Hansen. If the cross-claim were successful, then Hansen would have been prohibited from selling its MONSTER ENERGY product in Australia. 13 It was implicit in the order proposed by Bickfords that there could be a clear delineation of evidence and submissions made in relation to the cross-claim. I do not accept such an assumption. Putting aside time spent on cross-examination of Bickfords' witnesses, the reputation evidence led by Hansen was referable to both the claim and cross-claim, subject to the reputation evidence after April/May 2006 which was potentially relevant to the cross-claim only. Whilst I concluded, based upon Hansen's principal submission on the cross-claim, that Bickfords simply had not established on its own evidence sufficient reputation in Australia for its product, the evidence led by reference to the schedules of exposure was relevant to the cross-claim. Hansen was entitled to prepare its case accordingly. In the end I did not need to concern myself with any overlap of exposure, although I accepted that such could be potentially relevant to ascertaining Bickfords' reputation as alleged in the cross-claim. 14 Therefore, the way in which I approach the issue of costs is, in effect, to treat both parties as being unsuccessful in the claims they both made, each claim being significant, with Hansen's evidence being relevant to its claim and its defence to the cross-claim. 15 I should say that even if I were minded to adopt as a matter of principle the invitation of Bickfords to apportion by reference to submissions and affidavits filed and relied upon in court which are said to relate to the cross-claim, I do not consider such a course can be adopted in this case. Whilst I am mindful of the need to obviate unnecessary time and expense in taxations, I do not consider it appropriate to make an apportionment by reference only to affidavit material and submissions actually filed or relied upon in court --- there may well be other costs involved, such as those connected with preparation, discovery and correspondence. I have no way of assessing such costs. Whilst I appreciate that I need not apportion with any degree of precision, I must have some basis for making an apportionment and a clear identification of issues. 16 In view of my reasons above, it seems appropriate that each party bear its own costs. 17 The question then arises as to whether there should be any qualification of this approach to justify an award of costs in favour of Hansen for the reasons suggested by Hansen, namely those based on Bickfords' failure to admit facts set out in the notice to admit and the substantial number of unsuccessful objections taken by Bickfords. I note that Hansen does not seek to qualify its submissions that each party bear its own costs by reference to the fact that its reputation evidence which it led in respect of the period after April/May 2006 can only be relevant to the cross-claim. 18 As to the time spent on objections to admissibility of affidavit evidence, in many instances objections taken by Bickfords were unsuccessful. However, some objections taken were successful, and Hansen was given the opportunity during the trial to mend its hand. In particular, Bickfords' objections to Mr Alford's evidence were successful, which took up a significant part of the hearing and submissions. Nevertheless, I have come to the view that this is not a case where Bickfords was involved in 'the injudicious pursuit of issues without substance' (see eg Stena [2007] FCA 1141 at [12] ) or was involved in any unreasonable or inappropriate conduct (see eg BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557 at [18] ). In this proceeding the evidence and its presentation were important, and Bickfords was entitled to take the objections, although some were not upheld. 19 As to the notice disputing facts, O 62 r 24 provides that where a party serves a notice disputing a fact under O 18 r 2, and afterwards that fact is proved in the proceeding he shall, unless the court otherwise orders, pay the costs of proof. 20 It may be that not all the matters disputed were proved in the proceeding. The entitlement of Hansen to any order under O 62 r 24, in the absence of any contrary order, will be only available if Hansen can demonstrate to the taxing officer the disputed fact was proved in the proceeding. If the evidence of the disputed facts was admitted into evidence, then I would have thought that the fact was 'proved'. I say nothing more about this aspect. 21 I propose to make no order pursuant to O 62 r 24, which means that rule would operate according to its terms. No basis has been provided by Bickfords for any contrary order, its submissions being primarily based upon the operation of the rule according to its terms and the circumstances of this case. If so advised, Hansen will be able to proceed pursuant to O 62 r 24 (in default of agreement) to a taxation as to the costs of proof of the disputed facts to the extent such facts have been proved. The order I propose to make will not preclude such application by Hansen. 22 I mention one final matter. Submissions were made by the parties to the effect that the other party or parties unreasonably prolonged the proceedings, and that this is a matter relevant for my consideration. I agree that this is a matter relevant for my consideration on the question of costs. However, in my view, whilst on both sides time was required during the trial with further evidence being introduced, the parties and their legal representatives contributed to ensuring the trial proceeded expeditiously and with a large degree of cooperation in the conduct of the proceedings. I do not consider there to be any basis for criticising any party for any conduct, nor to conclude that any one adjournment during trial contributed to any unreasonable prolonging of the proceedings. 23 Therefore, in my view, the appropriate order to make is that there be no order as to costs. | general principles to be applied where evidence relevant to claim and cross-claim costs |
She is severely to profoundly deaf. She alleged that the University had discriminated against her by not providing her with interpreting services and other assistance necessary for her to benefit from lectures and other tuition. The Commission sought to resolve the issues between the parties but was not able to do so. On 23 June 2008 it terminated Ms Crvenkovic's complaint pursuant to s 46PH(1)(i) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) ("the Act"). Under s 46PO(1) of the Act Ms Crvenkovic then became entitled to apply for redress in this Court for unlawful discrimination by the University. She commenced this proceeding on 18 July 2008. By s 46PO(3) of the Act it was necessary that her application be confined to allegations which had been earlier made to the Commission. The University objected and sought a direction that Ms Crvenkovic would not be able to rely, at trial, on events which post-dated the lodging of the complaint with the Commission. The University relied on the decision of Katz J in Charles v Fuji Xerox Australia Pty Ltd [2000] FCA 1531 ; (2000) 105 FCR 573 in which his Honour held (at 580) that s 46PO(3) prevented a complainant from relying, in a proceeding in the Court, on any act of unlawful discrimination which occurred after the relevant complaint had been lodged with the Commission. Despite being referred to this decision, counsel for Ms Crvenkovic maintained that she was entitled to rely on discriminatory acts which had allegedly occurred after 28 February 2008. Having heard argument on the point I have determined that a direction of the kind sought by the University should be made. This will ensure that time and expense is not wasted by the parties in preparing for trial or at the trial. Counsel for Ms Crvenkovic argued the preliminary point at two levels. He contended, first, that a different construction should be placed upon s 46PO(3) than that which commended itself to Katz J. Alternatively, counsel contended that Charles was distinguishable. In the two situations with which it deals, it permits an applicant in a proceeding before the Court to claim that the facts alleged against the respondent constitute unlawful discrimination of a different legal character than the unlawful discrimination which was claimed in the relevant terminated complaint. The provision naturally permits the applicant to claim in the proceeding that those facts bear the same legal character as they were claimed in the complaint to bear. However, it goes further, permitting the applicant to claim in the proceeding as well that those facts bear a different legal character from that they were claimed in the complaint to bear, provided, however, that the legal character now being claimed is not different in substance from the legal character formerly being claimed. Paragraph (b) of s 46PO(3) of the [Act], on the other hand, permits the applicant to allege in the proceeding before the Court different facts from those which were alleged in the relevant terminated complaint, provided, however, that the facts now being alleged are not different in substance from the facts formerly being alleged. It further permits the applicant to claim that the facts which are now being alleged bear a different legal character than the facts which were alleged in the complaint were claimed to bear, even if that legal character is different in substance from the legal character formerly being claimed, provided that that legal character "arise[s] out of" the facts which are now being alleged. Charles has since been applied by other single judges: see Bahonko v Royal Melbourne Institute of Technology [2006] FCA 1325 at [68] (per Weinberg J); Maghiar v State of Western Australia [2002] FCA 262 at [18] (per French J); and Stanislawa Bahonko v Royal Melbourne Institute of Technology [2006] FCA 1492 at [4] (per Tracey J). More recently a Full Court, in Hurst v State of Queensland [2006] FCAFC 100 ; (2006) 151 FCR 562 , accepted that s 46PO(3) imposed "temporal limits" on any claim brought under s 46PO(1). The Court was referred to Charles and its reasoning proceeded on the basis that Charles was correctly decided. Ms Crvenkovic contended that s 46PO(3) should be read as if the words "the subject of" in its two paragraphs did not appear and that the reference to "practices" in para (b) comprehended "conduct following the termination of the complaint [which could] be said to arise out [of] identical practices that formed the subject matter of the terminated complaint. " It was also contended that the terms in which the Court's powers to grant relief to a complainant under s 46PO(4) , (6) and (7) were not consistent with there being a temporal limit of the kind which Charles had found to be imposed by s 46PO(3). I found these arguments to be unconvincing. Both paragraphs of s 46PO(3) would be rendered meaningless by the notional omission of the words "the subject of". The use of the word "practices" in s 46PO(3)(b) is apt to refer to practices which occurred prior to the lodging of a complaint. The fact that they continued to be implemented thereafter may support the making of a further complaint but this possibility does not compel the conclusion that s 46PO(3) should be construed in a manner contended for by the applicant. If the Court finds that unlawful discrimination has occurred it may grant one or more of the orders provided for in s 46PO(4). These orders may readily be applied to unlawful discriminatory acts, omissions or practices which have been the subject of complaint to the Commission. Section 46PO(6) provides for the granting of interim injunctions. Whilst the granting of such injunctions might be appropriate where conduct, which has been the subject of complaint to the Commission, has continued or been resumed, it does not necessarily follow that s 46PO(3) does not impose the temporal limit which was recognised in Charles . Section 46PO(7) merely provides the Court with power to discharge or vary earlier remedial orders made under the section. As a single judge of the Court I should follow Katz J unless I thought that he was clearly wrong: see Bank of Western Australia Limited v Commissioner of Taxation (1994) 55 FCR 233 at 255 (per Lindgren J) and the authorities there cited. I am not persuaded that his Honour was clearly wrong for the reasons advanced by Ms Crvenkovic or for any other reason. On the contrary, I respectfully agree with His Honour's reasoning. I am fortified in this view by the fact that, although the Full Court in Hurst did not expressly approve Charles , its reasoning assumed that Katz J was correct in his construction of s 46PO(3). Ms Crvenkovic sought to distinguish Charles on three bases. They were that: In my view none of these matters has any bearing on the proper application of s 46PO(3) to the proceeding commenced by Ms Crvenkovic. There will, accordingly, be a direction that Ms Crvenkovic not be at liberty to lead any evidence directed to establishing that the University, by act or omission, unlawfully discriminated against her after 28 February 2008. Ms Crvenkovic should pay the University's costs incurred in dealing with this preliminary issue. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | disability discrimination complaint to human rights and equal opportunity commission whether applicant can allege acts of discrimination which post-dated the complaint to the commission discrimination law |
In more recent times the persons represented by Dr Davis-Hurst have been described as the 'Saltwater People'. 2 On 4 December 2003, after a contested hearing in the above proceedings, I ordered that the present applicant, Mr Kemp, be joined as a party to each of the proceedings (see Davis-Hurst v Minister for Land and Water Conservation (NSW) (2003) 198 ALR 315). I did so in reliance on unchallenged evidence which tended to establish that Mr Kemp is a descendant of the Pirripaayi people who are traditionally associated by Aboriginal law and custom with an area which includes the Saltwater land. However, he is concerned that a determination in favour of the applicant would give formal recognition to a version of history that does not recognise the Pirripaayi people as the traditional owners of Saltwater. Mr Kemp's concern is not alleviated by the possibility that there may be extensive, or even complete, overlaps between the present claimant group and the living descendants of the Pirripaayi people. Mr Kemp believes, on the basis of information which he has obtained from Mr Marr, that under traditional Aboriginal law and custom a woman cannot claim the areas of land the subject of the applications. He also believes, apparently on the same basis, that the applicant may not accept, or perhaps be aware of, the correct dreaming story and the customary laws of the area in question. As is mentioned above, his belief is that the applicant accepts a version of the history of the claim areas that fails to give proper recognition to the connection of the Pirripaayi people to Saltwater. First, a concern that Dr Davis-Hurst and the Kattang people of the Manning Valley are not the group who hold the common or group rights comprising the native title in the Saltwater land. Secondly, a concern as to the identity of the traditional laws and customs under which that native title is held. No appeal was instituted against the order made on 4 June 2003 joining Mr Kemp as a respondent to the applications for determinations of native title in the Saltwater land. 6 On 11 August 2005 the second respondent, the Minister for Lands for the State of New South Wales, applied to the Registrar of the National Native Title Tribunal pursuant to s 24CG of the Native Title Act 1993 (Cth) ('the Act') for the registration of an indigenous land use agreement ('the Agreement') in respect of the Saltwater land. Mr Kemp is not a party to the Agreement. The parties to the Agreement are the second to seventh respondents to this proceeding; that is, two Ministers of State for New South Wales, the Director-General of a New South Wales government department, the local government body for the relevant area, Dr Davis-Hurst and an entity described in the recitals to the Agreement as having been incorporated under the Aboriginal Councils and Association Act 1976 (Cth) for the purpose of holding native title in trust for the Saltwater People. 7 The recitals to the Agreement refer to the proceedings in this Court for determinations of native title in respect of the Saltwater land. The State on the basis of evidence provided by the Registered Native Title Claimant is prepared to recognise that the Saltwater People hold native title rights and interests in the Saltwater National Park and part of the Khappinghat Nature Reserve. It is also not in dispute that Mr Kemp is not a member of the native title claim group represented by Dr Davis-Hurst. Consequently, Mr Kemp will enjoy no benefits, and assume no obligations, under the Agreement. Rather, registration of the Agreement will give substance to a decision by the State of New South Wales that those whom Dr Davis-Hurst represents, and not the Pirripaayi people, should be recognised as the holders of native title rights and interests in the Saltwater land. Whether those whom Dr Davis-Hurst represents are the holders of native title rights and interests in the Saltwater land is, as mentioned above, in dispute in proceedings in this Court. 9 On 12 December 2005 a delegate of the Native Title Registrar ('the Registrar') determined that, notwithstanding Mr Kemp's objection, the Agreement must be registered pursuant to s 24CL(1) of the Act. The Registrar's reasons for decision reveal that she proceeded on the basis that Mr Kemp is a person who prima facie may hold native title in the Saltwater land. She concluded, however, that his objection ' does not, in itself, result in the Agreement not being properly authorised. 11 The Registrar has filed a submitting appearance. The seventh respondent, the Greater Taree City Council, advised the Court that it did not wish to participate in the hearing of the application. A reference hereafter to 'the respondents' is, where the context allows, a reference to the second to sixth respondents. 12 For the reasons set out below I have concluded that the decision of the Registrar should be set aside. Part 2 Division 3 of the Act as a whole is concerned mainly with 'future acts' as defined by s 233 of the Act. A future act will be valid if the parties to an indigenous land use agreement consent to the act being done (s 24AA(3)). 14 The Agreement with which this proceeding is concerned is an agreement of the type for which Subdivision C of Division 3 of Part 2 of the Act provides; that is, it is an area agreement. An area agreement cannot be made if there are registered native title bodies corporate in relation to all of the area of land covered by the agreement (s 24CC). 15 Section 24CD of the Act governs who must be parties to an area agreement. All persons in the 'native title group' must be parties to the agreement (s 24CD(1)). As Dr Davis-Hurst is a registered native title claimant in relation to all of the area, the native title group for the Agreement consists of all registered native title claimants in relation to land or waters in the area and all registered native title bodies corporate in relation to land or waters in the area (s 24CD(2)). Mr Kemp is not a registered native title claimant in relation to any part of the area. Section 24CD thus makes it clear that Mr Kemp is not a necessary party to the Agreement. The critical issue to be determined in this proceeding is whether, nonetheless, the Agreement may not be registered unless he authorised its making. The meaning of the words emphasised in s 24CG(3)(b)(i) above is critical to the outcome of this proceeding (see [49] below). 17 Two statements by Dr Davis-Hurst accompanied the application for registration of the agreement. The first statement was to the effect that the requirements of s 24CG(3)(b)(i) and (ii) had been met. The second statement gave details of extensive efforts made by Dr Davis-Hurst to publicise the claims for determination of native title and to gain authorisation for the description of the claimant group. The second statement records that Dr Davis-Hurst discussed with the Purfleet Taree Aboriginal Land Council who should be part of the claimant group and 'they agreed it should be the traditional owners who camped in the Saltwater area and that these were both Worimi and Biripai people. ' It also gave details of efforts to ensure that those who fell within the description of the claimant group authorised the making of the agreement. 18 Assuming that it was necessary for them to do so, it is not entirely clear that Dr Davis-Hurst's statements provided grounds on which the Registrar could have been satisfied that all reasonable efforts were made to ensure that all persons who hold or may hold native title in the Saltwater land were identified. The statement makes no reference, for example, to the Pirripaayi people. It is probably uncontentious, however, that the statements demonstrated that reasonable efforts were made to ensure that all members of the claimant group which is represented by Dr Davis-Hurst were identified. 19 The second statement records that the National Native Title Tribunal advised Mr Kemp of the details of a meeting at which authorisation of the Agreement was to be sought from members of the claimant group. It further records that 15 people recognised as traditional owners attended the meeting and voted to authorise the Agreement. Mr Kemp is said to have attended part of that meeting and to have expressed his objection to the Agreement. 20 Section 24CH of the Act is concerned to ensure that notice of the agreement is given to certain persons or bodies should they not be parties to the agreement. 22 Section 24CI(1) provides for objections against the registration of an agreement to be made in writing to the Registrar where the application was certified by representative Aboriginal/Torres Strait Islander bodies for the area. The objection must be made on the ground that the requirements of s 203BE(5)(a) and (b) were not satisfied in relation to the certificate given by the representative body. The application in this case was not certified by a representative body. Section 24CI(1) thus had no application in respect of the agreement. 23 Nonetheless, both Mr Kemp and Ms Gloria Rogers advised the Registrar in writing that they objected to the registration of the agreement. 24 Section 24CJ of the Act provides that the Registrar must, after the end of the notice period, decide whether or not to register the agreement on the Register of Indigenous Land Use Agreements. However, the section further provides that in a case (such as the present) where s 24CL is to be applied, the Registrar must not do so until all persons covered by s 24CL(2)(b) are known. If the conditions are not satisfied, the Registrar must not register the agreement. 27 The Registrar further noted that s 24CL of the Act provides that two conditions must be met before the Registrar must register the agreement. That finding is not challenged. With respect to Mr Kemp's letter of objection, the Registrar noted that Kemp contended that he was a person who may hold native title in relation to the agreement area. She also noted that he further contended that as he had not authorised the making of the Agreement she should not register it. 31 The Registrar then turned to the requirements of s 24CG(3)(b) of the Act. She first expressed her satisfaction that the efforts made to identify native title holders for the area were reasonable for the purposes of that paragraph. She noted that the efforts made to identify native title holders resulted in Mr Kemp becoming aware of the proposed agreement and the authorisation meeting. I note that s.24CG(3)(b) does not require that all native title holders for the area authorise the making of the agreement. Rather, that those persons identified through the making of reasonable efforts authorise the making of the agreement according to the decision-making process applicable to that group. In this case, the information before me indicates that the relevant decision making process was an agreed and adopted process of majority vote. I am of the view that it is not necessary for me to consider this issue for the purposes of deciding whether the Agreement was properly authorised. I have taken the view that Mr Kemp is a person who prima facie may hold native title. Ms Davis-Hurst states that fifteen people recognised as traditional owners attended the authorisation meeting and voted to authorise the making of the Agreement. In addition Mr Kemp attended part of the meeting and expressed his objection to the Agreement. On this basis it would appear that the agreed and adopted decision making process of a majority vote resulted in the Agreement being properly authorised. Mr Kemp's objection does not, in itself, result in the Agreement not being properly authorised. She concluded that Mr Kemp's authority for the making of the decision had been obtained when the majority of those who attended the authorisation meeting voted in favour of the agreement being made. First, he asserted that the Registrar misconstrued s 251A of the Act. Secondly, he asserted that the Registrar found that the requirements of s 24CG(3)(b) had been met notwithstanding her recognition of Mr Kemp as a person who may hold native title in relation to the land or waters in the area and who did not authorise the making of the agreement. This majority decision-making process was used to authorise the ILUA, unanimous consent was not required to authorise the ILUA. 38 It seems likely that the Registrar overlooked the fact that the solicitor's response identified the decision-making process adopted by 'the Applicants' . In the context of the response, the reference to 'the Applicants' is to be understood as a reference to the claimant group represented by Dr Davis-Hurst. It is accepted on all sides that Mr Kemp is not a member of that group. 39 Counsel for Mr Kemp initially argued that, in the circumstances of this case, s 251A(b) required the claimant group represented by Dr Davis-Hurst and Mr Kemp, together to authorise the making of the agreement in accordance with a process of decision-making agreed to and adopted by them. He pointed out, in effect, that there was nothing before the delegate which suggested that Mr Kemp had joined in the agreement for and adoption of a 'decision-making process of authorising through the decision of the majority' (see [36] above). 40 I reject the above argument. In my view, it is plain that s 251A is concerned with how a single community or other group, the members of which together hold or may hold the common or group rights comprising the native title in relation to land or waters in the area covered by an indigenous land use agreement, may authorise the making of an indigenous land use agreement. 41 Section 251A is not intended to provide, and does not provide, a means whereby a single authorising decision can be obtained which is binding on two or more groups where their respective claims to hold native title in an area are in conflict. This can be seen from the reference in paragraph (a) to a process of decision-making that, under the traditional laws and customs of the persons who hold or may hold the common or group rights comprising the native title, must be complied with in relation to authorising things of that kind. It is hard to imagine any such process of decision-making where the respective claims of two groups to hold the native title are in conflict; it would require traditional laws and customs in relation to jointly authorising things binding on the members of both groups. 42 The material before the Registrar which tended to show that the members of the claimant group represented by Dr Davis-Hurst had adopted a process of majority vote for the purpose of authorising the making of the agreement was slight. Nonetheless, the Registrar was entitled, in my view, to conclude that they had adopted such a process (see s 24CL(4)). 43 However, as I think all parties ultimately accepted, the Registrar erred in concluding that Mr Kemp was bound by the majority decision to authorise the agreement adopted by the claimant group represented by Dr Davis-Hurst. For this reason, on the approach that the Registrar adopted, the Registrar erred in concluding that the requirements of s 24CG(3)(b) of the Act had been met. WAS MR KEMP'S AUTHORISATION REQUIRED? 45 The first ground on which it was submitted that it was unnecessary for Mr Kemp to authorise the making of the agreement was that the second condition in s 24CL (see [25] above) required the Registrar to form the view that all reasonable efforts had been made to ensure that all of the persons described in s 24CG(3)(b)(i) had been identified; it did not require the Registrar to be satisfied that all persons so described had in fact been identified. 46 I accept that the second condition is to be so understood. The reasons for decision reveal that the Registrar also understood the second condition in this way. However, the reasons for decision of the Registrar reveal that she regarded Mr Kemp as a person identified by the efforts of Dr Davis-Hurst. On the approach adopted by the Registrar, the Agreement could not be registered unless she considered that Mr Kemp had authorised its making. It is therefore unnecessary for me to determine whether it would be open to a Registrar to consider that the requirements of s 24CG(3)(b)(i) had been met if the Registrar were aware of individuals in the relevant class who had not been identified by the efforts claimed to have been 'reasonable efforts' within the meaning of s 24CG(3)(b)(i). 47 The second ground on which it was submitted that it was unnecessary for Mr Kemp to authorise the making of the agreement involves a much more difficult issue of statutory construction. That issue is the intended meaning of the words 'all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement' in s 24CG(3)(b)(i). 48 I take the proper approach to the determination of this issue to be as stated by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at 384. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. The factors upon which the respondents placed reliance are the following. 51 First, as they submitted, the words 'may hold native title' in s 24CG(3)(b)(i) are not words of expansion but rather are intended to demonstrate that proof of native title is not necessary before an area agreement may be registered. I accept that the words 'may hold native title' demonstrate that proof of native title is not necessary before an area agreement may be registered. However, this does not, of itself, assist in determining which of the two competing views of the meaning of s 24CG(3)(b)(i) should be accepted. 52 Secondly, s 24CL makes it impossible for an area agreement to be registered unless all persons who were registered native title claimants at the end of the notice period, and all persons who subsequently became registered native title claimants pursuant to applications made before the end of the notice period, are parties to the agreement. The respondents argued that s 24CL discloses an intention that a person like Mr Kemp should not be able to prevent the registration of the area Agreement unless he first becomes a registered native title claimant; as Mr Kemp chose not to adopt that course, the group represented by Dr Davis-Hurst was free to obtain registration of the agreement without his being a party to it and without obtaining his authority to make it. 53 I agree that the above argument carries weight and, indeed, derives some support from s 24CI of the Act. Section 24CI, which is concerned with objections against registration, does not provide for an objection to be made by a person who holds or may hold native title in relation to land or waters in the area covered by the agreement. The Explanatory Memorandum to the Native Title Amendment Bill 1997 explained the failure to provide an objection procedure in the case of an area agreement on the basis that 'the appropriate response of potential native title holders unhappy about the registration of such an agreement is to make a native title claim' (par 22.23). However, to the extent that s 24CL can be seen to reflect legislative recognition of the fact that it is the Court, and not the Registrar, which is able to determine competing claims to hold native title, it may be observed that Mr Kemp is a party to proceedings in the Court in which he challenges the claims of the group represented by Dr Davis-Hurst. 54 Thirdly, it is arguable that s 251A, which is concerned with the process whereby the making of an indigenous land use agreement may be authorised, has been drawn on the assumption that all persons who relevantly hold native title in relation to land or waters in the area covered by an indigenous land use agreement will hold that native title under the same traditional laws and customs. I agree that s 251A has arguably been drawn in this way. I note, nonetheless, that s 251A can sensibly operate to provide a procedure whereby persons in different communities or groups respectively may separately authorise the making of an agreement. 55 What then are the factors which favour the first of the two competing views as to the meaning of the words 'all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement' in s 24CG(3)(b)(i)? As the passage from Project Blue Sky cited above indicates, the strongest argument in favour of the first of the competing views is the literal meaning of the words. The words do not readily admit of limitation. No real difficulty would have attended drafting the passage in more limited terms. 56 Additionally, comparable words, namely 'any person claiming to hold native title in relation to land or waters in the area covered by the agreement' , are used in s 24CH(2)(d)(ii) of the Act with an apparently expansive meaning. In the context of s 24CH(2)(d)(ii) the comparable words must, I think, be intended to include any person who advances a claim in opposition to the claim to native title recognised by the agreement. The paragraph is intended to place such a person on notice that, in effect, the agreement might be registered, irrespective of his or her views as to its contents, unless he or she formally asserts a claim to native title. While details of an agreement are entered on the Register of Indigenous Land Use Agreements, the agreement has effect as if all persons holding native title in relation to any of the land or waters in the area who are not already parties to the agreement were bound by the agreement in the same way as the native title group (s 24EA). As a consequence a person who has a prima facie claim to hold native title but who is not a party to the agreement would be bound by any consents thereby given to the doing of future acts or classes of future acts (s 24CB(a) and (aa)). Indeed, it appears that the person could be bound by a surrender of native title rights and interests in the area to the Commonwealth, a State or a Territory and the consequent extinguishment of those rights and interests (s 24CB(e) and s 24EB(1)(d) and (3)). 58 I confess to having found this issue difficult to resolve. I accept that the construction for which the respondents contend would result in a logically coherent scheme for the registration of area agreements. However, a literal construction of s 24CG(3)(b)(i) does not, in my view, result in an absurd or otherwise plainly unlikely outcome. In the absence of a compelling case to do so, I am reluctant to depart from the literal meaning of the words which the legislative has chosen because a departure from that meaning could, in this and other cases, result in the loss of rights which an individual might otherwise enjoy. 59 Were it the case that Mr Kemp's claim to be a person who holds, or may hold, native title was merely colourable, it would have been open to the Registrar to conclude that his claim was without substance and, for that reason, his authority for the making of the agreement unnecessary. However, Mr Kemp had successfully applied to be joined as a party to proceedings in this Court to oppose the claim that Dr Davis-Hurst and those whom she represents hold native title in the area covered by the Agreement. In the circumstances, in my view, the appropriate forum for the resolution of the dispute between Dr Davis-Hurst and those whom she represents on the one hand, and Mr Kemp on the other, as to the identity of the community or group which holds native title in the Saltwater land is the Federal Court. 60 I am left with a lingering suspicion that those who drafted the relevant provisions did not envisage circumstances such as have arisen here. These circumstances, perhaps unusually, including competing claims to hold the communal or group rights and interests of Aboriginal peoples in relation to the land and waters covered by the Agreement and an unwillingness in one case to make an application for a determination of native title. It seems that Mr Kemp is unwilling for financial reasons to apply for a determination that the Pirripaayi people hold native title in the Saltwater land. I decline to so read them. I further conclude that it would not be appropriate to refrain from setting aside her decision on the basis that the error was not material because it was unnecessary for Mr Kemp to authorise the making of the agreement. 63 The decision of the Registrar that the Agreement must be registered pursuant to s 24CL(1) of the Act will be set aside and the application for registration remitted to the Registrar to be determined according to law. I will hear the parties on the appropriate order or orders, if any, to be made as to costs. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | judicial review of decision of native title registrar to register indigenous land use agreement area agreement objection to registration by applicant whether requirements for registration in s 24cg(3)(b) met authorisation process where competing claims to hold native title in relation to land or waters in the area meaning of ' all persons who hold or may hold native title in relation to land or waters in the area covered by the agreement ' in s 24cg(3)(b)(i) whether applicant, as a person who may hold native title in the area, required to authorise the agreement registrar's decision to register agreement set aside native title |
Two preliminary matters might be dealt with conveniently now and they are that: an application has been made for leave, consistent with authority, to join the Refugee Review Tribunal as a second respondent in the proceedings and I give that leave; secondly, leave has been sought to amend the title of the first respondent from Minister for Immigration and Multicultural Affairs to Minister for Immigration and Citizenship' and I give leave to make that change. 2 Now, in the proceedings, I should say that the appellant appears before this Court unrepresented but with the assistance of an interpreter. Because the appellant is unrepresented and is assisted by an interpreter, I propose to try and express clearly and simply the findings of this Court in relation to the central matters but because the appellant has contended that bias occurred in the conduct of the proceedings before the Refugee Review Tribunal, I propose to reflect in these observations some comments about the conduct of the Tribunal and particularly the conduct of the hearing. 5 In support of that application, the appellant filed an affidavit on 4 February 2006 in which the appellant stated that she had arrived in Australia on 16 November 2005 having been born in the People's Republic of China. The appellant said that she refused to go back to China as China, 'has no religious freedom' . I am a Christian. But the Chinese Government persecutes the Christian of "underground church. " I will be put in gaol if I return to China. Refugee Review Tribunal had bias against me and did not consider my application according to the Migration Act 1958 . The Tribunal did not notify the reasons that it would be based for refusing my application for a protection visa, I therefore could not provide reasonable response to those doubt. I clarify all my points at the hearing of the Federal Magistrates Court, but the judge did not seem to consider my application in more details and refused my application on my hearing date. I had put forward my argument, [and] grounds of my application at the Court, and I don't think my application has been considered reasonably. As to the first ground, in effect, the appellant is contending that the Federal Magistrate failed to find bias and therefore jurisdictional error on the part of the Tribunal. As to the second ground, the appellant is, in effect, alleging a failure on the part of the Tribunal to discharge its obligation arising under s 424A(1) of the Migration Act 1958 (Cth) and thus it is contended the Federal Magistrate failed to find error on the part of the Tribunal. The remaining grounds suggest that the Federal Magistrate failed to properly have regard to the claims and contentions of the appellant in discharging the adjudication function. 8 The appellant is a citizen of the People's Republic of China and arrived in Australia on 16 November 2005. On 23 November 2005, the appellant lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs. She often talked to me about Jesus. I went to her church meeting in 1996. Since then, I often went to Chen's place as I was unemployed during 1994-2001. The persons from local residential committee often came to Chen's place to check. In September 2000, local police came to Chen's place, they took Chen and five other members (including me) to local police station. They detained us for three days and detained Chen for three months. Next year 2001, I got good job in trading company. Now I got visa to come to Australia. I feel this is a democratic country and have real religious freedom. If not, I will be caught and sent to detention centre at any time by local police and the residential committee like old lady Chen. She is the organiser of the meeting. On that day, we six people gathered at her place. We were detained by local police for three days. Mrs Chen detained for three months. In December 2001, I saw police came to her home again. They took her away. In July 2001, I saw her but she was ill heavily. She never gave up her Christian beliefs. If I hold Christian beliefs like her, I fear that I will be put in detention centre. If not, why not? They will not protect me. Because local police do not want people to be Christian. They believe Communist Party. They hate people to believe Christian and other religions. They think Christian believes are superstition. They will not protect me. On 13 December 2005, the delegate of the Minister rejected the application for a protection visa. On 9 January 2006, the appellant lodged an application for a review of that decision before the Tribunal. At AB58 the appellant nominated, for the purposes of that review, the support of an adviser. On 17 January 2006, the Tribunal wrote to the appellant advising that the Tribunal would conduct a hearing on Monday, 13 February 2006 and would thus provide the appellant with an opportunity to place oral submissions before the Tribunal and generally support the contention that the appellant is a person who holds a well-founded fear of persecution for a Convention reason and is unwilling to avail herself of the protection of her country of origin. The particular fear, of course, is persecution by reason of the appellant's religious beliefs. 15 On 21 February 2006, the Tribunal reached a decision which was handed down on 7 March 2006 affirming the decision of the Minister's delegate. The consideration of the evidence by the Tribunal is set out at AB81, 82, 83 and 84 and the findings and conclusions of the Tribunal are set out at AB85 and 86. At AB81 the Tribunal notes that the appellant is assisted in the hearing process by an interpreter. The Tribunal noted that it wanted the appellant to explain why she held a fear of persecution for a Convention reason should she return to the People's Republic of China. The Tribunal noted that it would take the appellant through the details of her claim for refugee protection during the course of the hearing and that this was in fact the very function of the hearing. 16 At AB82 the Tribunal noted that it was unclear as to whether the appellant was a Christian as contended and whether it could be satisfied that the appellant held Christian beliefs or belonged to a Christian church. The Tribunal noted that this matter was plainly enough central to the claim of refugee status based upon a fear of persecution of the appellant's religious beliefs. The Tribunal questioned the appellant as to whether she belonged to a particular branch of the Christian faith and noted answers about that matter. The Tribunal asked the appellant when the appellant had first become introduced to the Christian faith. The appellant advised that she was introduced to Christianity in 1996 through the meeting with the elderly Mrs Chen. 17 The Tribunal asked the appellant to identify when she actually adopted the Christian value system or Christian faith and the appellant responded that she formally became a Christian in approximately March or April 2004 after the lunar new year. The appellant noted before the Tribunal that at this time she had been made redundant from her work. The appellant stated that she had commenced to embrace religion and had become committed to spreading the Christian faith. The Tribunal expressed some concern that the appellant was not able to identify what particular message or doctrinal position the appellant would seek to spread or indeed which particular church or affiliation she belonged to. 18 There are two further matters in the course of the examination of the evidence that the Tribunal emphasised. The first matter concerned the question of an apparent lack of understanding on the part of the appellant about the nature of baptism and the circumstances surrounding her contended baptism into the Christian faith. It may be that aspects of the doctrinal significance of baptism or the procedure surrounding it, was unable to be articulated by the appellant because of difficulties with the English language. However, in simple terms, the Tribunal seemed concerned that there was an inconsistency between the apparent or the contended baptism, the lack of understanding of the significance of that step, the introduction to Christianity in 1996 and the practise of it with some engagement from March or April 2004. That matter was perceived to be a matter of inconsistency and concern. 19 The second matter of inconsistency related to questioning at the hearing of the appellant in relation to aspects of the parables or Bible stories illustrative of doctrinal positions in the Christian value system. The Tribunal asked the appellant to recite one of the stories she had heard from the Bible as told by Jesus and to explain it to the Tribunal. The appellant advised that she did not know any stories told by Jesus in the Bible. The appellant explained that she had a poor education and was not able to read the Bible. The Tribunal noted that this observation seemed inconsistent with the fact that the appellant had before her at the hearing written questions and answers at the commencement of the hearing. 20 The Tribunal put to the appellant that there seemed to be some difficulty in reconciling the attendance at Mrs Chen's house from 1996 and the discussions with Mrs Chen and the group in relation to matters of the Christian faith and Bible readings, and the appellant's lack of understanding of any of the Bible stories. The Tribunal proceeded to ask the appellant questions about the distinction between the old and the new testament and the Tribunal concluded that the appellant did not seem to know of that distinction. 21 The appellant contended that this lack of understanding, illustrative of a lack of understanding about other matters, was a function of her lack of training in the Christian documents, but did not reflect a lack of commitment to the faith and the Christian value systems and particularly a commitment to the practise of the Christian religion. The Tribunal also asked questions of the appellant about the detention, the events in September 2000, the events which affected the elderly Mrs Chen and related matters. 22 The appellant confirmed to the Tribunal that she was detained for a period of three days and then released. The Tribunal noted that the evidence before the Tribunal indicated that there were no other incidences of detention until the time of the appellant's departure to Australia in November 2005. These matters are canvassed, not only at AB81 and 82, but also AB83 and 84. At AB85 the Tribunal reaches its conclusions and findings. The Tribunal notes that the mere fact that an appellant claims to fear persecution for a particular reason does not necessarily establish the genuineness of that asserted fear or well-founded fear for a Convention reason and that the role of the Tribunal is to test the evidence on those matters and reach the relevant state of affirmative satisfaction. 23 The Tribunal turned its mind to the question then of the credibility of the evidence and the extent to which it could rely upon the evidence of the appellant in reaching the relevant state of affirmative satisfaction. The Tribunal noted that it is definitely not fatal to the case of an applicant that they do not appear to have a good knowledge of the religion they are claiming to have converted to. The issue therefore, may be to assess whether the knowledge level of the applicant is consistent with claimed relevant activities and opportunities. In reliance upon the inconsistencies or at least inconsistencies apparent to the Tribunal, the Tribunal reached conclusions which were adverse to the appellant's credibility. When asked by the Tribunal how she was able to do this given that she had no knowledge of any aspect of the Bible, the applicant stated that she did not need to know these things as it was contained in literature that she would hand out. The applicant maintaining that her main role was to help people and that God provided protection to her. After considering her responses, and given I am satisfied the applicant has at least embellished if not fabricated most of the material claims, I am not satisfied she is a witness of truth. Thus I am not prepared to accept the applicant was even associated with a Christian church in the PRC. Furthermore, to the extent that I have not expressly rejected same above, I reject all her material claims to invoke refugee protection obligations in Australia. The findings of the Tribunal were open to it having conducted a review of the evidence and having heard the appellant give oral evidence. The question of credibility is entirely a matter for the Tribunal. 29 If, of course, there is simply no evidence to support the contended inconsistency, that becomes a relevant matter but in the face of an evaluation of the evidence and having had the benefit of seeing the appellant, the conclusions as to inconsistency were open to the Tribunal irrespective of whether another Tribunal may have reached, or this Court or another Court, may have reached a different conclusion. In Ex parte Durairajasinghan v Minister for Immigration and Multicultural Affairs [2000] HCA 1 ; (2000) 168 ALR 407 at 423 at paragraph 67, McHugh J makes plain that findings of credibility are a matter for the Tribunal. A finding on credibility is the function of the primary decision maker par excellence. In W148/00A v Minister for Immigration and Multicultural Affairs (2000) 185 ALR 703, the Full Court of the Federal Court, per Lee, Tamberlin and R.D. The relevant question is whether the minister and the tribunal could be "satisfied" that the case for refugee status has been made out: see ss 65 and 415 of the Act. The High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259; per Brennan CJ, Toohey, McHugh and Gummow JJ, considered this requirement of satisfaction and observed that the decision under review is of a subjective nature and is not the same as a review of an entirely objective determination of refugee status. This distinction underlies the need for care when viewing the decision of the tribunal, especially in relation to the question of credibility, because the review is as to the satisfaction of the minister or his delegate and not as to the determination of the minister or the delegate. The conclusions reached by the Tribunal were open to it and the inconsistencies relied upon were matters upon which the Tribunal was entitled to rely. 32 In ground three of the appeal, the appellant contends that the matters upon which the Tribunal relied were not put to her and thus she was not provided with an opportunity to respond. The difficulty with that proposition, of course, is that the matters reflecting the inconsistencies upon which the Tribunal relied, were matters arising out of evidence given by the applicant at the hearing for the purposes of the application judged against the background of the documents provided by the applicant/appellant. Thus, there was no obligation to independently communicate those matters to the appellant. Thus, no contravention of s 424A(1) arises. 33 In relation to the remaining grounds of appeal the central contention is that the Federal Magistrates Court in the conduct of the application brought before it, failed to properly consider and evaluate the various claims made by the appellant. My application for a protection visa was refused by DIMIA and RRT and I found jurisdictional error with RRT. I lodged my application to be reviewed at Federal Magistrates Court. The judge did not consider all information I provided. As I believe that my application has not been considered fairly, I hereby lodge my application to be reviewed at the Federal Court. RRT did not notify the reasons that it would be based for refusing my application for a protection visa. I therefore could not provide reasonable response to those doubt [s] . Federal Magistrate did not consider my application for review fairly. In relation to the hearing of the application before Federal Magistrate McInnis, I note that Federal Magistrate McInnis observed at paragraphs 2 and 3 of the reasons for judgment that the appellant complained that the Tribunal had not made a fair decision, that the appellant was nervous and found difficulty in articulating or communicating her concerns. Federal Magistrate McInnis in the course of the reasons, takes care to review the underlying facts and contentions of the appellant and I particularly note paragraphs 5, 6, 7 and 8 of Federal Magistrate McInnis decision. 35 The Federal Magistrate also highlighted the aspects of the inconsistencies relied upon by the Tribunal and considered the lack of particularisation in claims. It seems to me that there is no basis for contending that the contentions of the applicant before Federal Magistrate McInnis were not addressed or dealt with in a dispositive and proper manner. Accordingly, those grounds of appeal must necessarily fail. 36 Having regard to all of these matters, the appellant has not been able to demonstrate any error on the part of the Magistrate as contended or at all. Accordingly the appeal must necessarily be dismissed with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of the operation of s 424a(1) of the migration act 1958 (cth) consideration of a contention of bias consideration of a contention that adverse credibility findings not supported on the evidence migration |
It sought relief in the form of declarations, injunctions, pecuniary penalties, adverse publicity orders and orders to implement a corporate trade practices compliance program. The two respondents admitted the conduct alleged against them. They also agreed with the orders proposed by the Commission while acknowledging that the question of relief was ultimately a matter for the court. I was satisfied that the orders were appropriate and granted the relief sought. What follows are my reasons. 2 The contravening conduct occurred in the following circumstances. The first respondent, Netti Atom Pty Ltd, is a wholesaler of bicycles and bicycle accessories. One of the products it distributes, to approximately 80 retailers, is a popular brand of bicycles known as "Scott Bikes". It also manufactures and supplies bicycle clothing and helmets under its own brand to some 400 retailers. The second respondent, Mr Feltis, is the national sales manager and purchasing manager of Netti Atom. He also holds shares in Netti Atom's holding company and has a fixed and floating charge over the assets of that company. As part of his position, which he has held since 1989, Mr Feltis manages the Netti Atom sales team and has contact with the retailers to whom Netti Atom distributes Scott bicycles. 3 Between October and December 2006, a number of Scott bicycle dealers voiced concerns to Mr Feltis and his sales staff about a dealer who was selling Scott bicycles over the internet for delivery in an unassembled state at prices below the recommended retail price. Dealers were increasingly using the internet as a means of selling Scott bicycles. On about 31 January 2007, Mr Feltis sent a letter to each Scott dealer. Dealers that list Scott Bikes at below recommended retail prices run the risk of not being included as a Dealer for the following season. It is also common ground that sending the letter was the beginning and the end of the respondents' contravention. In short, s 48 prohibits a supplier from setting a minimum price below which its goods or services are not to be sold by a resupplier. Various types of acts are deemed by ss 96 and 96A to constitute resale price maintenance. It is not necessary to describe those provisions in any detail. Netti Atom admitted that it engaged in one act of resale price maintenance by attempting to induce Scott dealers not to sell Scott bikes at a price less than that specified by it (in contravention of s 96(3)(b)) by way of s 96(7)(a)). The sending of the letter by Mr Feltis is attributed to Netti Atom by ss 84(2) and 96 (4)(a). Mr Feltis admitted that he was directly knowingly concerned in and party to Netti Atom's contravening conduct for the purposes of being subject to injunctions (s 80(1)(e)) and pecuniary penalties (s 76(1)(e)). 5 The principle underlying the prohibition in s 48 is that competition in the distribution of goods and services is undermined if vertical price restraints, such as resale price maintenance, are permitted. A number of additional reasons have been put forward to justify the illegality of the conduct: see eg Australian Competition and Consumer Commission v High Adventure Pty Ltd (2006) ATPR |P42-091, 44,563. 6 There is, however, fierce debate about whether the practice of resale price maintenance produces anti-competitive consequences: see eg M G Landrigan, 'Vertical Price and Non-Price Restraints in Australia and the US: A Comparative Analysis' (1997) 25 Australian Business Law Review 312. The view that there are pro-competitive effects of resale price maintenance, and that they may actually outweigh the anti-competitive effects, has support in the US Supreme Court: Leegin Creative Leather Products Inc v PSKS Inc (2007) 127 SCt 2705 ("[I]t suffices to say here that economics literature is replete with procompetitive justifications for a manufacturer's use of resale price maintenance. ... [I]t cannot be stated with any degree of confidence that resale price maintenance 'always or almost always tends to restrict competition and decrease output'. ... As the rule would proscribe a significant amount of procompetitive conduct, [resale price maintenance] appear[s] ill suited for per se condemnation. ": at 2715 and 2717-2718). It has been argued that price floors: promote the entry of new products into a market (J Brebner, 'Resale Price Maintenance --- The Need for Further Reform' (2001) 9 Trade Practices Law Journal 19, 21); force retailers to compete on non-price factors such as service (Y Wang and M J Davison, 'Resale Price Maintenance: Is the Per Se Prohibition Justified? ' (1992) 14 Adelaide Law Review 35, 44-47); and provide a certification process which signals to consumers that some brands are of higher quality than others and are therefore more valued by some consumers (A J Meese, 'Property Rights and Intrabrand Restraints' (2003) 89 Cornell Law Review 553, 565). The third proposition, ironically, is given some validation, at least from Mr Feltis' perspective, by his response to a s 155 notice. He said that part of the reason he sent the letter of 31 January was the "devaluing of the Scott brand via the practice of discounted pricing of Scott Sports Bikes by other Dealers on websites. It is a per se contravention under the Trade Practices Act . It is therefore illegal regardless of its effect on competition or its impact on the market. 8 The parties filed joint submissions and minutes of proposed orders dealing with the penalties that should be imposed. There are many cases that consider the approach a court should adopt when parties agree on penalties: see eg Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR |P41-375; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR |P41-993. The import of those decisions is that a court should not depart lightly from the settled position. If an agreed penalty "is one within the permissible range in all the circumstances" the court should not diverge merely because it would have been disposed to select a different penalty: NW Frozen Foods at 291. This has the effect of encouraging settlements, thereby saving time and expense. The regulator will be free to pursue other contraveners. The court will be able to deal with other contraventions. Ultimately the deterrent effect of the penalty regime on restrictive trade practices will be enhanced. 9 The parties jointly submitted that the court should impose penalties in the order of $110,000 in the case of Netti Atom and $11,250 in the case of Mr Feltis. Resale price maintenance may take a variety of forms that call for a wide range of penalties. The maximum penalty for an individual is $500,000 while for a corporation it is the greater of $10,000,000, three times the value of the benefit attributable to the breach, or, if that cannot be determined, 10% of the corporation's annual turnover. 10 A number of factors bear on the question whether the amounts submitted in this case are within the permissible range. Some factors are set out in s 76(1) of the Act. The starting point is the "nature and extent of the act". In this connection it is significant that the letter of 31 January was sent to a relatively large number of Scott dealers, the conduct was deliberate and the plan was designed by a senior manager. On the other hand, neither Mr Feltis nor Netti Atom knew the conduct was unlawful and the threat to withhold supply was never acted upon. The breach, moreover, can hardly be described as systematic conduct operating over an extended period and it is properly to be treated as only one isolated act. Another factor in s 76(1) is "the circumstances in which the act... took place". Despite the joint submissions, the parties could not reach an agreed position on the background circumstances in which the letter was sent. Mr Feltis submitted that the principal reason for sending the letter was to address safety concerns associated with the sale of unassembled bikes. His argument was that discounting bikes below the recommended retail price was a consequence of selling them in an unassembled state due to the cost savings on labour. The Commission submitted that no evidence was adduced to support this assertion and the letter made no reference to product safety issues or the preference that only assembled bikes be sold over the internet or otherwise. The letter did, however, refer to a "protocol for handing over" which described the dealer's obligation to provide a bike that is free of faults, and there is evidence that Mr Feltis had discussions with at least one dealer in November or December 2006 about the risks of selling unassembled bikes directly to end users. It is apparent that safety concerns may have at least been part of the reason the respondents engaged in the conduct. 11 A number of mitigating factors were present. Neither of the respondents has previously been found liable of engaging in similar conduct. The joint submissions stated that the penalties proposed "incorporate a discount for cooperation and early acknowledgement of liability. " The respondents acknowledged their liability at an early stage of the Commission's investigation. Within a month of receiving a letter from the Commission that set out the alleged contraventions, Netti Atom sent a correction letter to each of the Scott dealers. The letter stated that while Netti Atom will continue to provide dealers with recommended prices, it "[does] not require Dealers to sell bikes at these or any other prices [and] Dealers will not lose their dealership status if they sell bikes at other prices. " The respondents also substantially acceded to the relief sought by the Commission at an early stage of the proceeding. The statement of claim was filed on 1 August 2007 and in their defence, which was filed on 3 September 2007, the respondents agreed with each proposed remedy with the exception of certain proposed adverse publicity orders. In due course, however, the respondents withdrew that opposition. The respondents' conduct streamlined the proceeding in the fast track list and they should therefore receive the benefit of a discount for their cooperation. 12 The final question was whether the agreed penalties were consistent with the parity principle. To that end, the parties provided me with a detailed table of cases decided since 2005 in which courts have imposed penalties for resale price maintenance. Netti Atom's conduct and financial position is most similar to that found in Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482, Australian Competition and Consumer Commission v Humax Pty Ltd (2005) ATPR |P42-072 and Australian Competition and Consumer Commission v Tooltechnic Systems (Aust) Pty Ltd (2007) ATPR |P42-154, where penalties of $250,000, $150,000 and $125,000 respectively were imposed against the corporate respondents. Netti Atom's contravention was more serious than that of the respondent in High Adventure (2006) ATPR |P42-091 (the contravention was also an isolated act but only involved one retailer; the penalty imposed was $20,000) but less serious than in Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 (the contravention involved a similar number of resellers (around 60) but occurred over an extended period; the penalty imposed against the principal contravenor was $600,000). The agreed penalty against Mr Feltis is also broadly comparable to the penalties imposed against managers and directors in those cases. 13 For the foregoing reasons it was clear that the pecuniary penalties, payment of which will be spread over 18 months, were within the permissible range and were sufficient to fulfil the twin objects of specific deterrence and general deterrence. They were also appropriate having regard to the financial circumstances of the respondents. Financial information about Netti Atom shows that it made a net profit after tax of $769,960 in the last financial year and that Mr Feltis has an annual salary of $95,000 with estimated net assets of $216,815. The parties agreed that there should be declarations of contraventions and injunctions enjoining further contraventions for a period of three years. There was also agreement that Netti Atom establish a trade practices compliance program for employees and publish an advertisement in a cycling magazine that outlines the respondents' contravening conduct, the size of the penalties imposed and the general nature of the prohibition against resale price maintenance. 14 The orders made reflect the terms of the agreement. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | resale price maintenance enforcement and remedies agreement between parties as to appropriate remedy trade practices |
The appellants are undischarged bankrupts. The respondent is their trustee in bankruptcy. In his first judgment, Phipps FM dismissed an application by the appellants that he disqualify himself from hearing an application to review a decision of a Registrar of the Court below made on 25 May 2009 ("the First Judgment"); see McKinnon v Pattison [2009] FMCA 695. The substantive application before Phipps FM was for an extension of time under s 33(1)(c) of the Bankruptcy Act 1966 (Cth) ("the Act") for the appellants to give a taxing officer notice of their wish to have the costs and remuneration of their trustee in bankruptcy taxed pursuant to reg 8.09 of the Bankruptcy Regulations 1996 (Cth) ("the Regulations"). In the second judgment, his Honour dismissed the application for review and ordered the appellants to pay the costs of that application and the costs before the Registrar ("the Second Judgment"); see McKinnon v Pattison [2009] FMCA 696. They also allege that the proceeding was part-heard before another Federal Magistrate. In addition the appellants submit that his Honour "failed to seek the requested info from the respondent to be returnable 19 June 2009". This matter originally came before Burchardt FM on Monday of this week, that is, 15 June [2009] and he adjourned it for hearing until today. I imagine he would have initially adjourned it to hearing before him, given that it would have then been on his docket. Burchardt FM is unavailable and the matter has been assigned to me. There is no reason why Phipps FM could not hear the matter assigned to him by another Federal Magistrate, providing there is no other valid basis for disqualification. The appellants' main concern with Phipps FM hearing the application was that he had previously heard a case involving them in their bankruptcy matter. The earlier proceeding was heard on 29 March 2004. On that date, his Honour observed that he had two matters before him: an application by the appellants to adjourn the proceeding and an application by the appellants to set aside a bankruptcy notice. Federal Magistrate Phipps refused the application for an adjournment of the proceeding. His Honour then proceeded to hear and dismiss the appellants' application to set aside the bankruptcy notice. None of them involved any issues of credit. All of them argued questions of interpretation about circumstances which were not disputed. His Honour noted at [15] that the facts before him on the application concerning the trustee's costs and remuneration were not in dispute and that the case concerned whether he should exercise an available discretion having regard to those facts. I agree with the views of Phipps FM referred to in the preceding paragraph. Simply because a judicial officer has dealt with a matter concerning a litigant does not mean that she or he is disqualified from hearing any other matter involving that litigant. The case against disqualification is even stronger in circumstances, such as exist in this matter, where no contested issues of fact or credibility fell for determination in the previous proceeding. The appeal grounds concerning his Honour's failure to disqualify himself on the basis of having previously heard a matter concerning the appellants is without merit. In a similar vein, the appellants made an application at the commencement of the appeal hearing seeking that I disqualify myself on the basis that I had previously heard an application by the appellants on 3 November 2005. That earlier application sought a stay of sequestration orders against the appellants' estates and is referred to by Dowsett J in McKinnon v Commonwealth Bank of Australia [2005] FCA 1898. No contested issues of fact or credibility fell for determination in that application. Simply because I dealt with an earlier matter involving the appellants, I did not consider that I was required to disqualify myself from hearing this appeal and ruled accordingly. The transcript of the proceeding in the Court below is not before me. They are both concerned with applications to extend time in different circumstances. North J at [35] described the power to extend time as a broad discretionary power which is unfettered and must be exercised with a view to doing justice between the parties. His reliance on Abeyratne v Trkulja (1998) 90 FCR 253 was unexceptional. Doubtless the appellants were seeking to invoke a broad power in their favour to have justice to them done as they saw it. However there is nothing in the cases relied on by Phipps FM which was adverse to their position. The appellants' grounds of appeal based on this issue are also without merit. The following background matters are contained in the Second Judgment or are discernible from documents referred to in that judgment: Pursuant to reg 8.09 of the Regulations the remuneration of a trustee can be taxed, provided that notice is lodged with a taxing officer in writing within 28 days of the bankrupt or a creditor becoming aware of the amount of the claim. As the claim for remuneration was made on 8 December 2008, the request for taxation should have been made by 5 January 2009. On 2 January 2009, the first appellant wrote to the respondent advising that the appellants intended to have his "costs" taxed. Further, on 4 January 2009, the first appellant sent an email to the respondent which said, "I will be giving notice that we will require your costs to be taxed". Although the appellants gave notice to the trustee that they wished to have his remuneration taxed, they gave no notice to a taxing officer within the required time. The respondent does not appear to have informed the appellants at any time that the notice requesting taxation had to be sent to the Insolvency and Trustee Service Australia ("ITSA"), as the relevant taxing officer, before it could be effective under reg 8.09 of the Regulations. The appellants only seem to have been made aware of the need to send the notice to ITSA after contacting ITSA on 16 March 2009. On 31 March 2009, the appellants were informed of their right to make an application for an extension of time under s 33(1)(c) of the Act. In early April 2009, the appellants applied to the Court below to extend the time for them to give notice to seek to have a taxation of the trustee's remuneration. His Honour went on at [14] to observe that there was no evidence before him that taxation would reduce the trustee's costs. It is unfettered and must be exercised with a view to doing justice between the parties; see Abeyratne at 262 and see also Vince v Sellers [2004] FMCA 564 at [6] . In order to evaluate whether it is just to grant an extension of time it is necessary to consider all the factors which militate for and against an extension in the circumstances of the particular case. Examples of relevant factors which may need to be taken into account include: the reason why the applicant did not perform the required act within the statutory time limit, the prejudice to other parties of allowing an extension of time and the public policy interest in allowing or refusing an application to extend time. In the exercise of his discretion pursuant to s 33(1)(c) his Honour focused solely on the question of whether the grant of an extension of time would be futile as it would not improve the financial circumstances of the appellants. His Honour did not appear to consider any other relevant factors in the exercise of his discretion. In denying an extension of time, on the ground of "futility" alone, his Honour erred in the exercise of his discretion by allowing one matter to guide the exercise of that discretion to the exclusion of other material considerations; see, by way of analogy, House v The King (1936) 55 CLR 499 at 504---5 per Dixon, Evatt and McTiernan JJ. It can be seen by the ensuing discussion at [33]---[42] below that "futility" was not the sole criterion for consideration. The discretion in the Court below having miscarried, it is appropriate that this Court should exercise that discretion afresh; see Draffin v Construction, Forestry, Mining and Energy Union [2009] FCAFC 120 at [5] per Goldberg, Jacobson and Tracey JJ. First, the appellants' failure to lodge their notice for taxation within the required time period does not appear to be due to deliberate delay on their part. The appellants were dissatisfied with the claim for remuneration by the trustee and gave early notice to him that they would seek a taxation of the claim. The appellants attempted to lodge a notice within the requisite time and appear to have made a genuine mistake about whom the notice should have been sent. They did not realise that they needed to apply to ITSA. The fact the appellants have provided a reasonable explanation as to why they failed to comply with the requirements of reg 8.09(1) is a matter which weighs in favour of granting an extension of time. Second, the time lapse between the date by which the appellants should have lodged their notice under reg 8.09(1) and the date by which they applied for an extension of time under s 33(1)(c) was only about three months. The appellants acted promptly once they became aware they had not lodged a notice in conformity with the requirements of reg 8.09(1) and could apply for an extension of time to comply with the terms of that provision. The fact that the delay was relatively brief and was not exacerbated by the appellants' conduct again weighs in favour of granting the extension. The respondent stated before Phipps FM and at the hearing of this appeal that he takes "no issue on the question of delay". The third factor which needs to be considered is that there is a public interest in ensuring that the time limits set out in the Regulations are adhered to. As has been noted the purpose of the time limit in reg 8.09(1) is to ensure that finality and certainty are brought to the quantification of a trustee's remuneration within a relatively short period of time; see Wenkart v Pantzer (No 6) [2003] FCA 1210 at [34] per Lindgren J. This would ordinarily militate against the granting of an extension of time. However, in the present case, the respondent was aware prior to the expiry of the statutory time limit in reg 8.09(1) that the appellants intended to request a taxation of his remuneration. The respondent cannot contend that he was surprised by the appellants' request to be allowed to lodge a notice for taxation after the 28 day period. The respondent has also not argued that he made any arrangements relying on the fact that the appellants failed to lodge a notice in conformity with reg 8.09 which will be disrupted if an extension of time is granted. Consequently, this argument is of little weight in the context of this case. Fourth, the respondent did not argue before Phipps FM that he would suffer any other prejudice if the extension of time is granted. Whether the respondent is correct in his claim for remuneration and his entitlement to his costs of taxation may be a matter for the taxing officer. It is not for this Court to pre-empt any such decision. Any failure by the appellants to pay the respondent's costs to date is not relevant to issue for current determination. The respondent has not shown that he would suffer any prejudice if the extension of time is granted. Indeed that is why he only relied on the futility factor in the Court below. The fifth factor to be taken into account is that the respondent has argued that the grant of the extension of time is futile because, in essence, even if the remuneration claimed by the respondent is taxed it will not improve the financial circumstances of the appellants. The implication is that the sole purpose of reg 8.09(1) is to enable the bankrupt or a creditor to gain some tangible financial benefit. Giving primacy to this approach, to the exclusion of other factors, fails to recognise and respect the wider public interest inherent in reg 8.09(1). A trustee in bankruptcy is under an obligation to exercise reasonable skill in the performance of his or her duties and "[a] trustee in bankruptcy who acts for remuneration is under a duty of care greater than that of a gratuitous trustee"; see Adsett v Berlouis (1992) 37 FCR 201 at 208 per Northrop, Wilcox and Cooper JJ. In this context, "properly" means work reasonably and bona fide undertaken for the purpose of administering the estate or performing any public duty imposed by the Act, conformably with the trustee's duty to perform the work with reasonable care and skill and in an efficient and economical way. There exists a public interest in ensuring that trustee's remuneration is open to objective scrutiny. That public interest remains regardless of whether there would be any prospect of financial return to the appellants after the taxation. A prima facie entitlement to taxation, provided by legislation which promotes the public interest, should not be overridden by factors peculiar to the financial standing of any particular bankrupt, without good reason. While the extension of time may arguably be futile, in the contexts of what remains in the estates, it does not mean that no benefit is gained by granting the extension of time. On the contrary, there is a significant public benefit in allowing the respondent's claim for remuneration to be taxed. This weighs considerably in favour of granting the extension of time under s 33(1)(c) of the Act. The respondent also relies on the creditors' approval of his claim for remuneration. However, the creditor's approval of the claim does not diminish the public interest in ensuring that the trustee's remuneration is limited to work properly undertaken. The Act enables a bankrupt to request taxation regardless of the creditor's approval of the trustee in bankruptcy's remuneration. Similarly, the approval by creditors of a claim for remuneration does not mean that the claim for remuneration will be unchanged after taxation. The process of approval and taxation serve different aims. I have taken all the above factors into account, in forming the view that his Honour's discretion miscarried. In order to do justice between the parties the discretion should be exercised afresh on appeal and the appellants' application for time to be extended under s 33(1)(c) of the Act should be allowed, for the reasons set out at [33]---[42] above. It seems that this is a reference to the financial statement exhibited to the respondent's affidavit sworn on 12 June 2009. That affidavit was filed before Burchardt FM on 15 June 2009. The appellants object to the affidavit and question the accuracy of its exhibit. Given the findings in relation to the exercise of the discretion conferred by s 33(1)(c) of the Act it is unnecessary to examine whether the Court below was mislead by the document. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | appeal from refusal by federal magistrate to disqualify himself where federal magistrate had previously heard proceeding involving appellants no contested issues of facts or credibility in previous proceeding no other grounds for disqualification reasonable observer would not conclude that federal magistrate would not bring an unbiased mind to the application taxation of trustee's remuneration application for taxation out of time appeal from decision of federal magistrate refusing to extend time pursuant to s 33(1)(c) of the bankruptcy act 1966 (cth) federal magistrate erred in solely considering the futility of any extension no deliberate delay on the part of the appellants public interest in enabling scrutiny of trustee's remuneration practice and procedure bankruptcy and insolvency |
He came from a marketing background but wanted to promote the use of natural gas in the transport sector. From the outset Mr Brand was the managing director of the company and provided his services in that capacity under successive agreements made between Energy and his private company, Martech International Pty Ltd (Martech). 2 Energy grew to become a substantial public company with interests in gas and power projects in Australia and overseas, including Indonesia and India. In 1999 however, it experienced financial difficulties. Its share price dropped and its principal financier the Commonwealth Bank of Australia (CBA) advised that it was not prepared to refinance or renegotiate a $115 million facility which it had provided. 3 Energy explored various options including asset sales. In the end a new investor came to its rescue in the form of Energy World International Ltd (EWI), whose principal was Mr Stuart Elliott. As an aspect of the restructuring that followed EWI's involvement, Mr Elliott replaced Mr Brand as managing director and Mr Brand became an executive director of the company. Ultimately, he resigned from the company in November 2001. 4 The parting of the ways between Mr Brand and Energy has given rise to the present litigation. Mr Brand's company, Martech, has made a variety of claims against Energy. One of the claims is for a shortfall of fees following its unilateral, but temporary, reduction in the fees paid under the service contract for the period from 1 March 2000 to 30 September 2000. That shortfall is claimed at $71,663.65. Martech also claims a substantial Termination Payment in excess of $800,000 which it says is due under the contract by reason of the change in Mr Brand's status from managing director to executive director and the change in his duties. Claims for damages for misleading or deceptive conduct are also made. 5 For the reasons that follow, I consider that Martech is entitled to the shortfall in agreed fees for the period 1 March 2000 to 30 September 2000. I do not consider that there is any entitlement to a Termination Payment. Nor do I consider that any of the other causes of action brought by Martech have been made out. 6 Energy and its subsidiary, Australian Energy Equity Ltd (AEE) cross-claim against Martech and Mr Brand arising out of a payment made in respect of a power station development in India. This development is known as the Vypeen Combined Cycle Power Project (the Vypeen Project). It is said that, in 1999, Mr Brand authorised a milestone payment in connection with the development of the Vypeen Project when the contractual condition of a Sale and Purchase Agreement, under which that payment had to be made, had not been satisfied. The relevant condition was that approvals had been obtained from the Indian Government for the importation of condensate fuel for use as an interim fuel in the proposed power station. A clearance given by one Ministry was later contradicted by another. It is alleged that Mr Brand failed in his duty to Energy and AEE by authorising the payment without taking reasonable care or exercising due diligence to ensure that it was due. 7 In my opinion because of Mr Brand's reasonable reliance on the judgment of a senior officer of Energy and the circumstances surrounding the payment, I am satisfied that he did not fail in his duty and the cross-claim against him and Martech in that respect should be dismissed. Fletcher Maurice Brand has been a shareholder of Energy since its incorporation and its Managing Director from that time until 29 September 2000. His services as Managing Director were provided under consecutive agreements entered into between his private company, Martech and Energy. One such an agreement was made on or about 28 May 1999 (the Agreement). It provided that Mr Brand was to act as Energy's managing director for the period 1 July 1999 to 30 June 2003. Martech was to be paid a fee of $500,000 per annum, reviewable on 1 July in each year of its term and to be increased by at least the annual percentage increase in the CPI on each such occasion. Under Energy's Constitution, adopted in 1998, Mr Brand as managing director was not required to retire on a rotational basis as were other directors of Energy. The services of most of Energy's senior staff were provided under consultancy agreements made with companies controlled by those staff members. In 1998 all of these agreements contained provision for termination payments calculated according to the length of service and payable if termination occurred other than by resignation or for cause. 9 In October 1997 Energy negotiated a two year facility with the CBA for a maximum advance of about $115 million. Monies advanced under the facility were to be repaid or rolled over for a ten year period in January 2000. However towards the end of 1999 the CBA advised Energy that it was not prepared to refinance or renegotiate the facility. It wanted the money repaid. At that time Energy's share price had declined. It had reached a peak of about $1.60 in the middle of 1998 and had declined to between 30 and 35 cents in the second half of 1999. The shares continued to decline through 2000. The CBA had refused to commit to a longer term. It would not agree to any extension until after the settlement of the sale of one of the company's projects known as Basin Bridge. This stance created a significant liquidity problem for Energy. The Board of Directors canvassed its options including refinancing, asset sales and reduction of overheads. It also considered seeking an injection of capital from a third party. 11 Present at the Board meeting was Stuart Elliott, the managing director of an unrelated company, EWI. He was a non-executive director of Energy. Also present, by invitation, was Mr Ian Jordan an Executive Director of EWI. He had been appointed to the Board of Energy on 29 November 1999 as an alternate director to Mr Elliott. 12 There was discussion at the meeting about a possible capital injection by EWI, which had previously been under consideration. EWI had commissioned a due diligence report by Poynton Corporation which it had received in draft on 21 January 2000. Mr Elliott said that EWI had confidence in Energy's asset base and that the company had a lot of potential. His group was prepared to put in $10 to $15 million through a funding arrangement and to underwrite a rights issue. However, he wanted to see a change in Energy's management. It suffered from a negative market perception which he estimated was worth at least 10 cents per share. He expected EWI would be a bigger shareholder in the future. It had already invested substantially in Energy and was concerned about management performance, particularly because of the size of write-offs made in September 1999 for the year ended 30 June 1999. Mr Elliott also queried the level of overheads at the corporate office and was told by Mr Brand that staff levels had dropped by 20 over the preceding 12 months. 13 The minutes of the meeting record that the EWI proposal was discussed in the absence of Messrs Ellliott and Jordan. They rejoined the meeting after that discussion and were informed of the status of the CBA facility. Mr Elliott said that EWI could make $5 million available with $10 million as a standby facility. However in return he would need 'some management autonomy'. The Chairman of the Board, Ronald Punch, said it was important that Mr Elliott complete his proposal so that it would be clear to the Board what he was preparing to do and how he saw his future management role. Mr Elliott said that initially he would expect to put in some financial and/or technical personnel. He expected the Board to decide on the role of EWI appointees and the persons to whom they would report. The Board resolved that Mr Punch, Mr Brand, Mr Hayes, the executive director finance, and Mr Elliott meet with the CBA to discuss the debt reduction program. Mr Elliott also asked that his representative from Poynton Corporate attend. 14 Mr Brand said, in evidence, that he told the Board that there had been a large reduction in staff over the previous months and that he had asked Energy's consultants to take temporary reductions in their fees pending the sale of the Basin Bridge project and other assets. They had agreed and the reductions would take effect from 1 March 2000. Mr Brand said he also told the Board that he would reduce his fees temporarily from $500,000 per annum to $300,000 per annum. Mr Bill Hornaday, who was chief operating officer, had agreed to reduce his fee to $200,000. The Chairman Mr Punch, said in effect that the proposed reductions were appreciated. Mr Brand was not cross-examined on that evidence. 15 Mr Brand's evidence was that the arrangements made with Energy's consultants, other than Mr Hornaday, contemplated that their arrears of fees would be paid up when assets were sold. These arrangements covered Messrs Bridgewood, Trigalvcanin and Lindsay. The arrangement he made with Mr Hornaday was similar to his own, namely that the reduction would be temporary and arrears would be paid in options and bonuses. 16 Mr Punch said in his evidence-in-chief that he did not recall Mr Brand making a statement about his fees at the Board meeting. He said it was unlikely that he personally would have thanked him for the reduction in his fees although why that would be so is not apparent. There is no record of Mr Brand's statement in the minutes of the meeting. Mr Punch accepted in cross-examination that he had no memory of what was said at the meeting other than what appeared in its minutes. It may well have been stated, but I have no recollection of it. In cross-examination Mr Elliott agreed that he was aware at the time that Mr Brand and other staff members had consultancy agreements with Energy. Neither he nor Mr Jordan was cross-examined on their evidence that Mr Brand had not informed the Board in their presence of temporary salary reductions. Given the importance accorded, in the statement of claim, to the meeting of 3 February 2000, this is surprising. On the other hand, it was not in dispute that Messrs Elliott and Jordan were absent for part of the meeting while EWI's proposal was discussed. 18 In Martech's statement of claim it is alleged that the board of Energy orally requested Martech (for which read Brand) in or about January 2000 that it forebear from claiming the entirety of the fee to which it was entitled under the Agreement of May 1999. It is then alleged that at the meeting of Energy's Board on 3 February 2000, Mr Brand proposed that Martech would forebear for the time being from claiming the entirety of the fee, would only claim $300,000 per annum, and that Energy would compensate Martech for the loss of part of the fee in a manner which would be agreed between them. It is further contended in the statement of claim, that at that meeting the members of Energy's Board orally represented to Martech that Energy was grateful for Martech's forbearance and that Energy would provide compensation in a manner which it would negotiate and agree with Martech. 19 Reference to the minutes of the Board meeting held on 3 February 2000 indicates that meetings of the Board had been held on 4 and 20 January 2000. Neither of those minutes was in evidence. There was no reference in the minutes of the meeting held on 3 February 2000 to the proposal which it is alleged that Mr Brand made at that meeting. Nor was there any reference to the members of the Board responding to any such proposal. However it is not in dispute that from 1 March 2000 to 29 September 2000 Martech was paid at the reduced rate of $300,000 per annum. 20 In my opinion, Mr Brand probably told the Board of the reduction in his fees and that of other consultants at the February meeting. It was a prudent and politic response to the parlous financial circumstances of the company. His evidence and Mr Punch's letter of 12 March 2000 support that finding. I am satisfied also that he said his fees were being reduced temporarily. That would have been consistent with a hope that the financial difficulties would be resolved. That does not imply, and the evidence does not support a finding, that Mr Brand proposed, or that the Board agreed, that he would be compensated for the shortfall in due course. Had such an agreement been reached at the meeting in February 2000 it would in all probability have been recorded or at least referred to in the minutes. It was not. I do not, in so finding, exclude the possibility that Mr Brand hoped or expected that the reduction in his remuneration could be compensated under some agreement which could be negotiated when the company's financial situation had stabilised. Mr Punch advised that he had signed an exclusivity agreement between Energy and EWI up to 15 March 2000 as EWI was incurring third party costs in preparation of proposals to the CBA. He had forwarded a letter to the CBA with a copy of the EWI proposal for the provision of a sub-debt of $15 million. He had informed the CBA that while some procedural and statutory matters were being addressed, the principle of the proposed funding arrangements offered by EWI had been endorsed by the Energy Board. The Board ratified the letter to the CBA. This may be taken as an acceptance in principle by the Board of the EWI proposal. 22 It also emerged at the meeting of 12 March that, in the course of carrying out due diligence inquiries for EWI, Poynton Partners had reported that cl 3.2 in Mr Brand's Agreement of 28 May 1999 was in breach of cl 10.18 of the ASX Listing Rules. Clause 3.2 provided, in effect, that Martech or Energy could terminate the Agreement in the event that one party or a group of associated parties acquired 25% or more of the issued capital of the company and so altered the composition of the Board that the majority of directors would be nominated or appointed by that controlling party. Mr Elliott had received the Poynton Partners' report and passed it on to Messrs Punch and Brand. The Deed of Variation amended the Agreement with effect from 1 July 1999 by deletion of cl 3.2 and the consequential deletion of a reference to that clause in cl 8.6. The deed was prepared by solicitors then acting for Mr Brand. There was no reference in the deed to any change in remuneration arrangements. We are appreciative of your efforts to assist in the process and I thank you for your support. I understand that you are comfortable with the reductions for Bill and I as working Directors as explained this afternoon. 25 In a letter sent to Mr Elliott on 17 March 2000, Mr Punch wrote about the need for reorganisation and restructuring of the Board and the management of Energy. He said that this was recognised and acknowledged by directors as an integral part of the new way forward to restore confidence and credibility for Energy. He referred to the need for discussions with Mr Bill Hornaday regarding his on-going role. He noted that Mr Hornaday had agreed to take a reduction in his drawings from $300,000 to $200,000 per annum which was put into effect during February 2000 and would continue until 30 June 2001. Maurice has suggested the position of Chief Executive Officer (with or without a Board seat), but has no difficulties with any other appropriate title. He proposed that Mr Brand continue to manage the West Kimberly LNG and Power Project which was at a critical stage in government processes. An amendment to his Contract has been instigated. 27 In his written statement Mr Elliott said that he understood from Mr Punch's letter that Mr Brand had agreed to reduce his salary. Neither Mr Punch nor Mr Brand, while engaged by Energy, ever told him verbally or otherwise that the reduction in salary was not permanent or that there would be any arrears due by reason of the reduction. Mr Brand was not cross-examined on this question. As I have earlier indicated, I am satisfied that Mr Brand did say that the reduction was temporary. I am not satisfied that he made any statement in February or March about claiming back arrears of his fees. 28 On 23 March 2000 Mr Brand sent a memorandum to Mr Mark Lindsay, who was then the company secretary for Energy. The memorandum was headed 'Cash Cost Reductions'. In his witness statement Mr Brand said that the memorandum referred to cash payment reductions which he had agreed with Energy's consultants, including, Mr Hornaday, Mr Bridgwood and Mr Lindsay. The purpose of the memorandum was to provide Mr Lindsay with information for the preparation of weekly and monthly cash flows. 29 Mr Lindsay's evidence was that he provided his services to Energy through his private company, Bracton Pty Ltd (Bracton). Because of Energy's cash flow problems he was asked by Mr Brand in February 2000 to temporarily forbear from charging the full fees which Bracton would otherwise be entitled to under its consultancy agreement. Mr Brand told him in effect that Energy was proposing to undertake a capital raising. When that was completed he expected that sufficient funds would be available to make good the arrears in the consultancy fees. Mr Lindsay agreed to the forbearance on this basis. He recalled the fee reduction being raised by Mr Brand at at least one directors' meeting at which he was present. He was not cross-examined on his statement and I accept its accuracy. 30 On 4 April 2000 Mr Punch again wrote to Mr Elliott raising topics which he thought should be discussed relevant to the content of an Explanatory Memorandum for the shareholders' meeting necessary to approve the proposed restructure. He asked Mr Elliott to let him have his thoughts on changes to the Board, which he would like to have approved by the shareholders. He referred to changes to Energy's management structure which had been generally canvassed in various discussions and would also have to be outlined in the Memorandum. Mr Elliott recalled, in his evidence-in-chief, receiving the letter. He understood at the time that Energy was taking steps to restructure its management and to reduce costs including consultants' fees. 31 Energy submitted in closing that Mr Brand, fully understanding the company's financial difficulties, unilaterally proposed the reduction of his own fee without any qualification or limitation. Martech rendered monthly invoices for its services. Invoices for the period July 1999 to November 2001 were tendered through Mr Jordan. None made any provision for deferment of payment of any amount. All claimed payments at the reduced rates applicable, according to Mr Brand's case, in that period. Mr Jordan, who became an executive director of Energy in September 2000 said that Mr Brand never told him or otherwise indicated to him that he was merely forbearing to claim his full fee entitlement rather than taking a reduction in the fee payable to him. Mr Brand spoke to Mr Punch shortly before 10 July 2000. He told Mr Punch, in effect, that as the sale of Basin Bridge and other assets was not proceeding he would be prepared to waive Martech's outstanding fees (the arrears of payments since March 2000) on the basis of a new structure. He told Mr Punch that he proposed, in general terms, the payment of arrears in the form of options and/or bonuses which would reduce demands on Energy's cash flow. On the other hand it would ensure that Martech continued to receive the agreed return for his services to ensure that he was not disadvantaged. He said in his evidence that the proposal he made was never negotiated and never proceeded any further. He told Mr Punch, in effect, that he was prepared to continue with the reduction in his cash payments until 30 June 2001. Mr Brand's evidence to this effect was neither challenged in cross-examination nor contradicted by other evidence. Rather Energy's position in closing argument was that what Mr Brand did was not by way of temporary forbearance. The reduction in fees, it was submitted, was necessary because of the dire financial situation of Energy which Mr Brand understood intimately. 33 Mr Brand also said that in June or July 2000 he spoke with the consultants who had temporarily waived part of their fees. He asked them to continue to do so. He said that as Energy had entered into a convertible note facility with EWI, which was to be put to shareholders at the AGM due to be held in late September or early October 2000, he expected that arrears would be paid once the funds from the facility were available. He said that he asked the consultants to continue to forego part of their fees until the facility was in place when they would be paid. They agreed to do so. 34 On 10 July 2000 Mr Brand sent to Mr Punch a memorandum on the subject of directors, management structure and contracts. The memorandum contained 'information and suggestions' for discussions between Mr Punch and EWI. Mr Brand contemplated in the memorandum the probability that he would no longer be Managing Director following the EWI injection. ( sic ) As a result, the drawings for 1999/2000 will be $479,000 (1998/99 $500,000) due to no leave being taken. For 2000/2001 it will be $327,500, which includes a carry over of one month as at 30 June 2000. I have previously conveyed to the Board this arrangement to 30 June 2001. No document has been executed by EEC to reflect this position. I was prepared to "waiver" the difference for the period to 30 June 2001 on the basis of a new structure. In a proposed structure which he attached to the memorandum Mr Brand said that because Messrs. Elliott and Jordan would be actively participating in other companies he had adopted for himself a dual role in relation to the company's operation in Australia and what he called 'Corporate' on the basis that he would have a reduced workload in 'the Corporate arena'. He suggested a base package plus cash bonuses such as a success fee for new projects or for achieving operating results ahead of budget. 36 Mr Brand explained that the purpose of the memorandum was to brief Mr Punch who was travelling to Sydney to meet with Mr Elliott to discuss, among other things, the issues raised in the memorandum. Mr Punch agreed that he had a meeting with Mr Elliott in Sydney sometime later in July 2000 and discussed the management structure for Energy. However, he did not recall whether he gave Mr Elliott a copy of the memorandum. Mr Punch was asked whether the matters contained in the memorandum were reflective of matters he had discussed with Mr Brand up until that time. His answers to these questions were not particularly responsive. He did say that he was not a party to discussions between Mr Brand and consultants engaged by Energy. 37 Mr Elliott said in his evidence-in-chief that he did not recall having seen the memorandum of 10 July 2000. He said he might or might not have seen it. He did think, however, that there had been discussion with Mr Punch about the agreement by certain of Energy's consultants to take temporary reductions in their remuneration and that they '... expected to catch up their remuneration' when 'the convertible note to be provided by [EWI] was in place'. 38 Mr Brand sent a memorandum to Messrs. Elliott and Jordan on 27 July 2000 asking to discuss the management structure and reporting arrangements with them. He attached a proposed Organisational Structure diagram. He received no response to that memorandum. In the course of that meeting Mr Elliott told him that he wanted him to cease as Managing Director of Energy for 12 months to negotiate the repayment of the CBA facility. He also told Mr Brand that, in effect, he would be appointed an Executive Director with responsibilities to be determined from time to time. Mr Brand said that he told Mr Elliott that he would cease as managing director on a basis to be agreed. Mr Brand observed that by September 2000, Mr Elliott's company, EWI, controlled Energy in the sense that it could ultimately remove directors by a shareholders' resolution. Mr Elliott therefore controlled the composition of the Board and he had no real alternative but to accept what Mr Elliott said about his future. Mr Elliott, in his evidence-in-chief, flatly denied having had such a conversation with Mr Brand. Mr Jordan denied that Mr Elliott had told Mr Brand, in his presence, that he wanted Mr Brand to cease to be managing director for 12 months. . Based on discussions with Mr Elliott, in Sydney, he has outlined a proposed organisational structure and a paper will be prepared by FM Brand and submitted to Mr Elliott for consideration by 6 October 2000. 41 Mr Elliott was cross examined about this part of the draft agenda. He was asked whether he told Mr Brand in Sydney at the meeting referred to in item 2.3 that he wanted him to cease to be managing director. He initially described the change as part of 'voluntary moves' by the Chairman and Directors of Energy. He had no ambition to become managing director of Energy but the CBA had requested it. He denied, however, that he told Mr Brand that he would act as managing director in order to deal with the CBA. It was Mr Brand and his fellow directors who offered to install him as managing director. 42 Notwithstanding the preceding testimony Mr Elliott eventually agreed in cross-examination that he had told Mr Brand in Sydney that the CBA had asked him to become managing director and that if they were to have any chance of saving the company they would have to accede to the CBA's request. I accept therefore that, as Mr Brand said in his evidence, Mr Elliott effectively required him to relinquish his office as managing director and become an executive director instead. Mr Elliott, in so doing, acted in his own capacity. His conduct was not to be attributed to Energy. His effective power came from EWI's status as a major shareholder. I find, moreover, that Mr Brand did not expressly assert any legal entitlement, on behalf of Martech, under which he could continue in that office. He agreed to what Mr Elliott proposed because the financial circumstances of the company, the attitude of its major creditor and Mr Elliott's control of a major shareholder, left him no practical alternative. 43 Mr Elliott was asked in cross examination whether he was aware, by reference to item 2.3.2 of the agenda, that Mr Brand expected there to be a new consultancy agreement to reflect his change of status from managing director to executive director and the change in his remuneration. Mr Elliott said he would have read the agenda but had no recollection of thinking that Mr Brand required a new consultancy agreement. 44 At the meeting of the Board held on 29 September 2000 discussion about Board appointments took place. Messrs. Elliott and Jordan retired during that discussion. The minutes record that Mr Punch noted that EWI had had the carriage of discussions with the CBA. Mr Brand observed that conditions precedent of proposed convertible notes included changes in management. He had discussed the proposed changes with Mr Elliott and it was a requirement that he step aside on a basis to be agreed. 45 Mr Elliott was appointed Managing Director and Chief Executive Officer of the company at a meeting of the Board held on 29 September 2000. (X 7) Mr Jordan was appointed as an Executive Director. It was also resolved that Mr Brand be appointed as an Executive Director. 46 Mr Punch reported that he had discussed the issue of an incentive scheme options plan with Mr Elliott and that the company should establish such a scheme at its next meeting. 47 Mr Brand said in his evidence-in-chief that up until 29 September 2000 he had, as managing director, full responsibility for all of Energy's operations in Australia and overseas and its administration, financial and accounting functions. Mr Lindsay, as Company Secretary and Financial Controller, reported to him as did Maurice Hayes. Mr Brand also had overall responsibility for Energy's Australian field operations at Barcoadine, Alice Springs, Eromanga and Gilmore. Richard Rutherford had managerial responsibility for the Australian operations and reported to Mr Brand through Mr Brand's fellow director, Bill Hornaday. Mr Hornaday had direct responsibility for the company's Indonesian operations and reported to Mr Brand on those. Energy's Indian operations were under a country manager, Mr Selvendra. He reported to Paul Bridgwood, who in turn reported to Mr Brand. On the same day he sent them a memorandum setting out the proposed organisational structure and cost review. Mark has assisted in this process and analysed the last two-year costs to assist in the evaluation. He proposed that Mr Rutherford report to him under the new organisational structure. He reminded Mr Elliott that following his approval of Mr Hornaday's basic arrangement it was essential that his current contract be amended which would reduce Energy's outstanding liabilities in the event of termination. He noted that the team allocated to the West Kimberley LNG and Power Projects included himself. I would like to participate in the Option Scheme and receive a bonus on Financial Close of the West Kimberley Project. It is important that my contract be amended so that potential liability to EEC is eliminated. 49 Mr Brand said that the terms of his engagement as an executive director of Energy were never expressly agreed between Energy and Martech or himself. From 29 September 2000 he ceased to discharge the duties of managing director and ceased to perform any of the duties set out in the schedule to the agreement of May 1999. Martech rendered monthly invoices for his consultancy fees as an executive director and these were paid ) . Mr Elliott, in his evidence-in-chief, said that there was no discussion of an agreement between Martech and Energy in his presence. 50 Mr Elliott agreed that he had received Mr Brand's memorandum of 7 October but assumed that the matters set out in it would be implemented by Mr Brand. The organisational chart attached to the memorandum was broadly consistent with his understanding of Mr Brand's role following his own appointment as managing director. The chart did not include Mr Jordan who, in effect, acted as Mr Elliott's assistant at all times. 51 Mr Elliott said that he remained based in Hong Kong after 29 September 2000. Mr Brand ran the Perth office and, according to Mr Elliott, 'was responsible for the West Kimberley project as well as the Australian operations of [Energy]'. The West Kimberley project involved a tender for the construction and operation of four power plants at Broome, Derby, Fitzroy Crossing and Halls Creek in the Kimberley region of Western Australia. 52 In cross-examination on the memorandum of 7 October, Mr Elliott seemed curiously reluctant to accept the obvious proposition that it embodied proposals directed to him. Eventually he agreed that it did contain a proposal, inter alia, for a reduction in Mr Brand's fees, participation in an option scheme and a bonus if the West Kimberley project reached a successful financial closure. He also said that he was not aware of whether he did or did not respond to the memorandum. No options were ever allotted to Mr Brand. He did say that he had offered Mr Brand a bonus if the West Kimberley project reached financial closure, but could not recall when. No such offer was put in writing. 53 I am satisfied that Mr Elliott did not respond to Mr Brand's proposals of 7 October 2000 and offered him neither participation in an option scheme nor, in any formal way, a bonus payable in respect of the West Kimberley project. I do not exclude the possibility that a bonus was raised in discussion but am satisfied that it never reached any sort of resolution. In any event, because of the fate of the West Kimberley Project, no bonus would have become payable. 54 Mr Brand sent a further memorandum to Mr Elliott on 31 October 2000 concerning the organisational structure of Energy, a cost review and a budget. He began by noting that he had been unable to discuss his memorandum of 7 October 2000 and attachments with Mr Elliott during the week of 9 October. He advised that nevertheless he had been implementing cash reductions as set out in the memorandum and documents. He'd run the company, he had all the capabilities to run and administer and put these things in place. No one was stopping him from doing that. We look to Mr Brand to take care of the Australian office and the operations here and to see that these things were in place and he was very familiar with all the staff and what had happened. It suggests a degree of detachment from the affairs of the company for which he was managing director. It may be that he was reliant largely upon Mr Jordan in relation to the affairs of Energy. Mr Hayes sued Energy for termination payments and claims for arrears of salary due following voluntary reductions. The company's defence in that case depended, in part, upon the proposition that Mr Brand did not have authority to negotiate with Mr Hayes the conditions upon which he based his claim. Pressed with this inconsistency, Mr Elliott suggested that Mr Brand was free to make arrangements and organise the staff in Perth but would have to put such arrangements to the Board. Whether such proposals were accepted by the other Directors was '... obviously a part of the administration that we had put in place to control costs'. His responses did not resolve the apparent inconsistency between his testimony about his attitude to Mr Brand's authority and the position taken by the company in the litigation with Mr Hayes. 57 Mr Brand said that although he received no response from Mr Elliott to his memorandum of 7 October 2000 some of the changes he recommended seemed to 'evolve'. A number of those changes, which he listed, were a natural consequence of his replacement as managing director by Mr Elliott. Messrs. Lindsay and Hayes reported to Mr Elliott on financial, administrative and accounting matters. Mr Brand's responsibilities, which had previously covered all of Energy's Australian operations and its Indonesian and Indian operations, contracted to direct second tier responsibility for the proposed West Kimberley joint venture project and some smaller Western Australian development projects. In respect of these, he reported to Mr Elliott. 58 From shortly after September 2000 Energy's Australian operations staff, other than those involved with the West Kimberley project, reported to Mr Jordan. The gas venture staff reported to Mr Hornaday, who now reported to Mr Elliott. Energy's 'power and development executives' left the company in February 2001 and were not replaced. Energy had no construction activities although some of its construction staff moved into the West Kimberley project and the power project development team. 59 As Mr Brand saw the position generally he had, prior to September 2000, been responsible for about 80 people including operational staff at the company's gas and power project in India and the company and group's entire operation. By February 2001 his responsibility had shrunk to five staff and all consultants who assisted with the development of the West Kimberley project. By that time he was reporting to Mr Elliott. 60 While this was undoubtedly a matter of regret for Mr Brand it hardly gave him cause for complaint. The reduction in his responsibility was a consequence of his necessary replacement as managing director by Mr Elliott. That in turn was a consequence of Mr Elliott's financial commitment to the company which was necessary for its survival. I accept that his substitution as Chief Executive of the company was also necessary to give it credibility with its principal financier, the CBA. Mr Jordan told him that Mr Elliott wanted Martech and other consultants to further reduce their fees. He agreed at a further meeting with Mr Jordan a day or two later that Martech would reduce its annual fee to $180,000 from 1 January 2001 in order to assist Energy with cashflow. Mr Jordan said in his evidence that he recalled the conversation with Mr Brand but not precisely when it had occurred. Mr Punch, who was in the chair at the meeting, replied that substantial adjustments to Management Remuneration had already been made. Messrs. Elliott, Jordan, Trayling, Brand, Adijanto and Punch were all re-elected as directors. The meeting also resolved to authorise the company to grant Convertible Notes, Shares and Options to Martech up to $100,000. According to Mr Brand, that invoice had not been paid by late February 2001. However, on 30 January 2001 Mr Lindsay had a discussion with Mr Elliott about the payment of consultants generally. He sent a fax to him on the same day following that discussion. In it he asked Mr Elliott to review a list of staff and to provide approval for their fees. The list included Mr Brand and Martech. It set out his commencement date with Energy as 1992 and his current contract as commencing on 1 January 1999 and expiring on 30 June 2003. 65 On 9 February 2001 Mr Brand wrote to Mr Elliott setting out a summary of staff consulting arrangements. In respect of each of Mark Lindsay, Maurice Hayes and Bill Hornaday he reported their agreement to reductions in their fees 'pending discussions on future arrangements'. In respect of operations staff, Richard Rutherford and Gelber Taco, he reported the extension of their base salaries '... pending discussion on future arrangements'. He had said that to Mr Brand but did not recall exactly when. His view was that permanent cuts would form part of the 'go forward plan'. The evidence does not, in my opinion, establish that any statement was made by Mr Brand on his own behalf or that of other consultants reserving their rights to claim catch-up payments at some later time. Nor does it support any implication to that effect which, objectively speaking, should have been appreciated by Mr Elliott. 66 Mr Brand said in evidence-in-chief that on or about 23 February 2001 he had a meeting with Mr Elliott. He thought Mr Jordan was also present. Mr Elliott wanted the consultants to become employees of the company. He also said that the company should not be paying GST on invoices rendered by consultants. Mr Brand replied that Energy had sufficient input credits to be able to claim back GST paid in any event. Mr Elliott, however, maintained his position that GST would not be paid. While Mr Brand said he was prepared to become an employee of Energy he wanted existing arrangements to continue until the Agreement expired on 30 June 2003. He said that he would consider the basis upon which he might be prepared to become an employee of Energy and would provide Mr Elliott with details. Mr Elliott recalled saying, at around that time, that he did not believe Energy was obliged to pay GST in addition to the remuneration specified in the various consultancy agreements. He denied that Mr Brand said that he was prepared to become an employee of Energy but wanted existing arrangements to continue until 30 June 2003. I accept Mr Brand's account of this conversation as it was consistent with the terms of the letter that followed on 23 February 2001. This does not involve any finding about the legal status of Martech's Agreement at this time. Responsible to the Managing Director/Chief Executive Officer. Executive Director responsibilities as nominated by the Managing Director. That the existing Consultancy Agreement be amended to an annual fee of $180,000 inclusive of GST effective 1 January 2001 to its termination date of 30 June 2003, at which time any future employment would be on an employment basis as governed by the Energy Equity Corporation Ltd policy for employees. If acceptable, the existing January 2001 invoice will be cancelled and reissued on this basis. That the termination provision with the existing Consulting Agreement be cancelled and that the date of service for termination be effective 1 January 2001 on the basis of one month for each year or part thereof to 30 June 2003. Thereafter, the provisions of the employee company policy apply with the effective date of 1 January 2001. (sic)Subject to shareholder approval, that I can participate in the Company's Option Scheme. In the meantime payment was made '"without prejudice", on account'. 69 Mr Brand denied that he had, at any time in 2001, offered to terminate the Agreement between Energy and Martech. After 5 March 2001 Energy continued to pay the consultancy fee monthly and Martech continued to invoice it. He did not receive a reply to his letter of 23 February 2001 either orally or in writing. That aspect of his evidence was not disputed. Neither Mr Elliott nor Mr Jordan referred in their evidence-in-chief to the letter of 5 March 2001. In cross-examination Mr Elliott could not remember whether he did or did not respond to the letter of 23 February 2001. 70 Mr Brand said that throughout 2001 he felt increasingly excluded from the decision-making processes at Energy. The Board did not pay a significant role in its management. No budget was presented for 2000-2001. There were no monthly management accounts and reports presented after December 2000. He said executive decisions were made by Mr Elliott and implemented by Mr Jordan. He himself was based in Perth and most executive decisions were made in Sydney without his involvement or the involvement of the Energy Board. Decisions in relation to strategic directions and funding plans were made largely without any consultation with him. This view of the company's operations in 2001 was denied by Mr Elliott who said in his evidence-in-chief that no important decisions were taken or implemented without Board approval. In cross-examination Mr Elliott initially said that after September 2000 Mr Jordan was responsible for 'part of the management' in Perth with Mr Brand. He denied that Mr Jordan had day-to-day control. Pressed with evidence he had given in other proceedings involving Mr Hayes, Mr Elliott agreed that he had designated Mr Jordan to take day-to-day control in Perth. He accepted the proposition that Mr Brand did not run the Perth office and then said that Mr Brand and Mr Jordan had worked out between them what parts they were each running. 71 In my opinion the reality throughout 2001 was that real authority in the Perth office had shifted from Mr Brand to Mr Jordan. Mr Jordan had, in effect, a direct line to the new Managing Director. The marginalising of Mr Brand is corroborated by Mr Elliott's failure to respond to his memoranda. I accept Mr Brand's evidence about his effective exclusion from decision-making processes in Energy in 2001. As managing director, Mr Elliott would not be required to submit himself for re-election. However under cl 53 of the company's Constitution, two of the other six directors would be up for re-election in that year, 2001, two in 2002 and two in 2003. It was therefore necessary for the directors to decide who would rotate. In order to expedite the process he had asked the company's auditors, Ernst & Young, to draw lots for the names of the directors to determine who would come up for re-election in the three successive years. This meant that he and Brian Littlechild would retire and, being eligible for re-election, would be nominated for election and included in the notice for the annual general meeting. The proposal was agreed to by the Directors. The Directors considered a draft notice for the annual general meeting to be held on 30 November 2001. They also discussed the collapse of the West Kimberley project for which Mr Brand had the oversight and management. As recorded in the minutes, the Board was informed, presumably by Mr Brand, that Western Power Corporation had terminated the project and reserved its rights. Costs to be written off as at 30 June 2001 were $2,086,355. Resolutions were passed by the Board for steps to be taken to protect any rights that Energy might have against other parties in respect of the project. There was no record in the minutes of any discussion of Mr Brand's ongoing role in Energy. 74 Mr Brand gave evidence of a meeting held later the same day between himself, Mr Elliott and Mr Jordan. He made notes of the meeting after it had concluded. He said the meeting was called to discuss the scaling down of Energy's Perth office and a transfer of a number of functions performed at it to the Sydney office. He said that in the course of the meeting Mr Elliott told him, in effect, that he should think about his future with Energy overnight and that they should meet the next day to discuss it. Mr Brand believed then that Mr Elliott did not want him to continue as a director of Energy. At that time, as a result of the balloting process which he had suggested, his term as an executive director was due to expire at the annual general meeting on 30 November 2001. He had offered himself for re-election. 75 Mr Elliott's evidence was that Mr Brand appeared 'visibly upset at the Board meeting that day'. As to the subsequent meeting on the same day, he remembered a discussion with Mr Brand and Mr Jordan about organisational and administrative changes which Energy should make in light of the collapse of the West Kimberley project. He recalled Mr Brand saying something to the effect that the Perth office should be closed and moved to Sydney and that various staff members should be terminated. He denied that he told him to think about his future overnight. Mr Brand recorded that suggestion in his notes of the meeting. In my opinion, it was, in the circumstances, inherently probable that Mr Elliott would make such a suggestion. 76 Mr Jordan recalled that at about the time of the Board meeting of 22 October 2001 he and Mr Elliott met with Mr Brand to discuss moving the centre of Energy's operations to Sydney. He had not, at that time, had any discussion with Mr Elliott about Mr Brand's position with the company. 77 A further meeting was held on 23 October 2001. Mr Brand said they had some further discussions about the Perth office and agreed to meet on the following day to discuss the question of his directorship. 78 According to Mr Brand's account of their meeting on 24 October 2001, he told Messrs Elliott and Jordan that it was clear to him from their discussions over the previous two days and from the way in which Energy was now being managed, that Mr Elliott wanted a fresh start. He had not been included in various strategic management meetings and he believed that it was in the best interests of everyone for there to be an amicable parting of the ways. He said that he would withdraw his nomination for re-election as a director rather than put it to shareholders. According to Mr Brand, Mr Elliott said that he did not think that Mr Brand could continue as a director of Energy. Mr Brand replied that it would be pointless for him to continue with his nomination if EWI did not support it. Mr Elliott said that that was a matter for the directors of EWI and its shareholders, however he controlled EWI. 79 Mr Brand said that he then told Mr Elliott that he had been a director of Energy for 16 years since its formation and had been assured the year before and more recently of a continuing role with it. He said he had not been seeking alternative employment and that he had fully supported the management restructure since September 2000. While he was prepared to withdraw his nomination, a reasonable basis for him so doing would have to be agreed. 80 He claimed that Mr Elliott then raised a number of issues which were in the nature of complaints about his performance as managing director and as an executive director. These related to the CBA facility, legal action commenced against Energy by consultants for unpaid consultancy fees and the failure of the West Kimberley project. He responded to those issues and then said he wanted to conclude a number of reports he had to hand and would be able to do so by 30 November 2001. He wanted to see some payment, perhaps by way of an issue of shares and cash, to give him some time to find alternative employment. 81 Mr Brand said that Mr Elliott required a letter withdrawing his nomination by noon that day or else it would have to proceed to the annual general meeting. He wanted the letter to be independent of any negotiation of a severance arrangement. Mr Elliott said he was prepared to negotiate a severance agreement in good faith provided that Mr Brand assisted in the defence of legal proceedings brought by previous consultants of Energy for arrears of consultancy fees and for termination payments. Mr Brand said he would give an accurate account of events and would assist where possible. He prepared notes of that meeting, as he had of the other two. 82 Mr Brand's evidence was that he knew that if he did not have EWI's support his nomination as a director of Energy would not succeed. He did not want to be humiliated in front of the shareholders. He had known many of them for many years. He therefore decided to accede to Mr Elliott's request and withdraw his nomination. This he did by a letter dated 24 October 2001. 83 In his evidence-in-chief Mr Elliott denied that he had agreed, on 23 October 2001, to meet with Mr Brand on 24 October 2001 to discuss his directorship. He denied without qualification Mr Brand's account of their conversation about the need for him to cease to be a director of EWI. He denied Mr Brand's evidence that he was required to provide a letter withdrawing his nomination as a director by noon that day. As to Mr Brand's statement that Mr Elliott raised complaints about his performance, this too was denied. According to Mr Elliott he had no further personal contact with Mr Brand after 22 or 23 October 2001. Mr Jordan, like Mr Elliott, denied that Mr Elliott had ever made, in his presence, the statements attributed to him by Mr Brand about not continuing as a director. 84 When cross-examined, Mr Brand agreed with the proposition that he had thought about his position prior to the meeting of 24 October 2001 and had come to the view that it was in everybody's best interests for there to be an amicable parting of the ways. He agreed to withdraw his nomination. He agreed it was his decision although he also said it was made only after he was advised that EWI would not vote for his re-election. While he contended that his experience within the LNG industry would have been beneficial to the company and said he mentioned that on 22 October, he did not offer any particular contribution. He agreed that there was no other project that he was able to offer at that stage to replace the West Kimberley project. He accepted that primarily as a result of the collapse of that project there was not a lot for him to do. 85 Mr Brand was pressed in cross-examination about his real reason for withdrawing his nomination. His position was that he had lost the support of EWI, as indicated by Mr Elliott. It was put to him, however, that his real reason for withdrawing his nomination was his wish to avoid being humiliated in front of shareholders whom he knew. He had formed the company in 1985 and by October 2001 the shares had fallen to 6 cents each from a peak of $1.60. He also agreed that he had suggested in the course of discussions that the Perth office should be closed. He did not accept that that would mean the end of his role. 86 I found Mr Brand's evidence on this question less than convincing in the light of his own account of the discussions that he had at the meetings of 22, 23 and 24 October 2001. The evidence does not support the inference that Mr Elliott unequivocally withdrew his support for Mr Brand, or that Mr Brand's decision was based upon his perception of Mr Elliott's want of support. In my opinion, the evidence rather indicates that Mr Brand reached the conclusion in his own mind and in discussions with Mr Elliott, that his position as a director of the company was no longer tenable. I make that finding on the basis that there was a discussion at the meeting of 24 October 2001 along the general lines indicated by Mr Brand. It is also consistent with his state of mind at the time that, as I have found to be the fact, he had been effectively marginalised in relation to Energy's operations after September 2000. I reject the evidence of Messrs Elliott and Jordan in so far as they deny that any such discussion took place. It seems to me to have been inherently probable that at that time, the very day that notices for the annual general meeting were to be issued, it was appropriate and practical to undertake a discussion of Mr Brand's future with the company. The operator was Mosbacher India LLC (Mosbacher). The other party to the JOA was Hindustan Oil Exploration Company Ltd (Hindustan). The JOA was originally made in October 1996 between Mosbacher, Hindustan and Petrodyne Inc. I infer that EEIP bought into the JOA at some earlier date which is not material for present purposes. As at 30 June 2001 the carrying value of the EEIP interest in the PY-1 gas field was shown in Energy's balance sheet as $13.4 million. At that time Energy's net assets were about $125 million. 88 It appears that by March 2001 EEIP had failed to meet cash contribution obligations under the JOA. An arrears notice was issued by Mosbacher. Mr Elliott spoke by telephone to one of its principals, Mr Rob Mosbacher, early in March and they agreed that EEIP could make up its shortfall of some $150,000 in instalments. Mr Elliott had a meeting with Mr Mosbacher and Walter Glasgow, the other principal of Mosbacher, on 31 March 2001. It appears however that Energy's difficulties were only temporarily abated. 89 On 22 August 2001 Mosbacher gave notice that under Article 8.1 of the JOA that EEIP was in arrears because of its failure to pay cash calls. The amount of the arrears was $US47,095.10. The notice, which was sent to Messrs Elliott and Jordan, stated that EEIP had remedies under the terms of the JOA in order to avoid default. These involved either demonstrating to the satisfaction of Mosbacher and Hindustan that the failure to pay was due to government hindrance or to pay the amounts due, with accrued interest, within 15 days of receipt of the notice. A default notice was issued by Mosbacher on 13 September 2001. 90 On 28 September 2001 Mosbacher sent a Withdrawal Notice to Elliott and Jordan citing EEIP's default by way of its failure to pay arrears due. The effective date of withdrawal shall be October 1, 2001 as the first business day following receipt of this notice. He sent a fax to Mr Glasgow on 2 October 2001 and followed up with a phone call. The response he received was not encouraging. Mr Glasgow sent him an email on 3 October 2001 pointing out that Energy had been in arrears three times in the previous two years. Although Energy had been allowed time to pay it was again in arrears in August. He referred to Energy's failure to respond to Mosbacher's previous notices and said had there been some response there might have been some grounds upon which they could have worked the matter out. 92 Mr Elliott responded directly to Mr Glasgow's communication by an email dated 4 October 2001. He pointed out that the earlier notices had not been brought to the attention of Mr Jordan or himself. He referred to the restructuring of Energy and the relocation of its registered office to Sydney. In a reply dated 4 October 2001 Mr Glasgow pointed out that the notices were both faxed and delivered via FedEx or registered mail to Mr Elliott at Energy's 'address of record'. Mr Elliott had a further telephone conversation with Mr Glasgow on 12 October 2001 and followed up with a letter of that date offering to meet with Mr Mosbacher in November 2001. He referred to a current investigation 'through legal channels' of 'the delicate matter discussed with regard to our former consultants'. He sought confirmation that upon receipt of the arrears Mosbacher would withdraw the default and withdrawal notices. Mosbacher replied on 15 October 2001 saying that payment of the arrears would not result in withdrawal of the notices. 93 Despite these unpromising responses Mr Elliott said in his evidence-in-chief that because he had resolved issues in the past with Mosbacher he was optimistic that he could resolve things at a face to face meeting proposed for 5 December 2001 in the United States. 94 Mr Brand did not become aware of the Withdrawal Notice until about 8 October 2001. The effect of the Notice, as he understood it, was to require EEIP to transfer its 35% interest in the PY-1 gas field to Mosbacher for no consideration. On 15 October 2001 he sent a fax to Messrs. Elliott and Jordan and to Mr Brian Allen in which he said that it was arguable that the ASX should be notified. He also stated that the CBA should be notified and the Withdrawal Notice would have to be mentioned in the Prospectus/Information Memorandum/Independent Expert's Report in relation to the forth coming Share Offer. He was concerned that Messrs. Elliott and Allen had signed a Representation Letter to Ernst & Young on 5 October 2001 and that Mr Elliott had signed financial statements as at 5 October 2001 with no reference to the Withdrawal Notice. 95 At the meeting of the Board of Directors held on 22 October 2001 the directors were advised of the Withdrawal Notice. Reference to the Withdrawal Notice would need to be incorporated into the Information Memorandum and Prospectus. The auditors had signed off on them on 8 October 2001. The Board, he said, was not advised of the Withdrawal Notice prior to the accounts being signed off. 96 At this time Energy was finalising an Explanatory Memorandum to go to shareholders for the annual general meeting to be held on 30 November 2001. The memorandum related, amongst other things, to a proposed rights issue to raise $11.331 million on the basis of the issue of one new share for every four existing shares at a price of $0.0665 per share. 97 Mr Brand was Chairman of the Due Diligence Committee which was responsible for overseeing the preparation of the disclosure documents relating to the Share Offer. When he sent his fax of 15 October 2001 he expected that the dispute with Mosbacher would be resolved as only a small amount of money had to be paid and there had been a good relationship between Energy and Mosbacher previously. 98 On 26 October 2001 the Directors passed a Circular Resolution authorising the distribution of a Notice of the Annual General Meeting together with an Explanatory Memorandum and Independent Expert's Report to shareholders together with the Annual Report. The Board also resolved that Energy announce its proposed non-renounceable share offer to raise $11.331 million on the basis of a 1 for 4 issue at an issue price of 6.65 cents per share. The offer was to close on 7 December 2001. Mr Punch was authorised to sign the Prospectus to be dated 29 October 2001. 99 On 29 October 2001 the Due Diligence Committee comprising Messrs. Jordan, Allen, Brand and Ms Ling signed its final report to the effect that it had prepared the prospectus dated 29 October 2001 and considered that it contained no material omission or error or misrepresentation known to the members of the Committee at that date. Mr Brand said that at this time he was still expecting the situation with Mosbacher would be resolved. 100 The Notice of Annual General Meeting was accompanied by an Explanatory Memorandum and Independent Expert's Report. He had seen it before it appeared in the printed version of the Explanatory Memorandum. 102 A similar statement appeared at p 15 of the Prospectus for the share offer. 103 On 9 November 2001 Mr Brand sent a memo to other members of the Due Diligence Committee. In that memorandum he expressed his concern that the disclosure relating to PY-1 in the Prospectus was inadequate and that the Committee should consider the matter. He asked the other members to advise him urgently of the position from their perspective. It is a key asset (and in my opinion, second to Sengkang in terms of future Shareholder value). Careful consideration should therefore be given within that context in terms of the adequacy of our disclosure. Mr Punch had advised Mr Jordan and himself that he wanted the Board to agree to the document and that everything was in order prior to the dispatch on 12 November. He asked the other members of the committee to discuss the matter with him first thing Monday morning. 104 Mr Jordan sent a memorandum to the directors of Energy enclosing a copy of the final report of the Due Diligence Committee. He reported that the CBA had been advised of the default issue in relation to PY-1. He indicated that should the position with PY-1 not be satisfactorily resolved, further disclosure during the prospectus period might be required. He asked all directors to sign an attached Circular Resolution. The resolution was that the Directors had received and accepted the report of the Due Diligence Committee and that they approved the mailing of the Prospectus to shareholders. 105 Mr Brand said in his evidence-in-chief that he was still concerned about the PY-1 disclosure. However Mr Jordan told him that Mr Elliott was meeting with Mosbacher and would sort out the issue of the Withdrawal Notice. Mr Brand said he also believed that if it were not resolved adequate disclosure could be made. The Circular Resolution was executed. The Prospectus was then distributed. 106 It appears that on or about 9 November 2001 Mr Jordan had sent a fax to Mosbacher about the capital raising. Mosbacher responded on 12 November 2001 over the signature of Mr Glasgow, stating that they had not been aware of the fund raising process. It did not however excuse non-performance under the JOA. The history of default was repeated in the letter. The letter concluded by observing that if Mr Elliott were to be in the US within the next six weeks Mosbacher would be pleased to meet with him to discuss matters, referred to in the letter, which appear to have had no bearing on PY-1. 107 Mr Elliott sent a reply fax on 13 November 2001 to Mr Glasgow. He confirmed that he was planning a visit to the US. He said he would appreciate Mr Glasgow alerting Mr Mosbacher to his travel plans and confirming that a meeting could be organised with him during the week of 3 December 2001. Mr Elliott said he wanted to discuss in detail Energy's ongoing involvement in the PY-1 JOA, inter alia. He set out the history of the PY-1 arrears default and withdrawal notices and the issue of the Explanatory Memorandum and Prospectus. Neither the EEC Board nor the Auditors were advised, yet the Directors who knew signed Representation Letters to the Auditors. The Board of EEC were advised of the issue at the Board Meeting on 22 October 2001. As an Executive Director I became aware on 10 October 2001. He expressed his belief that the implications of the withdrawal notice could raise further market speculation with respect to Energy. He sought legal advice as to the adequacy of the disclosure. He said that depending on that advice and if other directors did not wish to make further disclosure his options were to withdraw his consent to the Prospectus and/or resign as a director and/or continue with his plan to step down on 30 November 2001. 109 On 16 November 2001 Mr Glasgow sent an email to Mr Elliott and stated that he and Mr Mosbacher would be available during the week of 3 December 2001 to discuss matters other than PY-1. However, Mr Wong told him that the Act imposed strict obligations of disclosure on directors of matters material to share issues. Mr Brand said in his evidence-in-chief that he was more concerned about the adequacy of the Prospectus disclosure in relation to the Withdrawal Notice than the impact of the disclosure of the withdrawal notice on the share price on the ASX. He did not believe that the information would have a major impact on the traded price. 111 After he had spoken to Mr Wong, a long time shareholder, Mr Smyth, telephoned him and said that he was considering taking out his entitlement under the rights issue. According to Mr Brand, Mr Smyth told him that one of the reasons for doing so was the upside to the company represented by PY-1. Mr Brand considered he could not discuss the Withdrawal Notice with Mr Smyth. However the conversation indicated to him that the future of the PY-1 gas field was a matter affecting shareholder perception of the value of Energy shares. This amplified his concerns about the adequacy of the company's disclosure. He was due to cease being a director at the end of the month and was worried that once he was gone the Board would not make any further disclosures. He decided to resign over the issue. He was concerned to limit any personal liability he might have as much as possible. 113 In a letter dated 19 November 2001 to Mr Punch Mr Brand tendered his resignation, effective that day, as a director of Energy and associated companies. He also tendered his resignation as company secretary of Energy and associated companies. He attached another letter setting out the reasons for his resignation. The letter setting out the reasons for his resignation referred to the company's ASX Continuous Disclosure obligations and also the obligations of directors under s 730 of the Act. He referred, among other things, to the absence of any budget papers for 2001 and 2002. He noted that a complete proposal had not been presented to directors in June 2001 in relation to the refinancing of the Central Energy Power assets in Alice Springs. On 20 November 2001 he went to the office. Mr Jordan then told him that Mr Elliott had advised him that his services were no longer required and that he should leave Energy's offices immediately. 115 In cross-examination of Mr Brand it was put to him that he had signed the final report of the Due Diligence Committee on 29 October 2001. That Committee had approved the prospectus. Yet 12 days later he was expressing his concerns that disclosure had been inadequate. Mr Brand said that they were continuing concerns. He agreed that there was no such concern expressed in the minutes of the Due Diligence Committee. He said there was some discussion about PY-1 at the meeting. In response to his memorandum to other members of the Due Diligence Committee there was a discussion on Monday 12 November 2001. That was evidently a telephone discussion. He did not recall that any minute was prepared. The Due Diligence Committee did not come to any different view. 116 It was put to Mr Brand that after he had withdrawn his nomination as a director in October he couldn't wait to leave Energy. He denied this. It was put to him that he wanted to find any hook he could possibly find to justify going earlier. He denied this also. It was put to him that in his statement of reasons for resignation he said that Energy's directors should urgently request a written statement on the PY-1 position and determine whether the prospectus should be updated. He accepted that he had not asked that this be done in order to satisfy his concerns. He didn't know whether any of that had happened. 117 In my opinion, while non-disclosure of the Withdrawal Notice may have been one of the stated justifications for Mr Brand's decision to resign, it was not the cause of that decision. I find that, having decided not to seek re-election as a director, he saw little or no point in staying on. The non-disclosure issue was a matter he relied upon, in part, to justify his decision. He himself was quite ambivalent about the question of disclosure as revealed by his own inconsistent approach to it. He said he believed that there was an avenue to reach agreement when Mr Elliott met with Mosbacher in the US in December 2001. He also advised Mr Elliott that the JOA was governed by the laws of India, with dispute resolution being either by a single expert or a board of arbitrators. Arbitration would take place in London under Uncitral Rules. 119 Mr Jordan met with Clayton Utz, the solicitors who had assisted Energy with the Prospectus on 21 November 2001. He provided them with relevant documents in relation to the PY-1 gas field including the recent correspondence with Mosbacher and requested their advice in relation to the issues raised by Mr Brand in his letter of resignation. He received advice from Clayton Utz on 22 November 2001. That advice suggested that the Board's decision on disclosure might largely turn on its perception of Mosbacher's true intentions and whether that perception was reasonable. 120 On the same day Mr Jordan discussed Mr Brand's letter of resignation and the advice from Clayton Utz with Mr Punch. Mr Punch directed him to obtain advice from Corrs about any need to alter the Prospectus. Corrs had traditionally been Energy's lawyers. Mr Jordan also had discussions with Messrs. Elliott and Allen in relation to PY-1 and prepared and circulated an agenda for a Board meeting on 30 November 2001. 121 The advice from Corrs provided to Energy on 28 November 2001, described the situation as 'borderline'. They recommended that Energy seriously consider making a further ASX announcement as soon as practicable confirming that a meeting was scheduled for the following week in an attempt to resolve the situation as well as providing further details of the reasons for the Withdrawal Notice. 122 At the Board meeting held on 30 November 2001 directors were advised that a meeting had been arranged between Mr Elliott and Mr Mosbacher for 6 December 2001 in Houston. A draft Gas Sales Agreement had been prepared in 1999 and not finalised. Directors were told of the advice received from Clayton Utz and Corrs. Disclosure of the Withdrawal Notice issued by Mosbacher had been made in the Explanatory Memorandum and in the Prospectus. The minutes recorded the view that nothing further of material interest had occurred to require further disclosure. 123 In relation to Martech the minutes recorded that directors were advised by Mr Elliott that he had had discussions with Mr Brand and had agreed to have further discussions following the annual general meeting. It was agreed that the matter be left for the managing director to deal with. In January 2002 Energy received legal documents from Mosbacher which, if executed, would have effected EEIP's withdrawal from the PY-1 project. On 24 January 2002 Mosbacher issued a Notice of Arbitration under the Heads of Agreement. The dispute went to arbitration and on 27 March 2003 the London Court of International Arbitration delivered a Partial Award in respect of the Heads of Agreement in which it was held that Article 8.8 was a penalty within the meaning of s 74 of the Indian Contract Act. On 9 December 2003 the London Court of Arbitration delivered its second and final Partial Award. Energy was awarded the sum of $3.1 million by way of compensation for the assessed value of its interest in the PY-1 project. He said in the letter that he was disappointed that Mr Jordan had not responded to an earlier letter he sent on 26 November 2001 and that he had not made contact with him after the Board meeting. The tax invoice enclosed was for the amount of $483,026 said to represent the balance of fees payable to 31 October 2001 and an amount payable to 20 November 2001. Also enclosed, in the name of Martech, was a tax invoice for $990,000 representing the termination fee said to be payable pursuant to cl 8.6 of the Service Agreement. 126 The invoice for amounts totalling $483,026 set out what was described as 'balance of fees' for the years 1999/2000, 2000/2001 and 1 July 2001 to 31 October 2001. The balance in each case appears to have been calculated on the assumption of a total entitlement of $500,000 per annum for each period. For the first two full year periods the amount in each case was $500,000 less fees paid. For the period 1 July 2001 to 31 October 2001 the total fees said to have been payable for the period were $166,666 against fees actually paid of $54,545. Fees payable for the period 1 November 2001 to 20 November 2001 were said to be $27,777. GST was claimed in each case, apart from the fees for the year 1999/2000 when GST did not apply. 127 Mr Jordan responded to Mr Brand on 17 December 2001 expressing his disappointment at Mr Brand's action as he understood he had agreed to discuss matters with a view to reaching a mutually agreed solution. These amounts totalled $1,498,983.53. In his covering letter he referred to earlier correspondence and discussions he had had with Mr Jordan on 14, 25 and 28 February 2002. Energy (then known as Energy Equity Corporation Ltd) was referred to as the 'Company' in the Agreement. Martech was referred to as the 'Manager'. 130 The Agreement recited that Energy carried on the business of providing alternative energy packages utilising gas as the energy source and establishing energy activities. It also recited that in order to assist in the administration, management and financial control of the business of the company and the marketing of its products and services, Energy had requested Martech to provide the Specified Services which Martech was agreeable to do for the consideration and upon and subject to the covenants and conditions set out in the Agreement. 131 Clause 1 defined the term 'Specified Services' to be provided by Martech to Energy by reference to a definition in Item 1 in the Schedule to the Agreement. 133 In cl 2.1 of the Agreement Energy engaged Martech to provide the Specified Services for the Term and upon the terms and conditions contained in the Agreement. Martech covenanted to carry out the Specified Services to the best of its skill and ability and would act under and in accordance with such lawful directions of Energy as should be given by Energy from time to time to Martech. Under cl 2.5 Martech covenanted with Energy that it would provide 'the full time services of Fletcher Maurice Brand to perform the Specified Services hereunder at all times during the term of this Agreement...'. Clause 4 provided for the payment of the Fee at the time and in the manner specified in Item 3 of the Schedule. If this Agreement is terminated by either party under the terms of this clause the Manager shall be paid out the balance of the Term of this Agreement from the date of termination together with any other accrued entitlements or paid for a minimum period of two years which ever is the greater. 135 Clause 8 of the Agreement provided for its termination. None of the other provisions of the Agreement are material for present purposes. Mr Brand founded Energy in 1985 and acted as its Managing Director under a series of contracts from 1985 to 2000. 2. On 28 May 1999 Martech, a company controlled by Mr Brand, agreed with Energy to provide his services as Managing Director of Energy for a term of four years from 1 July 1999 to 30 June 2003. 3. Under the agreement Martech was to be paid an annual fee of $500,000 for Mr Brand's services. 4. In late 1999 and early 2000 Energy was in financial difficulty. Its share price had declined significantly and its principal financier, the CBA, declined to extend the $115 million facility beyond 20 February 2000. 5. At a meeting of the Board of Energy held on 3 February 2000 proposed funding and underwriting of a rights issue by EWI was considered. Stewart Elliott was the Managing Director of EWI and was assisted generally by Mr Ian Jordan. 6. At the meeting of 3 February 2000 Mr Brand, on behalf of Martech, told the Board that he would reduce the fee for his services temporarily from $500,000 per annum to $300,000 per annum. 7. Mr Brand did not say at the Board meeting, nor was any agreement then made, that he would be compensated for the shortfall at a later time. 8. On 12 March 2000 the Board of Energy accepted EWI's proposal in principle. Under that proposal EWI was to make a $15 million advance to Energy by way of subordinated debt. 9. The agreement between Energy and Martech of 28 May 1999 was varied on 13 March 2000 by deleting cl 3.2 in order that the agreement would not be in breach of the Listing Rules of the ASX. 10. On 16 March 2000 Mr Brand wrote to Mr Elliott confirming the reduction in his remuneration without reference to any later catch-up compensation. 11. Martech thereafter issued monthly invoices for its fees at the reduced rate with no reference to any outstanding balance deferred. 12. Mr Brand told the Chairman of the Board, Ronald Punch, in July 2000 that he was prepared to continue with the reduced fees until 30 June 2001. 13. Mr Brand made arrangements with other Energy consultants under which they were paid at rates reduced below their consultancy agreements on the basis that their shortfalls would be paid when the EWI facility became available. 14. In mid-September 2000, at a meeting between Mr Elliott and Mr Brand, Mr Elliott said he wanted Mr Brand to relinquish his position as Managing Director of the company and become an Executive Director instead. 15. Mr Brand agreed to Mr Elliott's request. He did not assert any legal entitlement under the agreement of May 1999. He agreed to the request because the attitude of the CBA and the financial circumstances of the company left no alternative. 16. On 29 September 2000, with Mr Brand's agreement, the Board of Energy appointed Mr Elliott managing director in his place and he was appointed executive director. 17. The terms of Mr Brand's engagement as an executive director were never expressly agreed between Energy and Martech and/or Mr Brand. 18. Mr Brand proposed to Mr Elliott on 7 October 2000 that his fees be further reduced, that he participate in an option scheme and that he receive a bonus if the West Kimberley project, of which he then had the carriage, were to come to fruition. Mr Elliott did not respond to that proposal. Mr Brand's proposed reduction in fees took them from $300,000 per annum to $240,000 per annum with effect from 1 October 2000 '... with a waiver of any arrears'. 19. Mr Brand's responsibilities within the company contracted significantly after 29 September 2000 as a consequence of his replacement as managing director. 20. Mr Brand unilaterally further reduced the fees payable to Martech from $240,000 per annum to $180,000 per annum with effect from 1 January 2001. 21. On 23 February 2001 Mr Brand wrote to Mr Elliott proposing amendment of his existing 'Consultancy Agreement' to an annual fee of $180,000 with effect from 1 January 2001 to its termination date of 30 June 2003. He proposed that thereafter he become an employee and that the termination provision of the existing Consultancy Agreement be cancelled. 22. Mr Jordan wrote, on behalf of Energy on 5 March 2001, accepting 'your offer of termination of the Consultancy Agreement, and our intention to offer you employment with the company'. 23. Mr Brand was effectively excluded from significant decision-making processes in Energy throughout 2001. 24. At a meeting with Mr Brand on 22 October 2001 Mr Elliott asked him to consider his future with Energy overnight. 25. On 24 October 2001 Mr Brand decided, following a discussion with Mr Elliott, that his existing position as an executive director was untenable. He decided to withdraw his nomination for re-election as a director of Energy. Mr Elliott however did not unequivocally withdraw his support for Mr Brand nor did Mr Brand base his decision on a perception of lack of support from Mr Elliott. 26. Mr Brand advised Energy of his decision by a letter to Mr Elliott dated 24 October 2001. The letter did not constitute a resignation from office at that time. 27. Energy, through its subsidiary, EEIP, had a 35% interest in a gas field permit PY-1 in India under a JOA with Mosbacher and Hindustan. 28. The value of the interest at 30 June 2001 was $13.4 million. 29. On 28 September 2001 Mosbacher issued a Withdrawal Notice to EEIP and, through EEIP to Energy, on the basis of EEIP's failure to meet a payment of $US47,095 due under the JOA. 30. Mosbacher rebuffed repeated attempts to negotiate a settlement of its dispute with Energy. Under the terms of the JOA EEIP could be required, after the issue of a Withdrawal Notice, to transfer its 35% interest to Mosbacher for no consideration. 31. Mr Brand became aware of the Withdrawal Notice on 8 October 2001. 32. On 15 October 2001 Mr Brand told Messrs. Elliott and Jordan that the ASX should be told of the Withdrawal Notice. 33. On 22 October 2001 the directors of Energy resolved that the circumstances did not require disclosure of the Notice to the ASX as action on it was incomplete. 34. On 29 October 2001 Mr Brand, with other directors on Energy's Due Diligence Committee, signed a final report to the effect that the prospectus for the company's share offer dated 29 October 2001 contained no material omission or error or representation known to the members of the Committee. The prospectus for the share offer contained a reference to the receipt of the Withdrawal Notice, stated that Energy and EEIP were reviewing the position and would take whatever action was required to protect the company and shareholders' interests in the PY-1 gas field. A similar notice appeared in an Explanatory Memorandum circulated with the Notice of Annual General Meeting called to authorise the share offer. 35. On 9 November 2001 Mr Brand sent a memorandum to other members of the Due Diligence Committee expressing his concern that the disclosure relating to PY-1 in the prospectus was inadequate. The prospectus was sent to shareholders without alteration. 36. In a conversation which he had with a shareholder on or about 16 November 2001 the shareholder told Mr Brand that he would take out entitlements under the rights issue because, inter alia, of the PY-1 gas field interest. 37. On 19 November 2001 Mr Brand tendered his resignation effective that day as a director of Energy and associated companies. One of the reasons he gave for tendering his resignation was his concern about the company's compliance with the ASX Continuous Disclosure obligations. 38. Mr Brand's resignation was primarily actuated by a desire to leave Energy prior to the annual general meeting. The non-disclosure question was one of a number of matters that he said should be of concern to directors. It was not, however, the cause of his resignation. Misleading or deceptive conduct by Energy comprising representations made on 3 February 2000, without reasonable grounds, that it would enter an agreement with Martech under which Martech would be adequately compensated for its forbearance to enforce payment of its full fee. Misleading or deceptive conduct by Energy by its conduct and silence in paying Martech at a rate consistent with Martech's proposal of 7 October 2000 and by its silence in not responding to that proposal thereby representing, contrary to its intention and without reasonable grounds, that it would agree or substantially agree on the terms of the proposal or negotiate it in good faith. (s/c 14 and 32-37) This claim was not pressed. 3. Breach of contract arising out of Energy's failure to pay Martech its unpaid fees under the Agreement of 28 May 1999 for the period 1 March 2000 to 29 September 2000. Claim in contract for the Termination Payment payable under the Agreement of May 1999 on the basis that the Agreement was terminated by mutual consent on or about 29 September 2000. Quantum Meruit claim for reasonable fees due under a New Contract said to have come into existence between Martech and Energy on or about 29 September 2000. (s/c 13A-17) This claim was not pressed. 6. Claim in contract for a Termination Payment due under the Agreement of May 1999 or the New Contract or for damages in a like amount on the basis that the Agreement or the New Contract was terminated on 24 October 2001 by Mr Elliott's withdrawal of support for Mr Brand's re-election as a director of the company. That withdrawal is said to have amounted to a repudiation of the Agreement or the New Contract accepted by Mr Brand by the withdrawal of his nomination for re-election. (s/c 18-19AF) Alternatively, the New Contract is said to have been terminated and to support a claim for such payment. 7. Claim in contract for a Termination Payment under the Agreement of May 1999 properly terminated by Martech on account of Energy's breach of an implied term by its failure to publicly disclose the Withdrawal Notice of its subsidiary's interest in the PY-1 gas field. 8. Claim in contract for a Termination Payment under the Agreement of May 1999 on the basis that, on 20 November 2001, Energy, through Mr Jordan, terminated the Agreement by requiring Mr Brand to leave Energy's premises. He did not propose at that meeting that Energy would compensate Martech for the loss of part of the fees in a manner to be agreed or otherwise. He made the decision to reduce the fees because of the serious financial difficulties then facing Energy. He reserved the right to reinstate the full fees at a later time. That reservation was implied in his statement that the fees were being reduced temporarily. He made no reference at the meeting of 3 February 2000 to some future recovery of the shortfall. His services were invoiced monthly by Martech thereafter at the reduced rate with no reservation of a right to claim arrears. That is to say, the invoices gave no indication that Martech was extending credit to Energy. There was no evidence that any such credit was shown in the books of Energy as a debt. I infer that no such credit was shown. 139 There is no evidence that Mr Brand raised any question of arrears of his fees until July 2000. Shortly before 10 July 2000 he told Mr Punch that, because the sale of Basin Bridge and other assets was not proceeding, he would be prepared to waive Martech's outstanding fees on the basis of a new structure. He proposed that he be paid for the arrears in options and/or bonuses to reduce their impact on Energy's cashflow. He proposed extending his reduced rate to 30 June 2001. This was reflected in his memorandum to Mr Punch of 10 July 2000. There was no response from Energy's Chairman, nor from Mr Elliott who was to succeed Mr Brand as managing director. 140 Energy submitted that the Agreement was varied in February 2000 by agreement between Martech and Energy. However, even assuming that Mr Brand was acting on behalf of Martech and as managing director of Energy at the time that he announced the reduction in his fees, there was no variation of the Agreement between himself and Energy. A contract is not varied merely by the action of one party to it announcing that it will accept less than the consideration to which that party is entitled under the contract. For absent some consideration moving from the other party, there is no enforceable agreement to vary the original contract. It was no doubt politic for Mr Brand to reduce his fees as he proposed given Energy's parlous financial state and the need to retain or recover some degree of confidence from the bank and shareholders. The benefit to Energy in its dealings with its banker and its prospective rescuer arising from the fee reduction does not amount to consideration moving from it. 141 It is well established that mere forbearance by one party to a contract in requiring performance of obligations by the other does not effect a variation of the contract unless supported by consideration or recorded in a deed under seal. In Foakes v Beer [1884] 9 App Cas 605 the House of Lords held an agreement between judgment debtor and creditor that the creditor would not take proceedings on the judgment in consideration of the debtor paying part of it and the residue by instalments, was nudum pactum as without consideration. It did not prevent the creditor after payment of the whole debt and costs from enforcing payment of interest on the judgment. But if there be any benefit, or even any legal possibility of benefit to the creditor thrown in, that additional weight will turn the scale and render the consideration sufficient to support the agreement. A reduction in fees for an unspecified but temporary period apparently to be determined at the will of one party, does not import certainty of obligation. In answering that question it is necessary not to demand unrealistic precision. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed. It is notable however that it pleads that the fee was reduced 'from $500,000 to $300,000'. As pleaded, the reduction was permanent. On the facts as found it was temporary, albeit its duration was undefined. 145 In my opinion the contention that the Agreement was varied on 23 February 2000 is met by the proposition that there was no consideration moving from Energy. Mr Brand made no contract with Energy to reduce his entitlement. Mr Punch and Mr Elliott seem to have themselves to blame for that result. They took no steps, despite Mr Brand's proposals, to agree with him and his company the varied terms upon which his fees would be paid from March 2000. There was no agreement that he or Martech should receive some other benefit in lieu of the shortfall in his fees. It follows that the question of the implied term pleaded by Energy, that repayment of the shortfall depended upon a significant improvement in Energy's financial position, does not arise even if it could be given some commercially meaningful interpretation. The total recovery of Martech is therefore $71,663.65. 147 Neither waiver nor estoppel is pleaded by Energy in relation to this aspect of Martech's claim. There was, as Martech submitted, no evidence of detriment suffered on Energy's part arising from reliance on any representation made by Martech nor any common convention or assumption to give rise to such detriment. On the factual findings made above, there were no representations made by Energy that it would enter a compensation agreement with Martech. In any event, Martech suffered no loss as it retained, absent an effective contractual variation of the Agreement, its entitlement to payment of the full fees at the agreed rate of $500,000 per annum. A 'New Contract' was formed under which, inter alia, Martech would provide Mr Brand's services as an executive director and such services as Energy's Board or Mr Elliott reasonably required. The fee would be $240,000 per annum. The New Contract was said to be terminable on reasonable notice. (c) Mr Brand no longer provided the services specified in the Schedule to the Agreement. (d) Martech's remuneration from 29 September 2000 ($240,000 per annum) was significantly different from that provided in the Agreement ($500,000 per annum). (e) The change in remuneration had the consequence that the termination payment in the provisions in the Agreement (cl 8.6) (which provided for the payment of '20 months' fee' at the 'stipulated' fee ($500,000 per annum) plus one month's fee (at that rate) for every year of service thereafter), could not work fairly for both parties after 29 September 2000; moreover there would be a question as to what was the amount of the 'termination payment', as a consequence of the change of remuneration. (f) The only matters of substance 'left' for which the Agreement provided after 29 September 2000, were the parties, and the fact that Mr Brand continued to provide services to Energy. Energy submitted however that the events of 29 September 2000 had to be seen in context. It referred to the Deed of Variation of 13 March 2000 which, by deleting cl 3.2, was said to have taken out of the right of termination the very circumstances which arose in September 2000. Although Mr Brand became an Executive Director his salary remained at $300,000 until his unilateral variation of it to $240,000. Mr Elliott did not relocate to Perth. He remained based in Hong Kong. Mr Brand had ongoing responsibility for the West Kimberley Project. Energy submitted that there was no fundamental shift in his role after 29 September 2000. Was the Agreement of May 1999 discharged or varied on 29 September 2000? 2. If it was discharged, was that discharge a termination within the meaning of cl 8.6 which gave rise to an entitlement to a Termination Payment? 3. If the discharge was a termination within the meaning of cl 8.6, did it flow from an agreement which extinguished any such entitlement? It has been applied particularly in cases of contracts required by law to be evidenced in writing. A parol variation of a written agreement would, in such a case, be unenforceable. On the other hand where the subsequent parol agreement discharges the earlier agreement it is not affected by the requirement that the original agreement be in writing. 154 It has been said, as a general proposition, that the result of varying the terms of an existing contract is to produce not the original contract with a variation but a new and different contract --- Williams v Moss Empires [1915] 3 KB 242 at 247 (Sankey J). That approach was adopted by the Court of Appeal in Morris v Baron . Lord Sumner referred to it in British and Beningtons, Ltd (at 68) as possibly correct 'as a matter of formal logic'. The alternative view, adopted by the House of Lords in Morris v Baron and again in British and Benningtons (sic) Ltd v NW Cachar Tea Company Ltd ... is based on the intention of the parties. They cannot have that which presumably they wanted, that is, the old agreement as amended; so the court has to make up its mind which comes nearer to their intention --- to leave them with an unamended agreement or without any agreement at all. The House answered this question by rejecting the strict view propounded by Sankey J and distinguishing between rescission and variation. If the new agreement reveals an intention to rescind the old, the old goes; and if it does not, the old remains in force and unamended. It appeared to be 'a matter of degree' (at 113). They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement. It merely modifies that relation by cutting out part of the rights and obligations involved therein, with or without the substitution of new rights and obligations in their place. Partial rescission is not the extinction of the contract but the variation of it. 157 The distinction between rescission and variation of contracts was indirectly an issue in Dan v Barclays Australia Ltd (1983) 46 ALR 437 (57 ALJR 442). The case concerned the construction of the terms of a guarantee of the payment of up to $500,000 owing under a bill acceptance facility which allowed for a maximum advance of $2 million. The maximum of the bill acceptance facility was increased sometime after its execution. It was held by Mason, Brennan and Deane JJ that the initial bill acceptance facility was significantly different from that subsequently granted and the guarantors were therefore not liable for interest and charges resulting from default under the later facility although, as a matter of construction of the guarantee, they were liable for the principal up to the figure specified in the guarantee. Wilson and Dawson JJ dissented. In their dissent they observed that cases dealing with the circumstances in which variation of a contract would amount to rescission did not necessarily provide the answer to the question of the construction of the guarantee in its application to 'the facility'. Variation of an existing contract, whilst it in one sense always gives rise to a new contract, does not always result in a substituted contract which, in order to operate, must necessarily rescind the contract which is varied. Variation may take the form of rescission of some of the terms of an existing contract but if that is to have the effect of rescission of the whole contract, the rescission must be express or by necessary implication and the determining factor must always be the intention of the parties as disclosed by contract when varied: see Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd, supra, per Taylor J at 143-4. ... However, the authorities show that the task is to ascertain the intention of the parties as embodied in the contracts. The varied contract was therefore a 'new' contract only to the extent that it contained terms which were not present in the original agreement. 158 In Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35 ; (2000) 201 CLR 520 at 534 reference was made in the joint judgment of Gleeson CJ, Gaudron, McHugh and Hayne JJ to the passage from the judgment of Taylor J in Tallerman and its approval by Wilson and Dawson JJ in Dan . If it was discharged, that discharge flowed, as a matter of implication, from the arrangements made on 24 September 2000. When the conduct of the parties to an agreement is such that an agreement to terminate or abandon the former contract may be inferred or where their conduct creates an estoppel. It is a particular application of the general case of consensual discharge by subsequent inconsistent agreement that an employment agreement may be discharged by sufficiently substantial change to the terms and conditions of employment. A discharge will occur when the changes are significant, not able to be accommodated by the terms of the original contract and not contemplated by the parties when the original contract was made. Whether there has been a discharge or a variation of the original agreement depends upon the intention of the parties discerned by reference to the terms of their second agreement. It is as Dixon CJ and Fullagar J said in Tallerman 'a matter of degree'. 163 In my opinion, Mr Elliott's appointment as managing director and chief executive officer of Energy on 29 September 2000 and Mr Brand's relinquishment of that office was of itself sufficient to constitute a discharge of the Agreement of May 1999. There was a very substantial difference between the office of managing director and executive director which supports the contention that objectively judged it was the intention of both parties to discharge the Agreement. The complete terms upon which Mr Brand provided his services as an executive director thereafter were never expressly agreed between Martech and Energy. Those terms and conditions would have to be considered in the context of the evolving commercial relationship between Mr Brand and Energy and their respective conduct. Mr Brand played a significant part in defining them himself, not least by unilaterally varying downwards his annual fee. 164 I do not accept the submission by Martech that Mr Brand was 'removed' from office by Energy on 29 September 2000. While the circumstances at the time made the course that he adopted the only practical course to take, that was a judgment he made for himself and to which he assented. I find that the Agreement was discharged consensually. 165 Martech submitted that it was entitled to the Termination Payment if the Agreement were terminated for any reason other than one of those set out in sub cls 8.1.1, 8.1.3, 8.1.4 and 8.1.5 or cl 8.5. Termination having occurred on 29 September 2000 for none of those reasons it says it was entitled. Energy submitted that, on its proper construction, cl 8.6 did not apply where Martech wished to terminate its services and agreed to termination. The benefit of the notice provision in cl 8.5 could be waived --- Perri v Coolangatta Investments Pty Ltd [1982] HCA 29 ; (1982) 149 CLR 537 at 543, 552, 560 and 565. 166 The critical question in considering the Martech submission is whether, on the proper construction of cl 8.6, the entitlement which it creates in a case in which the 'Agreement is terminated for any other reason ...' arises where there is a consensual discharge of the Agreement. That constructional question depends upon a consideration of the words of cl 8.6 and the context in which they appear both within that clause and within other parts of cl 8 and the Agreement as a whole. 167 The Shorter Oxford English Dictionary definition of 'termination' is equivocal. It can refer to either of two things --- either to termination by notice or termination by effluxion of time. It is often used in that dual sense in landlord and tenant and master and servant cases. Karminski and Buckley LJJ agreed. A contract may be said to terminate when it comes to an end by effluxion of time, or it may be terminated when it is determined by notice or otherwise by some act of one of the parties. This usage was recognised by Professor Carter in his identification of what he called 'the three principal bases for saying that a contract has been terminated'. Subsequent agreement by the parties. 2. Exercise of a right to terminate. 3. Frustration of the contract. (Carter op cit at 1317). Termination by agreement as he pointed out, is sometimes referred to as rescission by agreement. 170 It is necessary then to consider the way in which the word 'terminate' was used in cl 8.6 of the Agreement in order to determine whether it extended to rescission by agreement. In so doing it is necessary to have in mind the consequences of termination. In the latter context, only the primary obligations are discharged and accrued obligations or liabilities (giving rise to secondary obligations) are not divested. However, when the subsequent agreement is intended to release one party from a liability (or an alleged liability) the general principle is that the party in default is released from those accrued obligations or liabilities only if consideration has been given for the release. It may be abandoned by conduct where the conduct of one party acted on by the other leads to the inference of an implied agreement between them to abandon the contract. In the alternative, the conduct of one party towards another and the other's action upon that conduct to its detriment may result in the first party being estopped from denying that the contract has been abandoned --- Paal Wilson & Co v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 914 (Lord Brandon), 915 (Lord Diplock), 924 (Lord Brightman). 172 In summary the word 'termination' when referring to the discharge of a contract has a variety of possible meanings. It may be limited to non-consensual termination by the action of one or other party to the contract. It may extend to discharge of the contract by effluxion of time. That is a consensual termination in the limited sense that it is part of the agreement from the outset. The word may also be construed as applying to a discharge of a contract by agreement or by abandonment which may be taken to amount to the same thing. Its meaning in cl 8.6 depends upon the language of that clause and related clauses of the Agreement. It is also to be construed by reference to the context of the Agreement as a whole. 173 Clause 8.1 of the Agreement concerned the circumstances in which Energy could terminate summarily Martech's services. None of those circumstances applied in this case. Clause 8.2 allowed Martech to terminate the Agreement in the event of Energy suspending payment or compounding with its creditors or assigning its estate for their benefit. That circumstance did not exist either. Clause 8.3 limited the power of both Energy and Martech to terminate for breach of obligation by requiring that the party in breach be served with a notice requiring rectification and allowing 30 days for that to occur. Clause 8.5 allowed Martech to 'terminate its services' on three months' written notice. 174 If the Board of Energy had resolved to dismiss Mr Brand as managing director other than for any of the reasons set out in cl 8.1 that could be taken as a repudiation of the Agreement and, if accepted by Martech, a termination of the Agreement giving rise to the entitlement to a payment under cl 8.6. If Energy declined to renew the term of the Agreement at its expiry, that too would give rise to an entitlement to the fee under cl 8.6. In each of these cases cl 8.6 had work to do. Each involved termination by Energy of its relationship with Martech. 175 The question arises whether by cl 8.6 Martech was entitled to a termination payment in the event of a discharge by agreement. Absent clear words, I do not construe cl 8.6 as extending to such a case. The bases and terms upon which parties to an agreement may agree to discharge it are many and various. The extension of cl 8.6 to mandate a very substantial payment in the event of an agreed discharge of the parties' contractual obligations would impose a requirement on the parties as to the terms on which they may so agree. Even if cl 8.6 expressly applied to a discharge by agreement, it would be open to the parties by agreement to discharge that obligation along with all the others. Indeed so to construe cl 8.6 is to give it, in its application to an agreed discharge, an operation rather like that of an agreement to agree. Such an agreement is not a contract. I accept in so saying that it may theoretically be possible to create an entitlement to a termination payment which vests, pursuant to the Agreement, upon the external event of a later agreement to discharge. I do not accept, however, that cl 8.6 so operated. 176 The basis upon which the Agreement was discharged did not include any obligation to pay a termination fee. Whatever the terms of the New Contract which supplanted the Agreement it included Mr Brand's continuance as an executive director, initially at the fee he was then being paid as managing director. That was a rate which he himself proposed and subsequently reduced to $240,000 per annum with effect from 1 October 2000. There was no suggestion in the discussion leading up to the Board's resolution of 29 September 2000, nor in the terms of the Board's resolution, that Martech was to be afforded a Termination Payment under cl 8.6. That would have been a very considerable sum. Mr Brand did not, on behalf of Martech, purport to reserve any rights with respect to a Termination Payment. 177 In my opinion, cl 8.6 of the Agreement did not entitle Martech to a Termination Payment upon a consensual termination. The claim for such a payment flowing from the resolution of 29 September 2000 therefore fails. Nor, in my opinion, can any such claim succeed on the basis that it was the New Contract that was terminated. Accepting that a New Contract did come into existence after 29 September 2000, albeit that its precise terms evolved over a period of time, I am not satisfied that those terms included a Termination Payment provision along the lines set out in the Agreement. There was never any agreement to that effect. 179 In any event, the claim for a Termination Payment arising out of the events of 24 October 2001 rests upon the premise that Mr Elliott effectively removed Mr Brand from office as a director of Energy by advising him that he would not support his re-election at the annual general meeting of 30 November 2000. Martech alleged that the request that Mr Brand withdraw his nomination as a director was a repudiation of the Agreement or of the New Contract and that Martech accepted that repudiation. 180 For reasons set out earlier, I am not satisfied that Mr Elliott did, as alleged, unequivocally withdraw his support for Mr Brand or indeed that Mr Brand's decision was based upon a belief that Mr Elliott had done so. I find that Mr Brand reached the decision, on his own, to withdraw on the basis that his position as a director was no longer tenable. 181 There was no termination by Energy on 24 October 2001, either of the original Agreement which, in any event, had been terminated, or of the New Contract. The claim for a Termination Payment based on alleged repudiation of the Agreement and, alternatively, the New Contract by Energy fails. (s/c 5.2) Martech alleged also that the New Contract contained the same implied term. (s/c 18A) The existence of the implied term was denied in Energy's defence. 183 Martech alleged that the Prospectus issued by Energy on 29 October 2001 was misleading for failing to disclose that Mosbacher was entitled, upon service of a Withdrawal Notice, to sell the Participating Interest held by EEIP. This was said to be a contravention by Energy of s 728 of the Act exposing Mr Brand as a director to personal liability by virtue of s 729 (s/c 20-20D). Martech also alleged that by negligently failing to notify the ASX of the information about the effect of the Withdrawal Notice, Energy contravened s 1001A(2) of the Act (s/c 20E-20K). The implied terms pleaded were thereby breached and Martech was said to have been entitled to terminate the Agreement (and/or presumably, although it is not pleaded, the New Contract). This was done by Mr Brand's withdrawal of his nomination on 24 October 2001 and his later resignation as a director of Energy. On that basis, it was said, that Martech became entitled to the Termination Payment. The quantum claimed was the Fee for a further 22 months, being $989,326.25 exclusive of GST and allowing for a contractually agreed CPI adjustment (s/c 22). 184 Martech argued in its closing submissions that the Agreement and/or the New Contract should be construed so as to have entitled Mr Brand to resign as a director of Energy if he genuinely (and reasonably) held the view that the effect of the Act and the ASX Listing Rules, required disclosure of the Mosbacher Withdrawal Notice and that Energy's Board had decided, or would decide, not to disclose it. The Agreement, contained an implied term to that effect. The implication so submitted was considerably wider than that pleaded. 185 It was further submitted that neither the Agreement nor the New Contract should be construed as disentitling Martech to the Termination Payment if Mr Brand's resignation was on account of his exposure to liability as a consequence of a breach or reasonably apprehended breach of the Act or of the ASX Listing Rules. 186 I do not accept that there was ever, in the Agreement of May 1999 or in the contractual relationship which followed it, an implied term of the kind relied upon by Martech. As pleaded in relation to the Agreement, the implied term conferred an unqualified right to terminate in the circumstances that the affairs of Energy were conducted in a manner contrary to the Act or the ASX Listing Rules or in a manner which might result in Martech or Mr Brand incurring personal liabilities. But Martech's right to terminate under the Agreement was dependent upon Energy being in breach of its obligations under the Agreement for a continuous period of 30 days and upon Martech serving a notice of such breach. Clause 8.3 was expressed to be exhaustive of the circumstances of the conditions for a non-consensual termination of the Agreement. It opened with the words, 'The Company or the Manager can only terminate the Agreement if all of the following provisions are complied with' (emphasis added). 187 No implied condition of the kind relied upon having existed in the Agreement, there is no basis for saying that any such term was to be carried over into the succeeding contractual relationship. In my opinion therefore, whatever may be said of the conduct of Energy in relation to non-disclosure, there was no event which entitled Martech to terminate and claim a Termination Payment. Moreover there was no agreed Termination Payment provision under the contract which succeeded the Agreement. And Mr Brand's decision to resign 11 days early was made of his own accord. It did not flow from any act on the part of Energy. His services were not terminated by Energy. This aspect of the claim fails. 188 Although it is not necessary to do so for present purposes, I refer to evidence adduced by Martech on the question of non-disclosure from Mr Peter Strachan. Mr Strachan has had seven years experience in the mining industry and 22 years in the finance industry as a corporate analyst, stockbroker, investor relations manager and corporate executive. 189 Mr Strachan expressed the opinion that a reasonable person with information about the service of the Withdrawal Notice on EEIP by Mosbacher in September 2001 would expect it to have had a material effect on Energy's share price. He pointed out that in November 2001 EEIP had a market capitalisation of about $45 million to $50 million. Its balance sheet for 30 June 2001 showed shareholders' equity of $125.5 million, a deficit of working capital of $85.4 million and total assets of $255.1 million. 190 In its prospectus Energy disclosed that its share of hydrocarbon reserves in the PY-1 Gas Field was about 111 billion cubic feet of gas. The company had previously announced that gas reserves from the PY-1 project were being positioned with potential buyers wishing to use that gas to fuel power generation plants in India. Energy had announced its intention to sell this 35% interest in order to reduce its debt level. 191 In Mr Strachan's opinion, based on the numbers supplied in Item 14 of the company's financial year 2001 accounts, a reasonable person would have concluded that the company's book value for its 35% interest in the PY-1 Contract Area from which it was asked to withdraw, was $13.5 million. Furthermore, a reasonable person could expect that if information about the Withdrawal Notice were available to the market, analysts and sophisticated investors would have been able to compare the value of the PY-1 Contract Area with the price of similar assets in the region and conclude that by losing the asset Energy would lose value of between $25 million to $35 million. That would assume a selling price of around $0.25 million to $0.35 million per billion feet of gas in the project as it stood undeveloped. 192 Mr Strachan expressed the opinion that a reasonable person could have concluded that the company's market value would have had the potential to fall by between $13 million and $25 million representing a fall of between 29% and 45% from Energy's prevailing market capitalisation. 193 He also expressed the view that an investor may have been misled by the company's announcement in the Prospectus of 29 October 2001 qualifying its 35% interest in the PY-1 Contract Area. Mr Strachan said he believed that a reasonable person would assume that the statement implied the asset had not been finally lost and that there was some mechanism by which the asset might be retrieved by the company. 194 As I have already said, it is not necessary to resolve this question. I am of the view that Energy's failure to make an early specific announcement to the ASX in relation to the Withdrawal Notice was based on an overly optimistic view of its ability to negotiate out of the problem with Mosbacher. In my opinion, however, it is undesirable to explore at large the question whether Energy was guilty of a breach of either the Act or the ASX Listing Rules. The truth of the proposition pleaded in par 20A was not established at trial. And as it turned out when the dispute between Mosbacher was arbitrated the London Court of International Arbitration held that the article of the agreement entitling Mosbacher to sell EEIP's interest in the PY-1 Gas Field was a penalty within the meaning of s 74 of the Indian Contract Act . The truth of the proposition pleaded in par 20A as a matter of fact and law was not established. It is that proposition, which it is alleged should have been disclosed. Such evidence as there was indicated that the proposition may not have been true. I am satisfied therefore that there was no misleading or otherwise contravening non-disclosure in the terms pleaded in the amended statement of claim. That is not to say that the risk of a loss of the interest in the PY-1 Gas Field to which the Withdrawal Notice gave rise, should not have been disclosed to the ASX. But that is a different question. In the premises it is said Martech became entitled to a Termination Payment, namely the payment of the Fee for a further 22 month period. Alternatively, it is said that Mr Jordan's conduct attributable to Energy, was a repudiation of the New Contract. It was a repudiation which Martech accepted and on the basis of which the New Contract was terminated giving rise to an entitlement to the Termination Payment. This claim is answered by findings I have already made about the absence of any Termination Payment provision in the so-called New Contract. In any event, Mr Brand had tendered his resignation effective the previous day, that is 19 November 2001 as a director of Energy and associated companies. He, and Martech through him, had unilaterally decided to terminate the provision of his services. There is no basis for the claim made under this head. Martech will also be entitled to interest, pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), calculated from 30 September 2000 to the date of judgment. Martech's claim is otherwise dismissed. Whether such interest should be awarded, what the rate of such interest should be and from when it should be award are matters within the discretion of the Court subject to the provisions of s 51A. In this case the entitlement to the shortfall of fees may be seen to have existed as at 30 September 2000. However, there was a continuing unilateral reduction of fees by Martech well beyond that point. No suggestion was made that the shortfall would be subject to interest charges. I am inclined to think that if pre-judgment interest is to be awarded, it should be from the commencement of these proceedings. However, I will give the parties an opportunity to put submissions in that respect. It arises out of decisions taken by Mr Brand, as managing director of Energy and as a director of AEE, in connection with the development of a power plant project at Cochin in the State of Kerala in India. The project was for the development and construction of a combined cycle power plant. The proposal was known as the Vypeen Combined Cycle Power Project or the Vypeen Project for short. Mr Brand was its founder and first managing director. His background was primarily in marketing. He had 'no hands on' experience of the oil and gas industry. However he became familiar with its workings in the years that followed to the late 1990s. His original purpose in setting up the company was to promote the use of natural gas in the transport sector. The opportunity presented by natural gas was a driver in the formation of Energy and of its development. 200 In 1998 Mr Brand provided his services as managing director under a written agreement dated 27 August 1993 (the 1993 Agreement) between Martech and Energy. That agreement was the predecessor of the Agreement of May 1999, the subject of the principal proceedings. It was prepared by Mr Paul Hyland of McAlwaine & Hyland, Mr Brand's personal solicitors. Paul Hyland, through his firm, had also acted as Energy's solicitor for about five years prior to 1993. 201 The initial term of the 1993 Agreement was expressed to be two years commencing on 1 July 1993 and renewable by agreement '... to the intent that there shall be at least a term of One (1) year to run at any one time'. The services to be provided by Martech under the 1993 Agreement were set out in Schedule 1 of that agreement. By the middle of 1998 it had three main Divisions. They were designated 'Operations', 'Finance' and 'Business Development'. Operations was headed by Mr Bill Hornaday, Finance by Mr Maurice Hayes and Business Development by Mr Paul Bridgwood. At the time of the events the subject of these proceedings in 1998 and 1999, each of these men was a long serving employee whose judgment Mr Brand trusted. 203 Mr Hornaday was to become, in early 1999, the Chief Operating Officer of Energy and its group of companies. He was responsible for group operations which included all day to day activities, budgets, performance to budget, human resources, safety, environmental issues, drilling plans, construction activities on a project by project basis and business development in relation to oil and gas. Although in his evidence-in-chief Mr Brand said that Mr Hornaday occupied the position of Chief Operating Officer from mid 1998, he corrected that in cross-examination. He thought that he did not occupy that office until early 1999. 204 Mr Hayes was the Chief Financial Officer. He was responsible for group financial, and at times accounting, functions which included day to day financial management as well as short and long term cashflows and equity and debt plans at both corporate and project levels. 205 Mr Bridgwood was the Chief Development Officer for Energy and its group. He was employed in 1987. Before joining Energy, he worked as a consultant for an engineering firm, Worley Engineering. He was responsible for group business development with a particular emphasis on power projects, liquefied natural gas (LNG) and integrated gas to LNG/power projects. Mr Brand described Mr Bridgwood's responsibilities as covering 'development projects'. By this he meant projects during their formative stages up to what he called 'financial close'. Mr Bridgwood who was a key actor in relation to the authorisation of the payments by Mr Brand which had led to these proceedings, was not called as a witness. There was no question of his unavailability. He has not been en employee of Energy since 2001. He is now a director of Liquified Natural Gas Limited, a company which Mr Brand set up after his departure from Energy and of which he is managing director. It is a public company which was listed in September 2004. It appears that there are, or were, pending proceedings between Energy and Mr Bridgwood although the nature of those proceedings was not identified in the evidence. 206 Energy had an Executive Management Committee which usually met fortnightly. Generally it comprised Mr Brand, Messrs Hornaday, Bridgwood, and Hayes, an executive officer, Mr Bult, together with Messrs Adams and Lindsay and the Company Secretary, Mr Clarke. The Committee's meetings were conducted in a formal way and usually minuted. It would receive reports, both written and oral, from its members on matters arising in their areas of responsibility. The majority view on an item of discussion would usually prevail. Not all matters the subject of written report were discussed at Executive Management Committee meetings. The reports informed Committee members of matters occurring and issues arising within other divisions. Because Energy's business demanded a significant amount of overseas travel for several of its senior executives, particularly Messrs Bridgwood, Hornaday and Brand, they were not all able to attend all Executive Management Committee meetings although they were usually circulated with the papers. 207 The Board of Directors met monthly. An agenda and written reports were circulated before each meeting. Many of the reports were prepared by the heads of the divisions. They kept the Board up to date with the progress of Energy's projects and set out its receipts and cashflows. Often the reports were not expressly discussed at Board meetings. As a matter of practice, according to Mr Brand, absence of discussion signified that the Board collectively was satisfied with the report and had no issues with it. His own report would address and summarise critical issues facing the group. It usually dealt with operational performance, implementation of strategic plans, medium and long term financial plans, acquisition of and/or sale of assets and organisational changes and senior management appointments. 208 Mr Brand did not usually prepare reports on the progress of specific projects. They would be prepared by Messrs Bridgwood and Hornaday and if there were matters warranting mention they would speak to the reports at the Board meetings. Mr Hayes would prepare Board papers relating to Financial Division matters and would speak to them at Board meetings. 209 The practical effect of the management structure was that each of the divisional heads reported direct to the Board on many matters. These included, in Mr Bridgwood's case, the progress of development projects. It was also Mr Bridgwood's responsibility to implement Board decisions in relation to those projects. His implementation was the subject of further report to the Board which would be reviewed by Mr Brand before submission. In practical terms, each of the three divisional heads had, what Mr Brand described, as 'a significant level of autonomy'. Mr Brand agreed in cross-examination that in his position as managing director he was effectively the one person that had knowledge of all the divisions. He agreed also that this was important not only because of his role as managing director but also because he had to report to the Board in that capacity. 210 In cross-examination, Mr Brand explained some aspects of the relationship between the respective functions of Messrs Bridgwood and Hornaday. Mr Bridgwood was primarily responsible for the development of power related projects. Mr Hornaday was more responsible for oil and gas related matters. Nevertheless, no doubt because of a degree of overlap, in 'some sense' Mr Bridgwood reported to Mr Hornaday. 211 Mr Brand, in his evidence-in-chief, described some particular aspects of his role as managing director in 1998. By that time Energy had net assets in excess of A$140 million. It operated in Australia and Indonesia and employed about 180 staff. Its principal activities within Australia were in connection with the Barcaldine Power Plant, the Gilmore Gas Field, LNG and power plants at Alice Springs and the Eromanga Gas Field. In Indonesia it had an interest in the Sengkang Power Project, the Lematang Oil and Gas Field and a number of other oil and gas permits. 212 Mr Brand identified major development projects in India in which Energy was involved. These were the PPN Power Project, the Basin Bridge Power Project, the PY-1 Gas Field Project, to which reference was made in connection with the principal claim, and the Vypeen Power Project. In 1998 none was in operation. Apart from the PY-1 Gas Field Project, all were being managed by Mr Bridgwood. 213 I accept Mr Brand's description of Energy's organisational structure and the general description of the functions of the Divisional Heads, the Executive Management Committee and the Board of Directors. I also accept his description of the major development projects and other activities in which Energy was involved. None of these matters was really in dispute. They were generally borne out by the management reports, Executive Committee minutes and Board minutes which were in evidence. 214 Mr Brand said it was not possible for him to administer each of the companies on a hands on basis. Their administration required a high level of delegation, particularly in the case of projects overseas. His role, as he saw it, was to deal with the major issues facing Energy or arising from its management at the time. As a general proposition I accept that evidence also. 215 From mid 1998 to late 1999, Mr Brand focused on a limited number of significant issues. The first of these was the relationship between Energy and its financier the CBA. From late 1998 Energy was facing the real prospect that the CBA would call up its facilities or reduce the draw down commitment. This required on-going discussion. There was also a substantial dispute between Energy and PLN, the Indonesian Electricity Authority about payments due to Energy under the Project Power Purchase Agreement for the Sengkang Gas and Power Project. That had a total capital cost of US$225 million. Energy had a 47.5% interest in it. The dispute had a serious impact on Energy's cashflow. Energy was also trying to achieve financial close of a 336MW PPN power plant in Tamil Nadu in India and the sale of that project to El Paso Ltd. The capital cost of the project was US$330 million. The sale to El Paso was achieved ultimately in March and April 1999. According to Mr Brand it was of particular importance because of its positive effect on Energy's cashflows, which gave the company the ability to retire a portion of the CBA debt. 216 Another significant issue in late 1998/early 1999 arose in connection with the Cooper Basin, Queensland gas project. That involved an expenditure of $30 million and the installation of a gas plant and pipelines to supply the Pasminco Century Zinc project. There was a serious issue about Energy's capacity to meet its obligations to Pasminco under a 'take or pay' contract. There had been an unanticipated reduction in gas reserves and gas reduction. There was a possibility that Energy would sustain significant losses and would be in breach of its covenants under the CBA facility. 217 Mr Brand said that a number of these matters were of great importance and some of them involved him in extensive overseas travel. Energy was also negotiating with brokers and investment bankers about a possible capital raising and financial restructuring. He was heavily involved in those discussions. He had all the other usual responsibilities to perform including dealing with, and maintaining, good relations with brokers, analysts, the media, the governments in India, Indonesia and Australia at a regional, State and national level. The Board, he said, was aware that he was devoting his time to these important issues because he reported to the Board on the progress of his negotiations. I accept his evidence of how he saw his priorities as Managing Director at that time. PR and its subsidiary held 94% of the shares in Siasin Energy Limited (Siasin) which was undertaking the development and implementation of the Vypeen Project for the State of Kerala on a 'build, own and operate basis'. According to the recitals in the MOU, Siasin had executed a Power Purchase Agreement with the Kerala State Electricity Board (KSEB) on 17 July 1996 and had obtained in-principle clearance from the Central Electricity Authority for the project. PR was looking for partners in its future development. The MOU recited that Energy wished to conduct 'due diligence' on the project with a view to becoming a shareholder of Siasin and actively involved in the development of the project. Under the MOU, Energy was to conduct its due diligence investigations for a period of 30 days. If it decided to participate in the project it would negotiate in good faith to enter into a formal agreement to set out all agreed terms and conditions in the MOU and other 'reasonable terms and conditions' for the sale and purchase in Siasin and the scope of work of each party. 219 PR undertook to make available up to 40% of the shares in Siasin for acquisition by Energy which in turn agreed to make payments for their acquisition in accordance with terms attached to the MOU. The MOU recited Energy's intention to sell 10% of its shares in Siasin to Woodside Petroleum Ltd (Woodside) at or prior to financial closure. Attached to the MOU was a table entitled 'Vypeen Combined Cycle Power Project Payment Terms'. This set out 'milestones' for payments to be made by Energy. It is not necessary to reproduce that table here. It was scheduled to the Sale and Purchase Agreement entered into in May 1998 and is reproduced below. 220 The minutes of the meeting of the Board of Directors held on 26 February 1998 include reference to a report presented by Mr Hornaday on 'Engineering, Operations & Business Development'. Mr Brand noted that Energy was undertaking 'due diligence' on the proposed '1,200 MW Vypeen Combined Cycle Power Station in Kerala India' so that it could determine whether to acquire a 40% interest. He advised that the company had signed another memorandum of understanding under which Woodside would supply condensate and LNG to fuel the Vypeen power station, if it proceeded. 221 In his evidence-in-chief Mr Brand described Mr Bridgwood's responsibilities in connection with the Vypeen Project. Mr Bridgwood, he said, was an engineer with extensive hands on experience of power project development. His experience in that area was greater than Mr Brand's. He relied on him to progress Energy's development projects, as approved by the Board, and within the parameters of that approval but using his own initiative to do so. He expected him to report to the Executive Management Committee and to himself and the Board if there were difficulties or issues upon which he needed assistance or direction. 222 Mr Bridgwood's responsibilities in relation to power development projects included dealing with Energy's joint venture partners and maintaining harmonious relations with them. He was also expected in such projects to negotiate the terms of major commercial agreements with government instrumentalities and multi-national oil companies. He was expected to maintain the progress of a project ensuring, so far as possible, that governments dealt promptly with licences, permits and authorisations. According to Mr Brand, his responsibilities extended to the monitoring of expenditure and joint venture contributions or other payments. 223 Mr Bridgwood was assisted by Mr Selvendra. Mr Selvendra was employed as Energy's India Country Manager. He is an Indian national. His principal function was to assist Mr Bridgwood with negotiations and judgments to which Indian cultural issues, business practice and government and administrative practices were relevant. He was engaged because of his knowledge of India and its approach to business. He was a senior employee with a salary of about $120,000 per year plus overseas allowances. He had an office in Chennai in India and also shared an office at West Perth. 224 Mr Brand said in his evidence-in-chief that the establishment of a power project requires high level negotiation and commercial and other dealings on matters of complexity. It involves potentially very significant expenditure. In the case of the Vypeen Project an amount in excess of US$600 million was involved. The project comprised the construction of a power plant, the construction or modification of a fuel oil terminal, the possible dredging of Cochin Harbour to permit large fuel carriers to berth, negotiations with KSEB of a power supply agreement and negotiation with multi-national oil companies of a fuel supply agreement for LNG and liquid fuel. Negotiations were also necessary with overseas banks and other financial institutions. These, according to Mr Brand, were all matters handled by Mr Bridgwood himself or in conjunction with the joint venture partners' representative, Mr Swaminathan. Mr Bridgwood conducted negotiations for the power project on behalf of the joint venture company, Siasin. 225 Ultimately, the project Mr Bridgwood negotiated had to be approved by Energy's Board at, or prior to, financial close. Mr Brand regarded him as Energy's representative in dealing with the joint venture partners. Mr Bridgwood had only limited authority to incur expenditure by Energy. Mr Brand said in cross-examination he thought it would have been up to $250,000 or thereabouts. If he wanted to incur expenditure in excess of his limit, he had to obtain Mr Brand's authority. As a general proposition, Mr Brand relied upon Mr Bridgwood's recommendation that expenditure was necessary or due as the case may be. All payments in relation to the Vypeen Project were made on Mr Bridgwood's recommendation. Mr Brand's own authority to expend company funds would have been about $500,000 in 1998. 226 Neither Mr Bridgwood nor Mr Hornaday involved Mr Brand to any great extent in the discharge of their functions. Only if there were some difficulty or issue which they felt should be referred to the Executive Management Committee or to Mr Brand personally would he become involved. Mr Brand played no real part in Mr Bridgwood's activities or decision-making. He did not review Mr Bridgwood's correspondence or emails unless they were copied to him. That was infrequent up until early 2000. Sometimes Mr Bridgwood would ask Mr Brand to sign a letter as Managing Director on a topic perceived to be of importance and generally he prepared those letters for Mr Brand. I accept Mr Brand's evidence in relation to the functions and authority and modus operandi of Messrs Bridgwood and Selvendra. It is generally consistent with the documentary record. Energy's plan was to have Woodside supply condensate as the initial fuel until an LNG terminal was commissioned. Condensate is a liquid hydro-carbon by-product of natural gas that can be refined as if it were very light crude oil. Mr Yamada was concerned about how long it would take for the LNG terminal to come into operation. He wanted long term condensate supply by Woodside to be secured. He pointed out that it was also necessary to investigate the relevant regulations and clearances required for the importation of condensate into India. A General Open Licence (GOL) was required for the importation and that GOL was given only to the bearers of fuel linkage as condensate was deemed a crude product. Right now it is not clear how long this process will take, and we should perhaps take steps to apply for the licence to import it as an intermediate fuel until LNG is available from Petronet. These he identified as fuel supply, capital costs and terms of participation. The plan was to secure condensate as an initial or backup fuel for a term which was 'bankable' but flexible enough to allow LNG as primary fuel when it became available. Woodside would supply fuel either directly to Siasin or through a major Indian oil company such as Bhara Petroleum Corporation (BPCL) or the Indian Oil Company (IOC). He referred to the MOU which had been signed between Energy and Woodside for fuel supply and for a 10% share in the power project. He described the link with Woodside for condensate supply as '... critical to the success of the project'. However, meetings in Delhi with Petroleum & Power Ministries addressed this concern. The Ministry of Petroleum and Natural Gas will recommend to the Ministry of Power that condensate be approved for importation under the Open General Licence (OGL). Both Ministries are aware of this and have stated that this will happen. 230 Mr Brand agreed in cross-examination that as a result of Mr Bridgwood's fax of 26 March 1998 he understood that the laws of India at the time did not permit condensate to be imported. Energy, through its various officers, was endeavouring to persuade the Central Government of India to change the laws so that condensate could be imported under an Open General Licence. 231 On 31 March 1998 Mr Umashankar, of Siasin in New Delhi, sent a memo to Mr Swaminathan informing him that he was in regular contact with the Ministry of Power and Petroleum. Mr Selvendra wrote to Mr Bridgwood on 3 April 1998 reporting '... positive movement towards listing condensate on the OGL list'. Mr Brand accepted in cross-examination that this was an important matter. The project was essentially a gas-based project which required the importation of liquefied natural gas. Condensate was contemplated as the interim or alternative fuel. 232 On 3 April 1998 Mr Brand wrote to Mr Datuk Gnanalingam of PR in Kuala Lumpur. Mr Gnanalingam was the principal of the PR Group and associated with Siasin. The letter was prepared by Mr Bridgwood. Mr Brand said in the letter that the major hurdle facing the project was fuel allocation. Energy could secure fuel through its association and agreements with Woodside. Woodside had sufficient quantities of condensate and LNG to supply the Vypeen Project at a competitive price. This will require lobbying with the Ministries of Petroleum & Natural Gas and the Ministry of Power as well as the Finance Ministry. We believe that constructive progress has been made in this area and that all approvals may be obtained in the near future. Our staff in India will continue to work closely with your staff and with Woodside to lobby for these approvals. They had a brief discussion and then he signed the letter. 233 Mr Brand's letter of 3 April 1998 referred to the need to lobby the relevant Ministers to ensure that the condensate could be imported for use in the power plant. There were in evidence notes for presentation to the Minister for Power and the Minister for Petroleum and Natural Gas respectively. Mr Brand was aware of them. He said that he probably saw them in March 1998. The notes were in similar terms. It is useful to set out the note to the Minister for Power because it summarises the overall position at that point. The company has proposed to generate the said capacity in two stages, (Stage One 680 MW and the balance will be Stage Two). The Project will be developed as a Gas (LNG) fired power station, and ABB Switzerland has been chosen as the EPC Contractor. The fuel (LNG) is to be supplied from the proposed LNG receiving facility which is being developed in Vypeen Island, adjacent to our project site by the Government of India Consortium, Petronet LNG Limited, comprising of Gas Authority of India Limited (GAIL), Oil & Natural Gas Corporation (ONGC), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOCL). The estimated cost of the power project is approximately Rs 2200 crores (sic) . The Company has obtained all mandatory clearances from the Government of Kerala and the Government of India and other related Departments/Agencies and submitted these clearances along with other technical inputs to Central Electricity Authority (CEA) for the issue of Techno-Economic Clearance (TEC) which is the final approval for the project. The meeting of the Standing Projects Appraisal Committee (SPAC), which is mandatory for the issue of Techno Economic Clearance (TEC), will be convened shortly. M/s GAIL (through Petronet LNG) have promised to supply LNG by beginning of 2003 as per their schedule. But Siasin Energy will be completing the project works by the year 2002. Hence a backup/interim fuel become all the more necessary to commence commercial production of electricity immediately after the construction works are over. One type of interim fuel contemplated by the company is Condensate which is being used extensively in Australia for power generation. Siasin Energy can make arrangements to bring Condensate as interim fuel directly on OGL or channelise the import through any of the Government owned oil companies. A firm supply arrangement of an interim fuel is absolutely necessary for the financial closure of Siasin Energy Limited which in turn is required for the financial closure of GAIL's LNG Project. In his reply he informed Mr Brand that in the previous week the Ministry of Power had indicated to the Ministry of Petroleum and Natural Gas to consent to the use of condensate as a fuel for power generation. The Ministry of Petroleum and Natural Gas and the Commerce Ministry would have to reclassify import and tariff classifications to facilitate the importation of condensate by power plants. That process was expected to take at least three to six months. He said that it was unlikely that fuel security would be a complete non-issue by the time any sale and purchase agreement was signed. At that stage the signing was planned for 20 April 1998. But given the encouraging developments mentioned above, we are surprised that you now perceive it as a threshold criteria before you are prepared to proceed with the milestone payments. In the memo Mr Kacker referred to a recommendation made in November 1997 to the then Secretary of Power and Natural Gas that liquid fuel policy be amended to permit usage of condensate crude as a primary fuel for power generation. 236 On 20 April 1998 Mr Selvendra sent Mr Bridgwood a 'Compromise Payment Schedule' arrived at in discussions with Mr Swaminathan. He said that he hoped that it would be acceptable to Energy. The payment schedule set out payments to be made at various stages in the progress of the project. Against 'GOI Approval of Fuel' a figure of US$2 million was indicated. 237 On 23 April 1998 Mr Selvendra sent a memorandum to Mr Yamada. He had been to dinner with a Mr Justin Paul and had discussed the possible impact of intended government policy on Independent Power Projects in Tamil Nadu. Indications from the conversation were that the policy on the use of Naphtha for power generation was likely to change in favour of other fuels made available on OGL. It will not be available to power projects without fuel linkage. We must however wait for the official announcement. It requested Board approval for US$7.6 million in milestone development payments and internal/third party costs to reach financial closure on the project. In principle approval was also sought for a total investment by Energy expected to be US$71 million including US$22 million in premium and US$49 million in equity to acquire a 30% share in the project. In setting out the benefits of the project for Energy Mr Bridgwood stated that it was the company's most promising power project opportunity since Sengkang and PPN. This project does not currently have a fuel allocation from the Indian Government. Consequently it is dependent on obtaining approval from the Indian Government to import condensate. The Ministry for Petroleum and Natural Gas, Ministry of Finance and Ministry of Power have all indicated that this approval will be forthcoming. The land will be leased for the 30 year term of the PPA. The Techno-economic clearance (TEC) from the Central Electricity Authority (CEA) is expected in June 1998 following the Standing Project Appraisal Committee meeting scheduled for 15 May 1998. Formal approval for condensate to be imported under OGL is expected in the next 3 months. The Directors reviewed the Board paper on the Vypeen Project. Mr Brand advised that Energy was seeking Board approval for an initial commitment of A$10 million to fund its equity commitment to financial close. The payments were on a milestone basis with an initial amount of US$750,000 to be paid when the Share Purchase and Sale Agreement and Shareholder Agreement were signed. The US$10 million commitment had already been unanimously approved by the Executive Management Committee. The funding plan for the project had not been finalised but Energy could furnish the first 12 months equity through its existing capacity. 240 The Directors reviewed the risks. They noted that Energy would not be capable of undertaking another large project until the Vypeen Project was funded. $4 million was being placed at risk prior to the PPA being executed. Mr Brand noted that the key document for the project was the Fuel Supply Agreement. It was also necessary for the Government of India to approve the importation of fuel other than Naphtha. Mr Brand signed it on behalf of AEE. The agreement recited that Prenergy owned 57% of the share capital of Asian Resources Ltd (ARL) which in turn was beneficial owner of 94% of the share capital of Siasin. Siasin Trading and Services Pte Ltd (SS) held 43% of the share capital of ARL. Prenergy and SS were together referred to as the PR Group. The definition provision, cl 1 of the agreement, defined 'Shares' to mean 188,789 ordinary fully paid shares of ARL, representing 42.56% of its issued share capital. 242 Under cl 3.01 of the agreement Prenergy agreed to sell and AEE agreed to purchase the shares on terms and conditions therein set out. Each of the payments in Schedule 2, other than the first payment shall be made by AEE within 14 days of the receipt of a notification from PRENERGY of the achievement of the particular payment milestone and the receipt of proper evidence available to AEE that the particular payment milestone has been achieved. Milestone Payments to be made within 14 days of receipt of notification and proper evidence that the milestone has been achieved unconditionally. The amount of premium calculated as per this Agreement minus Sub-Total above. He agreed it was an important clause. He had also read and was familiar with the milestone schedule. He agreed that the reference to 'All applicable State and Central Government of India approvals for alternative fuel ...' was a reference to condensate. He played no part in obtaining for the company any legal advice before the agreement was signed. 245 In his evidence-in-chief Mr Brand said that, although structured as a share purchase, the Vypeen Project was 'really' a joint venture between Energy and Prenergy. The milestone payments 'viewed commercially' were contributions to development costs likely to be incurred by Prenergy prior to financial closure. In his experience, decisions about the timing of such payments involved commercial judgment. Typically, a question to be judged, was whether, as a matter of substance, the project had reached a stage at which, consistent with the spirit of the agreement, payment should be made and whether the joint venture party considered it was entitled to payment. Judgments of this kind were made by Mr Bridgwood in respect of projects which he administered. Mr Brand said he relied upon, and respected, Mr Bridgwood's judgments. Mr Brand also said that it is not uncommon to renegotiate milestone payments in the course of a project. Circumstances change. An unforseen development may make it inappropriate to make a particular payment on the happening of an event. 246 Although Mr Brand's general observations in his evidence-in-chief may be seen as to some extent self-serving, I accept them as reflecting the dynamic character of contractual relationships between parties to large scale project development joint ventures. No contract can anticipate all eventualities in such a relationship and commercial realities demand a degree of flexibility on all sides. This is not to say that contractual obligations are to be disregarded, but rather that they are amenable to variation or waiver and/or subject to a degree of mutually satisfactory 'interpretation' from time to time. 248 A meeting of the Vypeen Working Committee set up under the contract took place on 9 and 10 June 1998. Messrs Bridgwood, Yamada and Selvendra were present, representing Energy. Mr Swaminathan represented Siasin along with Mr Hyder Ali. The minutes show that Mr Hyder Ali submitted a list of permits and licences and was to take the lead in obtaining the permits and licences necessary from the Indian authorities. One of the necessary clearances, included in the list which he submitted to the meeting, was from the Chief Controller of Explosives for approval of siteport and storage of condensate/LNG under Rule 14 of the Petroleum Rules 1976. 249 The minutes of the Working Committee meeting of 9 and 10 June 1998 attached a summary of the current status with respect to 'Policy announcement for Condensate and LNG' provided by Mr Umashanka. This was in the form of a fax dated 9 June 1998. It was addressed to Mr Selvendra. We cannot commit anything at this stage till the Fuel Policy comes out. From the information available, condensate will not be tied up with the fuel linkage. Any IPPs will be permitted to import directly as their actual requirement. This will be done on the basis of State Govt's recommendation. He did, however, usually see its minutes or summaries which were circulated to members of the Energy Executive Management Committee by Mr Bridgwood. He accepted that that was the case. The approval had been anticipated at the time that the Energy Board gave approval to the project. The Government of India has just released the much awaited liquid fuel policy, in which condensate has been placed under OGL. We are therefore free to use Condensate as a fuel for power generation and import it without needing any linkage or special license. This will make Condensate cheaper than naphtha. He said 'Paul Bridgwood has mentioned the good news and this augurs well for our Kerella Project' (sic). 253 Mr Brand agreed in cross-examination, and I find, that he had received no supporting documentation with Mr Swaminathan's fax. He did not instruct Mr Bridgwood to obtain supporting documentation or to do anything further to establish whether Mr Swaminathan's assertions were correct. He did not direct Mr Bridgwood to do anything 'to prove up or investigate what Mr Swaminathan had said'. The report contained a review of existing projects and projects under development. In relation to the Vypeen Project, it reported the execution of the Sale and Purchase and Shareholders Agreements with PR, the signing of Heads of Agreement between Woodside and Siasin for the supply of condensate fuel for the Project and the MOU signed with Woodside in February 1998 under which it would have the option of acquiring a 10% interest in the Project. 255 Management papers prepared for a meeting of Energy's Board on 25 August 1998 included a report for which Mr Hornaday had responsibility under the heading 'Engineering, Operations & Business Development'. This related to 'Indian Activities'. To the extent that they related to the Vypeen Project, the management reports were prepared by Mr Bridgwood. In Mr Brand's view, the reference to the Government of India policy change appeared to remove the 'fuel risk' from the project. He said he formed the belief in July and August 1998, which he held until August 1999, that the Vypeen Project as an IPP was permitted by the Government of India to import condensate. His belief was reflected in the update report for the CBA prepared by Maurice Hayes. I accept that this was his belief. It was not suggested that he did not honestly hold it albeit his lack of inquiry was criticised. 257 In August 1998 Mr Brand visited Cochin with Mr Bridgwood and inspected the site of the proposed power station. They met with the chief engineer of the KSEB and with representatives of IOC and BPCL. They inspected a fuel terminal, which was to be converted to handle condensate. The terminal was owned or controlled by BPCL. They discussed their proposal with BPCL officials. Nothing was said in those discussions to suggest to Mr Brand that the condensate could not freely be imported into India under OGL. Indeed, the discussions proceeded on the premise that it would. Mr Brand reported on that visit to the Board in his management report for the 22 September 1998 meeting. 258 On 25 September 1998 the Vypeen Project obtained its Techno-economic clearance from the Central Electricity Authority of India. Mr Brand sent a memorandum to Mr Swaminathan at Siasin congratulating him and his team. As a result of that clearance AEE paid US$1 million to Prenergy as a milestone payment due under the terms of their agreement. A green light for condensate imports? The deviations related to carbon residue requirements and the final boiling point of the condensate. ABB had advised, on 5 October 1998, that Woodside should be able to agree with its carbon residue requirements without any problem. Woodside would have some difficulty in lowering the final boiling point of its condensate. ABB said it was reviewing this internally. Mr Bridgwood was to coordinate with ABB and Woodside to have them discuss the matter directly. Subsequent to the official notice, Director General, Foreign Trade (DGFT) of MOC will release an official notice on the application of the OGL to condensate by the end of October 1998. MSN was a reference to Mr Swaminathan. The Working Committee meeting of 6 and 7 October 1998 comprised Mr Swaminathan and Messrs Bridgwood, Yamada and Selvendra. It was also noted in the minutes that an OGL for the importation of condensate would be granted to an actual end user. This note, if correct, meant that Siasin would be able to import the condensate into India. 261 In cross-examination Mr Brand agreed that he did not see any subsequent official notice nor did he make any further inquiry to determine whether such a notice had issued. 262 On 15 October 1998 the Ministry of Power published a notice of 'RESOLUTION: FU-32/97/IPC.1'. The 'Resolution' was stated to relate to Liquid Fuel Based Power Plants. The text of the decision or notice adduced in evidence was illegible in parts. Mr Brand wrote to the Directors on 19 October 1998 on the subject of a financing plan and a budget for the 1998/1999 financial year. Since the previous Board meeting a range of strategic issues had been considered within the context of Energy's current market capitalisation, business focus, financial condition and growth prospects. Its key objectives were, inter alia, to maintain covenants with the CBA debt facility and to position the company to negotiate acceptable debt facilities in the second quarter of 1999 within a predictably more cautious debt market. He made recommendations in relation to various projects and activities and, in particular, recommended that Energy '... develop a plan to hold 20% of the Vypeen Project, with a credible 20% partner introduced by [Energy] to fund the balance of the 40% available'. 264 A Management Report to the Board meeting of 20 October 1998 again contained the statement that the Government of India had announced a new policy on 6 July 1998 allowing the importation of condensate without fuel linkage. 265 On 30 October 1998 Mr Brand sent a memorandum to members of the Board and of the Executive Management Committee setting out the minutes of a strategy review held on 27 October 1998. Directors and executives of the company had been present at that meeting. Mr Bridgwood was an apology. Messrs Brand, Hornaday and Hayes were among those present. Mr Brand said in cross-examination that he regarded the meeting as having the status of a Board meeting. The minutes recorded a review of all existing projects. A further review of the milestone payments was required in order to minimise EEC's development expenditure in the next twelve months. Furthermore, the development of both an equity and debt plan needs to commence to ensure adequate funding capacity at financial close. He agreed that he treated the resolution as equivalent to a Board resolution. He accepted that the best outcome for Energy would have been that the money was not payable. Asked whether he agreed that the first thing would be to check whether the milestone payment was payable he said 'yes'. Rather, it was a matter for which Mr Bridgwood was responsible. Mr Brand did not do anything personally to check the liability. His recollection was that at the next Management Committee meeting they reviewed the minute. Each of the staff was given particular assignments to implement what had been agreed. I will have to settle this before I need to respond to Umashankar before I leave as well. Also, if you decide to stagger in two payments, I have to "sell" to my management. Mr Swaminathan responded to him by a handwritten endorsement on the email which he faxed back to Mr Bridgwood. The balance of US$1,000,000 will be paid upon SEL obtaining the clearance from the Director General of Foreign Trade (DGFT), Ministry of Commerce, Government of India or by 15 February, 1999, whichever occurs later. M/s Siasin Energy in their letters dtd (sic) 22-7-98 and 28-8-98 have informed that they propose to use condensate as interim fuel. The suitability of condensate for the GT has been confirmed by the equipment suppliers M/s ABB Power Generation. Hence, I am to convey the approval of the State Government for the use of Condensate as interim fuel for the Vypeen Combined Cycle Power Project till LNG is available. In hindsight he would have expected either Mr Bridgwood or Mr Selvendra to have raised it with him. The first time he saw it was in June 2001. At that time Mr Bridgwood had departed from Energy. The letter was on a file which Mr Brand was asked to review and on which he was asked to provide a report to Mr Jordan. I accept his evidence in that respect. 269 It was Mr Brand's evidence-in-chief that sometime in December 1998 he had a discussion with Mr Bridgwood at Energy's West Perth offices. He said that, in the course of that meeting, Mr Bridgwood told him, in effect, that the milestone payment in relation to the alternative fuel was payable and had been requested by Mr Swaminathan. Mr Bridgwood told him Prenergy had obtained governmental approvals for the use of condensate as an alternative fuel. He had not raised with Mr Brand any question or issue as to whether the milestone payment was payable and Mr Brand said he assumed that there was none. 270 Mr Brand said in cross-examination that he had given Mr Bridgwood authority to renegotiate the milestone. The arrangement described in the letter for the payment of US$2 million in two tranches did not flow from any discussion or direction he gave to Mr Bridgwood. Mr Bridgwood told him in December 1998 that he had had discussions with Mr Swaminathan about the milestone payments but didn't give him any details of the discussions. Mr Brand didn't ask what those discussions were, nor whether any agreement had been reached. Mr Bridgwood did not tell him that he had reached an agreement with Mr Swaminathan. Mr Bridgwood did not tell him in December 1998 that there was an agreement to pay US$1 million at the time and US$1 million in addition at the latest by 15 February 1999. 271 Mr Brand agreed that what he had said in his statement in evidence-in-chief was inconsistent with his replies in cross-examination. He was asked to reflect on which was the correct position. He said the correct position was as set out in his statement of evidence-in-chief. He then said that Mr Bridgwood had told him that Prenergy was asking for their US$2 million because the milestones had been met. He said that was about the extent of the discussions he had with Mr Bridgwood in December 1998. 272 I am inclined to think that Mr Brand's recollection was a little confused which is not surprising given that he is being asked about conversations that occurred seven and a half years earlier. In light of what had passed before, I am satisfied that he believed that the necessary approvals had been secured and that he instructed Mr Bridgwood to try to renegotiate the milestone payments in order to ease financial pressure on Energy. 273 Mr Brand agreed in cross-examination that he did not seek any legal advice about whether Energy was obliged to make the milestone payment nor did he direct Mr Bridgwood to obtain such advice. He did not personally investigate whether Energy was so obligated. He did not call for documents to see what the position was. Nor did he direct Mr Bridgwood to investigate the matter further. 274 Mr Bridgwood was not called to give evidence by any party. He is being sued by Energy. I was invited to draw inferences adverse to Martech and Mr Brand from the failure to call him. In my opinion, however, any such inferences would be speculative. It may be that Mr Bridgwood was perceived as an unwilling or unreliable witness or one who, in the light of the proceedings between himself and Energy, would be too concerned to protect his own position. I do not draw any inference from his absence as a witness for Martech and Mr Brand. 275 On 5 January 1999 Ms Tan, on behalf of Mr Swaminathan, sent a fax to Mr Bridgwood referring to the letter of 18 December 1998 and asking whether AEE had remitted the milestone payment of US$1 million to Prenergy's bank account. On 18 January 1999 Mr Swaminathan sent a personal email to Mr Bridgwood making what he called a 'plea for the US$1 million milestone payment'. 276 Mr Brand had a discussion about the milestone payments with Mr Bridgwood at Energy's West Perth office in mid to late January 1999. Mr Bridgwood told him that the Vypeen Project was under funding pressure and that Prenergy required the payment to keep the Project moving forward. Mr Bridgwood, he said, told him that it was important that a payment be made to ensure progress be made. 277 A Management Report prepared for the Board meeting of 29 January 1999 noted that Woodside was reviewing the specification of condensate with ABB. ABB was to conduct some tests to verify condensate as an acceptable fuel. That verification would be given in the middle of 1999. Mobil was also interested in the supply of condensate and an initial meeting had been held with Mobil Singapore in October 1998. Messrs Swaminathan, Bridgwood, Yamada and Selvendra were all present. The minutes do not record discussion of milestone payments at that meeting, but it is an agreed fact that such discussion did occur. 279 Mr Brand did not attend the meeting but did meet afterwards with Messrs Bridgwood and Swaminathan. One or other of them told him that they had reached an in principle agreement to amend the milestone schedule. The amendments were reflected in a revised milestone schedule given to Mr Brand at the meeting by Mr Bridgwood. Mr Bridgwood explained the effect of the revised schedule to him. It provided for US$1 million to be paid on 15 February 1999 as a milestone payment for government approvals for alternative fuel. Mr Brand said he was told at the time that the government approvals for alternative fuels had been achieved. He assumed that they had been discussed at the Vypeen Project Working Committee meeting. He noted that a new milestone payment of US$1 million would be made when the condensate quality was approved by ABB. 280 Mr Brand told Mr Bridgwood and Mr Swaminathan that Energy could not make a US$1 million payment on 15 February 1999. It could manage the payment if it were divided into two tranches of $500,000 each, the first to be paid on 15 February 1999 and the second on 15 March 1999. The proposed new milestone schedule was amended accordingly. This was the only amendment which Mr Brand suggested. The words 'acceptable to the Working Committee' were included in the revised milestone schedule in relation to the approvals. Mr Brand did not realise at the time of his discussion with Mr Bridgwood that this requirement was an amendment to the schedule. Mr Brand also told Mr Swaminathan at the meeting that ABB's approval of the condensate specification was critical. 281 The first version of the revised schedule shown by Mr Bridgwood to Mr Brand bore Mr Bridgwood's hand writing. US$500,000 --- before 15 February 1999. US$500,000 --- before 15 March 1999. It is not necessary to set them out here. 282 Mr Brand thought that the agreement reflected in the proposed milestone schedule served the interests of Energy and AEE. Energy did not have the cash to pay Prenergy US$2 million in the immediate future. Payment of US$1 million in two tranches over two months was manageable. The liability to pay the second US$1 million, originally included in the US$2 million payment due when necessary approval for alternative fuel were secured, arose when ABB was satisfied that the quality of Woodside and Mobil condensate was suitable for the approved turbines. It was also in Energy's interests that the immediate cash needs for the project were met to some extent. In addition, the amendment allowed Energy to maintain good relations with its joint venture partner, Prenergy. 283 Mr Brand said that Energy would have the capacity to sell its interest in the project when financial closure was achieved. A sale of its interest would generate cash to enable it to retire a portion of the CBA debt. A sell down of Energy's interests had been discussed at the September 1998 Board meeting and the October 1998 strategy meeting. Mr Brand told Messrs Bridgwood and Swaminathan that the amended milestone schedule was acceptable. The first matter related to fuel testing by ABB. Mr Brand had evidently proposed to speak to the head of ABB to get it to push ahead with the test. Milestone payment. I would appreciate if the first tranche of US$500,000 could be sent as scheduled on 5 February, 1999 as we require to "deploy" the funds early next week. He said that he would arrange to speak with the head of ABB in the following week to ascertain their ability to push ahead with the turbine testing. He referred to the Vypeen Project and said that one of the most critical issues for its success was for ABB to guarantee the performance of its plant using condensate fuel. All parties involved in the development of the Project understood the importance of the matter being resolved in order for the Project to reach financial closure. He sought Mr Bergmann's support to ensure that ABB was making all efforts to ensure timely acceptance of condensate as a viable fuel for the Project. It was unable, however, to meet the balance payment of US$500,000 by 15 March 1999 as required under the revised milestone schedule. 288 The revised milestone payment schedule was reported to the Board of Energy at its meeting held on 26 March 1999. The relevant part of the Management Reports to the Board relating to the Vypeen Project informed the Board that the final Techno-economic clearance had been issued on 25 September 1998 and that Siasin had provided a progress report on 2 February 1999. 289 Against the heading 'Milestone Payments' the Management Reports set out Energy's milestone payments to the PR Group as revised and agreed. Mr Brand said in evidence-in-chief that in accordance with Energy's usual Board procedures and management practice this reflected Board approval of the Management Report. It also reflected Board approval of the agreement made on 2 February 1999 and the payment of US$500,000 already made under that agreement in relation to the alternative milestone as well as the scheduled further payment of US$500,000 which had been scheduled to be made on 15 March 1999, but which had not, at the date of the meeting, in fact been made. 291 I accept that the reference to these matters as reviewed and noted by the Board indicates its acceptance, on the materials before it, of the steps which had been taken in relation to the milestone payments. They agreed that the second tranche of US$500,000 would be paid in instalments of US$100,000 on 25 March 1999, US$100,000 on 31 March 1999, and US$300,000 before 15 April 1999. We are planning to release the further US$300,000 in April, hopefully to coincide with PPN settlement. It appears from the initials at the top of the document that it was circulated to the members of the Energy Executive Committee. Mr Brand said he read the document which stated that no fuel linkage was necessary for the Vypeen Project because 'Gas and condensate on OGL'. At the time he received this report part of the outstanding milestone payment had not been made. It is an agreed fact in these proceedings that Mr Brand, on behalf of Energy and AEE, approved payment to Prenergy of the second tranche of US$500,000 in four instalments; US$100,000 on 25 March 1999, US$100,000 on 31 March 1999, US$150,000 on 30 April 1999 and US$150,000 on 6 May 1999. It was also common ground that no further payments were made to Prenergy. The report related to a visit by Mr Umashankar to LNG Petronet. It is expected to be issued anytime. I shall keep a watch and inform you. We have paid US$1 million for this milestone. Please make sure that all necessary approvals are in place incl Ministry of Commerce (contact Umashanka (sic) direct?). 298 On 1 June 1999 an overview of the project status was prepared for a meeting of the Siasin Board of Directors. This was in similar terms to that dated 31 March 1999 prepared for the Energy Board. Fuel supply was discussed at the meeting. He was aware that there was a Vypeen Working Committee meeting to be held in Kuala Lumpur on 11 June 1999, but he did not attend it. In preparing his statement of evidence, Mr Brand reviewed emails which passed between Mr Swaminathan, Mr Bridgwood, Mr Selvendra and Mr Yamada after mid-May 1999. He had not been given copies of these emails at the times they were sent. He was not aware of their contents at the time. He said that they indicated that by mid-May 1999 a question had arisen as to whether further GOI approvals were required for the import of condensate. He was not informed by Mr Bridgwood, Mr Selvendra or anybody else about those issues. Thus condensate will be governed under the existing policy applicable for import of crude oil and cannot be put under OGL. There is a handwritten reference to an email about it but no email was in evidence. Nor was any relevant email discovered. 300 An agenda for a meeting of the Energy Board of 25 June 1999 set out in a report on the Vypeen Project that there were no applicable statutory clearances as gas and condensate were on OGL. The agenda also set out by way of report the position with respect to the milestone payments. At that stage milestone payments remained to be made in relation to the execution of an 'Escrow Agreement' and State Government guarantee acceptable to the Working Committee, the execution of a Fuel Supply Agreement acceptable to the Working Committee and approval of alternative fuel quality by the EPC contractor. The latter appears to be a reference to ABB. 301 Mr Brand said that, to the best of his recollection, he was not informed that condensate would not be placed under OGL until some time in August 1999. He was then told by Mr Bridgwood, who said to him, in effect, that he and Mr Swaminathan were considering and pursuing approvals for diesel or HSD as the alternative fuel for the Vypeen power station. Mr Bridgwood told him that there was no question about the suitability of diesel for the ABB turbines. Mr Brand told Mr Bridgwood at a meeting at about that time that he should pursue approvals for diesel as quickly as possible. 302 The information that condensate was not approved for import under OGL came as a complete surprise to Mr Brand. From July and August 1998 until August 1999 he had been informed, in conversations and documents, that GOI approval had been given for the import of condensate for use in the Vypeen power station or that the import of condensate was permitted 'under OGL' or similar statements. It was on that basis that he authorised the amended milestone payments at the meeting on 2 February 1999. Having regard to the finding I have already made about his belief that relevant approvals had been given, I accept that evidence. 303 On 5 August 1999 Mr Swaminathan sent to Messrs Bridgwood and Yamada a copy of an email that he had received from Arvind Bansal of SSKI Corporate Finance Limited. In that email Mr Bansal was reporting to Messrs Swaminathan and Selvendra on a meeting he had with representatives of the Ministry of Power, the Ministry of Petroleum and Natural Gas and the Director-General for Foreign Trade. However, MPNG has now decided that condensate will not be put under OGL. MPNG has recommended to DGFT that the product may be allowed to be imported on a case-to-case basis by issue of a special Actual Users' Licence for power projects. However, DGFT has not taken a view on this as yet. As of today, the position is that condensate is not on OGL and neither is there a mechanism for power projects to get a licence on this product. SO we have to wait for DGFT to allow. The Ministry of Petroleum and Natural Gas agreed to allow its use but was yet to come out with a notification which would set out the conditions attaching to that use. We now need to determine where can this product be sourced. I am told that ABB turbines should have no problem burning this fuel and indeed there is enough experience on this fuel worldwide. If it is indeed true, then we are actually in a better position and in a better negotiating stand with ABB and to develop the project faster. HSD storage facility will be cheaper than that for condensate and its transportation also will not be a problem. The Woodside memorandum referred to messages from Mr Yamada concerning the Fuel Supply Agreement. They recognised the need for documentary evidence of progress on a draft Fuel Supply Agreement to assist Siasin in its discussions with KSEB. In the memorandum they identified specific areas of concern which marked the project as being at 'an immature phase in a number of areas'. The letter provided by yourselves indicating KSBB's support for the use of condensate for the Vypeen project and the reference therein to a Ministry of Power regulation authorising use of condensate and its import under OGL contradicts our latest information on the position of the Ministry of Petroleum and Natural Gas in this matter. Our consultants in New Delhi have obtained letters indicating that condensate imported for power station consumption will be classified as Crude Oil and will be a canalised item. If condensate is to be a canalised item we will not be able to support this project. One of these was the apparent ability of Woodside to supply a variety of hydrocarbon liquids including Naphtha. The second was that condensate had become a politically charged label. 305 On 22 August 1999 Mr Swaminathan sent an email to Mr Bridgwood following a meeting which he, Mr Arvind Bansal and Hyder Ali had with Mr Velumani, the Director at the Ministry of Petroleum and Natural Gas responsible for liquid fuel allocation. From the discussions that followed they concluded that condensate would not be allowed as fuel for power generation. Mr Velumani was said to have been 'very categorical about this'. He said that the Ministry would never give an allocation or a recommendation for an actual user's licence for condensate even if the IPP could prove that it had secured a source for the fuel. The Ministry would consider approving a Naphtha allocation if it were recommended by the Government of Kerala and the Ministry of Power. In Siasin's case the situation was better as it was only being used as an interim fuel. This, however, was subject to approval by the Ministry of Petroleum and Natural Gas which was not forthcoming. Since they were now targeting diesel as the preferred alternative fuel, there were approvals relating to diesel which were outstanding. On that basis Mr Bridgwood requested that the milestone payment previously made for fuel be refunded. Mr Swaminathan responded asking for an official request for the refund citing the reasons. Mr Bridgwood followed up with a letter which he sent by fax to PR for attention Mr Swaminathan. The letter repeated the substance of his earlier email. No refund was forthcoming. He knew that Messrs Bridgwood and Selvendra had pursued approvals for diesel as an alternative for the Project. Until that time and possibly after, there was some prospect of selling down Energy's interest in the Project to the proposed operations and maintenance contractor PSEG. That sell down had been discussed at meetings of Energy's directors on 22 April and 28 May 1999. It was also discussed at Siasin's Board meeting of 10 June 1999. It was, according to Mr Brand, the principal reason that he was invited to attend that meeting. Negotiations were conducted with PSEG and other parties during that period. He believed they were conducted by Mr Swaminathan. The object was to complete the sell down after the Power Purchase Agreement had been renegotiated with the KSEB and an Escrow Agreement made. Messrs Bridgwood and Swaminathan negotiated those matters with KSEB until December 1999. 308 In September 1999 Energy had breached covenants in its facility agreement with the CBA. As a result, Mr Brand was heavily involved in negotiations with the CBA and exploring the proposed sale of Australian assets with a view to retiring the CBA debt. Issues with PLN in relation to payments under the Sengkang gas and power project were ongoing. In September, October and early November 1999 Energy's Board negotiated with the American multinational company, Enron, for the latter to become a 51% shareholder in Energy. Mr Brand described this as a major transaction in which he was heavily involved. All of these matters occupied almost all of his time in late 1999. 309 During this time Mr Brand had discussions with Mr Bridgwood about the progress of the Project. He told Mr Bridgwood that he should endeavour to secure the repayment of the US$1 million or come to some agreement with Prenergy under which that payment could be used to fund ongoing project costs or that Energy could take over the Project. 310 In December 1999 Mr Brand was told that Mr Swaminathan had resigned. Thereafter no progress was made in negotiations with Prenergy. In early 2000 Mr Bridgwood tried to take over the management of the Project for Energy. He did that with approval from the Board and reported progress. Mr Brand was kept in closer touch with the progress of the Project in early 2000 than he had been up until that time. 311 On 2 May 2000 Mr Brand wrote to Dato Gnanalingam referring to earlier discussions and correspondence on the Vypeen Project. Provide the most competitive tariff solution in order to defeat competing projects and obtain escrow. Secure the most appropriate fuel, both interim and long term. Attract an equity partner that can progress the project and add value. This has been outstanding now for some time and needs to be resolved together with future funding for project development and possibly a revised agreement between EEC and PR. This was necessary since no naphtha fuel allocation was available for the Vypeen Project. A MOU was signed with Woodside and a condensate FSA almost finalised. Condensate, however will not been (sic) approved by the MoPNG, despite being approved by the MoP, so this option is no longer being pursued. Note that various companies, including Woodside have been attempting to have condensate approved as an alternative fuel in India for several years without success. [Energy] agrees with its partner to take control and management of the project by end September 2000 and reaches agreement on the revise (sic) terms of the Sale and Purchase Agreement by end November 2000. SEL enters into a MOU with PTC or recommences PPA discussions with KSEB by end December 2000. SEL obtains a commitment on escrow from KSEB or another form of security to obtain financing acceptable for financiers by March 2001. SEL obtains a Fuel Supply Agreement for liquid and/or LNG fuel with BPCL by end December 2000. He referred to the status report of August 2000 and inferred from it that at the time Energy did not consider that any of the key documents for project finance were available. In January 2001 Mr Jordan told Mr Brand at a meeting in Energy's West Perth office, that Mr Elliott who had become Energy's Managing Director in September 2000 had decided not to incur any further expenditure on the Project. 316 Mr Bridgwood resigned from Energy in February 2001. Mr Selvendra resigned in April 2001. Mr Hyder Ali also ceased to work for Energy in about April 2001. 317 In May 2001 Mr Brand travelled to India with the new Managing Director, Mr Elliott and Mr Jordan, together with Mr Prux, an American adviser to Mr Elliott, to review Energy's Indian assets. They returned to Australia shortly before 25 May 2001. 318 The Vypeen Project was discussed at a meeting of Energy's Board on 26 May 2001. Mr Elliott raised the question of the US$1 million milestone payment and said he proposed to recover it from Prenergy. Mr Jordan asked Mr Brand, after the meeting, to prepare a report about the circumstances in which that payment had been made. At that time neither Mr Bridgwood nor Mr Selvendra were employed by Energy. Mr Brand said that if they had been still employed he would have asked them to prepare the report because much of his knowledge was second hand. The report he did prepare is based on a review of Mr Bridgwood's file. 319 The report took the form of a one and a half page memorandum. It set out a chronology of the events, which have already been referred to. The payment dates were deferred to meet EEC's cashflow. Nor has Energy been asked to make any such payments. Mr Pal's experience was initially in property, banking and constitutional law. His practice is general corporate law, 'foreign collaborations', joint ventures, mutual funds and technology transfer. He has been involved in privatisation and project financing in the oil, gas, power, telecom and mining sectors. As at January/February 1999 what approvals, if any, were required from the Ministry of Petroleum and Natural Gas ("MPNG") of the Central Government of India, for the importation and use of condensate as a source of fuel for power generation at a power plant which was to be constructed in the State of Kerala ("the Vypeen project")? What advice would an Indian lawyer with experience in the oil and gas industry have given, had he or she been asked in January/February 1999, whether any necessary approval from the ("MPNG") (sic) for the importation and use of condensate at the Vypeen project had been obtained. He was also provided with a copy of the letter dated 17 December 1998 from the Principal Secretary of the Government of Kerala to Siasin. 322 Mr Pal was asked to assume that it was intended to import condensate in large commercial quantities as an interim fuel for up to three years for the purpose of power generation at the Vypeen Project and not for use in designated private or joint venture refineries. The condensate intended to be used had a flashpoint above 23C and therefore fell within either Petroleum Category B or C. He was also asked to assume that it was intended that condensate would be imported directly into India by the Vypeen proponents. He assumed the definition of condensate as a 'liquidate hydro-carbon by-product of natural gas that can be refined as if it were very light crude oil and is treated at par with crude oil'. 323 Mr Pal gave a brief overview of the relevant legal and regulatory regime in India. The Ministry of Petroleum and Natural Gas regulates and develops oil fields and mineral oil resources, petroleum and petroleum products, other liquid and substances declared by Parliament by law to be dangerously inflammable. Responsibility for exploration and production of oil and natural gas, their refining, distribution and marketing, import, export and conservation of petroleum products and Liquified Natural Gas falls under the scope of the Ministry. The Petroleum Act 1934, is a consolidated law relating to import, storage, production, refining and blending of petroleum. The Act defines petroleum as meaning any liquid hydro-carbon and mixture of hydro-carbons and any inflammable mixture (liquid, viscous or solid) which contains any liquid hydro-carbon. Mr Pal was of the opinion that condensate, being a liquid hydro-carbon, would fall within the definition of petroleum. The Petroleum Rules 1976 are made to give effect to the Act's purposes. 324 Section 3 of the Act says that no one shall import, transport or store any petroleum save in accordance with the Rules. It is not necessary for present purposes to refer to the various Rules cited by Mr Pal. It is clear enough that approval for the importation of petroleum is effectively controlled under Indian law by, inter alia, the Ministry of Petroleum and Natural Gas. 325 By its Resolution No 224 dated 21 November 1997, the Ministry of Petroleum and Natural Gas notified that all petroleum products except crude condensate, inter alia, would be decanalised with effect from 1 April 1998. This left condensate on the canalised list. The term 'canalised' in this context, means that the goods can only be imported by designated State-owned corporations. 326 The Ministry of Commerce in a policy circular dated 28 August 1998 addressed to all licensing authorities, customs authorities and others regarding imports of canalised items stated that items which are canalised can be imported by the canalising agency only and not by any individual importer. An individual importer would require an import licence issued under par 4.8 of the Export and Import Policy 1997-2002 known as the EXIM Policy. 327 Under par 4.8 of the EXIM Policy any goods, the import or export of which is canalised, may be imported or exported by the canalising agency specified in what are called Negative Lists. The Director-General of Foreign Trade appointed under the Ministry of Commerce may grant a licence to any person to import or export any canalised goods. According to the Negative Lists of the EXIM Policy, canalised goods can only be imported through the IOC, a public sector undertaking, acting as a canalising agent. An application for the grant of a licence for import or export of items included in the Negative Lists can be made in a format set out in Appendix 24 to the EXIM Policy to the licensing authorities. 328 Mr Pal noted that the Ministry of Power, in its Resolution No FU-32/97-IPC.I dated 15 October 1998, permitted the use of condensate for power generation. A license from MPNG to import and store condensate in bulk. A licence from MC to import canalized goods as specified in Paragraph 4.8 of the EXIM Policy. A license from MPNG to import and store condensate in bulk. A licence from MC to import canalized goods as specified in Paragraph 4.8 of the EXIM policy. It would always be open for the proponent to arrange with the IOC to import condensate. In answer to a question from the Court, however, he said that the IOC was only a 'canalising agent' and that a licence would still be needed to import condensate through that company. He was then referred to a notification of 31 March 2001 by the Ministry of Commerce and Industry and agreed that its effect was that condensate could be imported freely into India without restriction after that date. 331 I infer from Mr Pal's evidence, which I accept, and from the evidence relating to the attitude of the Ministry of Petroleum and Natural Gas, that all necessary approvals for the importation of condensate for use as an interim fuel for the Vypeen Project were not in place at the time that the milestone payments were made. I accept also that the attitude adopted by the Ministry of Petroleum and Natural Gas contradicted all other indications previously given by the Ministry of Power and the State of Kerala. He was responsible for determining whether or not the Bank would finance power projects in China and elsewhere in Asia similar to the Vypeen Project. 333 Mr Allen agreed with Mr Brand that the establishment of a major power project such as Vypeen, required high level negotiations and commercial and other dealings on complex matters. It also involved considerable expenditure on development costs that are not recoverable in the event that the project does not go ahead or in the event that another party secures the project. In Mr Allen's opinion, for a project such as Vypeen to secure finance, a number of key agreements must be negotiated to the satisfaction of lenders. It is not necessary to set out that catalogue of agreements here. It is sufficient to note Mr Allen's opinion that none of the key documents necessary to establish a bankable project were in place in respect of the Vypeen Project. Moreover, many of the approvals which had been obtained were now out of date. In his opinion, if Energy or any other person wished to re-establish the Project it would need to be the subject of a complete and comprehensive negotiation. He considered it very likely that any documentation previously drafted would have little or no bearing on future events. 334 There have been ongoing negotiations between Energy and Prenergy. In August 2004, Prenergy was planning to wind up its subsidiary, ARL. Mr Allen wrote to Mr Choong of Prenergy on 19 August 2004 pointing out that if ARL were wound up then all past connections between it and the Vypeen Project and all historical records registered with Indian authorities would cease to be of any value. In cross-examination he somewhat implausibly denied that this carried the implication that there was some residual value in the Vypeen Project. 335 In its 2001, 2002 and 2003 financial reports, Energy included the value of its investment in the Project at $4,296,000 as a non-current asset. This reflected the expenditure which it had undertaken. It necessarily included the milestone payments which had been made. Those payments, it should be noted, were to be credited, under the Sale and Purchase Agreement, against the overall purchase price for the shares being acquired by AEE. 336 In 2004 the Board of Energy decided to write down the value of that investment to zero. 337 Since 29 November 2005 Energy has advanced a proposal to Prenergy under which, in effect, Prenergy would transfer its shares in ARL to Energy. Energy would grant Prenergy an option to acquire a percentage of the Vypeen Project or of the shares in ARL when the project went into operation. The precise number of shares to be transferred would be found by a calculation bringing into account development costs incurred by both Energy and Prenergy. The development costs would, in all probability, include the US$1 million milestone payment which is the subject of these proceedings. Mr Allen suggested that the extent to which particular payments could be brought into account in negotiations would depend upon demonstration in good faith of their relevance. He is a director of the first cross-claimant. His responses in the witness box at times tended to be argumentative and dismissive of the questions put to him. At times he presented more as an advocate than as a witness concerned to give factual answers to the questions put to him. In so saying, I do not suggest that he was anything other than honest. However, because of his adversarial approach, I treat his opinions with a degree of reserve particularly to the extent that they suggest that the Vypeen Project is, in effect, of no current value. I am left at the end of his evidence unable to draw any firm conclusion about the extent to which payments previously made in relation to the development of the Project are likely to be reflected in a future asset based on the negotiations which have been undertaken with Preneregy. His conduct is also attributed to Martech, of which he was the principal at all material times. Misleading or deceptive conduct on the part of Martech incorrectly representing to Energy that all applicable approvals had been obtained and that it had exercised due care and diligence in arriving at that determination (c/c 20). 2. Breach of an implied term of the deed between Martech and Energy that Martech would exercise reasonable care and diligence in carrying out the services provided (c/c 5 and 28). 3. Breach of common law duties of care owed by Mr Brand and Martech to Energy and AEE (c/c 11 and 11A, 28 and 31). 4. Breach of a fiduciary duty owed by Mr Brand to Energy and AEE to exercise reasonable care in the performance of his duties as a director of Energy and AEE (c/2 12 and 31). Although the formulations of those contractual, common law, fiduciary and statutory duties vary from one to the other, they are for practical purposes, subsumed in the one standard of reasonable care. As was submitted on behalf of Martech and Mr Brand, the duties which were imposed on directors by s 232(4) of the Corporations Law, which was in force at the relevant time, are essentially the same as the duties of directors under the common law and, a fortiori, in equity. The submission referred to authorities cited by Santow J in Re HIH Insurance Limited (In Prov Liq); Australian Securities and Investments Commission v Adler and Others [2002] NSWSC 171 ; (2002) 41 ACSR 72 at [372] . Plainly enough a director and, a fortiori , a managing director, may rely on the advice and information of officers of a company whose task it is to provide such advice and information. Reliance may also be placed upon judgments made by officers of the company which fall within their sphere of responsibility. That reliance would, of course, not be reasonable if a director or managing director knew, or by the exercise of ordinary care should have known, any facts which would raise a question about the judgment, information or advice offered. 342 The question whether reliance by a director upon an officer of the company or delegation of a function to such an officer is reasonable falls to be determined in the circumstances of each case. This, it was said, was a 'business decision' which involved the balancing of a range of circumstances and factors. It was Energy and AEE which wished, for their own reasons, to revise the milestone schedule and which had to reach a compromise acceptable to Prenergy. It was submitted that courts properly refrain from assuming the management of corporations and substituting their own decisions and assessments for those of directors. Directors can be expected to have much greater knowledge and more time and expertise at their disposal to evaluate the best interests of the corporation, rather than the court --- Darvall v North Sydney Brick and Tile Co Ltd (1989) 16 NSWLR 260 at 281. 344 In their submissions, Energy and AEE relied upon the formulation of the condition for the making of the milestone payment, namely the satisfaction of 'All applicable State and Central Government of India approvals for alternative fuel for the Vypeen Project'. They submitted that Mr Brand accepted that the law of India effectively prohibited the import of condensate for use in the Vypeen Project and that the way to address that situation was to seek to persuade the Indian Government to change the law. What was necessary was a change in the law generally not just a facilitation for the purpose of the Vypeen Project. The law in relation to importation of condensate did not change between 1998 and 1999 and for that reason applicable approvals had not been obtained. It was also emphasised that no application for approval was ever made. On that ground, it was submitted, that objectively speaking there was no basis upon which the milestone payment should be made. 345 Energy and AEE relied upon Mr Brand's understanding of certain important facts. He knew that the supply of condensate fuel was the most critical component and the key to financing the project. This appeared from the memorandum dated 27 February 1998 which he had received. He also knew from a fax dated 26 March 1998 from Mr Bridgwood that condensate was not then permitted to be imported into India. Of course that fax added that the Ministry of Petroleum and Natural Gas would recommend to the Ministry of Power that condensate be approved for importation under the Open General Licence (In fact the position seems to have been the other way round). He was aware of the proposed lobbying of the Ministry of Power and the Ministry for Petroleum and Natural Gas. The text of the brief to the relevant Ministers has been set out earlier in these reasons. 346 Energy and AEE also referred to Mr Brand's letter to Mr Gnanalingam on 3 April 1998 on the condensate issue and Mr Swaminathan's response of 4 April 1998. It was put that at this time he knew that the approval of both the Ministry of Commerce/Finance and the Ministry of Petroleum and Natural Gas was required for the importation of condensate. They pointed out that Mr Brand had read the executive summary of 5 May 1998, being part of the papers considered by the Board before it entered into the Sale and Purchase Agreement. He attended the meeting of 7 May 1998 and made a presentation in relation to the Vypeen Project in the absence of Mr Bridgwood. He had read the Sale and Purchase Agreement prior to entering into it. He was familiar with the payment clause 3.09 and the milestone schedule. He also received the fax of 3 July 1998 from Mr Swaminathan and replied to it on 6 July 1998. 347 It was submitted that until July 1998 Mr Brand was aware that there had to be a change in the law in India in order to enable condensate to be imported. There was no evidence of any change in that position other than the fax of 3 July 1998 from Mr Swaminathan to Mr Brand which attached no supporting documentation or provided any official indications which would support the proposition advanced by Mr Swaminathan. The source for Mr Swaminathan's views were said to remain 'entirely unknown and undisclosed'. 348 It was submitted by Energy and AEE that Mr Bridgwood was not the source of the information about the proposed change of the law. That source was Mr Swaminathan. It was in Mr Swaminathan's interest to promote Prenergy's position. It was submitted that the provisions of cl 3.09 of the Sale and Purchase Agreement underscored the fact that it was for Energy to consider its position before agreeing that it was obliged to make any milestone payment. 349 Energy and AEE pointed out that Mr Brand agreed in cross-examination that in deciding to make the payment he had in mind commercial considerations. They contended that Mr Brand's approach was that because Energy was in financial difficulties it was important to keep the Project moving, almost no matter what. As a result, he made a decision without regard to whether the milestone payment had fallen due because he wanted to keep Prenergy happy. As to the latter proposition I observe, as earlier found, that Mr Brand acted, at all material times, in the belief that the relevant approvals had been secured and saw the restructuring of the milestone payments as entirely to Energy's advantage. 350 In my opinion, Energy and AEE seek to hold their former managing director to an unrealistically high standard of care. At the time he authorised the milestone payments, Mr Brand believed that the relevant condition for making those payments had been satisfied. 2. Mr Brand formed his belief in July 1998, based on advice from Mr Bridgwood and a confirming fax from Mr Swaminathan. 3. Mr Brand regarded Mr Bridgwood as a senior, long-serving, experienced and trusted officer of the company. While it would have been reasonable for him to have requested precise documentary verification of the satisfaction of the milestone condition, it did not amount to a failure on his part to take reasonable care or to exercise due diligence as a director that, in the circumstances, he relied upon Mr Bridgwood's judgment. 4. The reasonableness of Mr Brand's conduct in relying upon Mr Bridgwood's judgment and advice can be viewed against the range of responsibilities that Mr Brand had as managing director and the variety of issues, including the question of the CBA debt, with which he was directly involved. 5. Although his authorisation of the milestone payments was founded upon the belief that the relevant condition was satisfied, Mr Brand also had legitimate concerns that the Project should be kept moving and that a harmonious relationship should be maintained with Prenergy. A close and searching scrutiny of the claimed approvals, having regard to his belief that they had been obtained, would, on that hypothesis, merely cause delay in the progress of the Project and disruption to the relationship with Prenergy. Commercial decisions, in the dynamic context of an ongoing commercial relationship and a complex development project, even important decisions, are not unusually taken on imperfect or partial information and reasonably in reliance upon the advice of colleagues and other officers in the common enterprise, whether it be a corporation or some other business structure. In my opinion, having regard to the circumstances to which I have referred, Mr Brand did not breach his common law duty of care nor his duty as a director of Energy and AEE. Martech did not, by reason of his conduct, breach any implied duty of care in the agreement under which it provided his services as managing director. 352 So far as the cause of action based in misleading or deceptive conduct is concerned, I do not consider that the representations attributed to Martech were made. Mr Brand was Chief Executive and Managing Director of Energy. If he formed a belief based upon advice given to him by a senior officer of the company, that belief is attributable to Energy. His actions upon that belief including reports to the Board of Directors are not capable of amounting to representations to Energy for the purposes of the Trade Practices Act . 353 For the preceding reasons, each of the causes of action alleged against Martech and Mr Brand fails. The cross-claim should be dismissed. It was submitted that given the new Liquid Fuel Policy announced by the Ministry of Power and the subsequent actions of Government of India Ministries, the KSEB and the State Government of Kerala consistent with the subsistence of the new Liquid Fuel Policy, the Board might well have regarded final placement of condensate under OGL as a formality likely to be satisfied in the immediate future. 355 Whether members of the Board, provided with all relevant documentation which was known to Mr Brand and/or Mr Bridgwood, would have come to a different view is a matter of some speculation. None of the former directors was called to say what they would have done in the circumstances. It may be that if they had had the benefit of advice from an Indian lawyer such as Mr Pal that there was a further step to be taken with the Ministry of Petroleum and Natural Gas, the milestone payment would have been deferred. It may be that they would have been prepared to make the payment even if the condition was not finally satisfied given the apparent likelihood of its approval and the availability of alternative modes of importation and alternative fuels, such as diesel. It may well have been relevant to such consideration that the milestone payment was an element of the ultimate purchase price of the shares under the contract. The causation hypothesis is based upon the assumption that Mr Brand had a duty to procure or request that legal advice be procured and that his failure to take reasonable care or to act with due diligence arose from that failure. 356 As Mr Pal pointed out, condensate could be imported into India from 31 March 2001. Had the Project continued to that point then, the alternative fuel milestone would have been satisfied and a payment of US$2 million due under the terms of the original agreement. The clearance gives approval for local government, the Kerala State Electricity Board and the Government of Kerala to proceed with the project. The probability is that the development of the power plant will be achieved in phases leading up to a total capacity of 680 MW rather than a single development. Mr Allen had been appointed to the Board as an executive director at that time. The company accounts disclosed the shareholding in ARL and identified their costs as $4,296,000. To make out the relevant loss it would be necessary for Energy and AEE to show that the milestone payment represented an irrecoverable cost associated with the Vypeen Project. 358 As was pointed out in submissions made on behalf of Martech and Mr Brand, Energy carried the value of the Vypeen Project up until 30 June 2004 at $4,296,000 represented by its 42% shareholding in ARL. Although it wrote off the carrying value of the Vypeen Project on 30 June 2004 this appeared from evidence given by Mr Allen in relation to a letter written by him in February 2004 to flow from the reluctance of financiers to lend to IPPs in India following the collapse of Enron. His explanation to Energy's auditors for the write off included the statement that the company remained confident that the investment made in the Project could eventually be recovered as a consequence of the future development implementation of the Project. Mr Allen did not express any view that the Vypeen Project has no value, or that the shares in ARL had no value. Nor did he express a view about what the value of the Project and the shares was. 359 Energy's argument, advanced by its counsel, that the Vypeen Project has no value, was based on the assertion that the Vypeen agreements were of no utility. The state of the Vypeen agreements has not altered since 2000. As contended by Martech and Brand, the submission is contrary to contemporary statements by Energy and, in particular, the statement made to its auditor on 26 August 2004. It was submitted for Martech and Mr Brand that Energy does see the value in the Vypeen Project because it has negotiated over time to acquire Prenergy's shares in ARL and continues to do so. When Prenergy threatened to wind up ARL in August 2004, Mr Allen asked it not to do so because the loss of connection to records held by Indian authorities in relation to the development of the Project meant that it would cease to have any value. 360 I am left in the position that I am not, on the balance of probabilities, able to say whether the Vypeen Project has any value and if so what value it has. Nor am I able to say that all or any part of the payments made in relation to the development of the Project are irrecoverable. At the very least it would appear that those payments provide a basis for negotiation with Prenergy for the acquisition of its shareholding in ARL so that Energy itself may be in a position to proceed with the Project subject to re-entry by Prenergy on some agreed formula. In my opinion, however, the evidence as to the actual loss, if any, suffered by Energy and/or AEE as a result of the alleged breaches of duty by Mr Brand and Martech is inconclusive. I certify that the preceding three hundred and sixty (360) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | variation termination interpretation managing director of company service contract with his private company annual fee payable company in financial difficulty unilateral temporary reduction in fee by managing director whether variation of service contract entitlement to recover shortfall change in status of managing director to executive director change of duties whether service contract terminated whether termination fee payable implied term reasonable duty of care whether breach by managing director authorising payment by company on advice from senior officer where company not liable to make payment directors duties statutory duty common law duty fiduciary duty reasonable care and due diligence reasonable reliance on advice of officer no breach of duty misleading or deceptive conduct representation of intention to enter into service contract alleged representations by silence no representations made no misleading or deceptive conduct managing director of company authorising payment by company on erroneous belief whether constitutes misleading or deceptive conduct by managing director's private company to the company of which he is managing director no misleading or deceptive conduct 'termination' contract corporations trade practices words and phrases 'terminate' |
It has brought infringement proceedings against the respondent Deltapine Australia Pty Ltd (Deltapine). By notice of motion filed on 13 October 2006 Bayer seeks directions under O 58 r 31 of the Federal Court Rules for the conduct of certain experiments and orders maintaining the confidentiality of experimental protocols proposed. 2 The invention the subject of the Patent relates to plant cells and plants, the genomes of which are transformed to contain at least two genes, each coding for a different non-competitively binding bacillus thuringiensis (Bt) insecticidal crystal protein (ICP) for a specific target insect species. Bayer alleges that Deltapine's exploitation of its Bollgard II variety of cotton, which contains Bt ICP genes coding for Cry1Ac and Cry2Ab toxins, infringes certain claims of the Patent. 3 One of the central issues in this case is whether, as Bayer alleges, the ICPs Cry1Ac and Cry2Ab "bind non-competitively" to receptors in the gut of the cotton bollworm insect Helicoverpa armigera . If that is the case, the possibility of the insect species developing immunity is greatly reduced. Non-competitive binding in a two ICP situation is said to occur where each ICP has a receptor for which the alternative ICP does not compete. 4 It has been shown that Cry2Ab does not compete for Cry1Ac receptors in the species in question. The reciprocal proposition, that is to say, that Cry1Ac does not compete for Cry2Ab receptors, has not thus far been conclusively established by experimental proof. Bayer's case, in evidence filed so far in support of that proposition, depends on inference. 5 The problem Bayer has encountered thus far in obtaining experimental proof is the lack of Cry2Ab protein of sufficiently high purity and stability. 6 After recent research, Bayer believes it has solved this problem. It proposes to conduct two series of experiments. The first (the purification experiments) will attempt to obtain sufficiently pure and stable Cry2Ab protein. The second (the binding experiments) will endeavour to establish whether the protein so obtained binds the relevant receptor. It says that the proposed experiments are "speculative" because there is no evidence to confirm that their conduct will advance or clarify any aspect of evidence already filed. The experiments are "imprecise and impractical", at numerous points requiring subjective assessment based on observation. The experiments will be expensive. Bayer's application comes too late, and was only made because Deltapine's evidence revealed problems for Bayer in the way it originally formulated its case. 9 Deltapine says that Bayer is relying on the discretion of the Court being exercised in its favour but has provided no valid reason why, over two and a half years after commencement of proceedings, only in May 2006 did it begin to look for an experimental procedure to prove its case. 10 This argument is misconceived. Order 58 rule 31 does not confer a power to permit or refuse experiments. Bayer can conduct any experiment it likes. As Lindgren J pointed out in Lucent Technologies Inc v Krone Aktiengesellschaft (No 2) [1999] FCA 1462 ; (1999) 94 FCR 124 at [8] , the purpose of the rule is to (a) ensure that the other party has an adequate opportunity to challenge the validity of the experiment or test, and (b) to avoid wasteful duplication by that party of an experiment that can be seen to be valid. Compliance with directions given under O 58 r 31 is a precondition of admissibility at trial of evidence as to the results of the experiment: sub-rule 3(a). Even if conditions have not been complied with, or no application has been made at all, results of an experiment may still be admitted by leave: sub-rule 3(b). 11 Patent cases are no different from other litigation, civil or criminal. A party is entitled, as of right, to tender evidence it believes will assist its case. The opposing party can object that the evidence is irrelevant or inadmissible, or should be excluded on discretionary grounds because it might be unfairly prejudicial or misleading or confusing or cause undue waste of time: Evidence Act 1995 (Cth) s 135. When such objections are taken, the trial judge will rule and the evidence will be admitted or rejected. 12 In the present case Bayer does not seek the Court's "indulgence". It is entitled to conduct such experiments it thinks may help to make out its case. To have the results of such experiments admitted into evidence it needs to comply with directions which will give Deltapine a fair opportunity to observe them. Deltapine's complaints as to the merits or usefulness of the proposed experiments may turn out to be valid. Bayer takes the risk that this may be so. The trial is the time and place where such questions will be resolved. These will take a few weeks and be followed by the binding experiments which will take four months. However, Deltapine's main witness Professor Gill has heavy teaching commitments in January and February and is not available until 15 March. Deltapine therefore asks that the purification experiments start on 15 March, to be followed by the binding experiments. 14 Upon obtaining instructions after the hearing of this application, Bayer's solicitors have advised that Bayer's main witness Professor Ferré and his colleague Dr Hernandez, who will conduct the binding experiments, are not available beyond the end of May 2007. If those restraints are to be accommodated, Professor Gill could attend for some two-thirds of the binding experiments (i.e. from 15 March onwards) but he would not be able to attend at all for the purification experiments. When Professor Gill is unable to attend, some other suitable independent scientific observer could act as his alternate. This is admittedly a less than perfect solution, but seems to be the only practicable one, especially since, as Deltapine emphasises, this case has been dragging on for some time. The role of an expert attending the experiments on Deltapine's behalf is to observe and report, not to participate, or express opinions, or give advice at the time. So there is to that extent less compelling need for Deltapine's principal witness to attend all the time. Moreover, the binding experiments consist of two similar exercises which will be conducted sequentially, so Professor Gill could be present for at least the entirety of one. 15 I will therefore direct that the purification experiments begin on or about 8 January 2007 and the binding experiments on or about 1 February 2007. I agree with Deltapine that it would be more convenient and less subject to confusion if the various stages were identified by actual dates. Any variations to the timetable should be notified to Deltapine as soon as possible. Deltapine says they should be conducted in Australia. 18 Dr Adri van Vliet, a senior research officer with Bayer, deposes that there are very few laboratories, experts and technicians around the world that are able to prepare the materials needed and have the appropriate expertise and facilities to conduct the proposed experiments. He says that one of the few laboratories in the world that does have the ability to conduct the experiments is that of Professor Ferré. 19 Deltapine contends that the equipment required to perform the proposed experiments is "not unusual and is likely to be found in laboratories in Australia". The evidence, however, did not seem to bear out that assertion. Dr John Cusick, an employee of Deltapine's solicitors, deposes that he spoke by telephone to a Professor Schmidt of the University of Adelaide who is reported as saying "Subject to also dealing with Occupational Health and Safety issues with the University we certainly have the capability to do the experiments". The last time 125J work was done here was fifteen years ago. We are usually labelling Bt-toxin with biotin or use antibodies, which would not have been a problem. It is therefore with much regret that I have to decline the project. 20 The proposed experiments are potentially dangerous, involving isotypes of iodine. On any view the experiments involve highly specialised science. It is not appropriate on the present interlocutory application to conduct a full scale investigation into the availability of appropriate facilities in Australia. Professor Ferré is Bayer's witness and weight ought to be given to his wish, not shown to be irrational, to conduct the experiment in his own laboratory. Professor Gill's home base is in California, so from his point of view there is little difference in attending in Spain rather than Australia. 21 I will direct that the experiments be conducted in Ghent and Valencia. Delatpine also wants to have a legal representative present "to monitor the compliance by (Bayer experts or employees) and to understand and record any variations proposed". That would seem to go beyond the usual role, or capacity, of a lawyer. However, it seems reasonable for Deltapine to have its own representative present to keep it and its lawyers in Australia advised of progress. Whether that person is legally or scientifically qualified is a matter for Deltapine's judgment. Serendipitously it appears that Dr Cusick is not only a solicitor but holds the degrees of Bachelor of Science with First Class Honours and Ph D in Chemistry from the University of New South Wales, so he might be very appropriate. But apparently Professor Ferré's laboratory is not a large one, so any more than two persons observing on Delatapine's behalf would be potentially burdensome and intrusive. 23 I will direct that Delatapine be entitled to have two persons of its own choice (ie including Professor Gill or his alternate) present at the experiments. I think that is an unreasonable restriction. Of course it is no part of the role of the Deltapine representatives to interfere with the conduct of the experiments. Subject to that, there appears to be no harm, and indeed positive benefit, in them asking questions of the experimenters to obtain a better understanding of what is happening. I will not make any formal directions in this regard as I see no reason to doubt that Deltapine representatives will act in a professional and common sense way. It says the normal mode of recording these particular experiments will not include photographs. However, since one of the aims of O 58 r 31 is to reduce the possibility of dispute over what in fact happened during the conduct of experiments, anything which contributes to an unassailable record should be permitted. 26 It may be that at some stage of the experiments photography, or some kind of photography such as flash, may create technical problems. Accordingly, I think the ultimate control should be left to those conducting the experiments. 27 I will direct that a Deltapine representative be permitted to take photographs so long as those conducting the experiments are satisfied that the taking of photographs will not interfere with the conduct of the experiments. Deltapine says that retention of confidentiality cuts across the fundamental bargain whereby the patentee makes full disclosure in return for a period of monopoly. Any order for the conduct of experiments should be conditional on Bayer waiving confidentiality. 31 It is certainly an interesting, and important, point whether the disclosure obligation goes beyond the invention itself and extends to means for the detection or determination of infringement. However, this is a matter going to validity and should be determined at trial. The suggested condition should not be imposed. That is to say, if Deltapine ultimately wins, it will recover those costs. That seems to be reasonable. Indeed, Bayer foregoes the possibility of recovering its own costs of the experiments should it be successful at trial. 33 Deltapine seeks an order for its costs in relation to the experiments on an indemnity basis, and to be payable in any event. This is not an appropriate occasion for indemnity costs. Bayer's decision to conduct the experiments did not involve any conduct on its part that could be said to fall outside the normal to and fro of litigation of this sort. It is possible that the experiments may in the end assist Bayer in making out its case that Deltapine infringed the Patent. If that happens there is no reason why Deltapine should get its costs in relation to the experiments. As I have already noted, this is not a matter for the grant of indulgence and Bayer have been substantially successful. The costs of the motion will be reserved. | application for directions for experiments patents |
It is convenient collectively to refer to them as "the BoQ parties". 2 As named in the pleadings, the First Respondent, the Industrial Court of New South Wales, is an institution which forms part of the judicial branch of government in that State, but not one which has legal personality separate and apart from its members. Though the identification of that court, rather than its members, as a respondent may strictly be irregular, the First Respondent is not an active party in the proceedings. 3 The active party respondents are the Second to Fifteenth Respondents. Each of those Respondents is either a party to an agreement with the Bank, a director of a corporation which is a party or a beneficiary of a trust of which such a corporation is trustee. In the Amended Statement of Claim the agreements made with the Bank are described as the "OMB Agreements". It is convenient to retain that description for present purposes and, for that matter, collectively to refer to the Second to Fifteenth Respondents as "the OMB parties". 4 The OMB parties have each commenced proceedings in the Industrial Court of New South Wales in which relief is sought pursuant to s 106 of the Industrial Relations Act 1996 (NSW) (the NSW Act). That section is the latest manifestation of now longstanding legislative provision in that State for the declaring wholly or partly void, or varying, of any contract whereby a person performs work in any industry if that the contract is found to be an unfair contract. In the New South Wales Industrial Court, the OMB parties seek that the OMB Agreements be declared void ab initio pursuant to s 106 of the NSW Act. 5 The BoQ parties have applied, pursuant to O 11 r 16 of the Federal Court Rules , to strike out those paragraphs of the amended defence identified in the notice of motion by which the application was brought. They expressly eschew reliance upon s 31A of the Federal Court of Australia Act 1976 (Cth). That means that the application falls for determination having regard to the circumspection in relation to the striking out of a pleading counselled by authorities such as General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125. 7 A major legal and factual premise of the BoQ parties' case is that each of the OMB parties who are parties to an OMB Agreement should be classified as an "independent contractor" for the purposes of the Independent Contractors Act . That term is defined by s 4 of that Act but only in a way that declares that an "independent contractor" is not limited to a natural person. It is neither necessary nor appropriate for the purposes of this interlocutory application to reach a concluded view as to meaning of the term. It is enough to observe that, subject the declaration in the definition, the question of whether a party to a contract, corporate or individual, is or is not an "independent contractor" for the purposes of the Independent Contractors Act has been seemingly left by the Parliament to be determined having regard by analogy to principles of the common law developed in modern times by cases such as Hollis v Vabu Pty Ltd [2001] HCA 44 ; (2001) 207 CLR 21 and Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1 ; (1986) 160 CLR 16. 8 On the pleadings, whether it should be concluded that each of the OMB parties who is a party to an OMB Agreement should be classified as an "independent contractor" for the purposes of the Independent Contractors Act is controversial. While it is unnecessary for us to express a concluded view on this question, it may well be that the expression 'independent contractor' in that section is intended to reflect the common law concept of what is an independent contractor as it applies in relation to natural persons, though we note that an independent contractor, as defined, is not limited to a natural person. If this is correct then the issue might be determined not only by reference to the terms of the contract between the principal and the alleged independent contractor but also by reference to the way in which the parties carry out or give effect to the contract between them: see Hollis v Vabu Pty Ltd [2001] HCA 44 ; (2001) 207 CLR 21 particularly at 40-41. As noted earlier, the OMB parties contended they are not independent contractors and the Bank parties contended they are. That being so, the OMB parties are entitled to plead and prove facts (unless admitted by the Bank parties) concerning the way in which the contractual arrangements have been carried out as part of proving that they are not independent contractors. This is so even if, ultimately, the issue falls to be decided primarily or solely by reference to the written agreements between the parties, and this now appears to be conceded now by the Bank parties. 9 Notwithstanding the cautionary note sounded by these observations, the BoQ parties have conceived that there is utility in seeking to strike out numerous identified paragraphs of the amended defence on the principal ground that each contains no reasonable defence. It is convenient to consider the merits of the strike out application by reference to the same grouping of paragraphs of the amended defence that the BoQ parties adopted for the purposes of their interlocutory application. It is further contended that such relief is available even if the OMB Agreements themselves are not declared wholly or partly void or varied. The amended defence proceeds upon the footing that "contract" is expansively defined by s 105 of the NSW Act to mean, materially, "any contract or arrangement, or any related condition or collateral arrangement". The resultant defence is, in effect, that even if, which is denied, the parties to the OMB Agreements are "independent contractors", the Independent Contractors Act does not affect the ability of the New South Wales Industrial Court to grant relief under s 106 of the NSW Act, at least in respect of the "arrangements" identified in the amended summons. In effect, the OMB parties' position is that the reach of the NSW Act is broader than that of the Independent Contractors Act . The BoQ parties' riposte is that the Commonwealth Parliament has "covered the field" by the Independent Contractors Act to the intent that there be no residual room for the operation of the NSW Act in respect of "independent contractors" who are parties to a "services contract". The propositions of law sought to be agitated both by the BoQ parties and the OMB parties do not strike me as frivolous. Whether they arise other than in a hypothetical way will depend upon the answering of controversial issues of fact. 11 The BoQ parties undertook an analysis of the nature of the claims made by the OMB parties in the New South Wales Industrial Court and incorporated by reference in their amended defence in this Court. For this purpose, the amended summons filed in that court by the Second and Third Respondents (the Rossmick Respondents) and others (No IRC 928 of 2007) was used as an exemplar. 12 That amended summons (Exhibit RJR-8 to the affidavit of Russell John Redsell filed on 27 March 2008) is, with respect, a prolix document. For present purposes, one critical paragraph is para 254. The numerous sub-paragraphs of para 254 of the amended summons give particularity to what the Rossmick respondents allege in the New South Wales Industrial Court to be the "overall arrangement between the parties". In turn, greater particularity is given to the allegations made in the sub-paragraphs of para 254 in earlier paragraphs of the amended summons. On analysis, these earlier paragraphs can be seen to allege the making of a series of discrete representations by one or the other of the BoQ parties. 14 The primary claim advanced by the Rossmick Respondents and the other Applicants in the New South Wales Industrial Court proceeding is for declaratory relief in respect of "the contracts, arrangements, conditions and collateral arrangements (defined in para 254 of the amended summons as "the Contracts and Arrangements") "whereby the Applicants performed work in an industry" (para 1 of the claims made in the amended summons). 15 On the present application, the BoQ parties contend that it is an "obvious fallacy" that any of the representations which amplify the allegations made in para 254 of the amended summons can properly be characterised as an arrangement whereby work is performed. To the extent that this contention involves doing more than taking the pleading in the amended summons as a given in this proceeding, it depends upon controversial issues of fact, i.e. whether those representations can properly be characterised as an arrangement whereby work is performed by a person in an industry. 16 For the BoQ parties, emphasis was given to the jurisprudence which had developed in respect of s 106 of the NSW Act and its predecessors to the effect that the jurisdiction was engaged so long as the "contract" led "directly" to the performance of work in an industry: Fish v Solutions 6 Holdings Ltd (2006) 225 CLR 180 at 192, [27] and Stevenson v Barham [1977] HCA 4 ; (1976-1977) 136 CLR 190 at 200-201. In their joint judgment in the more recent of these cases, Gleeson CJ, Gummow, Hayne, Callinan and Crennan JJ noted (at [28]) that "the description of a contract as 'one which leads directly to a person performing work in any industry' is not without its difficulty" (emphasis in original). Their Honours cautioned (ibid) that this and other glosses on the language of s 106 ought not to be permitted to divert argument away from the language of the section. That is, it is the arrangements (contractual and non-contractual) according to which a person performs the work (or in consequence of which or in fulfilment of which a person performs that work) which may be avoided or varied. And although the notion of 'avoiding' an arrangement that is not enforceable may be awkward, determining that some new arrangement will obtain for the future (thus 'varying' the arrangement) presents no such awkward juxtaposition of ideas. Further, to focus attention upon the arrangements whereby a person performs work in an industry, no matter whether the arrangement is found in the contract the parties have made or only in some related condition or collateral arrangement, sufficiently meets the need, identified by Barwick CJ in Brown v Rezitis, to recognise that these provisions of the Act have, as one important purpose, dealing with subterfuges which take workers outside the operation of industrial instruments intended to protect workers in an industry. At the same time, to read s 106 as hinged about performance of work in any industry and empowering the Commission to deal only with such of the arrangements between parties as can be described as a contract whereby a person performs work in any industry confines the jurisdiction of the Commission to declare a contract void or to vary it within bounds that leave intact the jurisdiction of the Supreme Court over other kinds of contractual obligations. 18 Even if for the purposes of the proceeding in this Court one takes it as a given that "the Contracts and Arrangements" constituted a "contract" whereby a person performed work in an industry, there would remain a mixed factual and legal controversy as to whether any of the OMB parties were properly to be characterised as "independent contractors" for the purposes of the Independent Contractors Act . There are thus hypothetical qualities to the questions of law which the BoQ parties seek to agitate. If the relevant OMB parties are not "independent contractors" for the purposes of the Independent Contractors Act there will be no "services contract" and nothing affected by s 7 of that Act. 19 There is Full Bench authority in the New South Wales Industrial Commission, in Court Session, which would support an argument that "the making of representations known to be acted upon by a person in considering entry into a contractual relationship and on the basis of which representations an agent as the representor intends the person to act may well, quite apart from any other connection with the contract subsequently made, be itself an arrangement whereby work is performed in an industry, or, at the least, a collateral arrangement to such a contract or arrangement": Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420, at 432, [28]. Contrary to the submission of the BoQ parties, it is thus not impossible for a representation to constitute an "arrangement". Further, if it is one, as the amended summons apparently alleges, and the submissions of the BoQ parties seem to ignore, whereby a person performs work in an industry, that arrangement, if unfair, may, all other things being equal, be the subject of relief under s 106 of the NSW Act. The Independent Contractors Act may or may not intrude on the ability to grant that relief, but that is not a matter for summary resolution. A Judge in chambers is not to try a case on affidavit where the facts are in dispute. See also to like effect in that same year observations made by Holroyd J in White v Johnston (1886) 8 ALT 53. The approach described had been evident since colonial times. Real questions of law and fact are raised by para 52(c) and paras 57 to 63 of the amended defence. It is not appropriate to deal with them summarily. Further, that there are presently hypothetical qualities to the questions of law sought to be agitated by the BoQ parties is an added reason, in the exercise of federal jurisdiction, for this Court not to answer them at this stage. The courts created by the Commonwealth Parliament under Chapter III of the Constitution do not give advisory opinions: In Re Judiciary and Navigation Acts [1921] HCA 20 ; (1921) 29 CLR 257. 21 For these reasons, it is not appropriate to strike out para 52(c) and paras 57 to 63 of the amended defence. As Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 demonstrates, if a representation becomes one whereby a person performs work in an industry, it is possible for that to fall within the expansive definition of "contract" in the NSW Act and to become a subject for the granting of relief under s 106 of the NSW Act in the event of unfairness being demonstrated. Rather, as the BoQ parties would also have it, the vice in these paragraphs is that they are directed to the end of making controversial in this Court whether what are termed in these paragraphs "the Meeting Arrangements" were false or misleading and therefore unfair at the time when they were made or became unfair for the purposes of s 106 of the NSW Act. 23 In the earlier interlocutory appeal the Full Court observed (at [16]) that, "Whether the Bank was capable of misleading the OMB parties seems to us to be irrelevant to the question of whether the OMB parties were independent contractors. Whether it did mislead is clearly irrelevant. " At one level, there is a certain tension between these observations and the BoQ parties' submission with regard to para 52(c) and paras 57 to 63 of the amended defence. In part, that submission did more than take the case as pleaded in the amended summons as a given and sought to strike it so much of it as was predicated upon the proposition that a representation could amount to an arrangement. 24 Be that as it may, paras 70 to 83 as presently cast do more than detail the nature of the case for the OMB parties before the New South Wales Industrial Court. Instead, these paragraphs are directed to the end of creating a controversy in this Court as to whether particular representations alleged in the amended summons were false or misleading and whether what are termed "the Meeting Arrangements" were or became unfair --- see paras 72, 73, 75, 76 and 83 of the amended defence. In this Court, as the Full Court has observed, the merits of that particular controversy are irrelevant. 25 The significant factual controversy in this Court is whether those of the OMB parties who are parties to an OMB Agreement are "independent contractors" within the meaning of that term for the purposes of the Independent Contractors Act . There is a related legal controversy as to how that term is to be construed. Assuming that this factual and legal controversy is resolved in favour of the BoQ parties, there is a further legal controversy as to what is the effect, if any, of the Independent Contractors Act on the ability of the New South Wales Industrial Court to entertain and grant relief in respect of the proceeding commenced by the amended summons. It seems to me that, in its earlier interlocutory judgment, the Full Court has counselled that, in the resolution of that legal controversy, the case as pleaded by the amended summons is a given, not a source in this Court of further factual controversies. 26 I did not in the end understand the OMB parties strongly to contest this striking out outcome but, lest I be mistaken in that understanding and in deference to the author of the pleading, who was unable to appear for those parties to respond to the notice of motion, I have nonetheless considered on the merits whether or not the paragraphs ought to be struck out. 27 Paragraphs 70 to 83 of the amended defence should be struck out. 29 The OMB parties have not sought to press for the retention of these paragraphs in the amended defence. I therefore do not pause to analyse them in detail but rather order that they be struck out. 31 The criticism made by the BoQ parties of this paragraph of the amended defence is twofold. The BoQ parties point to cl 33.1 of the OMB Agreement, which expressly provides for the assignment of the agreement with the Bank's prior written consent. In any event, they contend that the allegations made in para 108 are irrelevant to the determination of whether the OMB Agreement is a "services contract" and whether such of the OMB parties who are parties to such an agreement are "independent contractors" for the purposes of the Independent Contractors Act . 32 One response made by the OMB parties is that, "the question of goodwill or no goodwill cannot be 'untenable factually having regard to cl 33.1 of the OMB Agreement, which permits the assignment of the agreement'. The existence of goodwill is a question of fact. The OMB parties are on firmer ground in their further submission that whether or not there may be goodwill vested in an OMB party to an OMB Agreement is, or at least is arguably, relevant to a conclusion that that party is an "independent contractor" for the purposes of the Independent Contractors Act . One of the factors to which Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ adverted in Hollis v Vabu Pty Ltd (at 42, [48]) in determining that the bicycle couriers were not independent contractors at common law was that they were unable to generate "goodwill" as a bicycle courier. It is settled that goodwill cannot be assigned in gross but rather passes with the transfer of rights to conduct a business in substantially the same manner and by substantially the same means as before: Commissioner of Taxation v Murry [1998] HCA 42 ; (1998) 193 CLR 605 at 615, [23] and 617-618, [30] and [31]. It is not impossible in these circumstances to see how, for the purposes of the Independent Contractors Act and irrespective of a technical ability to assign the benefit of an OMB Agreement, it might be relevant in deciding whether a party to such an agreement was to be characterised as an "independent contractor" that either no "goodwill" vested in that party or in any event that none would pass on an assignment. 34 Paragraph 108 of the amended defence may well, with respect, be inelegantly drafted, but it does not strike me as either irrelevant or otherwise embarrassing. I do not read it as containing a positive allegation, inconsistent with the wording of cl 33.1 of the OMB Agreement, that it is not possible to assign the agreement with the Bank's consent. Instead, the argument which seems to be being put forward has two limbs. The first is that no goodwill would pass on the assignment of the agreement to a third party. The second is that, to the extent that any goodwill at all is vested in a non-Bank party to an OMB Agreement, it would only pass or at least be recognised and given value upon a transaction with the Bank itself. 35 While one might question whether, for example, the consensual premature extinguishment of an OMB Agreement at the initiative of the Bank could strictly yield a transfer of goodwill to the Bank: McDonald's Australia Holdings Ltd v Commissioner of State Revenue (Qld) 2004 ATC 4970 ; (2004) 57 ATR 395 (Chesterman J), another way of viewing this aspect of the allegations made in paragraph 108 of the amended defence is that such goodwill as may exist is inherently personal and unlikely to command value other than if the Bank for one reason or another wanted to be liberated from being bound by the OMB Agreement. It is neither necessary or appropriate for the purposes of this application to do anything other than conclude that the existence or otherwise of goodwill, the identification of the sources of any such goodwill and consideration of whether any goodwill would pass on an assignment such as cl 33,1 of the OMB Agreement permits is conceivably relevant to the question of whether a non-Bank party to an OMB Agreement is to be characterised as an "independent contractor" for the purposes of the Independent Contractors Act and raises triable issues of law and fact. The application to strike out paragraph 108 fails. In an earlier interlocutory judgment in respect of the then defence, Bank of Queensland Ltd v Industrial Court of New South Wales [2008] FCA 324 at [92] to [94] Greenwood J ordered to be struck out particular paragraphs which did no more than set out a contended construction of an OMB Agreement to be struck out. In the subsequent interlocutory appeal, Rossmick No 1 Pty Ltd v Bank of Queensland Ltd [2008] FCAFC 81 at [12] --- [13], the Full Court expressed agreement with the "general thrust" of this approach. As Greenwood J emphasised in his interlocutory judgment (at [92]), the relevant fact is the entry into the OMB Agreement. It would, in my opinion, be permissible, for example, to raise in a defence a consequential point of law namely, that, on its true construction, the OMB Agreement was not a "services contract" for the purposes of the Independent Contractors Act . The paragraphs concerned do more than that and instead offer a series of contended for constructions of the agreement or parts thereof. My understanding of the Full Court's agreement with the "broad thrust" of the approach taken by Greenwood J is that such contentions were a matter for submissions at trial, not pleading. 38 There was debate before me as to whether paras 110 to 116 of the amended defence fell within or outside the type of pleading that Greenwood J had ordered to be struck out. It seems to me that the paragraphs fall within the type which his Honour considered ought to be struck out. The end to which they are directed is the drawing of a conclusion that those parties were not "independent contractors" for the purposes of the Independent Contractors Act . 41 I have reflected upon whether the point is sufficiently doubtful as to make it prudent to leave its determination to trial. It will be recalled that in the passage from the Full Court's judgment in the interlocutory appeal quoted above, the Full Court opined (at [9]) that whether a party was an "independent contractor" would fall for determination at trial not only by reference to the terms of the relevant contract but also by reference to the way of the parties carried out or gave effect to the contract between them, i.e. to the terms of the contract and particular events thereafter. The provision or non-provision pre-contractually of information by the Bank falls outside these envisaged reference points. 42 Even having regard to the strictures which attend summary disposal of the point, it seems to me to be clear that the provision or non-provision pre-contractually of business viability information is not relevant to the drawing of a conclusion as to whether a party is or is not an "independent contractor" for the purposes of the Independent Contractors Act . The degree of control able to be exercised by the Bank under and in the performance of an OMB Agreement and in fact exercised is relevant. It is quite another thing, and outside the confines of a "control test" to regard a pre-contractual ability on the part of the Bank to control a flow of information as relevant. Such ability might conceivably be relevant to determining whether a contract was "unfair" in its formation, but that is not a matter for this Court to determine on this proceeding. 43 Paragraphs 117 to 120 are not relevant to the issues for determination at trial and should be struck out. The allegations they make relate to the exercise of control in various ways by the Bank following the entry into an OMB Agreement. It is at least arguable that an ability to exercise and the actuality of exercise of control in these circumstances is relevant to whether those of the OMB parties who are parties to an OMB Agreement are to be regarded as "independent contractors" for the purposes of the Independent Contractors Act . 45 Contrary to the BoQ parties' submission, I do not regard the allegations made in these paragraphs as so vague as to be embarrassing. 46 The BoQ parties contend that the paragraphs are directed to the development by the OMB parties of an argument that the status of those of them who are parties to an OMB Agreement is that of "dependent contractor", not, for the purposes of the Independent Contractors Act , "independent contractor". They further note that, in its judgment in the interlocutory appeal, the Full Court (at [10]) regarded the existence of an "independent contractor"/"dependent contractor" distinction for the purposes of the Independent Contractors Act as doubtful. They acknowledge that the Full Court expressly refrained from deciding the point. The BoQ parties contend that the distinction which that Act draws is as between independent contractor and employee, making reference for that purpose to the Explanatory Memorandum. 47 Once it is concluded that these paragraphs of the amended defence allege facts of arguable relevance and do so in a way that is not so vague as to be embarrassing, the BoQ parties' submissions amount to little more than a solicitation to decide a separate question of law. The Full Court refrained from so doing. In my opinion, the point is one best decided at trial once the facts are fully found, not as a separate question. 48 The BoQ parties' point is certainly not clear to demonstration. In the face of a statutory definition of "independent contractor" which provides that an "independent contractor" is not limited to a natural person, recourse to an Explanatory Memorandum which seeks to promote the notion that the Act is concerned with an independent contractor/ employee distinction may be nothing more than a distraction from giving attention to the language of the definition in the Act itself in the context in which it appears. If nothing else, and given that a corporation cannot be an employee at common law, the way that the definition of "independent contractor" is cast gives pause for thought about whether it might be possible to have a corporate contractor whom one would not conclude was an independent contactor, applying by analogy tests laid down in Hollis v Vabu Pty Ltd , supra and Stevens v Brodribb Sawmilling Co Pty Ltd , supra. I expressly refrain from reaching a concluded view on that subject at an interlocutory stage. 49 I decline to strike out paras 121, 122 and 123 of the amended defence. Only para 126 of the amended defence fairly meets that description, in my opinion. It is alleged in that paragraph that, though requested, the Bank declined to modify its products and practices, being unable or unwilling so to do. Arguably, such an allegation is relevant to the application of a "control" test. I decline to strike it out. 51 Paras 124, 125 and 127 to 135 of the amended defence are directed to the making of allegations that the Banks' products were uncompetitive and that those who conducted agencies incurred losses. They also contain allegations as to the payment by the Bank of the operating costs of agency operators other than the Respondents. 52 The BoQ parties contend that whether the Bank's products were competitive with those of other financial institutions, whether, as a consequence those of the Respondents who were parties to an OMB Agreement were unable to earn sufficient income and whether, accordingly, they suffered losses are irrelevant matters. I agree. None of these matters would be relevant where seeking to determine whether those parties should be characterised at common law as independent contractors. They have no better relevance if common law concepts are being applied by analogy to determine whether those parties are "independent contractors" for the purposes of the Independent Contractors Act . 53 Further, the way in which the Bank has conducted itself in the administration of agreements with persons who are not respondents is quite irrelevant to how one characterises, for the purposes of the Independent Contractors Act , the relationship between the Bank and those persons who are respondents. That is in contradistinction to the actuality of the controls that the Bank exercised in fact over those parties to an OMB Agreement who are respondents. 54 Paragraphs 124, 125 and 127 to 135 of the amended defence should be struck out. 55 Striking out these paragraphs but preserving para 126 has a consequential impact on para 136, which seeks to draw together and plead a consequence of allegations made in those earlier paragraphs of the amended defence. There is such an intermingling that it is best to strike out para 136 as well. 57 In my opinion, a more accurate critique is offered by the BoQ parties. Their contention is that the paragraphs plead characterisations of the OMB Agreements in a similar way to that which Greenwood J found in his interlocutory judgment and later the Full Court found to be inappropriate in a pleading. I have already referred to his Honour's and the Full Court's views in my consideration above of paras 110 to 116 of the amended defence. 58 Another feature of the allegations in paras 137 to 148 of the amended defence is highlighted by the BoQ parties in their submissions, namely allegations concerning the subjective intention or purpose of the Bank. The submission is advanced, with which I agree, that the Bank's subjective intention or purpose is not relevant to whether a respondent who is a party to an OMB Agreement ought to be characterised as an "independent contractor" for the purposes of the Independent Contractors Act . The task is one of objective characterisation having regard to the terms of an agreement and the way it was carried out. The existence or otherwise of goodwill vested in a non-bank party to an OMB Agreement may also be relevant. The subjective intentions or purposes of either such a party or the Bank, except insofar as they may manifest themselves in the way an agreement was carried out, are not facts relevant to that characterisation task. 59 Paragraphs 137 to 148 of the amended defence should be struck out. The response of the OMB parties is that these paragraphs are replications of paragraphs in the defence as originally filed the striking out of which was sought before but declined by Greenwood J. Regard to his Honour's interlocutory judgment at [101], [102] and [104] bears out the correctness of the OMB parties' response. As the OMB parties further contend, the declining to strike out these paragraphs was not challenged in the interlocutory appeal. 61 The proposition that a State Parliament can by a privative clause in its legislation preclude this Court from exercising a jurisdiction with which it is invested by s 39B of the Judiciary Act 1903 (Cth) is certainly startlingly. However, given that there has already been a failed attempt to strike out the paragraphs which was not pursued in the interlocutory appeal, it seems to me that the better course is not to strike out the paragraphs concerned but to leave the issues of law which they raise for determination at trial. The BoQ parties are not in any way precluded by that course from then pursuing their submission that there is no merit in the issues raised by those paragraphs. Assuming that the OMB parties chose to press those issues, I doubt that their consideration will much add to the length of the trial. 62 Paragraph 163(f) of the amended defence advances a contention that the determination of the issues raised by the amended defence require a trial of the facts. Even allowing for the reduction in the number of issues which will be a consequence of my ordering the striking out of various paragraphs, it is still the case that a trial of the facts is required. I note that Greenwood J declined in his interlocutory judgment (at [104]) to strike out an earlier formulation in the defence of what is now sub-para 163(f). I decline to strike out sub-para 163(f). 63 Sub-paragraph 163(g) of the amended defence, properly understood, pleads a proposition that the passage from its reasons for judgment which I have quoted above demonstrates the Full Court accepted in its interlocutory judgment namely, that the determination of whether the Independent Contractors Act operates to the exclusion of s 106 of the NSW Act is a matter that will require an examination of more than just the terms of the OMB Agreement. I note that Greenwood J (at [104]) declined to strike out an earlier formulation of this sub-paragraph and that this was not challenged on the interlocutory appeal. I likewise decline to strike out sub-paragraph 163(g). 64 I will hear the parties as to whether, given the extent to which paragraphs of the amended defence have been ordered to be struck out, leave to file and serve a further amended defence ought to be granted and in respect of the costs of the notice of motion. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | summary judgment application to strike out paragraphs of amended defence under order 11, rule 16 federal court rules application allowed in part and refused in part practice and procedure |
The claims are brought by former Aboriginal inhabitants of the Swan Valley Nyungah Community Aboriginal Corporation (the SVC) in respect of the enactment of the Reserves (Reserve 43131) Act 2003 (WA) (the Reserves Act) and actions taken under it. It is claimed that the effect of the enactment and the actions was that the Aboriginal inhabitants are no longer able to manage or reside at the Lockridge Camp of the SVC. The applicant in both claims (Bella Bropho) is an Aboriginal person of Nyungah origin. She has been at all relevant times and continues to be a Governing Committee member, Vice-Chairperson, spokesperson and member of the SVC. Further Ms Bropho claims to represent as applicant all persons who were Aboriginal persons of Nyungah origin and also members of the SVC who were Aboriginal inhabitants of the Reserve 43131 (the Reserve) at any time during the period 14 May 2003 to 13 June 2003. Bella Bropho was such an inhabitant. Although I will refer to her as the applicant, it will also be necessary to refer to those whom she represents as 'the applicants'. The claims which Bella Bropho brings to the Court are directed to the legality of the Reserves Act. That Act came into effect on 12 June 2003 and expired on the second anniversary of that date. The Act is of concern to her because it purported to revoke the management order (the 2002 Management Order) whereby the care, control and management of the Reserve had been placed with the SVC; placed the management of the Reserve with the second respondent, the Aboriginal Affairs Planning Authority (the AAPA); and authorised the third respondent, the Administrator appointed under the Act (the Administrator) to make directions to persons not to enter the Reserve, to leave the Reserve and to prevent entry or facilitate removal of a person. Purportedly pursuant to these powers, directions were made on 13 June 2003 to all persons (other than persons in categories listed as assisting the Administrator in the performance of his obligations) forbidding entry to the Reserve without the express authority of the Administrator. The result is that the Reserve is presently unoccupied and all the Aboriginal inhabitants of the Reserve and other persons living on the Reserve have moved elsewhere. The essential foundation of the case which Bella Bropho brings is that the Reserves Act is invalid as a consequence of its inconsistency with certain provisions of the Racial Discrimination Act 1975 (Cth) (the RDA). She also challenges the actions taken by the Administrator on the same grounds. Additionally, in reliance on the associated jurisdiction of the Court, claims are made for trespass and deprivation of possession. The relief sought is declaratory, injunctive and damages. The injunctive relief sought is mandatory, directed to the respondents to vacate the Reserve and deliver possession of it to the SVC and its members, the Aboriginal inhabitants of the Reserve. Proceeding WAD 157 of 2003 was filed in this Court on 22 July 2003. Proceeding WAD 204 of 2004 was filed on 25 August 2004. The second proceeding was filed following a claim made under the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (the HREOC Act) to cover the eventuality that such a claim was a necessary precondition to the bringing of a claim in this Court. On 28 July 2004 a delegate of the President of the Human Rights and Equal Opportunity Commission issued a notice of termination of the complaint pursuant to s 46PH(2) of the HREOC Act on the ground that the subject matter of the complaint could be more effectively or conveniently dealt with by another statutory authority. Based on the manner in which most of the witnesses were addressed in evidence, these reasons generally avoid the use of honorifics and refer to all witnesses by their given and family names. It was admitted on the basis that a limited number of objections would be raised in closing submissions. The applicant objects to exhibit P documents 5, 8 and 9 being received as relevant evidence. They each comprise Orders in Council which are said not to be related to this matter. The respondents propose their tender to prove that the transitional provisions to the Land Administration Act 1997 (WA) (the LAA) affected other management bodies in respect of other reserves, so that those provisions therefore are not discriminatory. On that basis I accept the documents are relevant. The applicant objects to exhibit P document 98. It is a Parliamentary statement, so the use to which it may be put by way of evidence is limited by Parliamentary privilege. The applicant objects, therefore, to its admissibility to prove any fact contained in the statement. However, the applicant has pleaded the document. It is also admissible on the question of special measure: Bella Bropho v State of Western Australia [2005] FCA 941 at [117] - [118] . The document is admitted as proof of what was said to Parliament by the Premier on 14 May 2003 and as proof of what Parliament believed in enacting the Reserves Act. It is not admitted beyond that as otherwise proof of its contents. The applicant objects to exhibit P documents 119, 120 and 121. Each of them comprises a criminal record of persons about whom there has been other evidence. They relate to Robert, Harvey and Herbert Bropho. The applicant states there is no evidence that such records were known to those advising the Government at the time when the Reserves Act was enacted. It is contended by the applicant that the records are therefore not admissible relevant evidence to support the reasons for the enactment or validity of the Reserves Act. The respondents contend that these go to the reputation and character of those named persons, in issue in relation to the appropriateness of the respondents' actions. They are entitled to admission on that basis and the issue of knowledge of reputation and character falls to be considered when that evidence is sought to be relied upon. In relation to exhibit P document 120, the criminal record of Harvey Bropho, this is relevant because the respondents questioned Denise Sambo concerning his criminal record and the credibility of her evidence in that respect is in issue. The respondents object to exhibit P document 115, A Report of the Select Committee on Reserves. The applicant submits that document is admissible subject to Parliamentary privilege and so is not admissible to prove the facts contained in it. However it is submitted that document 115 is admissible to the extent that it provides content to matters deposed to by Margaret Jeffery by way of reference to the report in the affidavit affirmed 25 November 2005 to which it was annexed. In Bella Bropho v Western Australia [2006] FCA 272 , I ruled the document inadmissible on the grounds of hearsay and opinion. Grounds based on relevance and parliamentary privilege were not upheld but that cannot overcome the inadmissibility arising from hearsay and opinion. The respondents object to exhibit P document 21, an extract from a Report of the Australian Institute of Health and Welfare. The applicant again maintains the document is admissible to the extent that it provides content to matters deposed to by Margaret Jeffery by way of reference to the report in the affidavit affirmed 25 November 2005 to which it was annexed. Alternatively, that document 21 is to be taken into account as submission by the applicant. Document 21 fails for the same reason as document 115, having also been previously ruled upon in Bropho [2006] FCA 272. Under orders 21 and 22, the supplementary affidavits of Irene Mary Thomas and Terrence Joseph Daly (exhibits 1(2) and 2(2) respectively) are to be viewed only by, and not disclosed to anyone except for the Court, Court staff, the deponents and other officers of the respondents and the solicitors and counsel for the parties. It comprised the group previously known as the Fringedwellers of the Swan Valley, of which the Bropho family was a major participant. The group had been formed in the 1970s. In April 1977 the Fringedwellers established a tent city in Stirling Square, Guildford to protest the poor housing conditions available to them. By June 1977 they were relocated to a temporary camp on Reserve 25363, immediately adjacent to the Reserve. Later they returned to Stirling Square and later still moved to Herisson Island on 10 December 1978. In the 1980s the group moved to the Reserve. However, their occupancy was tenuous and uncertain and they moved back to Herisson Island in October 1984 before again returning to the Reserve. On 19 July 1994 (gazetted on 22 July 1994) the Reserve was set apart as a public reserve for the purpose of 'Use and Benefit of Aboriginal Inhabitants' pursuant to s 29 of the Land Act 1933 (WA) (the Land Act 1933). Pursuant to s 33(2) of the same Act it was vested in the SVC for that purpose. At the beginning of 1995 tension arose at the Reserve concerning the management of the SVC by Robert Bropho Snr and members of his family. (All references to Robert Bropho are to Robert Bropho Snr unless otherwise stated). In April 1995 the SVC passed a resolution which had the effect of vacating the office of Chairperson. A son of Robert Bropho became Chairperson and Robert Bropho's daughter, Bella Bropho, became Vice-Chairperson. On 12 December 1995 the vesting of the Reserve was revoked pursuant to s 34B(1) of the Land Act 1933. The Reserve was amended pursuant to s 37 of that Act. It was then revested in the SVC for the same designated purpose as previously pursuant to s 33(2) of that Act. On 30 March 1998 the Land Act 1933 was repealed by the LAA. Pursuant to the transitional provisions in the Second Schedule to the LAA the vesting order of 12 December 1995 became a management order (the 1998 Management Order) under s 46 of the LAA. Police considered the death to be a suicide. According to Margaret Jeffery, Arthur Bropho did not live or die at the Reserve, but rather died at Bennett Brook (which is near the Reserve). In November 1994 Edna Maria Bropho (then 14 years old) was excluded from the Reserve by Robert Bropho and lived a transient lifestyle. From an early age, Edna had resided with her great aunt Edna Bropho Snr and her husband Robert Bropho. Edna was chronically addicted to various substances, having sniffed toluene since age 9 together with heavy use of marijuana on a daily basis. She was unable to read due to the effects of substance abuse and only attended school on a limited basis. Caroline Brazier accepted in cross-examination that one of the reasons Edna was excluded from the Reserve was because of her 'sniffing'. In February 1995 the Department of Community Development (the DCD) received reports that Edna Bropho was afraid to return to the Reserve because of physical violence from her uncle, Harvey Bropho and the absence of protection from other adults at the Reserve. This gave rise to a formal Child Maltreatment Allegation. A further Child Maltreatment Allegation was later raised concerning an alleged physical assault by Herbert Bropho. Margaret Jeffery denies any knowledge of these events. Denise Sambo, de-facto partner of Harvey Bropho, gave oral evidence that despite knowing Harvey had an extensive criminal record for violence, to Ms Sambo's knowledge, Harvey had never assaulted or threatened any one and she had never seen him commit any of these acts. From approximately 1995 the Derbarl Yerrigan Health Service (the Service) (formerly Perth Aboriginal Medical Service) had been banned by Robert Bropho from entering the Reserve and so did not have any adequate access to the Reserve. Evidence was given to the Coronial Inquiry into the death of Susan Taylor that the Service had difficulties accessing the area of the Reserve since the 1980s. The Coronial Inquiry heard evidence that the Service was banned from attending the Reserve following an incident in which nursing staff from the service had given a needle to the daughter of Bella Bropho when she had a cold. The community believed that event had resulted in the child's death and had caused the community to lose faith in the Service. The community then began to seek their medical services from the Lockridge Medical Service instead. In 1995 members of the Western Australian Police Service (WAPS) attended the Reserve having followed a stolen vehicle onto the property. A serious confrontation developed in which the police car was damaged by a number of persons, including Robert Bropho. Following the incident it was police procedure to call ahead to Robert Bropho before entering the Reserve and as a general rule two vehicles would enter the campsite together. Mr Bropho denied that the 1995 incident had occurred, but did not dispute the existence of the police procedure. Mr Bropho described it as 'building bridges'. Between April and May 1996 Cynthia Parfitt (aged seven) alleged that she had been sexually abused at the Reserve by Guy Bropho (aged 14), the grandson of Robert Bropho. She also identified other children whom she believed had been abused by Guy Bropho. Robert Bropho refused access to the Reserve to government agencies who visited to discuss the matter and did not allow investigators to talk to the children concerned or their parents. In May 1996 the SVC Camp School began. It was established as an annex to the existing Lockridge Primary School and operated as a kindergarten up to grade 10 school. On 24 June 1996 Robert Bropho denied the DCD access to the Reserve to discuss a program aimed at keeping children safe from abuse. His response was regarded as abrupt and the DCD staff were advised they were no longer permitted on the Reserve. Mr Bropho denied this in his evidence. On 12 July 1996 Nicole Bropho (aged 13 ) was found deceased at the Reserve, having hanged herself on the perimeter fence. On 10 September 1996 Edna Bropho (aged 16) alleged physical abuse by Herbert Bropho whilst she was staying briefly at the Reserve. Her injuries were noted as a gash to the head and four long red/purple welts which she claimed had been inflicted with a bottle and a broom. Miriam Spratt also made allegations at this time that Herbert Bropho had been hitting children who lived at the camp. In mid-1997 Robert Bropho ordered the DCD staff off the Reserve. At the time the DCD were involved in the investigation of claims made by a young child on the Reserve that he had been inappropriately touched by older boys. They wished to talk to the boys concerned but were unable to follow up the allegations due to lack of access. Mr Bropho confirmed this incident in his evidence. Subsequent to that incident officers from the DCD Midland office did not seek to access the Reserve. However some of the DCD staff from other district offices continued to access the Reserve. In mid-1997 a weekly playgroup conducted by the DCD on the Reserve was no longer able to operate as a consequence of what was considered to be the direction of Robert Bropho. He closed down the playgroup after Richard Bropho 'run amok with one of the teachers' abusing her. In other words, the playgroup was closed as a measure to protect the teacher. In October 1997 the DCD was notified that Marion Bropho, a three month old child, had been abandoned in Northbridge near the City of Perth. Marion was returned to her mother, Dorothy Bropho. According to Dorothy she was 'going out' and left Marion with two of her cousins who were later picked up on bench warrants by the police. On 20 October 1997 Robert Bropho, after a confrontation, ordered one of the SVC Camp School teachers off the premises. The teacher did not return and was replaced with a new teacher. Mr Bropho denied that he ordered the teacher to leave the Reserve. On 23 January 1998 police observed Susan Taylor (aged 15) attempting to hang herself from the front perimeter fence of the Reserve. On 10 May 1998 Susan Taylor again attempted to hang herself and was conveyed to the Swan Districts Hospital Emergency Department where she was reported as acting violently towards staff. She was later conveyed to Graylands Hospital and then Bentley Adolescent Inpatient Unit. On 5 and 6 August 1998 police attended the Reserve attempting to catch Richard Bropho who was allegedly heavily intoxicated. In the following two days Richard Bropho had a violent confrontation (one of a physical threat of violence and one of verbal abuse) with the Camp School's two teachers. On 14 August 1998 the Department of Education (DOE) withdrew its school teachers from the Reserve due to concerns about violence on the Reserve. Arrangements were made with Robert Bropho for the teachers to return to the school to collect personal belongings. The teachers were given five minutes to get a few possessions and leave by Robert Bropho who stood at the gate to the camp, allegedly in an intimidating manner. DOE property was left at the Reserve in a transportable building. Bella Bropho gave evidence that this arose from one incident involving Richard Bropho. Margaret Jeffery testified that the school was closed by the community following an incident involving one of Robert Bropho's sons who was affected by 'speed'. On 4 January 1999 Susan Taylor made a complaint to police at the Midland Detectives Office in relation to an allegation of an indecent assault and a physical assault perpetrated on her by her uncle, Richard Bropho. That incident was alleged to have occurred on the Reserve. The Coroner, in his Report into the death of Susan Taylor, accepted that after the incident Susan Taylor had gone to Robert Bropho's place where he did little or nothing to investigate her concerns. According to Margaret Jeffery, Susan Taylor was being abused elsewhere than at the Reserve. In February 1999 Susan Taylor hanged herself in the ablution block of the Reserve. The Report of the Coroner into her death found that she, along with other young people associated with the Reserve, had been sniffing spray paint on the morning of her death. Ms Taylor was not a resident of the Reserve but was a frequent visitor to the Reserve. On 22 March 1999 the police received a complaint that Robert Bropho had sexually assaulted Lena Spratt, a former resident of the Reserve. The police arrested Mr Bropho on 28 June 1999 following this complaint from Lena's mother, Miriam Spratt. The charge was later withdrawn prior to the trial because of deficiencies in the DNA evidence, but the charge was reinstated on 21 May 2003. Robert Bropho was acquitted of the charge in September 2004. He had been assaulted by his uncle, Herbert Bropho because he had been sniffing glue. Bella Bropho, Margaret Jeffery and Charlotte Bropho deny any knowledge of this event and state that they would have known if this event had occurred. In November 1999 Marion Bropho (then aged two) was reported to have been abandoned outside the gates of the Reserve. Margaret Jeffery denies any knowledge of this event. Dorothy Bropho, Marion's mother, also denied that this occurred. On 25 December 1999 the DCD arranged for temporary accommodation for Dorothy Bropho and her daughter Marion after Dorothy contacted the DCD saying she had had a family dispute, felt unsafe and wanted to leave the Reserve. Several other requests for emergency accommodation were made by Dorothy in early 2000. Margaret Jeffery denies any knowledge of this event. According to Dorothy, she and her mother had 'a little disagreement' and that she wanted to give her mother 'a bit of room ... because her partner had got released from gaol just before Christmas'. On 8 January 2000 the Swan Hospital Emergency Department provided a medical report that Richard Bropho was treated for lacerations to the head, stomach and legs as a result of an assault by Herbert Bropho that occurred at the Reserve. Bella Bropho, Margaret Jeffery and Charlotte Bropho deny any knowledge of this event and state that they would have known if this event had occurred. However Charlotte Bropho admitted that Herbert would 'jar up' Richard and 'tell him off' for sniffing. On 12 and 13 April 2000 Marion Bropho (then aged two years and nine months) was sexually assaulted by her mother's brother, Timothy Bropho, and her cousin Nigel Bropho at the Reserve. As a result of the sexual assault, Marion suffered severe injuries and tears to her vagina and anus. According to Naomi Bropho and Margaret Jeffery, both men were living on the Reserve at the time. Marion Bropho had been left with Naomi Bropho by her mother Dorothy Bropho, who according to Naomi, 'was on heroin' and 'wanted to go somewhere else'. Naomi then left Marion with Nigel Bropho because she had to care for her own child. According to Margaret Jeffery, both men were severely under the influence of glue and alcohol and were in a psychotic state at the time. Naomi Bropho also stated that Nigel was under the influence of glue at the time as she could smell it on his breath. Nigel Bropho pleaded guilty to the sexual assault in July 2001 and was sentenced to two years detention. Timothy Bropho was convicted following a trial in May 2002 and sentenced to 12 years imprisonment. Following the sexual assault in April 2000, Marion Bropho was removed from Dorothy Bropho's custody and placed in foster care. Marion was made a ward of the State in November 2000. Caroline Brazier explained in her oral evidence that she was concerned, not just about the fact that this incident occurred, but also about the level of substance abuse by those two residents of the Reserve that led to them committing the crime. According to the DCD's records, on 29 June 2000 a young woman, Natasha Bropho, (daughter of Bella Bropho) had her throat cut with a tennis racket by Herbert Bropho while at the Reserve. Charges were laid against Herbert Bropho. Bella Bropho confirmed in her oral evidence that Natasha had a laceration to her neck caused when Herbert Bropho accidentally hit her with a tennis racket. Herbert was not convicted of assault because Natasha went to South Australia and did not appear to give evidence. Natasha denied that was because she was scared to give evidence against Herbert, but her evidence in that regard was unconvincing. According to Bella Bropho and Margaret Jeffery, Herbert Bropho assaulted Natasha Bropho because she was sniffing. Bella Bropho acknowledged that Herbert used to bash children he found sniffing on the Reserve but said, '[i]t finally dawned on my brother Herbert what he was doing, that it was wrong, and that it was no way to help sniffers, with violence. His attitude has changed now. He does not use violence against sniffers'. On 29 June 2000 Maree Baker was physically abused by Herbert Bropho. This was substantiated on the DCD computer record system on 30 June 2000. According to Margaret Jeffery, Maree was assaulted by Herbert Bropho because she was sniffing solvents. He was duly charged. On 30 May 2001 Lynette Bropho and a seven year old child sought assistance to escape from domestic violence occurring on the Reserve. Bella Bropho, Margaret Jeffery and Charlotte Bropho deny any knowledge of this event and state that they would have known if any domestic violence had occurred at the Reserve. In August 2001 Clinton Pickett made allegations about physical and sexual abuse of himself and other youths on the Reserve. On 20 September 2001 Morgan Spratt (also known as Morgan Bropho) (aged 22) died at the Reserve as a result of acute toluene toxicity brought about by solvent abuse. Morgan lived in Northam but would stay at the Reserve whilst in Perth. Morgan suffered from organic and drug induced psychosis brought on by years of solvent abuse. According to the Report of the Coroner into the death of Morgan Spratt (delivered on 2 April 2004), for much of the time Morgan was at the Reserve he was on one substance or another, and whilst some on the Reserve believed that he was not medication compliant, no-one seemed to have endeavoured to determine what he should be taking and when. On 29 October 2001 a 14 year old girl, Megan Bropho (who was not a resident of the Reserve), was picked up by police in an intoxicated state. Kiara police were concerned about dropping her at the SVC. On 11 January 2002, Ric Baker sought priority housing from the Department of Housing and Works (DHW) on the basis, he said, of financial hardship, homelessness, domestic violence and harassment from residents of the Reserve. However he was not provided priority housing at that stage. The Report of the Coroner into the death of Susan Taylor was published on 21 November 2001. The evidence given at that inquest, and the Coroner's report, disclosed high levels of substance abuse by, and sexual abuse of, young people associated with the Reserve. The Report also highlighted significant difficulties experienced by service providers in gaining access to the Reserve and those in the community. It specifically investigated access to the campsite by the Family and Children's Services (now the DCD) and the police. That inquiry was conducted by Magistrate Sue Gordon AM, the Hon Kay Hallahan AO and Mr Darrell Henry and is generally known as the 'Gordon Inquiry'. The Gordon Inquiry was triggered by the Government's consideration of the Report of the Coroner into the death of Susan Taylor. In February 2002 Lynsey Warbey was seconded from the Crown Solicitor's Office to be the instructing solicitor for Richard Hooker, counsel assisting the Gordon Inquiry. On 31 July 2002 the Gordon Inquiry report 'Putting the Picture Together, an Inquiry into Response by Government Agencies to Complaints of Family Violence and Abuse in Aboriginal Communities' was published. The report contained various findings and recommendations with respect to the functions of Government agencies in relation to aboriginal communities. Part 5 of the Gordon Inquiry report addressed issues relating to the occupants of the Reserve. Recommendation 141, within Pt 5 of the Gordon Inquiry report, was the only recommendation dealing specifically with the SVC. In developing those Memoranda of Understanding, the conclusion of the Inquiry as to the good faith of service providers and their legitimate exercise of government function, ought be taken into account. At the beginning of December 2002 the Government published its response to the Gordon Inquiry report. This management order, which has taken effect, ensures that Government agencies have full access to the community, so that residents can get the benefit of Government services. This is especially important for community services, education and health officers. The corporation is also required to prepare a management plan within six months for Ministerial approval. Caroline Brazier explained that Memoranda of Understanding are effective if developed and implemented with people who are committed to working closely with Government, but where that is not the case they have not proved to be effective. Two separate committees were established within the Government to implement the Government's response. This comprised the Directors General of the DCD, DOE, Department of Indigenous Affairs (DIA), Department of Health (DOH), DHW, Department of Justice (DOJ), Department of Local Government and Regional Development, the Commissioner for Police and Shawn Boyle from the Social Policy Unit of DPC. It was co-chaired by Caroline Brazier, the Director General of the DCD, and Barry Mathews, the Commissioner for Police. Its role was to oversee the implementation of the Government's response. (b) Senior Officers Gordon Implementation Group (Senior Officers Group). This comprised the same representatives as the Gordon Implementation Group as well as other senior government officers and representatives from the Aboriginal and Torres Strait Islander Commission (ATSIC). It was co-chaired by Sean Boyle of DPC and Mick Gooda, State Manager of ATSIC. It had a more active role in the development and management of projects which were part of the Government's Gordon Inquiry response. The Government also established the Gordon Implementation Secretariat (the Secretariat) within the DPC, to co-ordinate the Government's response. On 24 February 2003 Lynsey Warbey was appointed the manager of the Secretariat. The role of the Secretariat was to monitor the implementation of the Government's response to the Gordon Inquiry report, support the DG Taskforce, the Gordon Implementation Group and the Senior Officers Group, perform ad hoc policy and project management functions and report to the Government on implementation and other key issues or projects. On 3 December 2002 the SVC again wrote to the Premier referring to their earlier letters of 17 October 2002 and 5 November 2002 concerning the negotiation of a MOU and referring to a media release that the Premier would be meeting with ATSIC to discuss the implementation of the Gordon Inquiry. On 11 March 2002 the DCD received a further report of concerns that Tina Jackson was sniffing. Bella Bropho, Margaret Jeffery and Charlotte Bropho deny any knowledge of these events and stated that Tina only occasionally resided at the Reserve and did not sniff at the Reserve. Tina also stated that she never sniffed at the Reserve because she would have 'got in trouble'. In March 2002 Roland Bayman took over as Manager of the DCD Midland office and was told by other officers of that Department that the DCD officers had been excluded from the Reserve around 1997 by Robert Bropho. He was also told that efforts by Donna Birch, a Senior Aboriginal Services Officer within the DCD Mirrabooka office, prior to the Gordon Inquiry, to develop a MOU with the SVC about access and service provision had been put on hold pending the outcome of the Gordon Inquiry. On 1 March 2002 a Crown Prosecutor, Patti Chong, was involved in trial preparation for the prosecution of Timothy Bropho for sexual abuse of Marion Bropho. Ms Chong visited the Reserve to interview witnesses associated with the matter. Robert Bropho was initially co-operative but became antagonistic when Ms Chong asked to interview other relevant witnesses, calling her a liar and restricting her contact with members of the Reserve. You never mentioned that you wanted to see Bella Bropho or anybody else what gives you the right of having told me some untruth to come in now to speak to anybody that I (sic) wish in the community. On 14 March 2002 whilst leading evidence in the trial against Timothy Bropho, Patti Chong received messages from, and spoke to, Robert Bropho who threatened to sue her for defamation, stating that she had done enormous damage to his community because of what had been reported in the press regarding the trial. The applicant submits it is not unlawful conduct for Robert Bropho to have threatened to sue for defamation unless he did so knowing that the prosecution of any such action would be malicious and done without him honestly believing that the prosecution of the action was justified, and that there was reasonable and probable cause for the action: Hicks v Faulkner (1878) 8 QBD 167 at 171; Herniman v Smith [1938] AC 305 ; Little v Law Institute of Victoria (No 3) [1990] VR 257 at 262-263. The evidence does not support a conclusion that Robert Bropho had the requisite knowledge to make the threat unlawful. He apparently did not know, although Ms Chong knew or ought to have known that what she had said in opening of the Crown case was subject to absolute privilege, and so she could not be sued for defamation: see Peterson LJ in Hodges v Webb [1920] Ch D 70 at 89. On 29 May 2002 Tina Jackson was admitted to Royal Perth Hospital for sniffing. She refused to return to the SVC. Tina Jackson was not a regular resident at the Reserve, but Caroline Brazier was generally aware that girls were fearful of going to the Reserve on occasions. Tina Jackson stated in her affidavit that she was not in hospital for sniffing and that she only sniffed occasionally and did not do it anymore. On 1 July 2002 Kathleen Clarkson and her three year old child requested emergency accommodation to escape domestic violence at the Reserve. Bella Bropho, Margaret Jeffery and Charlotte Bropho state that Ms Clarkson had left the Reserve before July 2002 and denied any knowledge of this event. They also stated that they would have known if any domestic abuse had occurred at the Reserve. On 5 July 2002 a young woman, Isobel Bropho, stated to the DCD case workers that she had been raped and sexually abused as a child by Robert Bropho and that another young woman, Edna Bropho had also been treated the same way. The latter denied on oath at the Coronial Inquiry into the death of Susan Taylor that this had occurred. Both had chronic substance abuse problems and in 2003 were in prison in South Australia and Western Australia. Robert Bropho has since been charged in relation to those allegations. On 10 July 2002 Bonnie Wallam, the pregnant partner of Richard Bropho (a young man in his early 20s and a grandson of Robert Bropho), reported that she had been assaulted by Richard Bropho and was seeking accommodation to escape from him. On 30 July 2002 the Swan Districts Hospital reported concerns that a nine year old child, Peula Bropho, had been admitted for medical treatment (not related to abuse) but by the time she was ready to be discharged no family could be contacted and no-one had visited her while she was in hospital. According to Denise Sambo, she visited Peula every day and believes that this information is a mistake. Roland Bayman a project manager of the DCD was asked in cross-examination whether this was the same incident which formed the basis of his interview with Peula Bropho in April 2003 (the 2003 meeting being in relation to Peula's well being after she had been to the Lockridge Medical Centre for scabies) and Mr Bayman said he believed it was the same. Caroline Brazier understood there may have been two different occasions involving the same child. In the respondents' submission there is no inconsistency between the evidence of Mr Bayman and Ms Brazier. Mr Bayman was clearly confused by the ambiguous nature of the questioning, and the better understanding of his evidence is that there were two incidents both involving the same girl. I proceed on the basis such was the case. On 11 October 2002 the SVC wrote to the Minister for Lands advising of their acceptance of the 2002 Management Order and stating that 'you have put into writing all the changes that we want to the management order'. On 11 October 2002 Lesley Affleck, on behalf of the Minister for Planning and Infrastructure, wrote to the SVC stating that some small amendments to the proposed 2002 Management Order's conditions had been necessary and providing a revised copy of the conditions for the proposed order for agreement. On 11 October 2002 Harvey Brophy wrote to the Minister for Planning and Infrastructure and confirmed that the 2002 Management Order was acceptable. The letter stated that 'if this is the final version of the management order, lets get on with it. We have discussed it and it is acceptable'. (Whether in fact the SVC gave informed consent is considered below). On 11 October 2002 the documents pertaining to the revocation of the existing 1998 Management Order and proposed 2002 Management Order were lodged at DOLA for registration. The 2002 Management Order required, amongst other things that the SVC prepare a management plan by April 2003 for the approval of the Minister for Planning and Infrastructure. That inquiry was conducted by a barrister, Richard Hooker (the Hooker Inquiry). The report was published on 30 April 2003. Of the eight cases reviewed by the Hooker Inquiry, four were associated with the SVC, being Marion Bropho, Edna Bropho, Morgan Bropho and Timothy Bropho. When the Hooker Inquiry report came to the attention of Caroline Brazier in mid-May 2003, she was satisfied that the concerns previously expressed to her by senior officers of her Department had been well-founded. That the victims are all children --- most of them very young infants --- serves to compound the tragedy. The seemingly self-perpetuating spiral of deprivation, substance abuse, and, in many cases, sheer sexual deviancy, continues to demand the most careful, dedicated measures from Government to redress its progress and avert its dreadful impact. With a certain fine tuning of some specific aspects of its service delivery, and the ongoing consideration of the conceptual challenges posed for its delivery of services, the Department with its new structure and richer, contemporary legislative base, can further enhance its quality of performance and continue to be a leading component of the Government of Western Australia in targeting the ongoing and utterly unacceptable abuse of children and other powerless Aboriginal Australians. No substantive step resulted. In the meantime the DCD received reports of incidents involving domestic and family violence, intimidation, abuse and neglect amongst persons associated with the Reserve, although not solely from inhabitants of it. On 21 November 2002, a meeting was convened at the request of the Director General of the DPC of representatives of seven government agencies. It was called to inform them about the new 2002 Management Order for the Reserve and that the Government wanted them to exercise their right of access to the Reserve in accordance with that order to perform their functions and also to ascertain what services were being provided to the SVC and how government agencies could better coordinate service provision to that community. That approach was favoured consistently with the recommendation of the Gordon Inquiry. The meeting agreed to undertake a stock take of the services and resources being delivered to the communities and how they could be more effectively delivered. The Midland office of the DIA was to take on the co-ordinating role for future meetings. The priority was to prevent further incidents of abuse of women and children such as had been disclosed in the Coronial Inquest into the death of Susan Taylor and the Gordon Inquiry. On 29 November 2002 a meeting was held at the DIA Midland office consisting predominantly of the local Midland government agencies and frontline service provider staff involved with the SVC. The group became known as the Interagency Working Group (the Working Group). Agency representatives agree that their goal was to ensure residents of the SVC had access to the services provided by Government and other agencies, to enable individuals and families to live in a safe and healthy environment. The outcomes of the meeting were that by 2 December 2002 the DIA would contact the SVC leaders to acknowledge their correspondence seeking a MOU, to explain the intention of a collaborative and coordinated agency approach to service provision to the SVC, and to discuss the SVC involvement in that process. It was also agreed the Working Group would conduct a workshop with the SVC at the Reserve to identify and consider issues of concern to the SVC and develop an action plan based on the collaborative and coordinated agency approach. On 2 December 2002 the DIA Regional Officer, David Pedler phoned the SVC office but was unable to speak to Robert Bropho. He was told by Margaret Jeffery that it would not be possible for a meeting to take place until late January 2003. On 3 December 2002 the SVC again wrote to the Premier referring to the earlier letters concerning the negotiation of a MOU. In early December 2002 Lynsey Warbey of the DPC and the Director General of the DIA organised a delegation of government officers to visit the Reserve to conduct what was known as a 'community audit'. Its purpose was to gather information about who was living on the Reserve, to assist in planning government service delivery to the SVC as well as to explain to the SVC the Government's intention to improve service delivery using the 2002 Management Order. The visit was planned for 4 December 2002. The residents of the Reserve had only about 10 minutes notice of the visit. They comprised approximately 25 persons, including women and children, headed by Robert Bropho. The visiting group was headed by a Police Superintendent supported by a Police Sergeant. Media representatives were at the gate of the Reserve. In the eyes of the community of inhabitants, it appeared as a show of force by the Government. The view of Roland Bayman of the visiting party was that he was met in a threatening manner and, because of the resulting tense mood, no audit was conducted. However, Robert Bropho agreed that the Working Group could meet with the SVC management to discuss the proposed workshop with the whole of the SVC on 17 December 2002. Mr Bayman told Mr Bropho on the occasion that, where appropriate, the DCD would telephone ahead to say it wanted to speak to someone on the Reserve but that on occasions they would attend unannounced, with or without police. On 5 December 2002 Roland Bayman again visited the Reserve, this time with a DCD child protection worker, to speak with a young girl about whom there were concerns whether her needs were being adequately met by her carers. Although a meeting was sought in the privacy of the girl's home, Robert Bropho told Mr Bayman that they could meet in the public open space on the Reserve. That was where the meeting took place, it being also attended by Sharon Davies who made notes. In his evidence Mr Bayman conceded that the reception he received at this subsequent visit may have been adversely affected given the events of 4 December 2002. On 6 December 2002 the Working Group met to plan the workshop. On 10 December 2002 the SVC wrote to the Premier referring to the community audit on 4 December 2002. In a memorandum to various government officers of the same date the community described the audit as a raid and requested that they be informed of any visit. On 18 December 2002 a meeting was held at the Reserve to discuss the community workshop. Although other Aboriginal people were present, only Robert Bropho and Margaret Jeffery spoke on behalf of the SVC. Mr Bropho commenced the meeting by presenting the government officers with a document entitled 'Preliminary Suggestions for Assistance' together with a copy of a letter to the Coroner complaining in relation to what he considered to be errors in the report on the inquest in to the death of Susan Taylor. He spoke also about the removal of the classroom from the Reserve earlier in the year, and his desire for a MOU with the Premier. David Pedler of the Working Group said that they were not able to respond to those issues, their role being to discuss local services for the residents of the camp and the workshop. He stated that the context was one where the Government was unable to engage with members of the community regarding direct service provision or to identify with precision who were the members of it. Robert Bropho said he would think about the workshop and contact Roland Bayman concerning it. In relation to discussing service delivery and meeting off the Reserve, Mr Bropho did not give a commitment and stated his preference for these issues to be discussed within the community. At the meeting on 18 December 2002, Mr Bropho had stated that no-one would be available over the school holidays to attend any meetings. On 18 December 2002 the Premier responded to the SVC's letters of 17 October, 5 November and 3 December 2002 regarding the negotiation of a MOU. It is undoubtedly in the best interests of the families and children in the community that they receive the government services which will assist them in their day to day lives ... It is this Government's firm view that children and families are entitled to the same level of services no matter where they live. He stated that it had been suggested that the next meeting take place at a venue other than the SVC to demonstrate good faith with local service providers. Mr Bropho responded on 27 January 2003 that the SVC had not suggested meeting elsewhere and that only Mr Pedler had done so. In January 2003 Richard Bropho made allegations to an officer of the DOJ of being physically assaulted by his uncle on the Reserve. Richard was known as being a substance abuser. In February 2003 he was arrested and released into the care of Charlotte Bropho, wife of Herbert Bropho, at the Reserve. On 5 February 2003 David Pedler provided a briefing note to the DIA Director General on the recent events regarding the SVC. In it he expressed the opinion that Robert Bropho was applying a passive resistance strategy to the attempts by the Working Group to establish access arrangements to the residents of the SVC. He stated that discussions regarding the workshop had been unproductive and gave his assessment that the likelihood of SVC residents participating in it was doubtful given Mr Bropho's ongoing influence. The foundation of these opinions was not made apparent and the applicant submits that maybe he was relying on a misunderstanding of the correspondence. On 14 February 2003 the Director General of the DCD, Caroline Brazier, was informed that Clinton Pickett had made allegations in August 2001 about physical and sexual abuse of himself and another youth on the Reserve. On 18 February 2003 he was removed from the Reserve by the DCD and the Police and interviewed again about the allegations. He refused to repeat the allegations or to speak about occurrences on the Reserve. I accept the submission of the applicant that the Court cannot draw any adverse inference against any person associated with the applicant from a report to Ms Brazier that officers involved in the interview considered he was frightened to speak out. On 19 February 2003 a number of government agencies received a letter from the SVC containing what were said to be specific proposals on substance abuse. Roland Bayman advised the SVC he had referred the letter and the earlier preliminary suggestions to agencies who had more expertise and experience in dealing with such matters, the DCD not having any broad policy proposals to address relevant solutions. On 27 February 2003 the Working Group met at the DIA Midland office to discuss the workshop. A further meeting was planned for 19 March 2003. On 14 March 2003 the Gordon Implementation Group met. From discussion there concerning the SVC, a consensus emerged that each Department was having limited success in improving conditions and that the focus on providing better services to the SVC would not solve the problem of child safety either from physical and sexual abuse, substance abuse or self harm while the existing management structure was in place. The principal concern with that structure was the dominating role of Robert Bropho. The Gordon Implementation Group considered that he had regulated and continued to regulate the conditions of access by government officers to the Reserve and to persons on the Reserve and showed no genuine intention of working with the Government to improve conditions there. In their evidence both Bella Bropho and Margaret Jeffery denied that Robert Bropho decided who could come onto the Reserve. Mr Bropho testified that he had been the spokesman for the community for many decades and under the direction of it, it was his job to tell people to leave the Reserve. The applicant submits that the government officers were unable to distinguish between the role of Mr Bropho in fulfilling this function and the issue of dominance of management by him. Furthermore, she submits that they did not give any consideration to the need for balance between access by them and the need of members of the community for privacy. The outcome of the meeting of the Gordon Implementation Group was that it was agreed the concerns of the agencies should be reported to the Cabinet Standing Committee on Social Policy, together with options for improving the management of the Reserve. A report to that effect was tabled at a Senior Officers Group meeting on 22 April 2003. It stated that State instrumentalities were being prevented by the SVC from providing services to or securing the safety and welfare of persons accessing or resident on the Reserve. Nevertheless it stated that DIA was in regular contact with the community; the DCD had been accessed for services on an ad hoc basis; the Kiara Police Station had made gains in obtaining unimpeded access to the community; DOH had provided regular visits by Aboriginal Health Workers based in Midvale; the Department of Education and Training (DET) was developing protocols for access to the community and the DOJ had protocols in place and that there were no difficulties in complying with protocols or gaining access. Therefore the applicant submits that the Gordon Inquiry report confirmed that government services were being provided to the SVC. She further submits that the matters identified by the report as 'remaining concerns' should be understood as referrable to the need to engage in dialogue concerning the 'political' ground rules or terms of a management plan and the issue of whether meetings should be held on the Reserve or at a neutral venue. On 18 March 2003 the DCD's Northam office advised senior management that Robert Bropho had ordered that Clinton Pickett be removed from the Reserve to pre-empt action by the DCD. Officers of the DCD were unable to locate Mr Pickett. Charlotte Bropho, with whom Clinton Pickett was living, deposed that he had left the Reserve because he was worried that the DCD were coming to take him away. She denied that Robert Bropho had ordered Clinton's removal. On 19 March 2003 the Working Group met again. It was agreed that representatives of the DCD would contact Robert Bropho to arrange a time to visit the SVC to discuss the proposed workshop. On 21 March 2003 a Senior Officers Group meeting was held at the DIA. It was decided not to make a specific response to the letter from the SVC of 19 February 2003 concerning substance abuse. Rather the Working Group and the individual agencies would continue to focus on provision of services to the residents of the SVC and other Aboriginal communities. The applicant submits that the Working Group did not seem to realise that if it engaged with the SVC on the broader policy issues identified by the SVC, a relationship of mutual trust may have developed which in turn may have facilitated the provision of services. This submission overlooks the fact that the Working Group was bound to focus on issues of departmental concern rather than broader policy issues within the provenance of higher levels of Government. On 25 March 2003 Clinton Pickett was picked up by Police. He made the following statements to the DCD officers: his uncle, Herbert Bropho, had made threats to kill him; his father had told him not to return to the Reserve because his uncle would kill him; he had been living on the streets with his mother and his sister Lynette Bropho since leaving the Reserve and he did not want to return to the Reserve as he did not feel safe. However, both Margaret Jeffery and Charlotte Bropho deposed that Clinton has learnt to tell people what they want to hear and he had never said anything concerning threats to him by Herbert Bropho. On 26 March 2003 officers of the DCD and the DIA visited the Reserve to endeavour to arrange a meeting between the SVC and the Working Group to discuss service provision. Robert Bropho would not meet with them, referring them to Margaret Jeffery, Sharon Davies and Iva Hayward-Jackson. They state they were not interested in meeting with the Working Group, preferring to talk to the Government about a MOU and the Preliminary Suggestions communication. Margaret Jeffery considered the officers did not appear to understand what she referred to. On 2 April 2003 Roland Bayman sent a copy of the SVC's Proposal on Substance Abuse to the Drug and Alcohol Office, sending a facsimile copy to the SVC. In April 2003 Richard Bropho and his partner were picked up by Police for sniffing solvents and being on the streets. The DCD offered to return them to the Reserve but each expressed such strong fears about returning there that the DCD arranged and paid for hotel accommodation. Margaret Jeffery deposed that both Richard Bropho and his partner were rendered violent by sniffing so that, when attempts were made to remove cans from either of them, allegations of assault arose. On 30 March 2003 the SVC provided to the Minister for Planning and Infrastructure and DOLA a written draft management plan as was required by the 2002 Management Order for the Reserve. On 16 April 2003 DOLA referred the draft to a number of government agencies for comment. On 6 May 2003 the DCD Director-General, Caroline Brazier provided the DCD's comments on the draft management plan to DOLA. The draft management plan stated that 'new and unannounced visitors are advised to come to the office ... they are then directed to who they need to see'. It further stated 'by common courtesy most visitors ring ahead'. Caroline Brazier was of the opinion that those statements were not consistent with cl 3 of the Annexure to the 2002 Management Order which provided that persons representing a State authority would be entitled to enter on and remain within the boundaries of the Reserve in order to carry out the lawful exercise and performance of the functions and duties of that authority without being required to obtain the prior approval or give prior notification to the SVC. In Ms Brazier's opinion, the DCD officers needed to be able to make unannounced visits and have direct and unimpeded contact with individual families and children at the Reserve. She also considered that it was important that members of the SVC were free to be contacted directly by officers of the DCD and were free to directly contact such officers. Caroline Brazier considered that the tenor of the draft management plan gave a strong impression of a closed community, there seemed little in the way of encouragement of communication or interaction with the wider Nyungah or Western Australian community, and there were not clear provisions as to how the SVC proposed to ensure the welfare, safety and development of children resident in the community. While a particular Aboriginal Health Worker has been identified as acceptable within the Plan, there is no broader mention of access for health care providers and in particular no mention of access for emergency ambulance services. This is inappropriate in relation to patient confidentiality. Further, in the event of psychological/psychiatric consultations such as those associated with suspected child abuse, the fear and apprehension of adolescent and other patients would (sic) be compunded (sic) if they felt that the reasons for a visit were being discussed with elders or community administrators. Mr Matthews indicated that the draft management plan should 'include a clear and strong statement of commitment to the safety and security of all inhabitants and visitors to the Reserve, as well as the [SVC's] support for the Gordon Report recommendations as they relate to [the SVC]'. The Police Commissioner queried whether there should be a main gate to the Reserve as 'the very existence of a gate carries with it the potential for it to be locked at any time, which may hinder police when their very presence is needed urgently'. It was also noted that other Aboriginal communities did not have gates restricting vehicle access. On 19 May 2003 DOLA received a letter from Terry Werner, Acting Executive Director of the DOE, containing the Department's comments on the draft management plan. Mr Werner indicated that the draft management plan failed to include provisions relating to access by government officials and in this respect was deficient. It was also his view that there were several statements in the draft management plan which could lead to conflict between members of the Reserve and the government officers undertaking their duties. The lack of specificity in statements [namely the draft management plan] ... could conceivably give rise to an expectation by members of the Community that residence at the Community confers some exemption from the legal rights and responsibilities of citizenship. The applicant submits that these responses were unduly negative and were unreasonable. She asserts that the provisions of the draft management plan were amenable to amendment in the course of response. In relation to the Police response concerning the gate, she states that it was an issue where a balance needs to be struck between protection and emergency entry. On 14 April 2003 the Secretariat prepared a draft document entitled 'Report on Service Provision to Swan Valley Nyungah Community'. David Pedler commented on the draft that the influence of the non-indigenous supporters in ensuring ongoing non-cooperation was a significant factor, so that access would be problematic even if Robert Bropho was not present at the Reserve. The applicant asserts there was no basis in fact for such a conclusion by Mr Pedler. On 22 April 2003 a Senior Officers Group meeting considered the report. The Secretariat then continued working on a Cabinet submission regarding the implementation of the Government's response to the Gordon Inquiry report. On 28 April 2003 the DCD Director-General was informed by the Department's Media Liaison Officer that the Government had been contacted by journalist, Colleen Egan, and advised that she had received anecdotal evidence from several sources that Robert Bropho was running the SVC 'with an iron fist'. Ms Egan raised questions regarding a particular woman who claimed she had been threatened with violence but was too frightened to leave the Reserve. On 29 April the DPC advised the Premier's office of the information. The applicant submits that these occurrences should be seen as precipitating a shift in approach by the Government from developing a management plan to enacting the Reserves Act. On 1 May 2003 the Premier raised the issue of the Reserve at a Strategic Management Council meeting. He was advised of the continuing concerns identified at the meeting of the Gordon Implementation Group on 14 March 2003, such concerns being directed to the safety of women and children at the Reserve. The Gordon Implementation Group expressed the opinion that the management of the Reserve did not have any intention of addressing in good faith the requirements of the 2002 Management Order of October 2002 and that strong action was warranted. (The applicant contends that the Gordon Implementation Group had no reasonable basis for forming their opinion and the evidence on that is set out in Part L: Justificatory Contentions). The Premier indicated that he wanted something to be done about the situation as a matter of urgency. As a consequence, various meetings and inquiries were undertaken by the relevant agencies. These included discussion of the option of formally removing the control of the Reserve from Robert Bropho and his extended family. The focus of the inquiries and discussions was directed to the issue of how to reduce the risk to the women and children of the SVC by protecting them from intimidation, physical violence and sexual and emotional abuse. The evidence of Caroline Brazier and Lynsey Warbey address the detail of these steps. In late April 2003 a 13 year old Aboriginal girl was reported to the police as having run away by her father and as living at the Reserve with Charlotte Bropho and Herbert Bropho. The applicant also deposed that Robert Bropho had also called police regarding the child because her father was causing trouble for the community and they did not want her to remain on the Reserve. On 2 May 2003 Bella Bropho requested the Midland DCD to remove the child because of brewing trouble between Herbert Bropho and the child's father. The outcome was that the child was removed by the DCD on that day. Subsequently Robert Bropho was charged with sexually assaulting the child while she was residing at the Reserve on that occasion. On 2 December 2005 he was convicted in the District Court of Western Australia of two counts of indecent dealing with Lee Marie Parfitt. His conviction was upheld on appeal to the Full Court of the Supreme Court of Western Australia: Bropho v State of Western Australia [2006] WASCA 109. In their evidence to this Court, Bella Bropho, Margaret Jeffery and Robert Bropho maintained that he was innocent of those charges and did not accept that the incident had occurred. Apart from the charges involving Lee Marie Parfitt, Robert Bropho later faced charges of rape and indecent assault of girls under the age of 16, arising out of separate incidents alleged to have occurred in the 1970s and 1980s. The two persons concerned were Lena Spratt and Isobel Bropho. The applicant submits that, in contrast to the advice from the Gordon Implementation Group to the Premier, the events concerning this child represented an appropriate involvement by the DCD in addressing a welfare issue. On 5 May 2003 the sister of the child in question and a member of the Bropho family, advised the DCD she was frightened because she had been subjected to continued harassment and violence by residents of the Reserve, especially by Charlotte Bropho and Herbert Bropho, since she had left the Reserve. She was moved initially into a protective hotel and then into a new house. On the same date three teenage boys who had resided at the Reserve made a number of allegations concerning people on the Reserve, including Robert Bropho and Herbert Bropho. Margaret Jeffery denied knowledge of the events alleged. Also on the same date also the Premier's Chief of Staff met with the State Manager of ATSIC to discuss changing the management of the Reserve. The latter indicated he was supportive of the idea of changing the management as family violence and child abuse could not be tolerated. A number of meetings were held subsequently to discuss the Government's strategy for dealing with the Reserve. Following the meeting of 1 May 2003, the DCD Director General, Caroline Brazier made enquires of the DCD and was told that it did not know the number, identity or ages of the children on the Reserve. She gave instructions for such information to be sought. This continued until August 2003. The outcome was that Cabinet approved the drafting of the Reserves (Reserve 43131) Bill 2003 (WA) (the Reserves Bill). Lynsey Warbey gave evidence that during the course of discussions leading up to the this Cabinet meeting, it was recognised that there was a need to include in any legislation provisions excluding the application of the rules of natural justice to, and the opportunity for judicial review of, decisions by the administrator to remove persons from the Reserve. According to Lynsey Warbey a concern was expressed at a number of the meetings that the whole rationale for the legislation, namely to protect women and children on the Reserve, could be defeated if a person whom the administrator considered it necessary to remove from the Reserve could go to court and get an interim injunction and thereby remain on the Reserve for months or years pending the hearing of their claim for a prerogative writ. Ms Warbey in her oral evidence stated that because of these concerns there was a clear policy direction that the administrator was required to have the ability to shut down or remove certain people immediately from the Reserve should the circumstances require it. There was also a concern that government officers were hearing allegations of abuse and intimidation of women and children associated with the Reserve but those women and children were too frightened to make formal complaints to the police or the DCD. In Lynsey Warbey's opinion, in those circumstances there may be good reasons to want to act to remove persons suspected of child abuse or intimidation from the Reserve even though there was no formal complaint or evidence upon which such action could be justified. In his oral evidence Grahame Searle also stated that he had suggested the Reserves Act because of the Government's concern for the safety of the people on the Reserve and a desire to avoid unnecessary delay. It was Mr Searle's view that should the Minister exercise her powers under the LAA and take administrative action to revoke the 2002 Management Order it was likely to lead to an injunction being sought. This would have delayed government action significantly, during which time the Government could not guarantee the safety of those people residing on the Reserve. It was Mr Searle's view that if the Government wished to take action swiftly 'the best way to do it was to use the parliament, which is the voice of the people, to pass a piece of legislation in order to give effect to what the government's intent was'. The applicant submits that the advice referred to in these preceding paragraphs failed to take into account the requirement on a court in granting an injunction to balance the harm which might be accorded to a person from being directed not to remain on the Reserve and the risk of detriment to others if the injunction was granted. Additionally she submits that the same advice gave insufficient credence to the powers of the Government to protect children without any necessity for a complaint as provided for in s 29 of the Child Welfare Act 1947 (WA). During this period a strategic management plan was also developed for dealing with the Reserve, assuming a Reserves Act was passed. That plan provided, amongst other things: The applicant submits that the possibility of retaliatory attacks in par (c) of this statement is unwarranted. However, Lynsey Warbey testified that such a possibility was a concern expressed by the DCD and the Police. ATSIC does not wish to see claims of racism cloud this very serious issue. This is about basic human rights and the safety of young indigenous Australians. The leaders of the Swan Valley Nyungah Community have not sought to engage with Government responsibly to address this issue. Instead, they have demonstrated that they lack the necessary leadership to provide a safe living environment for community members. On 14 May 2003 following the meeting with ATSIC, Sandra Eckert and Lynsey Warbey briefed the Premier on the draft Reserves Bill. Those who rule it defy all efforts to provide a better future for its inhabitants. It remains a place of ruination and despair. This Government is of one mind: the risk of abuse and violence to women and children of that camp is unacceptable... I am not prepared to wait for another Susan Taylor before we act. The Community has always helped us in any way it can. We can make telephone calls any time, we have access into and out of the Community at all times and transportation is provided for us if we need it. We are strong Women and no one tells us what to do or say. This issue is not about race; it is about intimidation, violence and abuse. The safety of all our children must be paramount, and it is incumbent upon all Western Australians to uphold the right of every child in this State to security and protection. The applicant and Denise Sambo went to Parliament House to deliver the petition to the Premier, having heard of the proposal to close the Reserve through the media. An official told Ms Sambo of the impending closure but no-one told her women and children were going to be removed from the Reserve. Following the introduction of the Reserves Bill numerous meetings were held from the middle of May 2003 onwards to plan for what would happen following the passing of the Reserves Bill. It had generally been agreed within Government that families would not be moved from the Reserve straight away but that there would be a period of transition after the enactment of the Reserves Act during which time the families' needs and aspirations would be ascertained and they would be relocated to other suitable accommodation. It was generally agreed that leaving the families to live on the Reserve was not a viable option because of the risk that the same social problems would continue. Her evidence and that of Caroline Brazier suggested that she was faced by intimidatory tactics of men in the community. The affidavit of Margaret Jeffery suggests that Robert Bropho and Iva Hayward-Jackson were keen to ensure that Ms Hart properly identified herself. Events in which Ms Hart was enclosed in a room by actions of Ms Jeffery and Sharon Davies are said by the applicant as being designed to accord Ms Hart privacy in conducting her interview. It is sufficient to find that the quality of communication between each 'side' was such as to leave each fearing the worst of the other. On 25 May 2003 the SVC held an 'open day' on the Reserve for the media. According to Bella Bropho, that was an opportunity for the SVC to put forward their case and their concerns. Ms Bropho agreed that she told the media 'there is no violence, sexual harassment, or solvent abuse in this community at all'. She maintained in her evidence that statement was accurate, except that she acknowledged some kids were sniffing. When particular incidents were then put to her, she admitted the incidents but frequently answered to the effect 'that's only just one incident'. Respondents' counsel directly put to Ms Bropho 'do you accept that there was any abuse happening at the Reserve in relation to children? ', to which she replied 'Only one incident and that was dealt by the law in a proper way'. Bella Bropho was also asked if she knew that Herbert Bropho was threatening to kill sniffers if he found them on the campsite, to which she replied 'I wouldn't have a clue, wouldn't have any knowledge'. She expressed the opinion that there was no violence on the Reserve. This can be contrasted with Ms Bropho's admission in her affidavit of 26 July 2006 that Herbert Bropho assaulted her daughter and used to 'bash' children he found sniffing on the Reserve. When it was put to her that Susan Taylor died at the Reserve, Bella Bropho responded 'nobody was charged', and that 'everybody gets on with their own lives and there's no disruption of anything'. I agree it is clear that Bella Bropho's statement to the media on 25 May 2003 did not correctly describe the situation. In her evidence before the Court she continued to play down the extent of violence, sexual harassment and solvent abuse at the Reserve around that time. In his testimony Robert Bropho agreed that sniffing and solvent abuse was a problem that afflicted Aboriginal children at the Reserve. He also agreed there was physical abuse and substance abuse and family violence at the Reserve, although he qualified that by saying it was the same as has occurred since the community has been closed down and the same as occurs in white society. In his evidence Robert Bropho also said that he had no knowledge of his sons Herbert and Harvey Bropho being violent or intimidating towards other people. When particular incidents involving Herbert were put to him, Mr Bropho responded that they could have happened when he was not there. It is clear that in this respect Mr Bropho's evidence should not be accepted. The Administrator had been nominated by ATSIC as their first choice for administrator and he was subsequently recommended to the AAPA. The Terms of Reference of the Administrator's appointment were to: On 12 June 2003 the Administrator attended a meeting at the DIA Midland office, with representatives from DIA, DPC, DCD, DHW, WAPS, Chubb security staff and ATSIC where his role as administrator of the Reserve was further explained to him. At the meeting the Administrator discussed and agreed with the others present that upon his appointment as Administrator he would as soon as possible enter the Reserve and give directions to Robert Bropho, Harvey Bropho, Herbert Bropho and Robert Bropho (Jnr) to leave the Reserve. This was because he was told by officers of the DCD and DOH that they were the persons who were preventing government officers from having full and free access to the Reserve. The Administrator also agreed with the others present at the meeting that the DCD and DOH would seek to resettle the other residents of the Reserve over the course of the following two or more weeks, and he would then secure the Reserve. He was told by Richard Curry and Carolyn Petroboni of DIA that part of his role as Administrator would be to consult with the Aboriginal community and relevant non-Aboriginal persons about possible future uses of the Reserve. He was told that the Government wanted the Reserve to continue to be used exclusively for the benefit of Aboriginal people. The Administrator deposed that he gave and maintained that direction to protect the infrastructure on the Reserve from damage through vandalism or other intentional acts, to prevent unauthorised occupation of the Reserve pending the implementation of the AAPA decision as to the future use of the Reserve and to limit his potential legal liability as the person with care, control and management of the Reserve for any injury to persons or property on the Reserve or as a result of things done on the Reserve. Since 13 June 2003 the Administrator has permitted access to the Reserve to persons who have had a legitimate reason to do so. This has included security personnel to secure the Reserve from unauthorised entry; contractors engaged to perform work on the Reserve; members of the Bennett Brook Catchment Group to inspect the vegetation on the Reserve and give advice about plant identification, suitability and pruning; City of Bassendean rangers to collect animals belonging to the former residents of the Reserve; representatives of Aboriginal Hostels Ltd to survey land for a proposed 30 bed nursing home and Fire and Emergency Services Authority of Western Australia personnel to inspect fire mitigation requirements. The applicant and those she claims to represent, along with all other persons (Aboriginal and non-Aboriginal), have not been permitted to access the Reserve if there was not a particular reason for their doing so. On 14 June 2003 Denise Sambo, Sharon Davies, Joyce Parfitt and Sadie Jackson returned to the Reserve to collect a dog that Ms Sambo had left at the Reserve. They were prevented from entering the Reserve by a security guard. Shortly after a Shire ranger drove out of the Reserve with the dog, which was returned to Ms Sambo. In the days following 13 June 2003 the Administrator arranged for a locksmith and a glazier to attend the Reserve to make the cottages secure by replacing door locks and broken windows. According to Margaret Jeffery the SVC carried out maintenance work at the Reserve including cutting grass, maintaining fire breaks, plumbing, gardening, bushland planting, repairing buildings, electrical work, plastering and painting and clearing up and arranging for removal of rubbish. However over the course of the 5 weeks following 13 June 2003 the Administrator arranged for cleaning contractors, plumbers and an electrician to work on the cottages to bring them up to a standard where they were hygienic and safe. He also had pest control contractors inspect the cottages and spray for white ants in the roof cavities, wet areas and kitchens. The Administrator also discovered that there was an enormous amount of rubbish on the Reserve, including old car bodies, shopping trolleys, bedding, household furniture and drums. In oral evidence the Administrator agreed that a significant amount of this rubbish had been there for some period of time but was unable to provide an estimation of the age of the dump, only that it was unlikely to have been as old as 10 or 20 years. The Administrator also gave oral evidence that in relation to some of the rubbish, such as the car bodies, it could only have been brought from Lord Street, through the Reserve. He accepted that in relation to rubbish such as car bodies removed from the Bennett Brook area he was unaware of the possibility that there was access to dump rubbish in that area via the next door Pyrton property. The Administrator engaged a contractor to remove rubbish located around the cottages. The contractor removed 100 cubic metres of rubbish (approximately 100 tonnes). In her evidence Margaret Jeffery explained that the disposal of rubbish on the Reserve had been a long term issue and that the Shire of Swan did not start collecting rubbish from the Reserve until 2001. The service was only able to take a limited quantity of accumulated rubbish each year. In oral evidence the Administrator stated that he had met with the Mayor of the Shire of Swan following his appointment. The Mayor indicated that the Shire was aware that there was a rubbish problem on the Reserve which it wished to have cleared up but it had experienced difficulties getting access to the Reserve to remove the rubbish. Following his appointment as Administrator, the Administrator consulted widely with members of the Nyungah community about the future use of the Reserve for the purpose of preparing a report to the Minister for Aboriginal Affairs. Among those Nyungah people with whom he spoke, there was a great deal of interest in making the Reserve available for use by Nyungah people and others for a range of purposes. On 24 November 2003 the Minister announced that the Reserve would be used for an environmental park and cultural centre for Nyungah people and others and that negotiations would continue on the possibility of developing an Aboriginal aged care hostel on a suitable portion of the Reserve. In September 2003 the Administrator was informed by the DIA that it had been contacted by the Crown Solicitor's Office, which in turn had received a request that persons involved in the Federal Court native title claim proceedings over the Perth metropolitan area be allowed to enter the Reserve for the purpose of an 'on-country' hearing. The Administrator understood that those persons included some former residents of the Reserve. On 18 September 2003 the Administrator wrote to the Crown Solicitor's Office informing them that he would allow access subject to certain specified conditions. He asked the Crown Solicitor's Office to refer the contents of his letter to the Federal Court. He understands that the hearing on the Reserve did not proceed. On 22 October 2003 the Administrator engaged a contractor to prune the trees at the front of the Reserve and cut fire breaks, pursuant to a consent under s 18 of the Aboriginal Heritage Act 1972 (WA) given by the Minister for Indigenous Affairs. The trees were overgrown, and there were not adequate fire breaks around the Reserve as required by law. Noxious plants were also prolific in creek beds on the Reserve. The Administrator gave oral evidence that the trees fronting the Reserve were mostly scrubby and self sown and that residents surrounding the Reserve were unhappy with how the Reserve presented. The Administrator met with the Bennett Brook Catchment Group who indicated to him which trees were of significance or value and should be kept and those which could be cut down or removed. According to Margaret Jeffery adequate fire breaks had been planned at the Reserve and the noxious plants in the creeks were the result of planting by the SVC with assistance from Men of the Trees and the Bennett Brook Catchment Group. On 12 June 2004 the Administrator's appointment as administrator of the Reserve expired. Margaret Jeffery claimed in her evidence that the Coroner made no adverse findings against the SVC in respect of the death of Morgan Spratt, although in cross-examination she acknowledged that there were adverse comments. It realistically resulted in a denial of basic human rights to vulnerable members of the Lockridge Community and, by example other aboriginal youth. By way of mis-education and isolation it prevented those in most need of protection from being able to access agencies which may have assisted, or at least tried, to offer some protection. It was assented to on 12 June 2003 and came into operation on that day (s 2). It expired on its second anniversary on 12 June 2005. I262262 is revoked by force of this Act. I262262 has effect as if it were a revocation of a management order under the LAA section 50(2). The rules known as the rules of natural justice (including any duty of procedural fairness) do not apply to or in relation to a direction under section 7(3)(a) or (b). (2) A person is not entitled, because of anything in this Act or anything done by another person, to expect that a discretion referred to in subsection (1) will be exercised in a particular way. The respondents rely upon s 8. Did the 2002 Management Order confer property upon the SVC? If so, did the 2002 Management Order confer beneficial ownership on the applicants? Were the applicants the beneficial owners of the land the subject of the Reserve by reason of vesting in trust in the SVC on 12 December 1995? Did the vesting confer an interest in the land upon the SVC? If so, did the vesting confer beneficial ownership upon the applicants? Were the 30 March 1998 transitional provisions to the LAA invalid by reason of s 10(1) of the RDA insofar as they converted the vesting to the 1998 Management Order? Was the revocation of the 1998 Management Order on 11 October 2002 invalid? Did SVC freely give prior informed consent? Was the revocation in the public interest? Was it invalid by reason of inconsistency between s 46 (or s 50) of the LAA and s 9 of the RDA? If not, did the applicants have a human right to manage and otherwise exercise ownership rights in relation to the Reserve? Is any right to manage and otherwise exercise ownership rights in relation to the Reserve a right to which s 10 of the RDA applies? Did the Reserves Act result in the applicants not enjoying the right to manage and otherwise exercise ownership rights in relation to the Reserve which is a right enjoyed by persons of another race? Was the Reserves Act thereby inconsistent with s 10(1) of the RDA and Art 5(d)(v) of the Convention? Is there a causal connection between the applicants' race and the alleged non-enjoyment of their right to manage and otherwise exercise ownership rights in relation to the Reserve? Is a law of the State inconsistent with s 10(1) of the RDA if it is reasonably appropriate and adapted to a legitimate end? Was the Reserves Act reasonably appropriate and adapted to a legitimate end? Was the Reserves Act nevertheless valid as a special measure? Or did the exception in s 10(3) apply? In addition: Did the applicants receive notice? Did the applicants have a right to be heard or other fair process? Did the applicants have a right to compensation? Did ss 8 and 9 of the Reserves Act cause any deprivation to be arbitrary? Is any deprivation of the right to manage and otherwise exercise ownership rights arbitrary if it is in the public interest? Additional issues here are: Did the applicants have a right of freedom of movement and residence within the Reserve? Did the Reserves Act authorise the deprivation of the applicants' right of freedom of movement and residence within the State? Did the Reserves Act authorise the deprivation of the applicants' right of freedom of movement and residence within the Reserve? Did the Reserves Act result in the applicants not enjoying the right of freedom of movement and residence that is enjoyed by persons of other races? Did the acts of the Administrator involve a distinction, exclusion, restriction or preference based on race? Did the acts of the Administrator have the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise on an equal footing of any human right or fundamental freedom? The last element is that in issue 15. If so, was the refusal by reason of the race of the applicants? If so, has the second respondent trespassed on the Reserve? If so, has the Administrator trespassed on the Reserve? Is the claim in trespass barred by s 12 of the Reserves Act? In identifying the issues under discussion in the following reasons I have given them the number or numbers which reflects their place in the above list of elements. Section 26 refers to 'any land...reserved for the use and benefit of the Aboriginal inhabitants' and s 32 empowers a declaration that 'the right to the exclusive use of any area...shall be reserved for the Aboriginal inhabitants of that area, being persons who are or have been normally resident within the area, and their descendents'. I take the description as referring to persons occupying a house on the Reserve as their principal place of residence. The persons who were Aboriginal persons of Nyungah origin, members of the SVC and Aboriginal inhabitants of the Reserve comprise a fluctuating group. It is said the evidence of who comprised the group from time to time is to be found in the following: I have examined the above evidence. A most useful starting point is appendix 11.3 of the report of the Expert Historian, Debra Fletcher which catalogues the residents of the Lockridge land from sources up to and including 2001. In appendix 11.4 it contains family trees. The affidavit of Irene Thomas, Manager of the Midland DCD, gives evidence of a helpful survey in May/June 2003. Lynsey Warbey deposed that on 6 May 2003 a meeting was held with local service providers including DIA, DCD, DOH and WAPS. It was also attended by the Secretariat. During the course of that meeting an attempt was made to identify the families residing at the Reserve and the services being made available to them. The understanding at the time was that only seven of the 13 houses on the Reserve were being permanently occupied. Ms Warbey's evidence was that the main persons associated with the Reserve were as follows (which I have annotated where there is differing evidence from Ms Thomas): Ms Thomas also described as itinerant residents Clinton Pickett, son of June Bropho; Kerry Bropho and Lee Marie Parfitt. She identified the children residing at the Reserve as being Jamie Baker (aged 15), Marie Baker (aged 13), Shaun Baker (aged 14), Sarah Bropho (aged seven), Peula Bropho (aged eight), Sam Bropho (aged 14), Janelle Baker (aged five), Louis Bropho (aged three), Richard Bropho (infant), Tina Jackson (aged 17), Sadie Jackson (aged 10), Joyce Parfitt (aged 12), Herbert Parfitt/Bropho (aged about five), Clemisha Wood (infant) and her two and a half year old sister. Against this background I can accept the further evidence of Ms Warbey that it was difficult to establish firm residency figures because of the highly transient nature of the population. Bella Bropho gave evidence that around the time the Reserve Act was passed there were 25 children, 12 women and 10 men living on the Reserve. She identified a number of those persons (generally consistently with the list above) and said they were all one family. Margaret Jeffery agreed with Bella Bropho's evidence and said that the population varied. She confirmed there were members of the SVC who did not live at the Reserve. The question of who were the members of the SVC and Aboriginal inhabitants of the Reserve as at 13 June 2003 does not need to be definitively answered at this stage of the proceedings (but may have greater relevance if the Court later needs to consider damages and other relief). There were, approximately, in the order of 25 children, 12 women and 10 men at the Reserve. Non-Aboriginal people also entered upon and associated with the Aboriginal inhabitants of the Reserve, including Margaret Jeffery, Sharon Davies, Lynda Nutter, Greg Stratton and Paul Allardyce. Was Robert Bropho an Aboriginal inhabitant of the Reserve? The respondents submit that the evidence in relation to whether Robert Bropho lived permanently at the Reserve was contradictory. When Bella Bropho was first asked whether Robert Bropho lived at any other address than the Reserve, she said 'only on occasions with Ms Margaret Jeffery down at her...' . She also said that he lived with Margaret Jeffery twice, but did not know when. In other parts of her evidence she said Mr Bropho only went there when the Reserve was closed but then seemed to contradict that by saying he 'moved back' (which he clearly has not done since 13 June 2003). Ms Jeffery's evidence was that Robert Bropho never stayed at her house between 1995 and June 2003, and only visited twice, and then only coming as far as the front door. When Robert Bropho was asked about his residence, he said that between the time the Reserve was in 'full swing' and June 2003 he had a bed at Margaret Jeffery's house and he would sometimes stay at her house to do work and go back to the Reserve the next day. He did this several times but could not say how many times. The respondents submit that Robert Bropho's evidence on this issue should be accepted, and that it is open to the Court to find that Bella Bropho did not give her evidence on this issue fully and frankly and Margaret Jeffery deliberately gave false evidence in this regard. The applicant submits that Robert Bropho was an Aboriginal inhabitant of the Reserve and should be found to have been a resident of the Reserve at all relevant times. The evidence upon which the applicant relies in support is substantially the same as that relied upon by the applicant to establish the membership of the SVC and residency at the Reserve. As to the cross-examination referred to by the respondents, the applicant submits that there was some confusion between counsel and witnesses on what period was being addressed so that there is no basis for concluding false evidence was given. Having considered that evidence and the effect of the evidence I am of the view that whatever doubts may have been left hanging on the exact period of Robert Bropho's residency, he is correctly to be found as having been an inhabitant of the Reserve. That is, he lived or dwelt there, if not all the time, then substantially. Importantly he was so at the time and immediately before the enactment of the Reserves Act. It is not necessary to make any adverse credibility findings to safely arrive at this finding. In my view the effect of the evidence is to establish that Robert Bropho was an inhabitant of the Reserve and lived and dwelt there, certainly for a majority of his time. He lived and dwelt on the Reserve even if on some occasions living and dwelling elsewhere. Was Iva Hayward---Jackson an Aboriginal inhabitant of the Reserve? The applicant also submits that Iva Hayward---Jackson was an Aboriginal inhabitant of the Reserve (being the son of a deceased Nyungah elder) who had a house allocated to him on the Reserve in which he resided from time-to-time prior to 13 June 2003; though he also had a residential address in Subiaco. She submits that the evidence of that is to be found in the following: (a) affidavits of Bella Lena Bropho sworn 15 December 2003, [8], and 25 August 2004, [9] (exhibits A1 and 2) and evidence of Bella Bropho (4/9/06). (b) affidavit of Robert Charles Bropho sworn 15 December 2003, [27] (exhibit D), contra evidence of Robert Charles Bropho (6/9/06); (c) affidavit of Denise Roberta Sambo sworn 15 December 2003, [11] (exhibit C1); (d) affidavit of Margaret Joanna Jeffery sworn 15 December 2003, [24] (exhibit B1). So far as the lists all referred to Iva Hayward-Jackson they did not stand up in cross-examination. Bella Bropho's evidence was that Iva Hayward-Jackson lived on the Reserve, in house number four. She denied having any knowledge of him living in Subiaco. Margaret Jeffery's evidence was that Iva Hayward-Jackson was living at the Reserve, but when it was put to her that he lived in Subiaco, she said that was his official address but he often lived at the Reserve and had a room there. Contrary to his affidavit evidence Robert Bropho said that Iva Hayward-Jackson lived in Subiaco and did not at any time sleep at a house on the Reserve. He described him as a person living around Subiaco who had come to the Reserve to assist as their land and culture officer. I find that the applicant has not made out that Iva Hayward-Jackson was an inhabitant of the Reserve. DID THE APPLICANT AND THE MEMBERS MANAGE THE RESERVE? She asserts that the applicants, as Nyungah People, have a capacity to manage the land in accordance to the laws and customs of Nyungah people which persons (such as the respondents) who are not Nyungah people, do not. Bella Bropho deposed that the residents of the Reserve and their friends and relatives and other Nyungah people have gathered at the Reserve to socialise and to celebrate various events such as Christmas and birthdays. She further stated that they have gathered according to 'traditional law and custom' to mourn the passing away of her mother, the late Edna Bropho, and other residents of the Reserve. Additionally she deposed that Nyungah custodians of the Reserve have cared for and watched over the Reserve and protected it in an Aboriginal spiritual dreaming way. She stated that the SVC had arranged for a primary school to open at the Reserve and controlled the manner of access to the Reserve. In his first affidavit Robert Bropho deposed that 'the area of the Reserve has been our ancestors' land since time began'. Further he deposed that the Reserve was adjacent to Bennett Brook, the site of the creation of the ancestral creation-time figure, the Waugyl. He described the Reserve as an area of religious significance to Nyungah people from the Swan Valley and a dreaming track and 'traditional' camping ground. As a further aspect of management Robert Bropho deposed that the SVC had applied for and obtained funding from ATSIC to build new dwellings, an office and further infrastructure facilities on the Reserve (the 'Environmental, Health and Housing Project'). It had advertised for, interviewed, selected and employed an architect and a construction manager for the project. It had employed residents of the Reserve as building labourers. It ensured that the dwellings were designed to be culturally appropriate for Nyungah people. It requested and obtained the installation of a solar energy system. Thirteen houses and one office were completed under the project. Additionally he deposed that the SVC had provided assistance to Nyungah people and others coming to the Reserve. This included provision of temporary accommodation at the Reserve; of emergency food; of transport; of emotional support; and the facilitation of the provision of government and non-government services to residents of the Reserve. Further Mr Bropho referred to the SVC allowing and enabling meetings in relation to processes under the Native Title Act 1993 (Cth) (the Native Title Act ). In respect of land management, his evidence was that the SVC arranged for various native trees and bushes to be planted and for wildlife (such as turtles) on the Reserve to be protected. It also took action to protect and control access to the Reserve by having a fence installed and access gates established. Margaret Jeffery's evidence supported some aspects of Robert Bropho's account. In addition she deposed that the maintenance work carried out at the Reserve on behalf of the SVC included, cutting grass; maintaining fire breaks; arranging for plumbing and electrical work; gardening, bushland planting; repairing buildings and fittings; plastering and painting; and clearing up and arranging for the removal of rubbish. Denise Sambo's affidavit is also corroborative of aspects of the management carried out by the SVC. This evidence, particularly as it relates to claims of tradition and religious association, must be read in the light of the expert evidence of Debra Fletcher. On the question whether the Reserve was a traditional camping ground of Nyungah people, she found that what was a traditional camping ground until the late 19 th century, became the home to a different family group who sought out the area for the same practical reasons as the original inhabitants. On the question whether the Reserve is an area of religious significance to Nyungah people from the Swan Valley area, she found it was such. I accept that these findings should be accepted for application here, this trial not having extended to re-examining the range of evidence reviewed by that expert. Evidence given on issues touched by the expert's findings in the two respects referred to should therefore be understood in terms of those findings as necessary. The evidence of background circumstances set out above makes apparent that, if the SVC was exercising a management role in relation to the Reserve, it inadequately provided for the management and maintenance of it. Nevertheless, it is apparent from the same evidence that the SVC, acting through the applicant and its members, managed the Reserve to a degree. By that finding I do not intend to imply that such management was up to the standard which it should have been; only that to some degree the SVC fulfilled a management role in relation to the Reserve. From the evidence of the actions deemed necessary to be taken by the Administrator, it is apparent that the manner in which the SVC discharged that role fell well short of what was required for full and effective management of the Reserve. It is agreed that the Administrator directed in writing Robert Bropho and Iva Hayward-Jackson, and orally directed Margaret Jeffery, Sharon Davies, and Greg Stratton to leave the Reserve on 13 June 2003. (The applicants submitted that it was agreed that Lynda Nutter also received an oral direction. This was not pleaded and was not agreed. Her affidavit states she was at the Reserve when the Administrator told Robert Bropho to leave but not that she received such a request. The affidavit of the Administrator does not refer to her as a person requested to leave). I accept the applicant's submission that other Aboriginal inhabitants left the Reserve before 13 June 2003: (a) in the knowledge that the Reserves Bill had been introduced into the Parliament (it having in fact been passed by Parliament on 15 May 2003 and was assented to on 12 June 2003); (b) aware of what they perceived to be the likely intention of the first respondent to exercise a power such as that under the Reserves Act to direct them to leave the Reserve; (c) in anticipation of receiving a direction to leave the Reserve under the Reserves Act if they had not left the Reserve; and (d) wishing to avoid undue attention from the media. The affidavits of Bella Bropho, Denise Sambo and Sharon Davies support findings to the effect of this submission. Oral testimony establishes that residents wished to be away from the Reserve so that the media could not take photographs of the departure of themselves and their families, which they considered would be humiliating. Margaret Jeffery, in cross-examination, claimed that the women left the Reserve because of threats from Minister Carpenter the day after the release of the Gordon Inquiry report. When asked what the threat was, Ms Jeffery said: 'Losing their homes, losing their property, losing their ancestors' spirits'; and that he was going to work to close the community down. In re-examination she conceded that Mr Carpenter had actually said he was trying to get support from his Cabinet colleagues to have the 2002 Management Order revoked and that he said nothing about people losing their homes or their spiritual connection. Her earlier evidence in cross-examination that Mr Carpenter made threats is therefore lacking credibility. At the time of the enactment of the Reserves Act it was not the intention of the Government that all persons would be immediately removed from the Reserve. It was intended that the Administrator would give notices to bring about the removal of Robert Bropho Snr and Jnr, and Harvey and Herbert Bropho as persons considered to have inhibited access by Government agencies. Lynsey Warbey testified that there was no intention to remove women and children and that service providers were planning to go in and talk to each of them about what they wanted to do. Ms Thomas deposed that as at 10 June 2003 the Government's intention once the Reserves Bill was enacted was to appoint an administrator and remove certain men from the Reserve, with women and children remaining on the Reserve until the DCD and other agencies had worked with them and identified suitable alternative arrangements based on their needs and wants. Based on this the applicant submits it was the first respondent's intention that the Aboriginal inhabitants would not remain in their homes on the Reserve (except perhaps some Aboriginal inhabitants for a short period following 13 June 2003: see the evidence of Roland Bayman, David Pedler and Caroline Brazier). David Pedler accepted in cross-examination that it was the intention of government that ultimately everybody would have been removed. I therefore accept that the applicant's submission on this issue correctly states the intended position. That was in response to the applicant's plea that the Reserves Act arbitrarily deprived the applicants of the right to manage and otherwise exercise ownership rights over the Reserve. The affidavits of Terrence Joseph Daly sworn 4 December 2003 and Irene Mary Thomas sworn 9 December 2003 set out the extent to which the first respondent offered to provide housing assistance to the Aboriginal inhabitants of the Reserve up to 1 July 2003. Supplementary affidavits provide particulars of accommodation made available but are subject to the agreed confidentiality orders previously referred to. The applicant submits it is apparent from the affidavit of Terrence Daly that 18 days after the direction was given by the Administrator for them to leave their homes, no alternative accommodation had been provided. It is said no concrete or particular offer was made up to that time (see the evidence of Roland Bayman and David Pedler) and that the only accommodation deposed to in any detail as having been provided was on 18 August 2003 (sic 2004). In contrast the respondents rely on evidence of various steps taken to make arrangements for accommodation. On 5 June 2003, officers of the first respondent visited the Reserve and told Robert Bropho that they wanted to speak to the women about the wants and needs of the families of the SVC. Mr Bropho said that the women and children had left the Reserve. On 9 June 2003 an officer of the first respondent gave notice of a meeting on 10 June 2003 at the Kiara Police Station to discuss the wants and needs of the families of the SVC. On 10 June 2003, officers of the first respondent waited at the Kiara Police Station to meet with the Aboriginal inhabitants of the Reserve to discuss the wants and needs of the families of the SVC. Neither the applicant nor any other Aboriginal inhabitants of the Reserve attended that meeting. On 10 June 2003, officers of the first respondent went to the Saunders Street Aboriginal Community and left messages for the applicant and other Aboriginal inhabitants of the Reserve that they wanted to discuss assistance to the Aboriginal inhabitants of the Reserve. On 13 June 2003, the Administrator asked Robert Bropho if he had alternative accommodation available to him. Mr Bropho said that he did. On 17 June 2003, officers of the first respondent spoke with Herbert and Charlotte Bropho at the Saunders Street Aboriginal Community about their housing needs. On 1 July 2003, officers of the first respondent spoke with Robert Bropho at the Saunders Street Aboriginal Community about the housing needs of the applicant and former Aboriginal inhabitants of the Reserve. Mr Bropho said that those people did not want any housing assistance from the DHW. On 21 July 2003, an officer of the first respondent went to Margaret Jeffery's house in Guildford and spoke to the applicant and others about providing emergency public housing. Between July and September 2003 the first respondent provided emergency accommodation and/or public housing to a number of Aboriginal inhabitants of the Reserve. As this issue can only be resolved by reference to the confidential affidavits previously referred to, I propose to return to this issue only in the event that it becomes necessary to decide whether any offer of alternative accommodation counterbalanced the loss of the rights which the applicant seeks to assert so as to make any deprivation of rights not arbitrary. WAS THE RESERVE PREVIOUSLY THE SUBJECT OF GRANTS OF FREEHOLD TO NON-ABORIGINAL PERSONS? DID THE SVC GIVE INFORMED CONSENT TO THE 2002 MANAGEMENT ORDER AS REQUIRED BY THE LAA? There can be no dispute that the SVC expressly consented to the 2002 Management Order. On 11 October 2002 Harvey Bropho, Denise Sambo and Robert Bropho on behalf of the SVC wrote to the Minister for Lands stating that 'you have put into writing all the changes that we want to the management order'. After referring to an increase in racist attacks against Aboriginal people, he also stated that the SVC 'again confirm[s] that we agree to make no claim for compensation'. In another letter on the same day Harvey Bropho as Chairperson of the SVC wrote to the Minister for Lands stating 'if this is the final version of the management order, lets get on with it. We have discussed it and it is acceptable'. Those communications raise the presumption that the SVC had in fact consented to the revocation. The applicant's argument is that the SVC did not 'freely give prior informed consent'. The evidence relied upon by the applicant to support this contention is as follows. On 12 September 2002 the Minister for Planning and Infrastructure wrote to Harvey Bropho as Chairperson of the SVC requesting its agreement to the existing 1998 Management Order in favour of the community being revoked and a new management order made setting out various conditions. The letter stated that this followed a meeting with representatives of the SVC on 20 August 2002 at which the Minister had expressed the need for open access to the site and concerns raised by a variety of government agencies gaining access to ensure health and well-being of residents. The letter included copies of the proposed revocation, new order and the conditions. It explained that the 2002 Management Order required the installation of a pedestrian gate and the development of a management plan for the Reserve within six months of the order. Further the letter stated that as the new management order was effectively being given in exchange for the 1998 Management Order, the orders would be made on the basis that the SVC would not claim any compensation for improvements on the Reserve. The Minister concluded by asking that the recipient respond to her by the close of business on 20 September 2002. Earlier in the letter she had stated that the orders were those which she proposed to make 'subject to any reasonable objections from the Corporation being received before the [sic] 20 September 2002'. The affidavit of Margaret Jeffery deposes that the SVC held a meeting on 21 September 2002 to discuss the Minister's letter. The meeting considered the SVC could not refuse to consent, on the basis that it would not lose any rights to use, care for, control or manage the Reserve by agreeing to the new management order. On 21 September 2002 the SVC wrote to the Minister requesting certain additions, subject to which the new management order was acceptable to it. The SVC also agreed to make no claim for compensation. Ms Jeffery testified that the SVC read the letter as being one with which it had to agree. The content of the above letters and the evidence of the circumstances in which they were sent, apart from the evidence of Ms Jeffery, is entirely supportive of the inference that the consent was freely given. Harvey Bropho did not give evidence so that it may be inferred he had no evidence to give to negate that inference. The additional evidence of the circumstances in which the consent was given does not provide a basis for a finding that the consent was not voluntary and legally effective. The evidence supports findings that, in addition to the statements of consent: In any event, the applicant has not distinctly pleaded duress or fraud or non est factum and so cannot deny the legal effect of the consent which was given: O 11 r 10 of the Federal Court Rules . The applicant also argues that, in order to validly revoke a management order pursuant to s 50(1)(a) of the LAA, what is required is not informed consent or even acquiescence, but establishment of the fact that the management body 'agrees that its management order should be revoked' (Emphasis added). The applicant submits the circumstances clearly did not suggest that an agreement was reached that the 1998 Management Order should be revoked. It is therefore submitted that the revocation of the 1998 Management Order was not validly achieved as an exercise of the power under s 50(1)(a) of the LAA. The reference in the relevant portion of s 50(1)(a) to 'should' can only be construed in its context to mean that it agrees to the Minister's proposal to revoke the management order. There is no reason in policy to favour a construction that would place the Minister in the position where, having received a consent from a management body to the revocation of a management order, it could subsequently disagree that the management order 'should' be revoked. WAS THE 2002 MANAGEMENT ORDER IN THE PUBLIC INTEREST AS REQUIRED BY THE LAA? Concerns have also been raised in relation to the Swan Valley Nyungah Community Aboriginal Corporation's accountability, transparency and its compliance with its rules and the provisions of the Aboriginal Councils and Associations Act 1976 (Commonwealth). There are a number of authorities which exemplify the breadth of the meaning of the phrase 'in the public interest'. In O'Sullivan v Farrar [1989] HCA 61 ; (1989) 168 CLR 210 , Mason CJ, Brennan, Dawson and Gaudron JJ (at 216) said that the expression 'in the public interest', when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only insofar as the subject matter and scope and purpose of the statutory enactment may enable given reasons to be pronounced definitely extraneous to any objects the legislature could have had in view. In Evans v Western Australia (1997) 77 FCR 193 at 215 Nicholson J cited O'Sullivan 168 CLR at 216 and the following statement from Lockhart J in the Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50: 'The public interest is a concept of wide meaning and not readily delimited by precise boundaries. Opinions have differed, do differ and doubtless always will differ as to what is or is not in the public interest'. Nicholson J went on to find that the National Native Title Tribunal had not erred in taking into account that on-going exploration activities were essential to the health of the mining industry, as part of the public interest in a proposed future act under the Native Title Act being undertaken. Right to Life Association (NSW) Inc 56 FCR 50 and O'Sullivan [1989] HCA 61 ; 168 CLR 210 were also cited by Jacobson J in the Full Court in McKinnon v Secretary, Department of Treasury [2005] FCAFC 142 ; (2005) 145 FCR 70 at [243] - [245] . The interest of a section of the public is a public interest, but the smallness of the section may affect the quantity or weight of the public interest so that it is outweighed by the public interest in having the mining operation proceed. In James v United Kingdom [1986] ECHR 2 ; (1986) 8 EHRR 123 the European Court of Human Rights considered the meaning of the sentence: 'No one shall be deprived of his possessions except in the public interest', in Art 1 of Protocol No. 1 to the European Convention on Human Rights. In particular, as the Commission noted, the decision to enact laws expropriating property will commonly involve considerations of political, economic and social issues on which opinion within a democratic society may reasonably differ widely. The Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislature's judgment as to what is 'in the public interest' unless that judgment be manifestly without reasonable foundation. Turning to the context of the LAA, I agree there is nothing which confines the Minister's discretion to decide whether or not a management order should be revoked 'in the public interest'. The public interest, in this context, clearly extends beyond the agreement of the management body and may exist even if the management body has not breached the management order (since those matters are already dealt with in ss 50(1)(a) and (b) of the LAA). In particular, concerns about the failure of a management body to prevent or adequately deal with unlawful or unsociable conduct on a reserve would appear to clearly fall within the bounds of the public interest. However, wrongdoing on the part of the management body is not a necessary factor. It would also be sufficient grounds for revoking a management order in the public interest that the Minister considered the management order should be subject to alternative conditions which, in the Minister's opinion, would better suit the use of the Reserve for its intended purpose or that another management body would better be able to manage the Reserve. Secondly the applicant submits that the concerns raised in the Minister's letter regarding open access for government agencies being a necessary requirement for management of the site was adequately accommodated by the regime in place in the community, which was no more restrictive than exists in many residential estates. The applicant relies on her affidavit evidence as well as the affidavit evidence of Robert Bropho, Margaret Jeffery and Denise Sambo relating to control by the SVC of access to the Reserve, all of which is given in the affidavits in similar form. That evidence has been set out in the context of all evidence in the narrative earlier in these reasons. I am unable to agree that the evidence relied upon viewed in that context supports the inference which the applicant asserts. The weight of that evidence viewed as a whole is that many agencies and both the Coronial Inquiry into the death of Susan Taylor and the Gordon Inquiry considered that the regime in place did not adequately provide open access. The intended purpose of the management plan was to achieve just that. Thirdly, the applicant submits that the 2002 Management Order in itself was not capable of achieving the protection of women or children or any similar public purpose. Reference is made to the evidence of Graham Searle. He testified in cross-examination that the need for the 2002 Management Order did not come about as a consequence of any breach of the 1998 Management Order or legislation. However, the 2002 Management Order had provided for the development of a management plan over a six month period to address the issues of concern. Nevertheless he had been concerned that any administrative action taken may have led to an application to the courts for injunctive relief which would have held up such action. Consequently he had supported the enactment of legislation to remove that possibility. I do not read his evidence as stating that the 2002 Management Order could not have achieved its aims; only that there was a risk its revocation by the Reserves Act could have given rise to litigation seeking injunctive relief which would have delayed progress on delivery of executive relief. In any event, as has been stated above, the existence of a breach of a prior order or legislation was not a necessary pre-condition to the exercise of the Minister's discretion to determine what was in the public interest. Fourthly, the applicant submits that there was no evidence given supporting the contentions of the respondents concerning the purpose of the 2002 Management Order. Firstly, she states there is no legal basis for suggesting that the SVC had a legal obligation to secure the safety and welfare of persons accessing or residing on the Reserve any more than any other land management body might have been expected to assume that obligation in relation to any other reserve. If that were so it would not preclude the inference that if the resultant management plan under the 2002 Management Order had been developed it would have addressed the issues of public concern. Secondly, the applicant contends there is no evidence that the SVC was failing to secure the safety and welfare of persons accessing or residing on the Reserve any more than any State agency responsible for securing the safety and welfare of persons accessing or residing on the Reserve. For example, none of the government agencies aware of the circumstances of the non-resident Susan Taylor had been able to secure her safety Thirdly, the applicant submits that State instrumentalities were not being prevented by the SVC from providing services to or securing the safety and welfare of persons accessing or resident on the Reserve. This is supported by reference to the evidence concerning access by officers of the DCD Cannington, Mirrabooka and Northam, Kiara Police, DOJ, Lockridge Medical Practice, Community Health Nurse and staff of Calunga School: see the oral evidence of Caroline Brazier and Roland Bayman, the affidavit of Margaret Jeffery of 15 December 2003 and the Schedule to the Report on Service Provision to Swan Valley Nyungah Community April 2003 (exhibit P80). Fourthly, the State or any of its instrumentalities had capacity to secure the safety and security of persons accessing or residing on the Reserve. There is evidence in relation to the provision of security from substance abuse and the sexual predations upon women of bungeemen: evidence of Caroline Brazier and Roland Bayman. Fifthly, the applicant contends that the compliance by the SVC with the requirements of the ACA Act and consequent accountability and transparency of the association are matters for the Commonwealth Registrar of Aboriginal Corporations to supervise (not the State). It is said that a new management order was not a 'necessary or appropriate' mechanism for ensuring compliance with statutory obligations existing under the ACA Act. In any event, the SVC claims to have been compliant with the requirements of that legislation. The applicants tendered to the respondents a compliance report by Deloitte Touche Tomatsu in relation to the SVC's compliance with the ACA Act. The respondents said it was not relevant to include in the agreed documents, from which the applicants inferred that compliance by the SVC with the ACA Act is no longer in issue. This contention is not a consideration which makes the Minister's exercise unreasonable. Short of any unreasonableness, it was for the Minister in the exercise of determining the public interest to decide what was within that discretion 'necessary or appropriate'. While there is evidence in the applicant's case of co-operation in relation to health and welfare issues, it was not the case that there was no evidence the SVC was failing to secure the safety and welfare of persons accessing or residing on the Reserve. Similarly there was evidence that access to the Reserve by government officials to improve provision of government services to Aboriginal inhabitants of the Reserve was frustrated by the management of the SVC. The evidence previously recounted, including the findings of the Coronial Inquiry into the death of Susan Taylor and the Gordon Inquiry, is evidence of such failures. Whether or not that was greater or less than other government agencies is not to the point. The Minister's discretion was exercised in relation to the Reserve, not in relation to other government agencies. The same may be said of the other evidence relied upon. The Minister had a broad discretion and, provided it was not exercised unreasonably, that is, with no evidentiary foundation for its exercise, it was the Minister who was entitled to weigh the factors now asserted together with all other relevant factors. In short, these contentions of the applicant on this issue are answered by the fact that in the making of the 2002 Management Order there is no reason to doubt that the Minister's concerns were genuine; nor could they be said to be manifestly unreasonable as the law understands that concept. Given the breadth of the concept of public interest, it cannot be said --- even taking the evidence on which the applicant relies on this issue at its highest --- that the Minister did not act 'in the public interest'. Even if I had been unable to reach this conclusion on this issue I would be required to consider the effect of s 4(2) of the Reserves Act. Assuming the Court cannot be thus precluded from examination of the compliance with s 50(2), I am satisfied that in any event such compliance did take place for the preceding reasons. The inter-related elements which constitute s 9(1) are that the unlawfulness is created by (1) any act (2) involving a distinction, exclusion, restriction or preference (3) 'based on' race, colour, descent or national or ethnic origin (4) which has the purpose or effect (5) of nullifying or impairing (6) the recognition, enjoyment or exercise, on an equal footing (7) of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life. 1.1 of the Convention. Instead s 10 is expressed to operate where persons of a particular race, colour or origin do not enjoy a right that is enjoyed by persons of another race, colour or origin, or do not enjoy that right to the same extent. Consequently, s. 10 should be read in the light of the Convention as a provision which is directed to lack of enjoyment of a right arising by reason of a law whose purpose or effect is to create racial discrimination. However, in Mabo v Queensland [1988] HCA 69 ; (1988) 166 CLR 186 at 217 Brennan, Toohey and Gaudron JJ said that ' section 10 of the Racial Discrimination Act is enacted to implement Art. 5 of the Convention and the "rights" to which s 10 refers is, like the rights mentioned in Art. 5, a human right - not necessarily a legal right enforceable under the municipal law'. Additionally it is to be noted that s 10 expressly addresses a law or a provision of a law whereas s 9 addresses an act. I approach the sections primarily on the basis that it is s 10 which must be considered in relation to the Reserves Act and its provisions and that s 9 must be considered in relation to acts, such as those of the Administrator. In case it is thought (as some of the submissions appear to accept) that the reference to an act in s 9 is to include a reference to the passage of the Reserves Act, I have also considered that position. First, the sub-section does not use the word "discriminatory" or cognate expressions. Yet these terms are used throughout the authorities in which s 10(1) has been considered. That to which the sub-section in terms is directed is the enjoyment of rights by some but not by others or to a more limited extent by others; there is an unequal enjoyment of rights that are or should be conferred irrespective of race, colour or national or ethnic origin. "Enjoyment"' of rights directs attention to much more than what might be thought to be the purpose of the law in question. Given the terms of the Convention which the RDA implements (the International Convention on the Elimination of all Forms of Racial Discrimination) that is not surprising. The Convention's definition of racial discrimination refers to any distinction, exclusion, restriction or preference based (among other things) on race which has the purpose or effect of nullifying or impairing (again among other things) the enjoyment of certain rights. Further, the basic obligations undertaken by States party to the Convention include taking effective measures to nullify laws which have the effect of creating or perpetuating racial discrimination (Art 2, s 1(c)). It is therefore wrong to confine the relevant operation of the RDA to laws whose purpose can be identified as discriminatory (cf Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349. At [117] their Honours said that 'it is because native title characteristically is held by members of a particular race that interference with the enjoyment of native title is capable of amounting to discrimination on the basis of race, colour, or national or ethnic origin. The latter occurs where the respondent imposes an avowedly neutral condition but it has in fact a disproportionately detrimental impact on persons of the status of the complainant that is unreasonable. That section does not have any reference to proportionality but rather, like s 6(1)(b) of the Disability Discrimination Act , refers to the requirement to find the reasonableness of the term, condition or requirement having regard to the circumstances of the case. This was considered by a Full Court (Black CJ, Heerey and Sackville JJ) in Australian Medical Council v Wilson (1996) 68 FCR 46. Heerey J, with whom Black CJ generally agreed, traced the legislative history of s 9(1A) at 52-55. At 55 his Honour said that the mutual exclusivity construction should be applied in the present case to ss 9(1) and 9 (1A) of the RDA because such an approach was consistent with the language of the provisions, their legislative history and the preponderance of authority. Sackville J at 74 agreed on the basis that it was a preferable course unless and until the High Court specifically considered the terms and legislative history of the RDA. The consequence is that the Full Court was of the view that s 9(1) was confined to direct discrimination. This was applied in Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 80 FCR 78. In Nguyen v Refugee Review Tribunal (1997) 74 FCR 311 at 318 Tamberlin J in obiter dicta accepted that the language of s 10 of the RDA did not exclude indirect discrimination. Also that the reasoning of Mason J in Gerhardy [1985] HCA 11 ; 159 CLR 70 did not restrict s 10 to direct discrimination, focussing on the 'purpose or effect' of the law and so upon its operation. He identified s 9(1A) of the RDA as the indirect discrimination provision in that Act. His Honour therefore concluded that in principle s 10 is capable of applying to indirect discrimination so that it would not be sufficient to dismiss an application under s 10 by holding that a particular law, on its face, applies equally to all individuals if in fact there is discrimination by reason of the operation of the law. The question must be whether the effect on (relevantly) Aboriginal people is so disproportionate in comparison with persons of another race as to constitute discrimination. While that is not reasoning in a binding authority it seems to me that is a view which should receive consideration in relation to the applicant's contentions. The applicant does not place any reliance on s 9(1A) of the RDA. In the case of s 9, it seems to me that I am required to proceed on the basis that it applies to direct discrimination, so that, in measuring effect, regard should be had only to direct effect. In the case of s 10(1), I should proceed on the basis that it is capable of application to direct or indirect discrimination. Therefore in measuring 'effect' under s 10 I should consider, in addition to direct effect, whether an indirect effect is established as a consequence of the proportionality of impact on (relevantly) Aboriginal persons of the Reserves Act or a provision of it. The availability of alternative, non-discriminatory methods is one of the factors relevant to determining whether a practice is reasonable in the circumstances of the case: see Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349 , per Dawson and Toohey JJ at 395. Other relevant factors will vary from case to case. The Report states that the prohibition of discrimination does not preclude reasonable measures responding in a proportionate way to the special characteristics of particular groups. This reflects the international practice in which references to race become discriminatory only where they lack an objective and reasonable basis or a legitimate purpose: McRae, Nettheim and Beacroft, Indigenous Legal Issues (2 nd edn, LBC Information Services, 1997) p324. In Lithgow v United Kingdom (1986) 8 EHRR 329 at 389 it was stated in reliance on Rasmussen v Denmark (1985) 7 EHRR 371 at [35] and [38] that a difference of treatment is discriminatory if it 'has no objective and reasonable justification', that is, if it does not pursue a 'legitimate aim' or if there is not a 'reasonable relationship of proportionality between the means employed and the aim sought to be realised. ' This is mentioned because argument has been addressed in these claims to whether the laws and acts of the first respondent were reasonable, proportionate and legitimate. WAS THE PURPOSE OF THE RESERVES ACT DISCRIMINATORY? Although not expressly an element in the wording of s 10 in relation to a law or a provision of a law, the purpose and effect of the Reserves Act may be examined as one of those elements identified as necessary to establish the non-enjoyment of a right under s 10 of the RDA: Gerhardy 159 CLR at 99 per Mason J. Accordingly, it is appropriate to examine whether the purpose or effect of the Reserves Act was discriminatory. Evidence is set out below under the heading 'Was any deprivation not arbitrary because it was reasonable, proportionate and legitimate' in support of the respondents' contention that the purpose of the Reserves Act was to address issues of public interest, namely the safety of women and children. The government officials who provided that evidence consistently stated that the race of the applicants was irrelevant to the actions taken by themselves or the respondents in enacting the Reserves Act. Rather, their evidence was that the purpose of the Reserves Act was to ensure the protection of women and children associated with the Reserve. The respondents also contend that the non-discriminatory purpose of the Reserves Act was demonstrated by the Premier in his address to Parliament on 14 May 2003 and the Second Reading Speech of the Reserves Bill the following day. This issue is not about race; it is about intimidation, violence and abuse. The safety of all our children must be paramount, and it is incumbent upon all Western Australians to uphold the right of every child in this State to security and protection. That evidence goes to proportionality and reasonableness, not to purpose. The respondents argue that it must therefore be accepted that the purpose and motive of the enactment of the Reserves Act, and the exercising of powers under that Act, was not based upon the race of the applicants but was to protect the women and children resident on the Reserve from violence and bodily harm as stated by the respondents' witnesses and evidenced by the addresses made by the Premier to Parliament. I accept that the overwhelming effect of the evidence is that the purpose of the Reserves Act was to address the human rights of the women and children on the Reserve irrespective of race. There was not any racially discriminatory purpose of the Reserves Act. WAS THE EFFECT OF THE RESERVES ACT DISCRIMINATORY? She contends that whatever the purpose of the Reserves Act, its effect was discriminatory. This is said to follow from the fact that the Reserves Act authorised acts which in their actual application were limited to a particular reserve, being a reserve for the use and benefit of Aboriginal inhabitants, so that the acts only affected Aboriginal inhabitants of the Reserve and persons associated with them. It is said that the effects on the enjoyment of rights were by reason of the applicants' race and that the effect of the Reserves Act was to substantially impair or nullify the capacity of the Aboriginal inhabitants of the Reserve to enjoy those rights on an equal footing with other persons in the State. The respondents agree that s 10 of the RDA only applies where the purpose or the practical operation and effect of a law is to create racial discrimination. The respondents acknowledge that s 10 of the RDA is not confined in its operation to laws that have a clearly racially discriminatory purpose. That is, the effect of a law is assessed independently of its apparent purpose. Section 10 of the RDA operates against inequality in the enjoyment of a human right, based on race. They contend that s 10 of the RDA is not engaged simply because the applicants are Aboriginal and the Reserves Act has an effect on their human rights. This is said to be supported by Mason J in Gerhardy 159 CLR at 99, as referred to above, who relevantly stated that 'the exclusion of persons of a race, colour or origin from the enjoyment of a relevant right by reason of a law does not necessarily involve 'racial discrimination' and that s 10 was a provision directed to laws whose 'purpose or effect was to create racial discrimination'. The respondents argue that s 10 could only be engaged if the Reserves Act affected the applicants' human rights by reason of their Aboriginality (or by reason of an attribute which is an essential characteristic of being Aboriginal). It is said there must be a causal connection between their Aboriginality and the alleged non-enjoyment of their human right. They require the practical application of causation principles explained in March v E & MH Stramare Pty Ltd [1991] HCA 12 ; (1991) 171 CLR 506 , whilst at the same time according due recognition to the beneficial purposes and objects of the RDA. The ambit of the expression "by reason of" is not confined to the absence or limited extent of the enjoyment of the persons first mentioned in the section, but must extend right through to the point at which the section starts to do its deeming work. In Bayside City Council v Telstra Corporation Ltd [2004] HCA 19 ; (2004) 216 CLR 595 , Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ held that, in identifying discrimination against telecommunications carriers for the purposes of the Telecommunications Act 1997 (Cth), it was appropriate to read State statutes in conjunction with levies imposed by local authorities (at 631). Similarly, in Commonwealth v South East Queensland Aboriginal Corporation for Legal Services [2006] 1 Qd R 12 , Muir J held that, for the purposes of s 10 of the RDA, a provision of the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth) creating a statutory qualification on a grant of property could not be read in isolation from the provision permitting the grant itself (at 28-29). It is contended that the change in management order effected by the Reserves Act was expressly done in accordance with s 50(2) of the LAA: see ss 4(2), 5(2), 5(5) and 6 of the Reserves Act. Therefore, on its face, the Reserves Act must be read in conjunction with the LAA to determine its effect. I agree with this submission and have already applied that approach in considering whether the 2002 Management Order was in the public interest. The respondents contend that, for the purposes of s 10 of the RDA, the inquiry into the effect of a law requires the correct characterisation of the law and the identification of its true basis of operation. Legislative or executive objectives may often be undertaken in a manner that incidentally interferes with human rights, but nevertheless do not discriminate or are carried out in a reasonable manner to achieving the objective. Such action will therefore not be unlawful: see, for example, Melkman v Commissioner of Taxation (1988) 20 FCR 331 at 336; Nguyen 74 FCR at 319 and Macabenta 90 FCR at 213. The Reserves Act, viewed in isolation, does not have general application throughout the State. It is directed at one specific area of land and its management. Therefore, the criterion on which the Reserves Act operates must be ascertained by reference both to its text and also to the expressed purpose for which it was enacted. Thus the respondents contend the applicant cannot succeed simply by establishing that it was a characteristic of the Reserve that it was inhabited by people who were, in the main, Aboriginal people. In Purvis v New South Wales [2003] HCA 62 ; (2003) 217 CLR 92 , the High Court held that the actions of a school authority in removing a student who exhibited violent tendencies as a result of brain damage did not discriminate against that student on the basis of his disability. Gleeson CJ held (at 102) that the 'true basis', the 'expressed and genuine basis', for the school authority's actions was the authority's responsibility to prevent violence. Similarly, McHugh and Kirby JJ held (at 134) that, where racial discrimination is alleged, it is appropriate to compare the treatment that would be received by people of different races exhibiting the same characteristic on which the law is expressed to operate (such as 'misbehaviour'). The reason is that such laws also have an effect that serves another purpose. It is said that s 10 of the RDA thus has a qualified or balanced operation with respect to laws that may produce racial inequality in their effect. The State must retain a capacity to legislate for genuine purposes, see Smallwood v State of Queensland [1985] 1 Qd R 477 at 481 per Kelly J. In that case the equal application of the law (the Community Services (Aborigines) Act 1984 (Qld)) to all persons in certain locations, irrespective of race, defeated the action under s 10 of the RDA (even though the Act's practical effect was undoubtedly greater in respect of Aboriginal than non-Aboriginal people). See also South East Queensland Aboriginal Corporation for Legal Services [2006] 1 Qd R 12 at 29 per Muir J, Fulcher v Hilt (1985) 61 ALR 359 at 367 per Wood J and Vanstone v Clark [2005] FCAFC 189 ; (2005) 147 FCR 299 at 352 per Weinberg J. The respondents therefore submit that where a law applies without racial distinction to a thing, an activity, or to defined circumstances, there is no basis for the operation of s 10 of the RDA. They argue it is not sufficient for the purposes of s 10 of the RDA simply or only to show that such a law may be more likely to affect persons of a particular race more than others. This submission does not sit with the concept of indirect discrimination, where the effect of the operation of a law or a provision of it may disproportionally impact on persons of one race so that in itself creates the reason for the discrimination. In my view the law recognises that as the dominating principle where it applies because it subsumes the issue of causality by the fact of the disproportional effect. The respondents contend that in this case the evidence discussed demonstrates that the Reserves Act was enacted because of particular circumstances which existed in relation to a particular reserve and that its effect upon the applicants was not by reason of their race. In particular, persons associated with the Reserve were Aboriginal and non-Aboriginal, and both were affected by the Reserves Act. It is also said that the Reserves Act does not change the status of the land as a reserve for the 'Use and Benefit of Aboriginal Inhabitants' and that the only change is in the identity of the management body. Accordingly, even viewed in isolation, it is said that the Reserves Act does not breach s 10 of the RDA. This is for two reasons. First, both ss 9 and 10 of the RDA apply with respect to a particular human right. Second, as s 10 applies in relation not only to laws as a whole but also to provisions of a law, attention should be directed to the specific provisions of the Reserves Act in reaching a view whether, in relation to a particular human right, there is not any inconsistency with the RDA. There are a variety of provisions in the Reserves Act. This is not a case where the law under scrutiny is of such uniform effect that it can be addressed globally. I therefore propose to proceed on the basis of giving consideration to each of the rights upon which the applicant seeks to rely and then considering in relation to each of them whether there is any inconsistency with either s 9 or s 10 of the RDA. In doing so I will have in mind and return to the submissions of the parties on the relevance of the fact of the Reserve was formerly in the care, custody and control of the SVC and that, as a consequence, the residents were Aboriginal persons. The human rights which the applicant contends were not so enjoyed are: (a) the right to own property alone as well as in association with others, said to have been nullified by the revocation of the vesting order in favour of the SVC in whom a property interest in the land had been vested: Art 5(d)(v) of the Convention and Ward 213 CLR at [240]-[241]. (b) the right to freedom of movement and residence, including the freedom to choose to reside on the Reserve, which was designated solely for the use and benefit of the Aboriginal inhabitants, said to have been nullified or impaired by s 7(3) of the Reserves Act; Art 5(d)(i) of the Convention; (c) the right to equal treatment before tribunals, said to have been nullified by the privative clause in s 11 of the Reserves Act and the denial of natural justice in s 8 of the Reserves Act in respect of Aboriginal inhabitants seeking to exercise the right in par (b) above and being prohibited from doing so by an exercise of power pursuant to s 7(3) of the Reserves Act; Art 5(a) of the Convention; (d) the right to participate in public affairs at the level of the community, as a member of the SVC making decisions about the management of the Reserve, said to have been nullified by the revocation by s 4(1) of the Reserves Act of the vesting order in favour of the SVC: Art 5(b) of the Convention. This is not a matter which is pleaded in the amended substituted statement of claim. However, the applicant contends that it is a matter of law which is not required to be pleaded and is merely another legal basis upon which to conclude that the Reserves Act is inconsistent with s 10(1) of the RDA, as pleaded at [43] of the amended substituted statement of claim. Inequality in the enjoyment of that human right may occur by discrimination in the provisions of the municipal law or by discrimination in the administration of the municipal law or by both. If we accord to the traditional rights of the Miriam people the status of recognised legal rights under Queensland law (as we must in conformity with the assumption earlier made), the 1985 Act has the effect of precluding the Miriam people from enjoying some, if not all, of their legal rights in and over the Murray Islands while leaving all other persons unaffected in the enjoyment of their legal rights in and over the Murray Islands. On the other hand, Mason CJ at 198-199, and Dawson J at 243, were unwilling to decide the matter on the basis of an assumption that the traditional rights and interests asserted by the plaintiffs in that case constituted a right to own property or a right to inherit property within the meaning of the Convention when no such rights were agreed or proved. The word "right" is used in s. 10(1) in the same broad sense in which it is used in the International Convention, that is to say, as a moral entitlement to be treated in accordance with standards dictated by the fundamental notions of human dignity and essential equality which underlie the international recognition of human rights: cf., the preamble to the International Convention. In that sense, the moral entitlement to own property alone as well as in association with others and the moral entitlement to inherit which are referred to in Art. 5 of the International Convention are "rights" for the purpose of the guarantee against racial discrimination contained in s. 10 of the Commonwealth Act. Implicit in those moral entitlements is the "right" to enjoy immunity from being "arbitrarily dispossessed of [one's] property" which is expressly recognized by Art. 17(2) of the Universal Declaration of Human Rights 1948. The word "property" is often used to refer to something that belongs to another. But... "property" does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as power permissibly exercised over the thing. The concept of "property" may be elusive. Usually it is treated as a "bundle of rights". Property is used in the law in various senses to describe a range of legal and equitable estates and interests, corporeal and incorporeal. Distinct corporeal and incorporeal property rights in relation to the one object may exist concurrently and be held by different parties. Ownership may be divorced from possession. Frequently there is a rapid and fallacious shift from the one meaning to the other. At times, also, the term is used in such a 'blended' sense as to convey no definite meaning whatever. They say that is not authority for the converse proposition i.e. that a person upon whom is conferred a statutory responsibility of care, control and management may have property in something 'even though the statute expressly declares that they do not' (a submission to which I will return). Where, under the general law , the indigenous "persons of a particular race" uniquely have a right to own and inherit property within Australia arising from indigenous law and custom but the security of enjoyment of that property is more limited than the security enjoyed by others who have a right to own or to inherit other property, the persons of the particular race are given, by s.10(1) , security in the enjoyment of their property "to the same extent" as persons generally have security in the enjoyment of their property' (Emphasis added. The four possible sources of statutory rights of property for which the applicants contend are Acts in connection with (1) the designation of the Reserve; (2) the 1995 vesting of the Reserve in the SVC; (3) the transition of that vesting into the 1998 Management Order; and (4) the substitution of the 2002 Management Order. Section 41 of the LAA provides that 'subject to section 45(6) [which is not relevant in this case], the Minister may by order reserve Crown land to the Crown for one or more purposes in the public interest'. Clause 14(2) of the transitional provisions in Sch 2 to the LAA provided that any land reserved under s 29 of the Land Act 1933 and remaining so reserved immediately before 31 March 1998 (which is the case with the Reserve) is to be taken to be land reserved under s 41 of the LAA. 43131 comprising Swan Location 11942 with an area of 7.9699 hectares on Land Administration Plan 18524 for the designated purpose of "Use and Benefit of Aboriginal Inhabitants". 43131 (Swan Location 11942) vested in the Swan Valley Nyungah Community Aboriginal Corporation for the designated purpose of "Use and Benefit of Aboriginal Inhabitants". 43131 (Swan Location 11942) "Use and Benefit of Aboriginal Inhabitants" to include Location 11966 as surveyed and shown bordered red on Land Administration Plan 18524 and of its area being increased to 8.8777 hectares accordingly. The respondents submit that the reservation of the relevant land for the purpose of 'Use and Benefit of Aboriginal Inhabitants' did not confer any interest in the land upon any particular Aboriginal persons or Aboriginal persons generally. In Ward 213 CLR at [221] the joint judgment of the High Court said that the designation of land as a reserve for a purpose under the Land Act 1933 did not without more create any right in the public or any section of the public so as to extinguish native title. At [219] the majority said that by reserving land the executive took to itself and asserted how the land would be used. No different conclusion arises under the LAA --- see in particular s 41 of the LAA referred to above. Consequently, the designation of the Reserve cannot be understood as having in itself created any right in the public. The designation did not give rise to any identifiable class with any interest of any kind in the Reserve. It is said the vesting in trust conferred the legal estate of the land in the SVC: Ward 213 CLR at [240]. The effect of that vesting is said to have been that the Aboriginal inhabitants acquired beneficial ownership as a clearly defined section of the public. They are persons who may exercise the rights of 'use and benefit as of right' so that they have a 'right, power or privilege' sufficient to fall within the concept of 'ownership of property' in s 10(2) of the RDA. The joint judgment in Ward 213 CLR at [238]-[241], held that where the purpose of a reserve was of a charitable nature, the effect of a vesting under s 33 of the Land Act 1933 was the creation of a public charitable trust. The respondents submit that the vestee did not thereby obtain a beneficial ownership of the land the subject of the Reserve. Attention needs to be directed to the foundation of the reasoning of the joint judgment in the High Court in Ward [2002] HCA 28 ; 213 CLR 1. The concept of trust was not reintroduced by amendments to s 33 in the Acts Amendment (Reserves) Act 1982 (WA), s 8 or the Acts Amendment (Land Administration) Act 1987 (WA) s 60(c). In Ward 213 CLR at [234] the joint judgment stressed the importance of the central inquiry being directed, not to the use of the reserved land, but to the rights created in others or asserted by the executive. At [228] they said the relevant starting point is the legislation. In the provisions of the Land Act 1933 as they relevantly stood on the vesting of the Reserve in the SVC, there was no legislative foundation for a conclusion that the vesting created a charitable trust. What the Land Act 1933, s 33 did on the vesting of the Reserve was to vest it in the SVC to be held by it for the designated purpose. Whether that is sufficient to create a trust and whether any trust so created would be of a charitable character has not been argued. Assuming in the applicant's favour that such may be the case, I return to that argument. If, as the applicant contends, the SVC held the legal estate in the Reserve as a trustee of a public charitable trust for the purpose of 'Use and Benefit of Aboriginal Inhabitants', there could not be any individual beneficiaries of the trust: see Attorney-General (N.S.W. The objects of ordinary trusts are individuals, either named or answering a description, whether presently or at some future time. To dispose of property for the fulfilment of ends considered beneficial to the community is an entirely different thing from creating equitable estates and interests and limiting them to beneficiaries. In this fundamental distinction sufficient reason may be found for many of the differences in treatment of charitable and ordinary trusts. There are three reasons why this must be the case. First, there may be no Aboriginal people inhabiting a reserve when it is created, or at any particular time; and if the reserve is only for the present inhabitants then no other Aboriginal people could legitimately come to inhabit the reserve. Secondly, such an interpretation is consistent with ss 4 , 26 , 31 and 32 of the Aboriginal Affairs Planning Authority Act 1972 (WA), which provide that any Aboriginal person may access a reserve for 'Use and Benefit of Aboriginal Inhabitants' and provide that an additional order may be made limiting access to particular reserves to only Aboriginal people in that locality. Such an additional order would be unnecessary if a reserve for 'Use and Benefit of Aboriginal Inhabitants' only referred to the people actually on the reserve. Thirdly, there cannot be a charitable trust just for a small number of specific individuals and there could not be a non-charitable trust the beneficiaries of which were just the inhabitants of the Reserve from time to time since there is no such defined class of persons. Accordingly, I do not consider the applicant can make out ownership in the applicants as a consequence of vesting of the Reserve in the SVC. Section 46(5) provides that an order made under s 46(1) does not create any interest in Crown land in the relevant reserve in favour of the management body of that reserve. The transition to the 2002 Management Order did not therefore create any interest for the SVC in the Reserve. Paragraph [29] of the amended substituted statement of claim, which pleads that the Reserves Act deprives the applicants 'as members of the [SVC] and Aboriginal inhabitants of the Reserve' of the 'right to manage and otherwise exercise ownership rights in relation to the Reserve'. The applicant maintains that care, control and management are property interests of the kind referred to in Yanner 201 CLR at [17]-[20]; Peverill 179 CLR at 263-264 and Ward [2002] HCA 28 ; 213 CLR 1. As the applicants are members of the SVC, it is contended the members are entitled to exercise the rights and interests placed in the SVC in accordance with its rules. As has been seen above, s 46(5) of the LAA provides that a management order under s 46(1) 'does not create any interest in [the Reserve] in favour of the management body of that reserve'. Consequently (and subject to any inconsistency with the RDA) the 2002 Management Order which placed the care, control and management of the Reserve with the SVC did not confer 'any interest' in the Reserve upon the SVC. It cannot therefore be said to be an owner of the Reserve (or to have any interest in it by statute, apart from the RDA) as a consequence of the making of the 2002 Management Order. I regard the statutory provision in s 46(5) of the LAA as so categorical that there is no need to form a view on the alternative argument based on consideration of general principles relating to a company having a separate legal personality from its members. The respondents contend that even if it were permissible to look beyond the express provision in s 46(5) of the LAA to decide whether a management body could be said to have 'property' in a reserve, there is nothing in the LAA or the general law to support the applicants' claim to have property in the Reserve. In The Queen v Toohey; Ex parte Meneling Station Pty. Ltd. [1982] HCA 69 ; (1982) 158 CLR 327 the High Court held that a grazing licence under Northern Territory Crown land legislation was not an estate or interest in land and therefore land the subject of a grazing licence remained unalienated Crown land. Mason J at 342 (with whom Gibbs CJ and Brennan J generally agreed on this issue) said that no-one who has a merely personal interest in land can be said to have an estate or interest in the land. Mason J said that a grazing licence was not property because it lacked the requisite degree of permanence (because of the Minister's power to cancel the licence) and it was not assignable. At 344 Mason J concluded that, notwithstanding its similarity to a profit a prendre, a grazing licence was a 'creature of statute forming part of a special statutory regime governing Crown land. See also Wilson J (with whom Murphy J and Gibbs CJ agreed on this issue) at 353. The respondents submit that the applicants' relationship to the Reserve in this case fails each of those criteria. First, it is not definable or identifiable by third parties. The Aboriginal people on the Reserve varied from time to time, and the meaning of the term 'inhabitant' is unclear. Secondly, it is not assignable. That is, the SVC could not transfer its management order, nor could any one or more of the applicants possess (let alone pass on) a right to decide who could or could not be an Aboriginal inhabitant of the Reserve. Furthermore, the non-assignability is inherent in the nature of the management order. Thirdly, the 2002 Management Order could be cancelled by the Minister by agreement, for breach of a condition of the management order or in the public interest; and the Reserve could be cancelled by the Minister at any time. This suggests that the applicants 'interest' arising from the 2002 Management Order was in the nature of a statutory responsibility, taking its content and colour from the LAA. In Hornsby Council v Roads and Traffic Authority (NSW) (1997) 41 NSWLR 151 at 152-153 Mason P gave two possible characterisations of the relationship arising from the placement of the 'care, control and management' of land. The first was that of a statutory responsibility, entirely outside the field of rights occupied by the group comprising the definition of 'interest. ' The second was that of a public trust, falling short of a proprietary right that would sustain a caveat: Municipal District of Concord v Coles [1905] HCA 35 ; (1906) 3 CLR 96 at 111 per Barton J. On either of these possibilities, what the applicants held from the 2002 Management Order cannot be described as coming within the concept of 'property' when the provisions of domestic statute law (apart from the RDA) are taken into account. That position in relation to such domestic law is not improved for the applicants by approaching the concept of property through the dicta on which they rely from Yanner [1999] HCA 53 ; 201 CLR 351 , Peverill [1994] HCA 8 ; 179 CLR 226 and Ward [2002] HCA 28 ; 213 CLR 1. This is because the concepts of property there referred to cannot overcome the effect of the provisions of the applicable statutes considered above on this issue and in particular s 46(5) of the LAA. Those statutory provisions are determinative of the nature of the legal relationship arising from the 2002 Management Order. Any contention that s 46 of the LAA is wholly or partly inconsistent with s 10 of the RDA is considered below. This is because they all applied equally to all reserves irrespective of the race of the persons holding the reserve. This was not a case where the LAA only affected reserves held for the use and benefit of persons of the Aboriginal race. Therefore the applicants did not enjoy any proprietary or human right (if they relevantly had them) in relation to the Reserve to any lesser extent than persons of other races. DID THE APPLICANTS HAVE A HUMAN RIGHT OF OWNERSHIP OVER THE RESERVE RECOGNISED BY THE RDA? However, the question nevertheless arises whether such rights as the applicants may have had in relation to the Reserve qualify as human rights within that ambit. These authorities have been examined above. Additionally the applicant argues that beneficial legislation should be interpreted consistently with its beneficial purpose: Brennan v Comcare (1994) 50 FCR 555 at 561; Northern Territory of Australia v Alyawarr, Kaytetye, Warumungu, Wakaya Native Title Claim Group [2005] FCAFC 135 ; (2005) 145 FCR 442 at [187] ; Bull v Attorney-General for New South Wales [1913] HCA 60 ; (1913) 17 CLR 370 at 384 and Pearce DC and Geddes RS Statutory Interpretation in Australia (4 th ed, Butterworths, 1996) at p 222. Therefore the applicant submits there is no reason to conclude that the term 'property owned' (appearing in s 10(3) in the RDA) was intended to be interpreted as applying only to one of the narrow uses of the words 'owned' and 'property' which might be adopted by the common law or statute law from time to time: see Coles 3 CLR at 111; Hornsby 41 NSWLR at 152-153; Commissioner of Stamp Duties (NSW) v Yeend [1929] HCA 39 ; (1929) 43 CLR 235 and Peverill 179 CLR at 243-244. The applicant also contends that the effect of this case law and the Convention is that there is no reason to interpret the use of the phrase 'property owned' in s 10(3) of the RDA narrowly to exclude the legal relationship which the Aboriginal inhabitants have with the Reserve. The question is therefore whether the legal relationship of the applicants to the Reserve, although not qualifying as 'property' in the general law (apart from the RDA), can nevertheless qualify as 'property' for the purposes of the RDA and the Convention. The applicant submits that the effect of the above-mentioned case law is that the concept of 'property' for the purposes of the RDA is not limited to interests which are recognised by the general domestic law, as contended by the respondents. It is also argued that it is not anywhere pleaded that such a right is a right within the meaning of s 10 of the RDA. The respondents contend that the RDA is concerned only with rights fundamental to the individual's existence as a human being and the rights and freedoms protected by s 10(1) of the RDA do not encompass every right which a person has under the domestic laws of a country or every other right a person may claim: see Gerhardy 159 CLR at 124 and 126; Mabo 166 CLR at 217 and 229; Secretary, Department of Veteran's Affairs v P (1998) 79 FCR 594 at 599-600; Trau v Repatriation Commission (1998) 88 FCR 349 ; and Ebber v Human Rights and Equal Opportunity Commission (1995) 129 ALR 455 at 476. In Department of Veteran's Affairs v P 79 FCR 594 and in Trau 88 FCR 349 , there were alleged rights to certain war veteran's benefits which were found not to be fundamental rights or freedoms recognised under the RDA. In Ebber 129 ALR at 477 acceptance of a German educational qualification to allow a person to work as an architect was held not to be a fundamental human right or freedom. The respondents submit that the case law on the scope and meaning of the word 'property', as relied on by the applicant and set out above, provides no basis for a finding that the applicants have property in the Reserve. Again in the respondents' submission, it does not follow from the proposition that property can be a bundle of rights that any bundle of activities undertaken on land establishes the existence of a property right. Thus in Simpson v United Kingdom (1986) DR 274 (European Commission of Human Rights, 14 May 1986) at [5] the Commission said that the fact a person had been living in a house for a period of time with no legal title could not found a claim based on Art 1 to Protocol No. 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms (which provided that 'every... person is entitled to the peaceful enjoyment of his possessions'). Other submissions of the applicant and respondents are considered in the reasoning which follows. Further that the word 'property' as there used is to be taken as referring to a bundle of rights. This directs attention to the character of the rights (if any) existing between the grantor and the grantee in relation to the relevant property interest. In this case the relevant right is to care, control and manage the Reserve. The nature of the human right recognised by the RDA in relation to property is that --- as Art 5(d)(v) requires --- it must be 'property' which is 'owned'. The juxtaposition of these requirements of 'property' and ownership is emphasised by s 10(3) of the RDA, which operates only where management occurs in relation property owned by Aboriginal persons. Even if the dicta of the High Court to which attention has been directed can support a concept of 'property' which is wider than property recognised by domestic law (apart from the RDA), it nevertheless must be 'property' which is 'owned'. This is not to deny that the word 'own' should itself receive a beneficial interpretation. However, in Koowarta v Bjelke-Petersen (1982) 153 CLR 168 Gibbs CJ at 184, with whom Aickin and Wilson JJ agreed at 243 and 244 (in dissent in the result) said that: 'although the word 'own' in Art 5(d)(v) should no doubt be given a wide meaning, it seems to be going too far to hold that the right to 'own' property includes a right to mere possession under a licence to occupy'. Hence even if a mere right of occupation was encompassed within the claimed right to manage, a right to property under the Convention could not be made out. A fortiori where there is no right of occupation. On the other hand, Brennan J in Koowarta 153 CLR at 266 said that the enjoyment of a licence to use property is a civil right within the meaning of Art 5(d) of the Convention. It is not the case that the Convention brings its own definition of 'own' into play or that the use of that word in s 10(3) of the RDA is required by that Act to be understood in any special way other than that indicated by the members of the High Court in Koowarta 153 CLR 168. Consequently it becomes necessary to consider whether whatever qualifies as property in the bundle of rights under consideration is capable of being 'owned'. The question of what is 'owned' can only be resolved by looking to the effect of other domestic law determining issues of ownership, ownership being a private right recognised by the domestic law. For the reasons set out in the previous section, the applicants do not have an interest in the Reserve and so do not have any ownership interest in it. A right granted by statute must be interpreted in accordance with the domestic law which created it. In Mabo [1988] HCA 69 ; 166 CLR 186 there were a different set of circumstances because the rights claimed there were rights outside domestic law. They became recognised by common law only after the Court had identified the legal relations that could be seen to exist from the evidence led. That is not the position here. It is not that the grantee may not have 'property' in such a reserve within the wide Convention concepts; rather that such property simply cannot be one of 'ownership' because the right is a statutory one not encompassing ownership. Likewise it cannot be said that rights in the nature of a bare licence or a non-charitable public trust can qualify as property 'owned'. In the case of the 'property' here in issue, it cannot be the case that it can exist as an human right independently of its statutory origins. First, they say that recognition of such a right would be inconsistent with the general (non-discriminatory) regime for the management of public reserves established by the LAA. Management of a reserve by a management body is created and defined by statute, not inherent common law or international human rights principles. Recognition of private human rights would be inconsistent with the nature of a vesting or a management order. Recognition of such a right held by individuals (in this case, the applicants) would also be inconsistent with the statutory conferral of care, control and management on a nominated management body which has a separate legal personality and is required to operate according to the LAA and the ACA Act. Secondly, any such right is incapable of definition. For example, does it arise immediately, or only after a period of years of occupation, and if so, how many years? Do individuals have the right, or groups? In either case, what if different individuals or groups wish to exercise their rights to manage the Reserve in ways which are inconsistent? Does the same right arise in respect of other Aboriginal reserves, and in respect of other reserves for other purposes; and what are the facts or matters that are relevant to determining those questions? If the right only arises in respect of the Reserve, or only in respect of particular Aboriginal reserves, then is there a comparable right in respect of other reserves or other areas of land, and if so, what is it? It is necessary to answer these questions because the RDA only operates in the context where persons of a particular race do not enjoy a right which is enjoyed by other persons of other races (or enjoy it to a lesser extent). I record these submissions but rest my view on the effect of the statutory regime. WAS THERE A LACK OF ENJOYMENT BY THE APPLICANT OF THE RIGHT TO MANAGE AND OTHERWISE EXERCISE OWNERSHIP RIGHTS UNDER s 10 OF THE RDA BY REASON OF THEIR RACE? I have reached the view above that the vesting order cannot be a foundation of the applicant's claim for a right because the mode of its revocation was not inconsistent with s 10 of the RDA in that the revocation applied equally to all persons in whom a reserve was vested under the Land Act 1933 without regard to race. The right claimed is also not made out as a human right. This renders the further consideration of this issue unnecessary. Simply put, there could not have been a lack of enjoyment of a particular right under s 10(1) of the RDA if no such right existed. However, in order to give full effect to the arguments that have been presented, I proceed to consider the principal submissions on the issue. Section 10 of the RDA requires the applicant to establish that by reason of the Reserves Act the inhabitants of the Reserve do not enjoy or enjoy to a more limited extent the particular right (in this instance, the right of management and ownership) which is available to the other persons. The applicant and the respondents have both contended that the comparison between the extent of the rights enjoyed by the inhabitants of the Reserve and persons of another race, colour or national or ethnic origin is not limited solely to one in respect only of this particular Reserve. The respondents have contended that such a comparison extends not only to this Reserve but to 'other comparable reserves', whilst the applicant has focused more broadly on 'other reserves and other lands'. The applicant argues that a causal connection between race and the non-enjoyment of a right is established if the effect of the Reserves Act upon a racial group is that the group does not enjoy a right and the law does not have that effect on other racial groups: see Mabo 166 CLR at 218 and Ward 213 CLR at 99-102. It is contended by the applicant that the Reserves Act did not have any effect upon the property rights of any people other than Aboriginal inhabitants of the Reserve (and those associated with the Aboriginal inhabitants). It is said that the particular sui generis rights of management and ownership which the applicants held as Aboriginal inhabitants of the Reserve (with the capacity as members of the SVC to enjoy the control of the management of the land) were peculiar to them as people of a particular race. It is also contended that, pursuant to the ACA Act, only Aboriginal people control the management of the corporation and the applicants in this case were Aboriginal people managing a reserve vested in that corporation for the use and benefit of Aboriginal inhabitants. The respondents contend the fact that the purpose of the Reserve is for the 'Use and Benefit of Aboriginal Inhabitants' does not mean that rights in respect of the Reserve (including any ownership rights that might be thought to exist) are characteristically held by Aboriginal people. For example, the management body for a reserve for the 'Use and Benefit of Aboriginal Inhabitants' may be a non-Aboriginal person, or a corporation controlled by non-Aboriginal people (such as a church group running a mission). Occupation of and access to a reserve for 'Use and Benefit of Aboriginal Inhabitants' is not necessarily limited to Aboriginal people, but may include non-Aboriginal spouses, community workers, nurses and such. It follows from this that any rights of these people, being people of another race, colour or national or ethnic origin, would have been equally affected by the Reserves Act. The respondents submit that persons associated with the Reserve were both Aboriginal and non-Aboriginal and that both groups were affected by the Reserves Act. The applicants, then, were not treated any differently from other persons (Aboriginal or non-Aboriginal) in relation to the Reserve, nor any differently from other persons or management bodies in respect of other reserves. In Wilson 68 FCR 46 Heerey J at 63 said the comparison was essential to ascertain whether the purpose or effect was discriminatory when it was apparently so. The English cases have discussed in detail the problems associated with the determination of an appropriate base group. Two main contrasting approaches can be identified. One seeks to narrow the base group to the particular group of persons to whom the requirement is directed, while the other seeks to establish a broader base beyond the immediate context. In this context the concept used in s 9(1) and in s 9(1A) of impairing the enjoyment of a right on an equal footing must be taken to be a broad one that involves looking at the footing upon which rights are enjoyed by those sections of the community at large who do not suffer from the racial discrimination and the other like types of discrimination that the Act aims to eliminate. Although the applicant's submissions on this issue lack specificity in identifying the persons of 'another' race, it is clear from the views of Brennan, Toohey and Gaudron JJ in Mabo 166 CLR at 217-218 that the persons compared to were variously referred to as 'other members of the community', 'any other Australian' and 'those whose rights... did not take their origin from the laws and customs of the Miriam people. ' In the light of this there does not appear to be any proper basis upon which to confine the comparators to holders of comparable reserves. (ii) assessment of whether the right is not enjoyed (which on the assumption would be the case) or was enjoyed to a more limited extent than such other persons. It is at this point that regard must be had to the effect of the relevant provisions of the Reserves Act upon the Aboriginal inhabitants. It is clear that, if they had held the right of management and ownership, ss 4 and 5 of the Reserves Act would have occasioned the right not to be enjoyed by the SVC and, to the extent if any in which they were involved in the exercise of the right, the applicants. This raises the issue how much the effect on the SVC is an effect on the applicants. It is an issue not able to be resolved on the evidence. The connection between the SVC and the applicants was not such that the rights of the applicants would have been necessarily affected by any measure impacting on the SVC. I have earlier found that the applicant's submission that the SVC was a charitable trust in favour of the applicants cannot be made out in the relevant law. The evidence shows that following the enactment of the Reserves Act and the substitution of the AAPA for the SVC, (1) the Administrator had the option not to require the Aboriginal inhabitants to leave although he intended to do so; and (2) they left in anticipation of such action by the Administrator. It was the anticipated actions of the Administrator on behalf of the AAPA which determined whether they were to have continuing residence; not the removal of the SVC. To make out their claim the applicants would have to overcome these obstacles which I do not consider their case has done. (iii) there remains the question whether any such cessation of any assumed rights of the applicants through the SVC would have been 'by reason of' the race of the applicants. The provisions themselves are neutral. Therefore account must be taken of the effect of the provisions. The direct effect of the provisions was to cause the rights of the SVC to cease. On the respondents' view the evidence is clear that such effect was not 'by reason of' the race of those leading the SVC or the race of the applicants. Rather it was 'by reason of' the assessment made by Parliament of the lack of requisite quality in management of the Reserve by the SVC with consequent jeopardy to the human rights of certain women and children being Aboriginal inhabitants of the Reserve. On the applicant's case, the diminution would have impacted detrimentally to a disproportionate degree on the Aboriginal inhabitants so as to be unreasonable. For reasons given in Part L below, I do not consider that such disproportionality and unreasonableness can be made out. (In reaching this and like conclusions in relation to other rights I rely not only on the general and specific findings above but also on the evidence and findings in Part L relating to Justificatory Contentions). If the right had been made out, it would also be necessary to consider whether the justificatory contentions resulted in this prima facie position being set aside. Therefore the applicant submits that there was no identified process by which she and those she represents had any prior notice of the content of the Reserves Act or any opportunity to be heard before the enactment of it. The applicant contends that notice of an intention to enact legislation pertaining to the subject matter and a Parliamentary process for the enactment of the legislation does not constitute a fair process for the deprivation of property such as to make it otherwise than arbitrary. She states that an analogous process of deprivation of property by legislation was held to be arbitrary by three judges in Mabo 166 CLR at 216-219 per Brennan, Toohey and Gaudron JJ. She contends that a fair process would be one analogous to that provided for under the Lands Acquisition Act 1989 (Cth), which requires publication of a pre-acquisition declaration (s 23) or a certificate as to urgent necessity laid before both Houses of Parliament (s 24) , a right for an affected person to obtain a re-consideration of a pre-requisition declaration (ss 26 and 27 ) and a review of that by the Administrative Appeals Tribunal (s 28) and an entitlement to just compensation (ss 52 and 55 ) and a detailed process for the claim to, and determination and payment of, compensation (Pt VII, Divs 4, 5 and 6). Alternatively under the LAA, which provides for notice of an intention to take interests in land (s 170), power to lodge an objection within 60 days in relation to the taking (s 175), an entitlement to compensation for an interest taken (s 202) including compensation for the loss of use of structures erected and improvements made by a management body under a management order (s 204) and a procedure for applying for and obtaining compensation (ss 207 to 257). The rules of natural justice require that a person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interests which the repository of the power proposes to take into account in deciding upon its exercise: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 628. As Mason J said in the same case at 584, 'where the decision in question is one for which provision is made by statute, the application and content of the doctrine of natural justice or the duty to act fairly depends to a large extent on the construction of the statute'. The relevant statutory authority here is the LAA. Under that Act, no particular process is required to be followed before a management order is revoked in the public interest (i.e. there is no express requirement for notice or a right to object). The relevant requirements of procedural fairness are those which arise at common law. The statutory analogies upon which the applicant relies are referrable to interests of a proprietary character. I have earlier found that the nature of the applicants' interest is not of the same character. The applicants' interests are not analogous to the interests upon which the applicant relies to advance the contention of the requirement for prior notice of enactment of the Reserves Act. In any event, the rules of natural justice at common law are in any particular case fact specific. Here the respondents had actual knowledge of the proposal to revoke the 2002 Management Order and to replace it with a new management order in favour of the AAPA, and made submissions to the first respondent about that proposal. That actual knowledge appears from the facts earlier set out. In short, they were the Premier's statement to Parliament on 14 May 2003 of the intention to introduce legislation in relation to the Reserve; the introduction of the Reserves Bill on 15 May 2003; the letter dated 20 May 2003 from the SVC to the Premier; and a press conference held by the SVC on 25 May 2003 to state its opposition to the Reserves Bill. In the context of the provisions of the LAA and these particular circumstances, there cannot therefore be any practical injustice to the applicants. The respondents plead justificatory conduct in defence of any deprivation and this is considered later in these reasons. The first is that the paragraph refers to 'right' in the singular and refers to 'movement and residence' in conjunction. However, judicial authority to which reference will be made permits the addressing of movement or residence as separate components where appropriate. The second is that the right is one existing 'within the border of the Convention State. ' It would appear these latter words are included, not to give emphasis to the obvious limits of jurisdiction of the Convention State, but to emphasise that the right is one co-extensive with the territory of the Convention State. The third is that in relation to the freedom of residence, the right is open to being understood in two ways. The first is with reference to the actual place of residence of a person. The second is as a right within the Convention state but without reference to any particular place within that limit. It is common ground that the applicants have the right to freedom of movement and residence in the borders of Australia as the Convention State. It is said the applicants therefore have a right of freedom of movement within the Reserve so that a restriction on its exercise within the Reserve would be a curtailment of a fundamental freedom of the applicants. [Issue 26] The respondent argues that the fact the Reserve is reserved for the use and benefit of Aboriginal inhabitants does not mean that any particular Aboriginal persons, or indeed any Aboriginal persons, can as of right enter or reside upon the land. While the Reserve is for the use and benefit of all Aboriginal people, the management body may from time to time determine how the Reserve should be used and how Aboriginal people will benefit from it. I agree with this submission of the respondents. It has earlier been seen that the designation of the Reserve alone without more did not confer any interest on any Aboriginal persons. The evidence is not clear on how the Aboriginal inhabitants each became residents of the Reserve. The implication from the evidence is that the SVC determined who became a resident and who was no longer to be a resident. That is consistent with the SVC being a community. This is so even though examination of the terms of the 2002 Management Order (being the order in place before the enactment of the Reserves Act) do not disclose any provisions relating to management of residents. I infer in the circumstances that any right of residence and movement on the Reserve which may have been held by any of the Aboriginal inhabitants was derivative from but not dependent on the fact of the management being held by the SVC, the community to which they belonged. Alternatively that the Aboriginal inhabitants of the Reserve at the time of the enactment of the Reserves Act were persons permitted by the management body (the SVC) to reside on the Reserve and so also to exercise their freedom of movement in relation to the Reserve at that time. The right, given by statute, of access to an area so large that it constitutes more than one-tenth of the State, seems to me to be a right in a field of public life...'. It extends, generally speaking, to movement without impediment throughout the State, but subject to compliance with regulations legitimately made in the public interest, such as traffic laws, and subject to the private and property rights of others. And it would include a right of access to facilities necessary for the enjoyment of freedom of movement, subject to legitimate regulation of those facilities... Despite the lack of universal consensus on content, it is no doubt correct to say that, in general, freedom of movement does not extend to access to property in private ownership. Murphy J at 107 similarly held that the exercise of the power to exclude in that case was an exercise of public power due to the size of the area involved and the fact that it was exercised by a body vested with particular statutory authority. See also Deane J at 145. In the light of this authority the applicant accepts that freedom of movement and residence within particular areas of the State is necessarily restricted by private ownership and the general law: Gerhardy 159 CLR at 86 per Gibbs CJ and Mason J at 102-103; and R v Secretary of State, Ex parte McQuillan [1995] 4 All ER 400 at 421-422. However the applicant contends that no such restrictions applied to the applicants in relation to the Reserve. The respondents submit that there is no absolute right to freedom of movement and residence within the Reserve. They say that as Mason J recognised in Gerhardy 159 CLR at 102, the Convention right of freedom of movement (and residence) must be subject to regulations legitimately made in the public interest. They contend this is consistent with the fact that Art 5(f) of the Convention recognises a 'right of access to any place or service intended for use by the general public such as transport, hotels, restaurants, cafes, theatres and parks'. That is some areas are by their nature to be open to access by the general public, while other areas, even if not private property, are nevertheless not intended for access and use by the general public. The respondents say a reserve for a scout hall, a nursing home, or a rifle range are examples of reserves that are clearly not intended to be freely available for movement and residence. Similarly, for example, access to schools, hospitals, government offices, museums etc located on public reserved land is restricted for reasons of safety and security. The conferral of care, control and management of a reserve upon a management body gives that body the power to decide how the land will be used, including who may enter and reside on the land (if indeed anyone is to reside on the land). Such a power is inherent in the statutory conferral of care control and management; and see s 267(2) of the LAA (which provides that residence on any Crown land without lawful excuse is prohibited). Furthermore, the respondents say many Crown reserves in Western Australia are subject to a range of legislative restrictions upon freedom of movement and residence. For example: Aside from the possibility of the Reserves Act, the only limitation on any right of freedom of movement and residence on the Reserve brought to attention by the parties arises from the LAA. The applicant draws attention to s 267(1)(a) of the LAA which makes it an offence for a person to reside (and engage in various other activities) on Crown land 'without either the permission of the Minister or reasonable excuse'. It is said that prohibition does not affect a general right to freedom of movement on the Reserve. It is further submitted that the prohibition in relation to residence was not in effect in relation to the Aboriginal inhabitants of the Reserve at the time of the enactment of the Reserves Act. The provision appears in the LAA as reprinted as at 22 June 2001 and there is no evidence of it having been repealed before the Reserves Act was enacted. It was proclaimed to come into effect in January 1997, some years before the passage of the Reserves Act. It was therefore a major limitation on the right of residence on Crown land. The applicant contends that prior to the enactment of the Reserves Act the effect of the placing or vesting of the Reserve in the SVC and its reservation for the use and benefit of the Aboriginal inhabitants had the effect of providing either the implicit permission of the Minister or a reasonable excuse for the applicants to exercise and enjoy residence on the Reserve as of right. I accept that had any of the Aboriginal inhabitants been charged with an offence against s 267(1)(a) of the LAA, a court would have accepted a defence of either Ministerial permission or reasonable excuse, based on the fact of the Minister's grant of the 2002 Management Order to the SVC. The consequence is that at the time the Administrator acted to require some Aboriginal inhabitants to leave the Reserve and to prevent any person entering the Reserve, the Aboriginal inhabitants were lawfully resident upon the Reserve. The other limitation arising from the LAA was that contained in s 50(2). That gave to the Minister the power, in the absence of agreement or non-compliance, and if considered by the Minister to be in the public interest, to revoke the management order. So far as the right to residence on the Reserve and movement on it was derivative from the fact of a community being appointed as manager, the power to revoke such appointment was a potential limitation on the right to freedom of movement and residence. Furthermore, the 2002 Management Order expressly provided in cl 8(b) that nothing in the Order limited in any way the powers or rights of the Minister under the LAA. So far as the Aboriginal inhabitants right of residence on the Reserve and movement within it was dependent upon their community being the manager of the Reserve, it was vulnerable to the Minister's exercise of the power to revoke the appointment of the Manager. Did the Reserves Act also have a limiting effect? The applicant submits the Reserves Act authorised the deprivation of the right to freedom of movement and residence within the border of the Convention State by authorising the deprivation of the applicants' freedom of movement and residence in the Reserve. [Issue 27] The applicant says acts authorised by ss 5(1), 7(3), (5), (6), (7), (9) and (10) of the Reserves Act all comprise acts which resulted in the applicants not enjoying the right of freedom of movement and residence within the Reserve. The Reserves Act authorised a deprivation of those rights in a manner which had not previously existed in relation to the Reserve. The SVC as the management body under the 2002 Management Order prior to the enactment of the Reserves Act only had the power to restrict freedom of movement and residence within the Reserve in accordance with any rights of private ownership and the general law that may have existed. To the extent that the respondents are successful in arguing that there were no private ownership rights in relation to the Reserve, the SVC had no power in that regard. The SVC could not exercise such power as it had (a) without according procedural fairness; (b) in its absolute discretion; (c) with immunity from judicial review; and (d) with immunity from any action in tort, as provided for in the Reserves Act ss 8, 9, 11 and 12. The applicant submits that to the extent of the substantial difference between the powers of a management body under the LAA and the AAPA or a person appointed by the AAPA under the Reserves Act, the Reserves Act authorised a substantial deprivation of the applicants' rights. The applicant contends the Reserves Act resulted in the applicants not enjoying the right to freedom of movement and residence that is enjoyed by persons of other races. This, it is argued, is because the Reserves Act resulted in the powers under ss 7(3)(a) and (b) being exercised resulting in the applicants not enjoying the right not to be arbitrarily deprived of freedom of movement. [Issue 28] The respondents contend that in this case the enactment of the Reserves Act did not of itself have any effect upon anyone's freedom of movement and residence on the Reserve. For example, it did not make it a criminal offence for anyone, or anyone of a particular race, to enter or remain on the Reserve: cf Gerhardy [1985] HCA 11 ; 159 CLR 70. Nor did it result in the Reserve being in any way fundamentally different from any number of other Crown reserves in Western Australia with respect to the applicants' (and the public's) freedom of movement and residence. For this reason, and given the existing power of a management body under the LAA, the existence of s 7 of the Reserves Act did not have any greater effect upon the applicants' freedom of movement and residence upon the Reserve than was the case before the enactment of the Reserves Act and s 10 of the RDA could have no application. Any breach of the RDA could therefore only arise in respect of the exercise of the power in s 7 of the Reserves Act if it contravened s 9 of the RDA. The respondents argue that, as demonstrated above, the powers in s 7 of the Reserves Act are not dissimilar to powers conferred under other legislation in respect of other reserves. It did not affect a large area of land, nor did it prescribe where the applicants or anyone else could or could not go outside the Reserve. Access to the Reserve was possible with permission of the second respondent and there was no evidence that such permission was unreasonably withheld. Hence the Reserves Act simply does not affect any right of freedom of movement and residence (any more than granting the land the subject of the Reserve to another person in freehold would do so). The respondents conclude by submitting that if, contrary to the above submissions, the applicants' right of freedom of movement and residence has been affected by the Reserves Act then it was only affected by the existence and exercise of the power in ss 7, 8 and 9 of the Reserves Act. Sections 4, 5 and 6 of the Reserves Act did not of themselves restrict the applicants' freedom of movement and residence on the Reserve in circumstances where the Reserve remained for the 'Use and Benefit of Aboriginal Inhabitants' and the second respondent was obliged to continue to manage it for that purpose. Hence the respondents say in those circumstances the Reserves Act would only be invalid (assuming it was discriminatory, as to which see elsewhere in these reasons) to that extent. I agree with the respondents that the Reserves Act itself did not in its terms have any effect on the freedom of movement and residence of anyone. Sections 4, 5 and 6 did not in terms have that effect. The enactment of ss 7, 8 and 9 did not have that effect. Therefore the Reserves Act as a law does not create an inconsistency with s 10 of the RDA in relation to such freedom nor does any provision of it do so. It cannot be concluded that either 'by reason of' the enactment of the Reserves Act or of a provision of it there was created any whole or limited enjoyment of the right of freedom of movement and residence. The enactment of s 7 raised the possibility that the Administrator may act so as to effect the freedom of movement and residence of the persons on the Reserve. However, without that 'act' being taken, there was no operative causal link. Further, the revocation of the 2002 Management Order by s 4(1) of the Reserves Act took effect as if it were a revocation under s 50(2) of the LAA. The revocation is therefore to be understood as the act of the Minister, not of the enactment of the Reserves Act. What the enactment of ss 4 and 5 of the Reserves Act did was to remove from the management of the Reserve the SVC from which the Aboriginal inhabitants' right of freedom of movement and residence was derivative. It did not as such curtail that right. It was open to the new manager (the AAPA) to continue to recognise such rights, if any, as existed. The freedom of movement and residence of the Aboriginal inhabitants was not touched until the Administrator acted in reliance on s 7(3) of the Reserves Act. Those were acts which require consideration later in relation to s 9 of the RDA. If this view does not reflect a correct application of s 10 there are other obstacles in the way of the applicant. Conversely in the respondents' submission, a right of freedom of movement and residence within the borders of a state is not infringed just because occupation upon and use of a small and discrete area of Crown land (amounting to 8 hectares) is restricted. As Gibbs CJ said in that case, the concept of freedom of movement and residence is vague and elastic and must be considered in the context of the realities of life. Furthermore, it must be considered in the context of freedom of movement and residence 'within the border of the State'. The respondents submit that the realities of life are that the Reserve was for many years private property and therefore an area in which Aboriginal people did not have freedom of movement and residence, except at the discretion of the landowner. It was then a Crown reserve for purposes not associated with Aboriginal people. It is said that the applicants, and persons associated with them, had been living in the area of the Reserve only since the mid-1970s. While the SVC was the management body, only certain Aboriginal people were permitted or chose to live on and enter the Reserve. Given the dicta in Gerhardy [1985] HCA 11 ; 159 CLR 70 , this submission requires careful consideration. However, that case concerned the freedom of movement. When the freedom of residence is principally involved it is difficult to see why size should be determinative. The place of residence is necessarily confined. It therefore do not rely on this submission of the respondents. In its terms s 11 of the Reserves Act applies the denial to any person affected by the actions of the Administrator under s 7 and wishing to challenge them. The Administrator is defined by s 7(1) to mean a person engaged under a contract of services under s 7(2)(a) or nominated as an officer referred to in the Aboriginal Affairs Planning Authority Act s 15(1) under s 7(3)(b) of the Reserves Act, in each case to enable the AAPA to perform effectively its functions in relation to the Reserve. It is contended by the applicant that s 11 of the Reserves Act had a special effect upon the rights of the applicants because of their race. It is said their right to enter and remain on the Reserve was a right which was peculiar to them because of their racial status as Aboriginal persons. The Reserve was declared to be for the use and benefit of Aboriginal inhabitants. The applicant argues that the right to challenge in the courts an exercise of the authority granted under s 7 of the Reserves Act to prevent Aboriginal inhabitants from accessing the Reserve and so affecting their ability to exercise those rights is one which Aboriginal people (and those associated with those Aboriginal persons, by reason of that association) are denied the enjoyment of by the operation of s 11 of the Reserves Act to an extent which does not apply to other persons in relation to their exercise of property rights: see Mabo [1988] HCA 69 ; 166 CLR 186. Other persons are said not to be denied the right to the full range of judicial review in relation to the exercise of the rights which they may have in relation to the use and enjoyment of land. Therefore the applicant says the Reserves Act was inconsistent with s 10(1) of the RDA and Art 5(d)(i) of the Convention by reason of the matters set out earlier in these reasons on that issue. The respondents say that the human right recognised by Art 5(a) of the Convention is a right to equal treatment before tribunals administering justice and not a right of access to tribunals. They also note that the application of s 7 of the Reserves Act could be towards and was used in respect of non-Aboriginal people as well, including Margaret Jeffery, Sharon Davies, and Gregory Stratton. The respondents also contend that even if a right to access tribunals administering justice existed, s 11 of the Reserves Act did not wholly remove the right of access, as evidenced by R v Hickman; Ex parte Fox [1945] HCA 53 ; (1945) 70 CLR 598 and Plaintiff S157/2002 211 CLR 476. The Hickman principle is to the effect that if legislation purports to impose limits on authority and contains a privative clause, there is a question of interpretation of the whole legislative instrument whether transgression of the limits, so long as done bona fide and bearing on its face every appearance of an attempt to pursue the power, necessarily spells invalidity. This admits of an attempt to reconcile the apparently conflicting legislative provisions. Where the decisions in question do not upon their face exceed the authority and do amount to a bona fide attempt to exercise the powers and relate to the subject matter of the authority, they will not be invalid: Plaintiff S157/2002 211 CLR at 501. The operation of a State privative clause is purely a matter of its proper meaning ascertained in its legislative context. However, privative clauses, whether in State or Commonwealth legislation, are construed "by reference to presumption that the legislature does not intend to deprive the citizen of access to the courts, other than to the extent expressly stated or necessarily to be applied". Thus, a clause which merely provides that a decision is to be final and conclusive is construed as not excluding certiorari for error of law on the face of the record. So, too, a clause which provides only that a decision may not be called into question in a court of law is construed as not excluding review on the ground that the decision involved jurisdiction error, at least in the sense that it involved a refusal to exercise jurisdiction or that it exceeded the jurisdiction of the decision-maker. However and provided the intention is clear, a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does, the decision in question is entirely beyond review so long as it satisfies the Hickman principle. ' (Footnotes excluded. I do not agree with the submission of the respondents that Art 5(a) of the Convention is confined to appearance before tribunals and not access to them. The paragraph falls for interpretation in the light of the preamble to it, which cites the goal of equality before the law. That context suggests that 'the right to equal treatment' should be read inclusively and not narrowly and so be read to include equal right to access to tribunals as well as equal right to treatment before tribunals. This view receives support from what was said by N Lerner, Group Rights and Discrimination in International Law , International Studies in Human Rights, 2 nd edn, Martin Nijhoff Publishers, 2003 at p 59 based on the width of the opening words of Art 5 of the Convention. That is not to say that any human right to equal treatment before tribunals is a guarantee of access to a tribunal administering justice in respect of every government action. It could only be a guarantee of access where the law permits such access and does so on a non-discriminatory basis. I also do not agree that the fact that s 11 does not wholly remove access to the Courts assists the respondents. The jurisdiction which remains under the Hickman principle is one which applies as a matter of law and irrespective of race and like considerations. The issue is whether what was removed creates an inconsistency with s 10 of the RDA. The relevant comparison may therefore be found not within the limited confines of the Reserve but in relation to other reserves and hence to a wider spectrum of non-Aboriginal persons than those on the Reserve. There is no evidence that those persons on other reserves are similarly constrained in respect of the reserves which they hold. (ii) assessment must be made of whether the right is not enjoyed (which on the facts is the case) when the right is enjoyed by comparators. Section 11 sought to bring immunity from judicial supervision in respect of any decision or act done or purported to be done under s 7. The powers in s 7 were exercisable in relation to (a) persons entering the Reserve and (b) persons leaving the Reserve. The powers in s 7 were in fact exercised by the Administrator (1) to direct all persons other than listed service persons not to enter the Reserve, in circumstances where most of the Aboriginal inhabitants had departed the Reserve; (2) to direct in writing two Aboriginal persons to depart the Reserve and to direct orally three non-Aboriginal non-resident persons to do so. The applicant contends that to the extent that the Reserves Act may affect persons who are not Aboriginal persons, that effect is by reason of the association of those persons with Aboriginal persons and so the effect is still said to be by reason of the race of the Aboriginal persons. Section 10 of the RDA requires only that regard be had to the race of persons concerned and not to other factors, such as those sought to be relied upon by the applicant. For the purposes of the application of that section, regard must be had to the race of each of those persons. The non-Aboriginal non-residents were Margaret Jeffery, Gregory Stratton, Lynda Nutter, Paul Allardyce and Sharon Davies. There is no evidence that these had any interest in the Reserve or contractual engagement (although being a volunteer) with the SVC so that they do not appear to have had any obvious interest for bringing a claim against the Administrator of the type referred to in s 11 of the Reserve Act. Nevertheless it is open to posit that the manner in which the Administrator executed his actions might have allegedly impacted on some of them in some adverse way so that they sought relief of that type and been precluded by an application of s 11. The direct effect of the provision (s 11) was purportedly to bring immunity from judicial supervision in respect of any of the remedies stated in the section where those remedies were sought by any person affected by an act of the Administrator. This direct effect was not as such discriminatory. However, indirect discrimination will be established where there is a disproportionately detrimental impact on (relevantly) Aboriginal persons. I consider that is the case in relation to the application of s 11 of the Reserves Act to the persons on the Reserve. The non-Aboriginal persons involved with the Reserve were few in number. The impact of s 11 was on the Aboriginal inhabitants, who were the holders of the right of residence if it was found to exist. As a consequence considerably more persons of the Aboriginal race were affected by s 11 than of any other race, so that it was persons of the Aboriginal race who did not enjoy the right of equal access to tribunals than persons of any other race. There was a clear disproportionality of effect on the Aboriginal inhabitants, detrimental in leading to the loss of their right when the right is enjoyed by other races. (iii) because of the indirect discrimination so resulting, it was 'by reason of' a provision of the Reserves Act, namely s 11, that the Aboriginal inhabitants did not enjoy their right to equal treatment before tribunals when that right was enjoyed by persons of another race in comparator positions, including reserves. That is the prima facie position. This is a reference to s 4 of the Reserves Act revoking the 2002 Management Order and s 5 placing the management with the AAPA in substitution for the SVC. While the applicants have listed this as a human right relevant to their claim they have not pressed the right in any further submissions nor has it been pleaded. I do not consider that the claim in this respect has been made out. This contrasts with s 10 of the RDA which is concerned with the effect of a law or a provision of a law. It is contended this was a right peculiar to them because of their racial status as Aboriginal persons. The Reserve was declared to be for the use and benefit of Aboriginal inhabitants. The causal connection is established between race and not enjoying a right, if the effect of the Reserves Act upon a racial group is that the racial group does not enjoy a right and the Reserves Act does not have that effect upon other racial groups: see Mabo [1988] HCA 69 ; 166 CLR 186 and Ward 213 CLR at [105]. In that way it is said s 9 operates in the same way as s 10. The discriminatory result may arise under s 9 from either the 'purpose or effect' of the act. Regardless of the motive or intent of the act, if the effect is to nullify or impair the recognition, enjoyment or exercise on an equal footing of a human right, then s 9 is infringed. The 'intention, motive or purpose...do not carry the matter far [if the act is] inherently or essentially discriminatory': per Lockhart J in Commonwealth of Australia v Human Rights and Equal Opportunity Commission [1993] FCA 547 ; (1993) 46 FCR 191 at 204; Macedonian Teachers' Association of Victoria Inc v Human Rights and Equal Opportunity Commission [1998] FCA 1650 ; (1998) 91 FCR 8 at 26. I regard it as unlikely that the Reserves Act is an 'act' to which s 9 is applicable. This is because s 10 expressly addresses the effect of a law or a provision of a law. Construing s 9 in that context shows that s 9 is directed to actions of persons, in contrast to enactments. That is because I have earlier concluded that the rights in relation to management and ownership of property which the applicants claim and which the SVC had (namely, the care, control and management of the Reserve) do not have the status of human rights or fundamental freedoms. Specifically they are not human rights in relation to the ownership of property, even understanding those terms in the Convention context. In the event the Reserves Act was an 'act' within s 9 of the RDA and the applicants had rights of management and ownership, the apparently disproportionate impact on them would not have given rise to relevant indirect discrimination because it is only in the circumstances of s 9(1A) of the RDA that it can arise and that section is not relied upon by the applicants. The applicant also contends that to the extent the LAA in ss 46 and 50 purported to permit the revocation of the vesting order which vested a legal estate in the SVC, it comprised an arbitrary deprivation of the property interests of the applicants as Aboriginal inhabitants and members of the SVC and was invalid pursuant to s 109 of the Commonwealth of Australia Constitution Act 1900 (Imp) (the Constitution ) to the extent of its effect on the rights of the applicants because of its inconsistency with s 9 of the RDA. Again I consider it unlikely that s 9 is intended to apply in respect of enactments. In any event, this contention cannot be made out in relation to the deprivation or the existence of property rights. The effect of cl 16 of the transitional provisions of the LAA has been considered in relation to the effectiveness of the 1995 vesting. It applied without involving any distinction, exclusion, restriction or preference. The same reasoning is applicable to the sections relied on here by the applicant. As the evidence has shown, the large number of Aboriginal inhabitants left the Reserve, not as the result of any act of the Administrator, but because of their perception that such an act might be undertaken. Those facts do not enliven the provisions of s 9 in relation to those persons. This is because the section is only applicable when an act is done (and is of the type which involves the prohibited distinction, exclusion, restriction or preference based relevantly on race). The direction of the Administrator of 13 June 2003 directed that certain people (police, security, cleaners and the like) could enter and leave the Reserve for the purpose of assisting him in the performance of his obligations as Administrator. This exercise of the power in s 7 evidences (in the listed persons entitled to enter and leave) a non-discriminatory basis of selection. In its reference to members of ATSIC and to others, the direction applied in that respect to Aboriginal and non-Aboriginal persons in the listed categories. The principal impact of the direction derived from its provision that persons not so listed ('excluded persons') were not permitted to enter the Reserve without the Administrator's express authority. That applied in respect of any person of any race who was outside the Reserve. It was neutral in its terms and applied to the Aboriginal inhabitants as well as the non-Aboriginal supporters who had left the Reserve or to any other person than a listed person. Likewise relevant to the applicant's case on this issue are the written directions of the Administrator made in reliance on s 7(3)(b) of the Reserves Act on 13 June 2003 to Robert Bropho and Iva Hayward-Jackson and the oral exercises to non-Aboriginal non-inhabitants (M/s Jeffery; M/s Davies; and Mr Stratton) to the same effect . However, the exclusionary acts did not in their terms involve a distinction, whether based on race or otherwise. The acts applied to all persons in relation to their entering the Reserve. (ii) There was no distinction based on race involved in the acts of the Administrator giving notice (written or oral) to the persons who remained on the Reserve on 13 June 2003. The notice was given to Aboriginal and non-Aboriginal persons alike, both resident and non-resident. (iii) The effect of the acts was to nullify the enjoyment on an equal footing of the human right of freedom of movement and residence of all those to whom the acts of the Administrator applied. The objective was to do so in order to remove the effects of the SVC and the associated community upon the persons whose rights had been adversely affected. (iv) The act of the Administrator in excluding persons from the Reserve impacted disproportionately upon the Aboriginal inhabitants. This is so because the Reserve had been their place of residence. However, for reasons given earlier, under s 9 of the RDA considerations of indirect discrimination are confined to application in the circumstances addressed in s 9(1A) of the RDA which is not relied on by the applicant. Therefore no conclusions can be drawn in this instance of discriminatory character of the acts from disproportionate impact on the Aboriginal inhabitants in these circumstances. There is no relevant act in the evidence by which the right to equal treatment before tribunals was the object of such action. Consequently no inconsistency with s 9 can be made out. To establish a breach of this right under s 9 it is not enough that there are actions which might arise under s 7 of the Reserves Act in relation to which s 11 of the Reserves Act precludes equal treatment before tribunals. The inconsistency to which s 9 directs attention is between one involving a racial distinction which itself nullifies or impairs the right to equal treatment before tribunals. It is s 11 which arguably does that rather than any act, so that the relevant inconsistency (if any) is arguable only in relation to s 10 of the RDA where the effect of a law or a provision of a law is material. It remains to consider those acts in relation to the justificatory considerations referred to below. It is agreed that, if the Administrator breached s 9 of the RDA, the first and second respondents would be vicariously liable for the acts of the Administrator. The applicant argues that the Administrator refused to permit the applicants to occupy the Reserve by directing some of them to leave the Reserve and directing all persons, including all of them, not to enter the Reserve and did so 'by reason of their race'. She also contends that the right to occupy the Reserve was only accorded to Aboriginal inhabitants by the terms of the reservation. Her argument is that the refusal to permit the applicants to occupy the Reserve effected by directions under the Reserves Act affected only the rights of Aboriginal persons and so operated by reason of their race: Mabo [1988] HCA 69 ; 166 CLR 186 and Ward 213 CLR at [105]. The effect of the Administrators' direction of 13 June 2003 in excluding all persons from the Reserve amounted to a refusal to permit a person to occupy land or residential accommodation because it excluded the Aboriginal inhabitants. Was it 'by reason of the race' of the Aboriginal inhabitants? The weight of the evidence is heavily against a finding that the Administrator did so 'by reason of' the race of the applicants. His patent reason was to bring about the exclusion of the entire community represented by the SVC from the circumstances considered by the AAPA and Parliament to have been and to be inducive to the loss of human rights of certain women and children resident on the Reserve. The question remains whether the applicants can make out that the acts of the Administrator were 'by reason of' their race because they impacted unreasonably and disproportionately upon them as the Aboriginal inhabitants of the Reserve. Aside from the words 'by reason of', there are no words in s 12(1)(d) inviting examination of a comparison in that respect, such as appear in s 10 of the RDA. The focus of s 12(1)(d) is upon the relevant act of 'refusal' as such. In the absence of any authority, such as the obiter remarks of Tamberlin J in Nguyen 74 FCR 311 in relation to the application of indirect discrimination under s 10 of the RDA, I do not consider it has application to s 12(1)(d). If the position is otherwise, I do not consider the unreasonableness and disproportionality can be made out for the reasons given in Part L below. The applicants do not have a proprietary interest in the Reserve recognised at law (as I have previously found in these reasons). They also have no proprietary right that the law would protect against a trespass. Trespass is a tortious action that came in to being to protect the legal relationships a person has with land. Without a recognisable and definable legal relationship (in this case between the applicant and the Reserve) there can be no trespass by another person for which the applicant can seek relief from the Court. It must be remembered that where a proprietary interest is granted by statute the right or interest created is consequentially limited by that grant. At no stage can it be said that the applicant was granted an exclusive right to possession of the land. The possible exception arises from reasoning Manchester Airport Plc v Dutton [2000] 1 QB 133. This is the same principle as allows a licensee who is in de facto possession to evict a trespasser. It is entitled 'to enter and occupy' (my emphasis) the land in question. The fact that it has only been granted the right to enter and occupy for a limited purpose ...and that...the grant does not create an estate in land giving the plaintiff a right to exclusive possession does not seem to me to be critical. In Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096 ; (2004) 62 NSWLR 534 Barrett J gave extensive consideration to the reasoning of the majority in Manchester Airport [2000] 1 QB 133 . Later cases in which the Court of Appeal's decision has been cited have been disposed of without any need to analyse the reasoning of the majority: see Countryside Residential (North Thames) Ltd v Tugwell (2001) 81 P & CR 2 ; Alamo Housing Co-operative Ltd v Meredith [2003] EWCA 495. That reasoning has, however, been criticised by several commentators: see P Birts, "Trespass and possession: no loosing of the chains" (2000) 144 Solicitors Journal 316; M Wonnacott, "Flawed judgment" (1999) Estates Gazette 165 (Issue 9911, 20 March 1999); E Paton and G Seabourne, "Unchained Remedy: Recovery of Land by Licensees" (1999) Conveyancer and Property Lawyer 535; W Swadling, "Opening the numerus clausus" (2000) 116 Law Quarterly Review 354. To do otherwise would be to fail to accept principles about the nature of trespass to land which are deeply rooted in Australian law and have been recognised by the High Court. The issue that the majority in Manchester Airport Plc v Dutton had with the traditional approach to trespass was some perceived illogical distinction between a licensee in possession and a licensee out of possession. But focus on the licensee's bare rights overlooks the nature of the wrong of trespass and its foundation in possession. A right of possession of the kind enjoyed by a lessee will support an action in trespass. Possession in fact may also be sufficient, at least as against a defendant having no right of possession. Such a defendant, unless entering with the authority of the owner or lessee, may not plead that person's right to possession as a defence and, for that reason, may be unable to resist an action by a plaintiff whose possession is possession in fact only. But possession in fact is by no means the equivalent of occupation, even sole occupation. It may be found to exist where, as Wonnacott put it (see at 562 [102] supra), a person "is, as a matter of observable fact, enjoying the rights and incidents of an estate or interest in land". Mere physical presence or physical use can never satisfy that test. In my view the reliance which the applicant places on the majority reasoning in Manchester Airport [2000] 1 QB 133 finds no support in Australian law and should not be followed here. In the event that the position was to the contrary it would be necessary to consider the effect of s 12 of the Reserves Act. That would on its face preclude review by a court of the actions of the Administrator who acted in good faith in the performance of the functions bestowed upon him by the Reserves Act, subject to the Hickman principle. It would then be necessary to consider a further contention of the applicant that s 12 of the Reserves Act was itself inconsistent with the RDA in so far as it denied the applicants the right to equality before the law. Whether a deprivation is arbitrary will depend on whether the possession or right admits of its deprivation and in what circumstances. Section 9 provided that the exercise of discretion was absolute and not required to be exercised in any particular way. The applicant contends those provisions provide a substantial basis for concluding that the deprivation of the rights to manage and otherwise exercise property rights on the Reserve (and the rights to freedom of movement and to reside within Australia) occasioned by the operation of the Reserves Act was arbitrary. She argues that a decision which prevents a person from exercising property rights is arbitrary in the sense used in Art 17 of the Universal Declaration of Human Rights because when, as in this case, it is without notice, without any hearing or other fair process or any right to compensation for the loss of the right. Likewise, a decision is arbitrary if, as a result of the juxtaposition of the operation of ss 7, 8 and 9 of the Reserves Act, it is not based on some pre-existing criteria which are general in their application and provide an opportunity to comply with those criteria: MacCormick v Federal Commissioner of Taxation [1984] HCA 20 ; (1984) 158 CLR 622 at 639; Dilatte v MacTiernan [2002] WASCA 100. The respondents plead that the deprivation of rights to manage and otherwise own property was not arbitrary because it was reasonable. That leads to consideration of the question whether the enactment of the Reserves Act was a reasonable response to the first respondent's concerns about the management of the Reserve and about unlawful conduct by persons on the Reserve and, as the applicant puts it, interference with the human rights of Aboriginal inhabitants of the Reserve. Section 8, in particular provides for the exceptions to the application of the part of the Act in which ss 9, 10 and 12 appear. It is argued by the applicant it does not permit of what is described as a general ill-defined defence of 'reasonable justification'. If, which the applicant denies, reasonableness is relevant to whether or not a deprivation of property is arbitrary, the test of whether the deprivation was unreasonable is an objective one, requiring the Court to weigh the nature and extent of the discriminatory effect against the reasons advanced in favour of the measure taken: Secretary, Department of Foreign Affairs and Trade v Styles [1989] FCA 342 ; (1989) 23 FCR 251 , per Bowen CJ and Gummow J at 263. But it is necessary to take account of both the nature and the extent of the discriminatory effect of the condition or requirement... and the reasons advanced in its favour. A decision may be logical and understandable by reference to the assumptions upon which it is based. But those assumptions may overlook or discount the discriminatory impact of the decision. She contends the respondents have not pleaded any actual facts as being the reason for the deprivation of property, only pleading 'reasonable concerns'. The applicant's submission is that there is no factual or evidentiary basis upon which the Court could conclude that the deprivation of property was objectively reasonable and not arbitrary. The applicant argues the concerns of the respondents were not reasonable because they were not based upon a reasonable or sufficient inquiry into the circumstances upon which they were based. Reliance is placed in support on affidavits and the evidence given by the deponents in answer to questions in cross-examination which it is said disclose the process by which information was collated in the form of incomplete and second and third hand reports and conjecture and linking of events to the SVC which had no relevant connection to the manner of management of the SVC or, in some cases, even to the Reserve, in order to arrive at the concerns expressed. The affidavits are those of Caroline Brazier, Roland Bayman and David Pedler. The applicant states that the evidence of Caroline Brazier and Roland Bayman confirmed that the Government had no evidence to support assertions that (i) residents were not free to access government services, (ii) intimidatory tactics prevented the reporting of incidents, or (iii) communication between children and women and government officers was being hampered by the community management. On the contrary, it is argued they conceded in evidence that residents had access to government services which they chose to access, that government agencies had access to the Reserve and that there were only issues of contention concerning access by officers of one office out of several of the DCD (i.e., Midland) and one medical service (the AMS) as a result of historical events which had caused the SVC members to lose faith in the nature of the service provided to the Community by that particular office and service. This is said to be confirmed by the Draft Report on Service Provision to the SVC of the Working Group of April 2003 (exhibit P80) which reported in detail on the provision of services by relevant Departments. These are detailed in attachment 1. Most departments have developed, or are developing agreed protocols with the management of SVNC for individual services. There is some doubt that continuing the current levels of time consuming negotiations with camp management for access to residents or cooperation in collaborative approaches would result in the effective levels of access or cooperation required. Here reliance is placed on the affidavits of Margaret Jeffery, Bella Bropho, Denise Sambo, Sharon Davies, Dorothy Bropho, Naomi Bropho, Charlotte Bropho, Paul Allardyce and Tina Jackson. The applicant also contends that there is no evidence that access and residence on the Reserve was 'restricted' to Robert Bropho and his family. It is said the evidence is that the Aboriginal inhabitants of the Reserve, at least in recent times, were largely persons who were part of or affiliated with the Bropho family. That does not result in any conclusion that the Reserve was not managed for the benefit of the Aboriginal inhabitants. Aboriginal people are at liberty to choose to live on any of the many reserves set aside for the use and benefit of Aboriginal people throughout the State. It is hardly surprising that Aboriginal people, in exercising that liberty, may tend to inhabit reserves where others with whom they are affiliated reside. The applicant's submissions continue by stating there is no evidence that the SVC did not take all reasonable steps within its power and capacity to manage the Reserve for the benefit of Aboriginal people. The fact that Aboriginal inhabitants of the Reserve suffered significant adverse social circumstances resulting in substance abuse, deaths and criminal activity on the Reserve was not as a result of any failure of the SVC to take all reasonable steps within its power to manage the Reserve for the benefit of Aboriginal people. Furthermore it is argued there was no evidence from which to draw the conclusion that anything which the SVC did or failed to do caused or contributed to any of the deaths on the Reserve. One of the deaths (Arthur Edward Bropho) relied on by the respondents did not occur on the Reserve. It is argued that the death of Susan Taylor on the Reserve was fortuitous and could equally have occurred at Herne Hill, where she lived. Morgan Spratt's death was as a result of toluene abuse despite serious attempts by Paul Allardyce, acting on behalf of the SVC to secure a psychiatric hospital placement for him: see the affidavits of Margaret Jeffery and Paul Allardyce and the evidence of Caroline Brazier. Additionally the applicant argues there was no evidence that anything done or not done by the SVC caused or contributed to the commission of criminal offences on the Reserve or condoned criminal conduct among its members. It is said the fact that Robert Bropho and Bella Bropho made it clear in their evidence that they do not accept Robert Bropho's convictions of offences of indecent dealing and that special leave to appeal those convictions is being sought does not detract from that proposition. It is submitted that where individual members of the SVC have committed offences, that may amount to sufficient cause to disqualify such individuals from a management role in the SVC but it is not sufficient cause to justify revocation of the 2002 Management Order in favour of the SVC. Further the applicant says that the DCD and other instrumentalities of Government did not demonstrate that they could have taken any steps which the SVC failed to take to reduce the risk of violence being visited on the inhabitants of the Reserve. Indeed, the evidence of Roland Bayman and Caroline Brazier for the DCD was that there was no assistance which the DCD could offer in relation to the management of toluene abuse, which is acknowledged as one of the highly prevalent and significant root causes of violence and death which occurred within the Reserve. Therefore the applicant says the weight of evidence leads to the conclusion that the management of the SVC did not deliberately or unreasonably frustrate any attempts by government officers to improve the provision of government services to the Aboriginal inhabitants of the Reserve. The applicant accepts it is certainly the case that the SVC did not readily accept government services in whatever form the government chose to deliver them. It accepted services from a range of government agencies, but had a history of having rejected certain services or having put a stop to certain activities by government agents on the Reserve. Its judgment in doing so may have been questionable in certain instances. However, the applicant contends it did not amount to a general frustration of attempts by government officers to improve services to Aboriginal inhabitants of the Reserve. Rather the applicant argues that the SVC (perhaps unlike other Aboriginal communities) sought to engage with the Government in determining the nature and form of services provided. It might be said that an engagement between the service provider and the recipient in fashioning the nature of the service provided is generally a desirable process which would usually result in the service being tailored to better suit the needs of the recipient. The SVC engaged with government services in a manner which kept in mind the need to balance the provision of services with the maintenance of the autonomy and privacy of individuals and the group. For example, there are powers outside of the operation of the Reserves Act for law enforcement officers and the courts to remove persons and prevent them from returning to places where they pose a threat to the safety of women and children ( Restraining Orders Act 1997 (WA), s 13). Those powers can be exercised where there is a demonstrated risk of the kind said to be in issue here. The application of such a measure to any other community group or section of the public would be regarded as a fundamental breach of human rights. It is contended that there is no sufficient reason to view the Aboriginal inhabitants of the Reserve any differently. The applicant says this contention completely disregards the basis upon which an interlocutory injunction might be granted. It fails to take into account the fact that an interlocutory injunction would not be granted unless the balance of convenience favoured it. It accords no credit to the capacity of the judicial process to balance the risk to which women and children might be exposed with any potential loss of property rights in determining whether or not an interlocutory injunction ought to be granted. It created powers in the agent of the State instrumentality to direct persons including the Aboriginal inhabitants to leave or not enter the Reserve and denied natural justice and judicial review to those persons in relation to the exercise of those powers. The powers in the Reserves Act were then used to make a general direction which had the effect of excluding all Aboriginal inhabitants from the Reserve. It is argued that the effect of that general direction on Aboriginal inhabitants was different from its effect upon others because only the Aboriginal inhabitants used and enjoyed the Reserve as of right and the direction affected the exercise of that right. The submission continues to the effect that the enactment of the Reserves Act grossly exceeded what might have been a response which was reasonably appropriate and adapted or proportional to what can be recognised as a legitimate end, namely, as suggested, protecting Aboriginal persons requiring protection in order to ensure such individual's equal enjoyment or exercise of the right to security of person and protection by the State against violence or bodily harm. The Reserves Act did not in any direct sense address that end or address the cause of any infringement of such rights. She contends its immediate effect was to indiscriminately dislocate a whole community of Aboriginal persons from the security of their homes and the right to freely pursue their economic, social and cultural development: International Covenant on Civil and Political Rights , Art 1. The Reserves Act is said by the State to be justified because it removed any uncertainty as to the power of the management body to remove persons from the Reserve who posed a risk to the safety of women and children on the Reserve. The applicant argues that the difficulty with this justification for the Reserves Act is that the Reserve remains reserved for the use and benefit of Aboriginal people. The applicant contends that the Reserves Act goes beyond the usual provisions of the law and purports to empower an arbitrary exercise of the power of removal, without any reasonable basis being required for its exercise (Reserves Act ss 9 and 10), without recourse to judicial review of such an exercise of power being available (Reserves Act s 11) and without any obligation to accord procedural fairness (s 8). The consequence, it is contended, is that the Reserves Act has an effect upon the Aboriginal inhabitants of the Reserve in exercising their rights as Aboriginal people to use and enjoy the Reserve, which subjects them to a law which operates in a way which no other law operates to deny them rights which apply to other citizens in relation to their ability to exercise those rights over property. In other words, if any other person is threatening a woman or child with violence in a place which the first person has a right to occupy, then that person cannot be removed from the place and prevented from returning without there being a reasonable basis for doing so, a process which is either the subject of a judicial decision or is open to judicial review and the right to procedural fairness in relation to the exercise of the power. The applicant therefore submits that, in all the circumstances, the enactment of the Reserves Act was not a reasonable response to the identified problem. They claim that while the goal of protection of women and children was undoubtedly a reasonable goal to adopt, the judgment as to the means to be adopted for achieving that goal can be seen, for the reasons expressed above, to be 'manifestly without reasonable foundation': James 8 EHRR at 142. There must be a 'reasonable relationship of proportionality between the means employed and the aim pursued': Mellacher 12 EHRR 391 ; Coleman v Powers [2004] HCA 39 ; (2004) 220 CLR 1 per McHugh J at [100]. Given the concerns, for which the evidence shows there was a foundation, that the SVC was itself an obstacle to the provision of the requisite protection, and given the viability of the alternatives proposed by the applicant, the respondents submit it cannot be concluded that the Reserves Act was disproportionate or unreasonable. The respondents plead in their defence and submit that the identification of the true or actual basis for the operation of a law may be ascertained by the application of the test of reasonable proportionality. That is, if the reason for the treatment of persons of a particular race differently from other persons of other races (if that were found to be the case) is reasonably appropriate and adapted (or proportional) to a legitimate end (i.e. one which is not racially discriminatory) then the difference in treatment cannot be said to be by reason of race and does not itself constitute discrimination. In that context, the freedom from discriminatory burdens of a protectionist kind postulated by s 92 does not deny to the legislature of a State power to enact legislation for the well-being of the people of that State unless the legislation is relevantly discriminatory. Accordingly, interstate trade, as well as intrastate trade, must submit to such regulation as may be necessary or appropriate and adapted either to the protection of the community from a real danger or threat to its welfare or to the enhancement of its welfare. Similarly, they say that for the purposes of s 117 of the Constitution , a law that discriminates between residents of a State would not be unconstitutional provided that it served a legitimate purpose and was 'appropriate and adapted' to that purpose: Leeth v Commonwealth [1992] HCA 29 ; (1992) 174 CLR 455 at 489 (per Deane and Toohey JJ). Where, as here, the underlying legal inquiry is to identify the actual purpose of a particular law or measure, the 'appropriate and adapted test' is employed to assess the 'faithful pursuit of the purpose': Cunliffe v Commonwealth [1994] HCA 44 ; (1994) 182 CLR 272 at 296 (per Mason CJ). In dealing with questions of discrimination generally, the respondents say it is therefore necessary to assess the 'relevance, appropriateness or permissibility' of the basis on which the law operates; but 'questions of degree may be involved' and the particular context in which it arises may also be relevant: Bayside 216 CLR at [40] (per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ). The requirements of this test therefore afford significant discretion to the legislature. There must be a 'reasonable relationship' between the measure and the purpose, but a measure will not be invalid simply because it could be characterised as 'unfair': Minister of State for Resources v Dover Fisheries Pty Ltd [1993] FCA 366 ; (1993) 43 FCR 565 at 575. See also: Gerhardy 159 CLR at 127 per Brennan J; Sportodds Systems Pty Ltd v New South Wales [2003] FCAFC 237 ; (2003) 202 ALR 98 at [29] - [36] in relation to 'discrimination' as used in s 92 of the Constitution ; Lithgow 8 EHRR at [116] and [176]-[177]; Simpson v United Kingdom DR 274 at [7]; and R Dubler, ' Direct discrimination and a defence of reasonable justification ' (2003) 77 ALJ 514 in particular at 526 --- 529. it did not affect the human rights to own and inherit property, if there were such). They argue that if anyone had property in the Reserve by reason of it being a reserve for the 'Use and Benefit of Aboriginal Inhabitants', that property is not owned by the applicants but by all the Aboriginal inhabitants of the State. If the relationship had been one of trust, that beneficial ownership was not affected by a change in the management body (i.e. the trustee). Likewise, the respondents say that even if the applicants were the only persons who came within the class of Aboriginal inhabitants, the change in management body still did not affect their beneficial ownership. Further the respondents contend that if the applicants claim property by reason of their membership of the management body for the Reserve (the SVC), the nature of that property was such that it was inherently susceptible to removal in the public interest so that its removal in the public interest does not constitute a deprivation of property. Thus in Minister for Primary Industry and Energy v Davey (1993) 47 FCR 151 the Full Court held that an amendment to the Northern Prawn Fishery Plan (NPF Plan) which reduced the amount fishing licence holders could catch, was not an acquisition of property. The making of such amendments is not a dealing with the property; it is the exercise of powers inherent at the time of its creation and integral to the property itself. The respondents contend that in all the circumstances the Reserves Act was a reasonably appropriate and adapted response to the respondent's reasonable concerns in that: (a) the 2002 Management Order did not result in the applicants managing the Reserve for the benefit of Aboriginal people as anticipated by the first respondent. The applicants continued to fail to address the concerns of the first respondent regarding the management of the Reserve; (b) revocation of the 2002 Management Order otherwise than by the Reserves Act could have resulted in a person challenging the validity of the revocation under the LAA and seeking an interlocutory injunction preventing a change in the management of the Reserve, thus leaving at risk the safety of women and children on the Reserve; (c) the Reserves Act removed any uncertainty concerning the power of the management body to remove persons from the Reserve who posed a risk to the safety of women and children on the Reserve. Caroline Brazier stated that her advice to Government during March to June 2003 was that action needed to be taken to change the management of the Reserve, in order to better protect the safety of women and children associated with the Reserve. In giving that advice, she was aware that child abuse, violence and intimidation were not restricted to the SVC. However Ms Brazier believed that what made complaints about the SVC different from other Aboriginal or non-Aboriginal communities was the hindering of departmental officers exercising their statutory responsibilities. The SVC was not readily accessible to officers from the DCD and in Ms Brazier's belief this did not change after the Government registered the 2002 Management Order over the Reserve. Ms Brazier gave evidence that her advice to the Government to take action to change the management of the Reserve, and her support within the government for the Reserves Bill, was motivated solely by her concerns for the welfare of women and children associated with the Reserve. It had nothing to do with the Aboriginality of members of the SVC. Ms Brazier stated that her actions and advice would have been exactly the same if the persons concerned were non-Aboriginal. Ms Brazier's concerns and those of the Directors General of DOH and DIA were recorded at the time in a draft media release. It was put to Ms Brazier in cross-examination that the media release was drafted with a political motive, but Ms Brazier denied this and said that 'its not often I think that Directors General actually join in one voice about an issue and this was an issue we believed of sufficient import to do that in relation to, that was our motive'. Her compelling evidence and demeanour in re-examination spoke eloquently of her sincerity in this regard. In his oral evidence Grahame Searle stated that the Reserves Act was enacted because the Premier and the Government were concerned that they were unable to guarantee the safety of the people residing on the Reserve and the actions available to them under the LAA to revoke the Management Order held by the SVC would result in unnecessary delay. In Mr Searle's view the decision to enact the Reserves Act 'was made in the public interest and was the right decision ... [t]he Parliament of the day made a decision that that was an appropriate thing to do'. Lynsey Warbey gave evidence that the focus in Government was always, and only, on protecting the women and children associated with the Reserve from intimidation, physical violence and sexual and emotional abuse and the need for the Government to take firm action consistent with its commitment that it would act against family violence and child abuse, including in Aboriginal communities. In Ms Warbey's view the outcome of the Reserves Act met her expectations and achieved what she understood to be its purpose, namely to protect the women and children associated with the Reserve from physical abuse and to enable government service providers to work with them. In his evidence David Pedler stated that throughout his involvement in the events leading up to 13 June 2003, and subsequently, he had never seen or heard anything from anyone in Government that suggested the Reserves Act was passed for any reason other than because of concerns for the safety of the women and children associated with the SVC. In Mr Pedler's view whilst other urban Aboriginal communities have similar problems to the SVC, compared to the SVC the residents of other Aboriginal communities generally have open access to government services and do not experience the same degree of domination and intimidation by management as appeared to be the case with the SVC. Consequently it was necessary for the Government to treat the SVC as a special case and no decision has been made by the Government that any other urban Aboriginal community should be closed. The Reserves Bill was also supported by ATSIC who issued a press release supporting the Government's intention to 'close' the SVC, stating that ATSIC did not wish to see claims of racism cloud a very serious issue. The press release also stated that the Reserves Bill was 'about basic human rights and the safety of young Indigenous Australians'. ATSIC believed that the leaders of the SVC had not sought to engage with the Government responsibly to address the issues and had demonstrated that they lacked the necessary leadership to provide a safe living environment for community members. The respondents submit that in all the circumstances the Reserves Act was a reasonable response to those reasonable concerns. They say firstly that the 2002 Management Order had not resulted in the applicants managing the Reserve for the benefit of Aboriginal people. That is, there was evidence that the applicants continued to fail to address the concerns of the first respondent regarding that management. Secondly, revocation of the 2002 Management Order otherwise than by the Reserves Act could have resulted in a person challenging the validity of the revocation under the LAA and obtaining an interlocutory injunction preventing a change in the management of the Reserve, thereby leaving at risk the safety of the women and children on the Reserve. Thirdly, the Reserves Act removed any uncertainty concerning the power of the management body to remove persons from the Reserve who posed a risk to the safety of the women and children on the Reserve. The respondents also submit that the fact that they could have reasonably responded in other ways does not mean that the approach adopted was not reasonable. The reasonableness of the first respondent's response is also said to be demonstrated by the evidence in relation to the provision of alternative housing. It was generally, and in the respondents' submission, reasonably, agreed within Government that leaving the families to live on the Reserve following the enactment of the Reserves Act was not a viable option because of the risk that the same social problems (including those arising from 'bungeemen' coming onto the Reserve) would continue. However it was also agreed within Government that families would not be moved from the Reserve straight away but that there would be a period of transition after the enactment of the Reserves Act during which time the families' needs and aspirations would be ascertained and they would be relocated to other suitable accommodation. Immediately following the discovery on 4 June 2003 that the women and children had left the Reserve, officers within Government established protocols with the service providing government agencies so that they could keep track of any assistance provided to former residents of the Reserve and so that they could be given priority assistance. In the respondents' submission the relevant government agencies went to great lengths to provide the residents of the Reserve with alternative accommodation in a timely and efficient manner. Between July and September 2003 the first respondent provided emergency accommodation and/or public housing to a number of Aboriginal inhabitants of the Reserve. It is said that the availability of other measures to address the problem is only material to the question of whether a measure is appropriate and adapted where those alternatives are shown to be as efficacious as the impugned measure ( Castlemaine 169 CLR at 476-477 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ). In the present case, although the applicants have proposed alternative measures that the State could have adopted, those measures were not efficacious for reasons which now follow. The respondents submit that utilisation of the criminal law would have been an entirely inappropriate and inadequate response in light of the concerns held by the first respondent. Firstly, the criminal law can only address problems after they have occurred and it may take many years to secure a conviction. In such a circumstance the safety and security of those residing on the Reserve could not be guaranteed. The respondents, in acting responsibly in their duty to protect children and other vulnerable people on the Reserve, could not ignore the substantial body of information addressed above and leave the matter to the workings of the criminal law. Secondly, the applicants, in their affidavit evidence and their oral testimony before this Court, have clearly demonstrated an unwillingness to accept that incidents of violence and abuse have occurred on the Reserve (even when verified by lawful convictions). For example: Thirdly, those who did make complaints of abuse and violence on the Reserve were often intimidated and threatened, leading to any criminal charges that were pressed being withdrawn. Alternatively, the fear of being threatened or intimidated often made it difficult for government officials to pursue their inquiries or provide assistance to those who required it. For example: Fourthly, the respondents say the evidence demonstrates that access to the Reserve by Government was problematic because of the intimidating and obstructionist attitude of the SVC management. The applicants disputed that access to, and residency on, the Reserve was controlled solely by Robert Bropho. Regardless of that dispute, it is clear that the SVC management, including Robert Bropho and his sons Herbert and Harvey, Iva Hayward-Jackson, and other non-Aboriginal supporters including Margaret Jeffery, regulated the conditions of access by government officers to the Reserve and to persons on the Reserve, and that they showed no genuine intention of working with the Government to improve conditions on the Reserve. For example: In the respondents' submission conduct of the applicants reasonably gave rise to a belief on the part of the State that the Reserve had become a closed community. The fact that the applicants may have allowed some particular agencies, or some particular government officials, access to the Reserve does not detract from the veracity of that overall assessment. In the respondents' submission access to the Reserve by government officials was dependent upon whether the SVC viewed the service being provided by the official as a beneficial one. Consequently, whilst DIA had regular contact and access with people on the Reserve for heritage and cultural issues, those departments such as the police or the DCD who were involved in the investigation of violence and abuse on the Reserve were met with obstruction by members of the SVC. Services, such as those concerned with child protection which most people would see as positive services, were not necessarily viewed as such by the community at the time. In circumstances where criminal allegations had been made in relation to certain people in authority on the Reserve it was entirely inappropriate for those same people to control access to the Reserve, or to decide the time, place and manner in which the Government would investigate its concerns or provide services to the most vulnerable members of the Reserve. In such an environment the powers given to government officers to enter the Reserve under the existing laws of the State proved to be ineffective. For example, Caroline Brazier explained that the power to enter private property under the Child Welfare Act was not an appropriate mechanism for accessing the Reserve because the power related to a specific child and the DCD wished to be able to have free access to women and children on the Reserve to form relationships with them. Ms Brazier also explained that children and young people will provide information in certain environments in which they feel safe and in other environments they will retract or not be prepared to talk about those matters. Accordingly, reliance upon the provision of the current criminal law was an inadequate response in light of the reasonable concerns held by the respondents. The respondents say that in circumstances, such as those detailed above, where the Government held grave concerns for the safety of women and children resident on the Reserve and where the SVC was unwilling to engage with local service providers and allow them access to residents of the Reserve, there is no reason to believe that a MOU would have proved effective. The issue of a MOU detracted the attention of the SVC away from the provision of basic local services to members of the Reserve, which was the State Government's priority. The broad policy and governance issues sought to be raised by the applicants for inclusion in a MOU did not adequately address the more pressing concerns of the Government in relation to the safety of women and children on the Reserve. This in turn includes, particularly in cases of alleged indirect discrimination, regard being had to the proportionality of the matter in question. The authorities cited in the submissions of the respondent on the present issue along with those considered in the consideration earlier in these reasons of the nature of discrimination provide the necessary support for this view. It must be accepted, as the applicant submits, that the measures provided for in the Reserves Act and the implementation of them were far-reaching and beyond what may have been the usual response to issues involving the legal and human rights of women and children. The question whether they were disproportionate and thus unreasonable must be considered objectively in all the circumstances. The starting point in the evidence is the availability of alternative measures. It is quite clear that the alternative of a memorandum of understanding had not worked in the circumstances. It was a principal objective of the 2002 Management Order, which had been introduced with a view to advancing the recommendation of the Gordon Inquiry to that end. It had not elicited a response from the SVC addressing the matters requiring attention in such a memorandum so that no understanding had been reached. As to the criminal law, the respondents' submissions are powerful and are supported in the evidence. The submission answers the applicant's submission that the criminal law was a reasonable alternative. Additionally, it is not the case that the existence of a judicial discretion to grant or refuse an application for injunctive relief is a reason why that remedy may not have been an obstacle to the introduction of measures of reform to the Reserve. It was the fact that the remedy could have led to the grant of an injunction in circumstances where the condition of some women or children required immediate assistance that presented an obstacle in the circumstances. There were two further factors of considerable significance. The Aboriginal inhabitants were not resident on private land owned by them. They were resident on a public reserve for which the Minister under the LAA had responsibility to see was well managed by the appointment of an appropriate manager. In the absence of a negotiated solution being found and/or of the criminal law to provide the protection required for vulnerable women and children, there were no other available remedies to provide that protection. Additionally, the vulnerable women and children were among Aboriginal inhabitants of a community charged with the management of the Reserve, in relation to which the view had been reasonably (that is, based on evidence) formed was a dysfunctional community unable to provide the necessary protection either immediately or in the longer term. The evidence showed that the view had been formed that the SVC through some of its members had become the leader of a closed community, impervious to any of the measures taken to alleviate the position of women and children on the Reserve who alleged their human and other rights were in jeopardy. It is only in that context that the choice of the remedy of closing the community at Lockridge can be understood. Such closure would not necessarily be a course to be embarked upon in other circumstances. The choice of that course is a measure of the sense of despair by those in authority at their inability to address and alleviate the occurrence of conduct gravely affecting women and children on the Reserve. It is in these circumstances that the objective finding of the reasonableness and proportionality of the Reserves Act must be made. What else could a responsible government have done in the circumstances? In my view, despite the unusual and far-reaching character of the measure, the enactment of the Reserves Act and the actions taken under it must be found to have been both reasonable and proportionate. In reaching that view it should be stated, as has been stated in other sections of these reasons, it is not for the Court to rework or remake the decisions of Parliament and Government. The function of the Court is confined to whether, in all the circumstances, it was objectively reasonable for certain actions to have been taken. That requires the Court being satisfied that there was a foundation in fact for the decisions made, not that those decisions were, in the view of the Court, the best ones to have been taken at the time. If there was a foundation so that the decisions were reasonable, it is for Government to decide the course of action. I consider there clearly was such a foundation. It is not to the point that there may have been other views to have been taken of the evidence if in fact the evidence at the time provided a foundation for the action which was taken. WAS ANY DEPRIVATION NOT ARBITRARY BECAUSE THE ENACTMENT OF THE RESERVES ACT WAS IN THE PUBLIC INTEREST? They say that a deprivation of property in the public interest cannot be characterised as arbitrary. The applicant argues that there was no reasonably identified public interest in enacting the Reserves Act. She accepts the Second Reading Speech in relation to the Reserves Bill identified the public interest in and the 'fundamental responsibility of the Western Australian Government to provide a safe and secure environment for all its citizens, particularly its children'. While that is a reasonable objective, it is submitted the Reserves Act did not contribute to the provision of such an environment. It is said by the applicant that the action taken was not reasonably connected to the stated public interest. Rather it had the opposite effect of dislocating citizens from their homes. It did not provide any safer environment. The evidentiary base on which this issue arises is that already set out in relation to proportionality, reasonableness and legitimacy. Weighing the evidence upon which the applicant relies in the context of the evidence on which the respondents rely, it is apparent that the applicant's contentions that there was no public interest involved in the enactment of the Reserves Act cannot be upheld. The purpose of the leading players in the enactment was entirely one of public interest, namely, the safety of women and children. It is not for the Court, by reference to the evidence upon which the applicant relies on this issue, to rework the exercise of discretions made by the witnesses as parliamentarians or senior public servants in determining where the public interest lay. Not only did they think that the Reserves Act was in the public interest, but there was evidence upon which they were entitled to rely to reach that view. In reaching this view I take into account the authorities previously set out in relation to whether the 2002 Management Order was in the public interest concerning the scope at law of the phrase 'in the public interest'. As has earlier been set out, a special measure is one 'taken for the sole purpose of securing adequate advancement of certain racial or ethnic groups or individuals requiring such protection as may be necessary in order to ensure such groups or individuals equal enjoyment or exercise of human rights and fundamental freedoms' (Convention, Art 1(4)). The Convention provides that such a measure shall not be deemed racial discrimination provided that it does not, as a consequence, 'lead to the maintenance of separate rights for different racial groups and that they shall not be continued after the objectives for which they were taken have been achieved. ' Section 8(1) provides that Pt II does not apply to, or in relation to the application of, special measures other than measures to which s 10(3) applies. It is to be noted that a special measure may be for the advancement not only of racial or ethnic groups but also of racial or ethnic individuals. Aboriginal women and children inhabiting the Reserve) requiring such protection as may be necessary in order to ensure those individuals' equal enjoyment or exercise of human rights and fundamental freedoms i.e. the human right in Art 5(b) of the Convention - the right to security of person and protection by the State against violence or bodily harm, whether inflicted by government officials or by any individual, group or institution. The respondents submit that in all of the circumstances detailed above the respondents held, and were justified in holding, concerns regarding the safety of women and children residing on the Reserve, including concerns that: (a) the applicants were not managing the Reserve for the benefit of Aboriginal people by reason that access to and residence on the Reserve was restricted to Robert Bropho and members of his family and persons associated with them and that attempts by government officers to improve the provision of government services to the Aboriginal inhabitants of the Reserve were frustrated by the management of the SVC; (b) unlawful conduct was occurring on the Reserve including substance abuse, that persons residing or visiting the Reserve, especially women and children, may be assaulted, including indecently assaulted and sexually assaulted and may attempt suicide; and (c) the human rights of Aboriginal inhabitants of the Reserve may be interfered with, including that some Aboriginal inhabitants, especially women and children may be subjected to physical and sexual abuse and intimidation, contrary to their human right to security of person and denied assistance by government service providers, contrary to their human right to protection by the State against violence or bodily harm. Drawing from the jurisprudence concerning constitutional facts, Gibbs CJ held that 'the fact must be ascertained by the court as best it can, when the court is called upon to pronounce upon validity' and that in doing so the Court may have regard to material before it and to facts that are notorious (at 87-88). 1.4 is whether it embraces a legislative measure such as the State Act, the object of which is to vest in a body corporate for the benefit of the people of a particular race or races, title to land with which they have been traditionally associated, the title being inalienable and access to others being restricted. In considering this question we need to recall that the object of legislation of this kind is not merely to restore to an Aboriginal people the lands which they occupied traditionally, but also to provide that people with the means to protect and preserve their culture. So much is made clear in the case of the State Act by the Minister's Second Reading Speech on the introduction of the Bill in the South Australian House of Assembly: Hansard, House of Assembly, 23 October 1980, p 1387. ' (Emphasis added. In his speech, the Premier refers to the extensive discussions and negotiations with the Aboriginal leaders of the relevant tribes that preceded the preparation of the Bill. The result is a measure directed to securing for the Pitjantjatjaras such advancement as will enhance their capacity to experience the full and equal enjoyment of human rights and fundamental freedoms. From the terms of the Act and those facts which, upon the evidence or otherwise, the Court is entitled to take into account, I am of the view that it is a conclusion which the legislature might properly have reached. ' (Emphasis added. When the character of a measure depends on such a political assessment, a municipal court must accept the assessment made by the political branch of government which takes the measure. It is the function of a political branch to make the assessment. It is not the function of a municipal court to decide, and there are no legal criteria available to decide, whether the political assessment is correct. The court can go no further than determining whether the political branch acted reasonably in making its assessment. That dicta was not supported by the other justices and is not consistent with the general principles expressed in the case. The respondents say that in the present case, the beneficiaries of the measure are, in particular, the children who lived in the Reserve. Ascertaining the wishes of these children was problematic, in significant part due to the difficulties in obtaining access to those children. In such circumstances, they argue it would defeat the purpose of the RDA and the 'special measure' provisions were the wishes of the adult members of the SVC, including those responsible for the violence and abuse that occurred on the Reserve, to be determinative. This submission does not address the fact that the beneficiaries of the measure were also expressly stated to be the women who lived on the Reserve, who were subjected to physical and domestic abuse. A large number of these women did not agree with the enactment of the Reserves Act and indeed presented a open letter to the Premier to that effect, stating that they were 'completely free' to act as they wished. If the above dicta by Brennan J was to be given weight, a consideration of the wishes of the women might suggest that the measure was not to be taken for the purpose of securing their advancement. However, as the dicta of Brennan J in this respect has no apparent judicial support, I cannot place weight on that aspect of his reasoning. The views expressed in Gerhardy [1985] HCA 11 ; 159 CLR 70 as to the significant weight that is to be given to the judgment of the elected government as to questions of policy are consistent with general legal and constitutional principle and with the position under international conventions: James 8 EHRR at [46] the European Court of Human Rights considered the meaning of the sentence: 'No one shall be deprived of his possessions except in the public interest', in Art 1 of Protocol No. 1 to the European Convention on Human Rights. In particular, as the Commission noted, the decision to enact laws expropriating property will commonly involve considerations of political, economic and social issues on which opinion within a democratic society may reasonably differ widely. The Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislature's judgment as to what is 'in the public interest' unless that judgment be manifestly without reasonable foundation. Against the background of this authority, it is apparent the Court must objectively determine whether the Reserves Act was solely a protective measure of the required type when it was made. The applicant accepts the first respondent's enactment of the Reserves Act on the basis of a concern in relation to possible breaches of human rights is a matter which the Court is entitled to determine as a constitutional fact 'as best it can' from the evidence, including Ministerial statements in the Parliament and the Court's knowledge recognised judicially of the circumstances in which Aboriginal people find themselves generally living on Reserves: Gerhardy 159 CLR at 143. However, she argues an expression of government as to the reasons for introducing legislation into the Parliament does not prevent an objective analysis of the words of the statute so as to determine whether they go beyond a particular purpose: cf R v Toohey; Ex parte Northern Land Council [1981] HCA 74 ; (1981) 151 CLR 170 at 187-188. I accept that although the Court will ordinarily accept the view of the government that a particular measure is taken for the advancement of a disadvantaged group or individuals, that will not be the case where the Court is not objectively satisfied that it was reasonable for the government or legislature to have reached the view which it did. That is, that there is evidence of a proper foundation for the view which government has adopted. It is not for the Court to determine whether the political assessment was correct when made or whether the assessment of disadvantage was in fact fulfilled by the measure adopted. It has already been determined above that the Reserves Act was, in the particular circumstances, objectively to be seen as reasonable and proportionate and hence legitimate. The Premier's Second Reading Speech to the Reserves Bill stated 'there is only one course of action that will secure for the children and women of the Swan Valley Nyungah Community the protection and safety they deserve and halt the cycle of abuse and violence; that is, the current management order must be revoked, and the Swan Valley reserved be vested in the Aboriginal Affairs Planning Authority...'. He referred to 'systemic sexual and physical abuse, substance abuse, family violence and intimidation that has occurred' and the fact that 'grave concerns continue to be held about the safety of children and women living in the Swan Valley Community'. The evidence on this has been set out more fully under general findings of fact. The applicant submits that no objective analysis of the Reserves Act could reach the conclusion that it constituted a 'special measure' of the kind contemplated by Art 1(4) of the Convention. It is contended by the applicant that the Court might find that, although the first respondent's concern about the human rights of Aboriginal inhabitants of the Reserve to be secure in their person was genuine, it was not a reasonable response to enact the Reserves Act, revoking the 2002 Management Order which was in favour of the SVC. The respondents argue that it is notorious that Aboriginal people are a disadvantaged group and that one of the ways in which this disadvantage manifests is violence and substance abuse, with a particular effect on children. They say the Government acted for the advancement of this community in this respect and the Court should accept the Government's determination that this was an appropriate policy measure. Close attention must be given to the evidence considered under the headings 'was any deprivation not arbitrary because it was reasonable? ' and 'was any deprivation not arbitrary because the enactment of the Reserves Act was in the public interest? ' appearing above. That examination makes apparent that there was evidence upon which the Government could rely as a foundation for the view which it formed. As has there been found, it cannot in those circumstances be concluded that the view of Government and then of Parliament was unreasonably held. It follows in accordance with authority that I should accept the view of Government that the Reserves Act was enacted for the sole purpose of the advancement of a number of disadvantaged individuals, namely some Aboriginal inhabitants of the Reserve who were women and children. Consequently the proviso in Art 1(4) of the Convention does not have any application. This has the consequence that even if I were to conclude that the Reserves Act was in some way racially discriminatory because of an inconsistency with ss 9 or 10 of the RDA, the Reserves Act would be upheld as valid in the inconsistent respect because it qualifies as a special measure. For reasons which now follow, the exception in s 10(3) is not applicable. It is agreed that the Reserves Act prevented or restricted the applicants from terminating the AAPA's management of the Reserve (s 10(3)(b) of the RDA). The applicant argues that the Reserves Act is invalid by reason of inconsistency with ss 10(3)(a) and (b) of the RDA. It is said the public interest which the respondents assert in revoking the 2002 Management Order in favour of the SVC does not eliminate the effect of the Reserves Act in denying or limiting the enjoyment by the applicants of their human rights on an equal footing with persons of another race, taking into account the effect which the Reserves Act had on the exercise of those. As I have already determined, the applicants had no right of ownership over the Reserve nor did they have a human right to that effect. As s 10(3) clearly relates to a situation whereby the property in question is owned by an Aboriginal or Torres Strait Islanders, then it is plain that the claims of the applicant in this regard cannot succeed. Were this not the case the respondents would contend that s 10(3) of the RDA does not apply where the provisions in question (being the provision in ss 4 and 5 of the Reserves Act which authorises property owned by an Aboriginal to be managed by another person without their consent) applies to persons generally without regard to their race, colour or national or ethnic origin. I have already determined that if the applicants had property in the Reserve as Aboriginal inhabitants of the Reserve then ss 46 and 50 of the LAA inherently provided for that property to be managed by a management body chosen by the Minister, and that applied generally to all reserves (and therefore to persons generally, without regard to race). Hence it is argued s 10(3) has no application. If the applicants had property in the Reserve as members of the SVC the respondents would contend s 10(3) of the RDA can have no application because, on their own case, the Reserves Act did not result in that property being managed by other persons; rather they say the removal of the SVC as management body deprived them of the property altogether. As I consider the sub-section cannot apply, consideration of these additional arguments is unnecessary. However the fundamental difficulty with the claim as I apprehend it is that it does not have a foundation of a right to property in domestic law or a human right to the ownership of property. What the applicants had in relation to the Reserve was the care, control and management under the 2002 Management Order. In my view examination of the nature of that right discloses that it is not enough to sustain the claims which have been brought. Even if that seminal difficulty could be overcome, I do not think that the applicant has made out a case that the Reserves Act or actions taken under it were 'by reason of' race or involved a distinction, exclusion, restriction or preference 'based on race'. Additionally I have found that in the circumstances where there were no viable alternatives, the measures adopted were, although unusual, reasonable and proportionate. Further it has been established that the Reserves Act and the actions were taken for the sole purpose of securing adequate advancement of individuals requiring such protection to ensure equal enjoyment of human rights and fundamental freedoms and so was a special measure to which ss 9 and 10 of the RDA do not have application. Accordingly, for the above reasons I consider the claims should be dismissed. I certify that the preceding five hundred and eighty-nine (589) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | reserve for the use and benefit of aboriginal inhabitants vested in aboriginal corporation vesting revoked land area of reserve increased and reserve re-vested in the same corporation vesting transmitted to 1998 management order by legislation alleged misconduct on the reserve public inquiries into such conduct 2002 management order replaces 1998 order alleged continuance of misconduct on reserve safety of women and children said to be at issue enactment of reserves act purporting to (1) revoke 2002 management order; (2) place care, control and management of the reserve in the aboriginal affairs planning authority; (3) authorise administrator to take actions with respect to vacating and occupancy of reserve; (4) exclude rules of natural justice in relation to administrator's directions; (5) provide immunity from judicial supervision of decisions of administrator; (6) provide protection from liability whether 2002 management order invalid for statutory non-compliance whether any inconsistency of reserves act with ss 9 or 10 of the racial discrimination act rights to equality before the law whether applicants have a right to manage and otherwise exercise statutory ownership rights whether applicants have a human right of ownership of the reserve under that legislation was there a lack of enjoyment by the applicants of such rights by reason of their race whether rights arbitrarily deprived whether applicants' right of freedom of movement and residence within the borders of the state deprived whether any such deprivation arbitrary whether applicants deprived of right to equal treatment before tribunals whether applicants deprived of possession whether applicants deprived of right to participate in public affairs whether justificatory contentions applicable whether enactment reasonable, proportionate and legitimate whether reserves act a special measure whether any act done involving a distinction, exclusion, restriction or preference based on race having the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise on an equal footing, of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life whether any act depriving applicants of right to manage and otherwise exercise ownership rights in relation to the reserve whether any such deprivation arbitrary whether any deprivation of applicants' right to freedom of movement and residence within the borders of the state whether any such deprivation arbitrary whether any act in relation to applicants' right to equal treatment before tribunals or right to participate in public affairs whether justificatory contentions applicable whether enactment reasonable, proportionate and legitimate whether a special measure whether acts of administrator contravened racial discrimination act whether acts contravened provisions relating to land, housing and accommodation trespass whether applicants deprived of possession commonwealth of australia constitution act 1900 (imp) ss 92, 109, 117 racial discrimination racial discrimination racial discrimination racial discrimination tort |
Two Australian companies and their director seek leave to serve an application out of the jurisdiction on two English companies. That is not unusual. What is unusual is that the application they wish to serve in England is an application for preliminary discovery pursuant to O 15A of the Federal Court Rules . It is not in terms limited to documents within Australia. Indeed, it is apparent from the evidence before the Court that the bulk of the documents sought are likely to be found in England and not in Australia. 2 The events which have led to this application began with the development, by a West Australian Mr Alan Burns, of a new form of marine propulsion system. The principal elements of the system were described in a Provisional Patent Application PQ8024 filed in the Australian Patent Office on 7 June 2000. The invention was said to have been devised particularly, although not solely, as a propulsion system for propelling watercraft. It relied upon the expulsion of a jet of water from an outlet to propel watercraft in the opposite direction. It could also have other applications including the pump-like propulsion of a stream of water such as in fire fighting hoses. A claimed advantage of the invention over existing water jet propulsion systems was that it did not require the use of an impeller driven by an internal combustion engine. That system was said to involve cavitation and other efficiency limitations and to involve loss of heat energy. 3 As described, in one of its aspects, the system has an intake connecting with a source of "working fluid" (the water in which the boat floats) and an outlet through which that water is propelled. It provides a means for introducing a jet of "driving fluid" into a mixing zone in a flow direction towards the outlet. The interaction between the driving and working fluids generates a pressure reduction which causes the working fluid to be drawn from its source (the water in which the boat floats) and propelled to the outlet. The driving fluid is typically a gas at high temperature such as steam or the exhaust gases from an engine or a combination of those things. Compressed gas, high pressure water or hot water or any combination of them could also be used. Where the working fluid is aerated by the driving fluid then the density of the two phase mixture is reduced. This was said to assist the transfer of the working fluid towards the mixing chamber. 4 Provisional patent applications for related inventions were filed by Mr Burns in February 2001. They represent various elements of a marine drive unit. 5 Companies set up by Mr Burns, Carnegie Corporation Limited (Carnegie) and its subsidiary, New Millenium Engineering Pty Limited (NME) made an agreement in September 2000, providing for the assignment of intellectual property rights associated with his technology to an English company, Pursuit Dynamics Plc (Pursuit Dynamics). The agreement provided, inter alia, for the ongoing payment to NME by Pursuit Dynamics of a royalty of 1% of revenue derived from exploitation of the technology. On its face the agreement conferred royalty rights in respect of the exploitation of widely defined "improvements" to the technology. Variation agreements made in March and June 2001 related to the restructuring of Pursuit Dynamics and the setting up of Pursuit Marine Drive Limited (Pursuit Marine) as its holding company. 6 Carnegie and NME complained to Pursuit Dynamics that it and Pursuit Marine had lodged patent applications and licensed associated rights to third parties without accounting for the revenue generated from those activities on which royalties may have been payable under the agreement. Pursuit Dynamics and Pursuit Marine responded that the subsequent technology which they have developed and licensed falls outside the scope of the agreement with Carnegie and NME. They say they are not liable to pay royalties in respect of that exploitation. 7 Carnegie and NME evidently do not feel they have sufficient material upon which to determine whether they have a reasonable cause of action against Pursuit Dynamics or Pursuit Marine. They seek preliminary discovery against them in order to decide whether or not to commence proceedings and against whom. But Pursuit Dynamics and Pursuit Marine are English companies and have not submitted to the jurisdiction of this Court in respect of the application for preliminary discovery. They maintain, for a variety of reasons that such an application could not succeed. They say that the agreement is explicitly governed by English law and that an arbitration process precludes resort to litigation. They also contend, as a matter going to discretion, that the law of the United Kingdom precludes the use of Letters of Request in aid of the enforcement of discovery orders in that country. 8 Although Pursuit Dynamics and Pursuit Marine have not submitted to this jurisdiction they have sent a letter to the Court through their solicitors outlining their contentions. In the meantime, notwithstanding their invocation of the arbitration clause against Carnegie and NME, they have commenced proceedings in the Chancery Division of the High Court of Justice in England (Patents Court) seeking declarations as to the proper construction of the agreement made in September 2000 and subsequent variations in March and June 2001. Whether the Court's power to give leave to serve originating process out of the jurisdiction extends to this application. 2. Whether there are discretionary considerations relevant to the grant of such leave independent of the merits of the application for preliminary discovery. B. The Option thus granted involved four steps designated Stage 1, Stage 2, Stage 3 and Stage 4. The Stage 1 Option appeared to involve the provision by NME of all information reasonably required by Pursuit Dynamics and all reasonable assistance in order to enable it to continue with its due diligence into the Project. Pursuit Dynamics undertook to expend a minimum of UK[sterling]100,000 on research and development work on the Project within six months of the exercise of the Stage 1 Option. 12 The Stage 2 Option was available at any time up to the expiry of six months following exercise of the Stage 1 option and the expenditure of not less than UK[sterling]100,000. Under the Stage 2 Option NME undertook to assign to Pursuit Dynamics a half share (as tenant in common) of all NME's legal and beneficial interest in the Intellectual Property. Pursuit Dynamics undertook to expend a further minimum UK[sterling]500,000 on research and development within 12 months from the exercise of the Stage 2 Option. Carnegie shareholders were to receive, as at the date of exercise of the option on a pro rata basis, shares in Pursuit Dynamics equivalent to a 10% interest in it. 13 The Stage 3 Option arose after the expenditure of UK[sterling]500,000 pursuant to the Stage 2 Option. Under the Stage 3 Option Pursuit Dynamics would issue Carnegie shareholders shares in Pursuit Dynamics equivalent to a further 10% interest in that company and would pay to Carnegie UK[sterling]150,000. NME would assign to Pursuit Dynamics the balance of all of its legal and beneficial interest in the Intellectual Property. Stage 4 provided that upon the acquisition of all of Carnegie's interest in the Project, Pursuit Dynamics would then solely fund it to commercialisation. There was a royalty provision in cl 10 which provided that Pursuit Dynamics would pay to NME a royalty of 1% of revenues. 14 There was provision for the calculation of royalties. Pursuit Dynamics was required to determine the amount of royalties on an interim basis from the revenue figures in their management accounts for the relevant period (cl 11.1). A final amount was to be calculated from the final audited annual accounts for the relevant auditing period. Pursuit Dynamics was also required under cl 11.8 to keep, during the term of the agreement and for seven years after the end of the relevant accounting period "proper, complete, full and accurate records of matters relevant to the calculation of royalties at least as are reasonably necessary to verify the calculation of royalties hereunder". There was provision in cl 11.9 for NME to inspect such records by an independent auditor for the purpose of verifying the royalty calculation. 15 There was a dispute resolution provision in cl 17 which required the parties to first use all reasonable endeavours to resolve disputes or differences "arising out of or in connection with this Agreement". If they could not settle the dispute then any party had a right to give one month's written notice that the matter should be referred to arbitration. This provision did not mandate arbitration but simply gave a right to refer a matter to arbitration. It does not appear that any written notice was given in this case. Indeed, Pursuit Dynamics has resorted to court action. There was no definition "above" or anywhere else in the agreement. Pursuit Marine was then intending to make an application for its ordinary share capital to be admitted to trading on the Alternative Investment Market of the London Stock Exchange. Immediately prior to that application its brokers Numis Securities Ltd were to have used their reasonable endeavours to procure that investors subscribe for shares in Pursuit Marine under a Placing Agreement. It was then intended that all of the issued shares in Pursuit Dynamics would be exchanged for the same number of shares in Pursuit Marine. The variation was designed to take account of that restructuring arrangement. Carnegie was to receive the same percentage holding in Pursuit Marine as it had in Pursuit Dynamics. There were other variations which are not material for present purposes. Although it appears to be assumed by all parties that Pursuit Marine was under contractual obligations to Carnegie, NME and Mr Burns like those of Pursuit Dynamics it is not clear when and how that occurred. I will assume in favour of the applicants that that is the case. 22 A second Deed of Variation was recorded in a letter of 27 June 2001 signed by both Pursuit Marine and Carnegie. The changes effected by that deed are also immaterial for present purposes. 23 It appears that the post-September 2000 developments the subject of Provisional Patent Applications by Mr Burns in 2001 will have fallen within the scope of the Intellectual Property of which Pursuit Dynamics had a right to take an assignment pursuant to cl 12 of the Option Agreement. Pursuit Dynamics had responded that it did not believe that its licensing arrangements related to the Invention. Mr Heathcote of Pursuit Dynamics advised Mr Hopkins, the managing director of Carnegie, in May 2005 that preliminary advice received from Pursuit Dynamics' UK patent attorneys was that the new patents did not rely on any of the claims of those acquired from Carnegie and others. It was as if an independent inventor had come up with the developments. As a result Pursuit Dynamics did not believe that the royalty obligation applied. In the event Pursuit Dynamics said it would have its commercial lawyers review the agreements between the parties. This process dragged on for an extraordinarily long time. 25 On 23 May 2005 Mr Heathcote sent an email to Mr Hopkins stating that the royalties due to Carnegie were limited to the invention disclosed in Australian Provisional Patent Application PQ8024, a family member of PCT/AU01/00677 and any improvements and developments of that invention. He referred to a website used by Pursuit Dynamics and a brochure showing how what it called PDX technology worked. Mr Hopkins said in his letter that "this still looks a lot like the technology we sold to Pursuit". He noted that he had had no response from Pursuit Dynamics since that company had agreed to request its commercial lawyers to check the agreements. A number of additional licences had since been issued. He asked that the matter be addressed with some urgency. 27 The materials before the Court include an extract from a share market newsletter of 9 July 2002, published by Numis Securities Ltd which was involved with the Pursuit Dynamics restructuring. It contained an article about Pursuit Dynamics. In that newsletter it was stated that the company was formed in 2000 to exploit innovative pumping technology invented in Australia which has no moving parts in the fluid being pumped. Its flotation in May 2001 raised funds to complete the acquisition of the Intellectual Property from the founder and his backers. Pursuit Dynamics had identified the marine outboard motor as its initial target market. Initial scientific verification was undertaken at independent facilities but since December Pursuit has established its own development facility at Royston, Hertfordshire, in which it has the capability of simulating the movement of the motor through the water in its own customised flume (tank with pumped water flow). Reference was made to the development of a demonstration prototype to be installed in a boat and the development of the pumping technology for additional markets such as the nuclear and chemical industries. There were repeated delays for which Pursuit Dynamics apologised on the basis that it was still awaiting legal advice. Ultimately in April 2006 Mr Gary Pyle, the Chief Financial Officer of Pursuit Dynamics told Mr Hopkins that he and Mr Heathcote had met their lawyers the previous Tuesday afternoon and had been advised to refer the matter to counsel. Further exchanges and a meeting occurred in August 2006 without any resolution. 29 On 23 November 2006 Wright Legal, the solicitors for Carnegie, NME and Mr Burns, wrote to Mr Heathcote. They pointed out that despite numerous requests by Carnegie Pursuit Dynamics had failed to explain or justify its denial of royalty entitlements with respect to applications currently developed by Pursuit Dynamics and its third party licensees. They attached a schedule of patent applications comprising the Pursuit Dynamics portfolio. The subject inventions controlled by Pursuit Dynamics are reflected in the various applications detailed in the schedule as annexed to this letter. documents recording or evidencing revenue derived from the sale or other supply of products or services covered by the Inventions the subject of the Patents, as referred to in clause 10.2 of the Option Agreement and/or the Patent Rights, as referred to in clause 7.2 of the said Agreement. Reference was then made to O 15A rr 3 and 6 of the Federal Court Rules . The solicitors requested a response in writing by 28 November 2006 as to whether Pursuit Dynamics would comply with the request. It does not appear that any reliance was placed upon cls 11.8 and 11.9 of the Option Agreement. 31 Further correspondence was exchanged between the parties which led to Carnegie extending the time allowed for Pursuit Dynamics to reply until 2 February 2007. The fact that Pursuit Dynamics was an English company whose main place of business was in the United Kingdom. 2. The operative agreements governing the contractual relationship between Carnegie and Pursuit Dynamic were subject to English law with an English forum arbitration provision. They also foreshadowed that any application for pre-action discovery under O 15A r 3 and O 15A r 6 would be made on notice and not ex parte. They contended that the existence of the governing law clause and the dispute resolution clause did not constitute an ouster of Federal Court jurisdiction. They repeated the request that Pursuit Dynamics provide details of its nominated legal representative in Western Australia for service of process in the event that it declined to provide the requested documents. 34 On 1 February 2007 without prior notice and notwithstanding their solicitors' contentions about the arbitration provision, Pursuit Marine and Pursuit Dynamics commenced proceedings in the Patents Court in the Chancery Division of the High Court of Justice in England. A copy of the claim form was sent to Wright Legal "for your information" with a letter of 1 February 2007 by post and email. Our first letter today sets out Pursuit's position and its rejection of those demands. It seems likely to us however, that your clients will persist in their claims and demands. To give Pursuit the certainty it requires for its business activities, the legal proceedings represented by the Claim Form have been issued. The English court is plainly the appropriate forum to deal with these proceedings. The agreements concerned both contain English governing law clauses. They deal with activities which take place in England. Most of the material witnesses, documents and other subject matter are situated in England. 35 In a contemporaneous letter Eversheds LLP set out their clients' case more fully. Pursuit Dynamics was formed with the sole intention of exploiting the Burns Marine Drive. Documents disclose "very clearly" that the technology which it purchased was the Marine Drive and the money raised was to commercialise that technology. That proved fruitless because it was impossible to achieve commercial reduction to practice. Pursuit Dynamics invested in Marine Drive technology but that was not what it was currently pursuing or exploiting. 2. The "intention" of the agreements was to document a transaction by which Burns/Carnegie sold Marine Drive to Pursuit Dynamics. Burns and Carnegie were paid for the technology. Carnegie was now contending that the agreements supported a royalty of 1% on "virtually anything which Pursuit does". This was based on the definition of "Intellectual Property" in the Option Agreements. That definition does not make sense as a matter of English. Pursuit's case was that in 2000 it purchased Marine Drive and that its agreements are confined to that. If necessary, Pursuit would seek rectification of the agreements. 3. At a technical level, Pursuit's technology was substantially different from the Burns/Carnegie technology such that it could not be said to be either a modification of or improvement of the Burns Marine Drive technology. Pursuits' solicitors claimed that in 2002 Pursuit Dynamics, having been unable to reduce the Burns' technology to practice in a commercial manner, set about developing different products which offered a better commercial return. It developed different principles and geometrics and produced technology aimed at completely different markets. It maintained that none of Pursuit Dynamics current patents or patent applications (other than the original Burns patent family) had any application in the field of marine propulsion but were used in the field of fluid mixing, mixing fluids with solids and powders, heating, cleaning, sterilising, fluidization, degassing, fire suppression, decontamination, volatile stripping and smoke suppression. The solicitors invited Carnegie's patent attorney, at a time to be agreed, to have an open discussion with Pursuit Dynamics' patent attorney, Mr Murnane of Murgitroyd & Company so that he could explain the difference between the Marine Drive and Pursuit Dynamics' current technology. 37 Pursuit Dynamics was not prepared to concede any entitlement on the part of Burns/Carnegie to royalties under the Option Agreement nor to disclose commercially confidential documentation to them. They expressed the view that Carnegie was showing an intention to engage in a fishing expedition for documents to which it was not entitled on the basis of a cause of action under the Trade Practices Act 1974 (Cth) (the TPA) which lacked any real substance. In addition discovery is sought of all documents filed with the Patents Office in Australia and any Patent Office elsewhere in the world by any patent attorney for Pursuit Dynamics and/or Pursuit Marine in relation to each of the patents and/or patent applications comprised in the Pursuit Dynamics portfolio. The categories of documents thus sought are elaborated by definitions of the term "documents". The exercise upon which Pursuit Dynamics and Pursuit Marine would be required to embark were the application to be granted is likely to be massive. 40 Filed with the application was a motion which had two limbs. Under the first Carnegie and NME sought leave to serve the application out of the jurisdiction on the two respondents. The second limb sought the preliminary discovery claimed by the application itself. Why the relief claimed in the application was repeated as relief claimed in the interlocutory motion is not apparent. It is a power in aid of the exercise by the Court of its jurisdiction. It is therefore an exercise of judicial power within the meaning of Ch 3 of the Constitution . So too is an order under O 15A for preliminary discovery. Although an application for preliminary discovery is an application in a proceeding it does not yield substantive final relief. It is interlocutory in character. It involves the exercise of a power in aid of the jurisdiction of the Court which must be identified by reference to a matter in respect of which preliminary discovery is sought. 42 Order 15A is premised upon the proposition that the discovery sought, whether it be identity discovery under r 3 or discovery to enable the applicant to decide whether it has the right to obtain relief, relates to the prospective invocation of the jurisdiction of the Court in a claim for relief against an identified or yet to be identified respondent. Ordinarily a court's jurisdiction is enlivened by an initiating process seeking a determination of the substantive claim one party alleges it has against another. But ... such need not necessarily be the case. Necessity may require otherwise if a person's right is to be vindicated in a substantive claim. Preliminary discovery of the types provided in O 15A rr 3 and 6 have long been accepted as a proper and appropriate precursor to the making of a substantive claim --- and appropriate because it assists in the administration of justice in relation to the making of the claim itself. There is no reason for present purposes to distinguish between the two types of discovery. Each reflects a different necessity. Though in form a discrete proceeding (as was the old bill of discovery: see the quotation from Story ) preliminary discovery is, as a matter of substance, properly to be regarded as interlocutory in character in that it does not, nor is it intended to, determine finally the rights inter se of the parties to the substantive application: cf Malouf v Malouf [(1999) [1999] FCA 284 ; 86 FCR 134]. Its function rather is to assist in that determination when or if the substantive application is brought consequent upon what is revealed in the preliminary discovery itself. In consequence I consider an O 15A order for preliminary discovery to be an unexceptionable exercise of judicial power when made in relation to the matter necessitating the making of the order. He held that the rule did not purport to confer jurisdiction on the Court. Rather it was "... an exercise of the rule making power by the judges in accordance with s 59 of the Federal Court Act ". 44 In this case the jurisdiction in aid of which the order for preliminary discovery is sought is said to relate to matters arising under the TPA and breaches by Pursuit Dynamics of the Option Agreement. The causes of action said to arise under the TPA, in respect of which this Court has jurisdiction, were not expressed with precision. They were said to arise in Australia against Pursuit Dynamics and Pursuit Marine to the extent that they have been involved directly or indirectly in exploiting any of the inventions the subject of the Pursuit Dynamics Patent Portfolio by asserting a right in trade or commerce that they, and each of them, are lawfully entitled to do so without regard to the obligations arising under the Option Agreement. Assuming for the moment, the correctness of Carnegie and NME's contention that the respondents have been engaged in exploiting intellectual property which falls within the extended definition of that term in the Option Agreement, the entitlement which arises under the agreement is an entitlement to royalties. Carnegie, NME and Mr Burns have not terminated the agreement. They are not asserting any ownership entitlement in respect of the intellectual property rights being exploited by the respondents. Absent any contention of any legal or beneficial interest on the part of Carnegie or NME in the intellectual property rights currently being exploited by the respondents, it is difficult to see how they are misrepresenting any entitlement to exploit them. These causes of action are elusive. It is difficult to escape the view that they have been invoked to provide a more secure jurisdictional footing in this Court than might be available from an action for breach of contract pure and simple. 46 A cause of action arising under the TPA would, by virtue of s 86 of that Act, fall within the jurisdiction of this Court. Where the primary jurisdiction is invoked under the TPA a cause of action in breach of contract arising out of the same factual substratum may fall within the accrued jurisdiction of this Court as part of the same "matter". However, a common law claim in contract does not of itself fall within the jurisdiction of the Court unless, for example, there is some federal law associated with the claim and perhaps deriving from the subject matter of the contract. Where a contract deals with subject matter in the nature of rights owing their existence to federal law may be a matter arising under federal law. So a contract for the assignment of copyright, trade mark rights or patents may be a contract whose breach gives rise to such a matter. The breaches suspected in this case relate to the obligation of Pursuit Dynamics to provide information relevant to the calculation of royalties to Carnegie and NME and to pay the appropriate royalties. The entitlement is built upon the assignment of rights in part connected with provisional patent specifications comprising the Burns' propulsion technology. It is arguable that there is a connection between such rights and federal law, in this case the Patents Act 1990 (Cth) sufficient to support a contention that the claim of breach of contract is a matter arising under a law of the Commonwealth and thereby within the jurisdiction of the Court under s 39B(1A) of the Judiciary Act 1903 (Cth). I make no concluded finding on that proposition which is not without some difficulty in this case. For present purposes however I assume that jurisdiction is arguable. 47 The threshold question remains whether an application for preliminary discovery is a process of the kind which may be served outside Australia under O 8 of the Federal Court Rules . Order 8, it may be noted, was substantially amended in August 2006. 48 A necessary condition for service of process outside Australia, imposed by O 8 r 2, is that the process concerned be an "originating process". 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. 54 The second question is whether or not an application for preliminary discovery is an originating process in one of the kinds of proceedings mentioned in O 8 r 2. The submissions made on behalf of the applicants did not really address this question with any nicety. They seemed rather to proceed on the basis that I should treat the application for preliminary discovery as though it were an application for relief in respect of the possible causes of action to be ascertained by the application for preliminary discovery. 55 The premise upon which preliminary discovery is sought under O 15A r 3 is that the person seeking it, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the court against that person. And in an application under O 15A r 6 the premise is that there is reasonable cause to believe that the applicant has or may have a right to obtain relief in the court from a person whose description has been ascertained but the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the court to obtain that relief. The corollary premise is that no proceeding has been commenced in the Court for substantive relief. Proceeding based on a cause of action arising in Australia. 2. Proceeding based on a breach of contract in Australia. Proceeding in relation to a contract that is made on behalf of the person to be served by or through an agent who carries on business in Australia. 4. Proceeding based on a breach of a provision of an Act committed in Australia. 5. Proceeding based on a breach of a provision of an Act (wherever occurring) seeking relief in relation to damage suffered wholly or partly in Australia. 6. Proceeding in which the subject matter, so far as it concerns the person to be served, is property in Australia. Such proceedings are directed to determine who should be sued and alternatively whether some ascertained person should be served. The proceedings contemplated by the items relied upon in this case, in my opinion, involve originating processes seeking relief in such proceedings. They refer to, in my opinion, claims for substantive relief dependent upon the establishment of the causes of action identified or defined in those items. The applicants' submissions appeared to be posited upon the assumption that the relevant proceedings are those which they might ultimately bring under the TPA and for breach of contract. But those are not the proceedings which have been commenced in this Court. 58 Order 8 r 2 is to be read subject to O 8 r 3. Order 8 r 3(2), read with O 8 r 3(1), requires, as a necessary condition of leave to serve originating process in a foreign country that the service will be in accordance with a convention or the law of the foreign country. Under O 8 r 3 the evidence on an application for leave under O 8 r 2 must include a statement that the proposed method of service is permitted by the convention where a convention applies or in any other case, by the law of the foreign country. No such statement appears in the evidence in this case. 59 The solicitors for Pursuit Dynamics and Pursuit Marine have written a letter to the Court drawing attention to the Hague Convention on taking Evidence Abroad in Civil and Commercial Matters. That Convention facilitates the transmission and execution of Letters of Request. It is designed to improve mutual judicial cooperation in civil and commercial matters. The Convention has been ratified by both Australia and the United Kingdom. The United Kingdom has, it is said, made a declaration under Article 23 with respect to the operation of the Hague Convention in the United Kingdom, that it will not execute Letters of Request issued for the purpose of obtaining pretrial discovery of documents. The Convention is given legislative effect in the United Kingdom by the Evidence (Proceedings in other Jurisdictions) Act 1975 (UK). Relevant courts of the United Kingdom are given power by s 2 of that Act, by order, to make provision for obtaining evidence for the purpose of giving effect to a request in pursuance of which the application for such an order is made. Such orders may make provision, inter alia, for the production of documents. An application for preliminary discovery served on a party in the United Kingdom may be related entirely to documents in the possession, custody or power of that party through agents in Australia. Orders made pursuant to such an application would be enforceable in Australia. Presumably they could only be enforced in respect of documents in the United Kingdom with the assistance of United Kingdom authorities. It may nevertheless be that the policy reflected in the United Kingdom declaration relating to the Hague Convention and s 2(4) of the Evidence (Proceedings in other Jurisdictions) Act would, if not constituting a legal bar to such enforcement, weigh against it as a matter of discretion. 61 Even assuming however that I had the power to order service out of the jurisdiction in this case, it is ultimately concerned with alleged breaches of contract. The governing law clause relied upon by the respondents cannot exclude the jurisdiction of this Court in proceedings arising under the TPA. But where the proceedings are, as a matter of substance, proceedings concerned with an alleged breach of contract then the applicants' express submission to the exclusive jurisdiction of the English courts in that regard is a powerful factor against the assumption of jurisdiction by this Court. In my opinion, even were I satisfied that I had the power to grant leave to serve the application for preliminary discovery on the respondents in England, I do not think, as a matter of discretion, that I should do so. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | service out of the jurisdiction preliminary discovery power to grant leave to serve application for preliminary discovery out of the jurisdiction whether application for preliminary discovery an originating process whether an originating process in a proceeding for which leave can be granted no power to grant leave on bases sought discretionary considerations against grant of leave preliminary discovery relating to claim essentially based in breach of contract peripheral and elusive trade practices claim choice of english law clause in contract factor in favour of refusal of leave practice and procedure |
Regulation 1.24 in that division requires statutory declarations to be provided in respect of certain evidence. 3 The appellant, an Egyptian national, applied for a Partner (Migrant) (Class BC) visa ('the visa') on the basis of his marriage to an Australian citizen. The relationship broke down and the appellant made claims of domestic violence suffered at the hands of the sponsor and her family. A delegate of the Minister concluded that the appellant had not established that he suffered domestic violence because the requirements of Div 1.5 were not satisfied. It followed that he had not met the requirements for a grant of the visa. On review of that decision, the Migration Review Tribunal was not satisfied that the appellant had been in a genuine domestic relationship with the sponsor. It also concluded that the appellant did not meet the requirements of the Regulations in relation to domestic violence. The Tribunal affirmed the Delegate's decision. 4 At each stage, the appellant provided statutory declarations, purportedly in accordance with the Regulations. They were apparently made in accordance with Victorian legislation. The appellant accepts that the statutory declarations before the Tribunal and before the Delegate were not in accordance with the form prescribed by the Commonwealth Act. 5 The appellant sought judicial review of the Tribunal's decision in the Federal Magistrates Court. The Minister conceded that the Tribunal had committed jurisdictional error in relation to its conclusion that there was no genuine domestic relationship between the appellant and the sponsor. However, O'Dwyer FM found that the appellant had not satisfied the requirements of the Regulations because he had not provided a statutory declaration in the form prescribed by the Commonwealth Act ( Mohamed v Minister for Immigration & Anor [2007] FMCA 30 at [25] ) and dismissed the application. 6 The appellant appears by Counsel and the parties agree that the sole issue in this appeal from the Federal Magistrate's decision is whether the 1.21 definition encompasses only a statutory declaration in the manner and form required by the Commonwealth Act ('a Commonwealth declaration') or whether a statutory declaration in some other form and made under a State Act ('a State declaration') is also a statutory declaration for the purposes of Div 1.5 of the Regulations. It renders it unnecessary to define the words "statutory declaration" in a law of the Commonwealth or a Territory specifically to include a declaration made under the Commonwealth Act. Section 8 prescribes the "mechanics" of a statutory declaration made under the Commonwealth Act. Provision is made for the "prescribed form" under reg 3 of the Statutory Declarations Regulations 1993 (Cth). 10 By s 7 and s 8 of the Commonwealth Act, a Commonwealth declaration in the prescribed form is a statutory declaration for the purposes of the Regulations unless the contrary intention appears. The appellant does not suggest any such contrary intention. 11 The appellant draws a distinction between a statutory declaration " made under" the Commonwealth Act and a statutory declaration "under" the Commonwealth Act, the latter being prescribed by reg 1.21. The appellant argues that a "statutory declaration" in Div 1.5 is not confined to statutory declarations made under the Commonwealth Act and ought to be interpreted as including all statutory declarations sworn under any Act of a Parliament, provided that the declaration contains the information as required by the Regulations. He submits that a "statutory declaration" pursuant to reg 1.21 is not confined to a Commonwealth declaration as prescribed by s 8. The use of "under" rather than "made under" is said to enliven the whole of the Commonwealth Act, including s 7. That section, the appellant submits, is plainly inclusive and sufficiently broad to encompass a statutory declaration made in Victoria pursuant to Victorian legislation and intended to be used in a proceeding arising under Commonwealth legislation. 12 The appellant accepts that, if this is not the case, the Tribunal was bound by the Migration Act 1958 (Cth) ('the Act') and the Regulations to affirm the decision of the Delegate and it would be futile to remit the matter to the Tribunal. 13 In the context of the Act and Div 1.5 of the Regulations, reg 1.21 refers to a statutory declaration "under", in the ordinary sense of ' in accordance with ' ( Macquarie Dictionary , 4 th ed, 2005, 16) or ' pursuant to ' the Commonwealth Act ( Energy Resources of Aust Ltd v Commissioner of Taxation (2003) 52 ATR 120 at [37] per Lindgren J and the cases there cited), that is a s 8 statutory declaration. The fact that the expression used is "under" rather than "made under" does not mean that statutory declarations made in accordance with legislation other than the Commonwealth Act are or were intended to be included for the purposes of Div 1.5. The appellant contends that Parliament could have stated its intention more explicitly by referring in reg 1.21 to a statutory declaration "made under" or "in a manner prescribed by" the Commonwealth Act. That may be so but it does not mean that the intention was the opposite, to include State declarations. 14 The appellant submits that, if the intention were to specify only Commonwealth declarations in reg 1.21, the intention was not executed. I do not accept that this is so. A statutory declaration under or in accordance with the Commonwealth Act is a Commonwealth declaration which complies with s 8 of the Commonwealth Act. 15 Regulation 1.21 is a definition for the purposes of Div 1.5 of the Regulations, which relates to domestic violence. The effect of Div 1.5 is to institute a mechanical form of proof of domestic violence, a serious allegation, which absolves an applicant from the need to prove domestic violence in the ordinary course. It is therefore appropriate that every element of that mode of proof be satisfied ( Cakmak v Minister for Immigration & Multicultural Affairs [2005] FCA 503 at [40] per Gray J, not the subject of comment on dismissal of the appeal in Cakmak v Minister for Immigration & Multicultural Affairs [2003] FCAFC 257 ; (2003) 135 FCR 183). The specification of a Commonwealth declaration also absolves the decision-maker from having to ascertain whether a statutory declaration meets the requirements of the varied State laws. Perhaps, as a matter of less significance, a single form of declaration exposes a person making a statutory declaration to uniform penalties for a false declaration. 16 The appellant submits that a declaration sworn under State legislation is no less effective or efficacious than a declaration under the Commonwealth Act. In his submission, it has the same effect of imposing on the deponent an awareness of the consequences of a false declaration and the penalties for perjury. That may be the case for awareness but not necessarily for the consequences. 17 The parties referred the Court to reg 1.27 of the Regulations after the hearing, without further comment or submission. That regulation provides that a statutory declaration made under the relevant provisions of Div 1.5 is not admissible in evidence before a court or tribunal otherwise than in an application for judicial review or merits review of a decision to refuse to grant a visa or in a prosecution "under section 11 of the Commonwealth Act" for the making of a false declaration. There is no reference in reg 1.27 to admissibility in prosecutions under relevant State legislation. If State declarations were intended to be included within the meaning of reg 1.21, such a reference would be expected. 20 Neither party made submissions in reliance on s 27 of the Acts Interpretation Act . As with reg 1.27 of the Regulations, the parties referred the Court to the provision after the hearing, without submission or comment. 21 Section 27 applies to the words "statutory declaration" when used '[i] n any Act '. That includes the Regulations (s 13(1)(a) of the Legislative Instruments Act 2003 (Cth)). Expressions used in the Regulations have the same meaning as those used in the enabling legislation (s 13(1)(b) of the Legislative Instruments Act ). If a State Act comes within "any Act" in s 27(c) (cf a reference to "a State Act" as envisaged by subs 38(3) of the Acts Interpretation Act ), "statutory declaration" when used in the Regulations would include a declaration made by virtue of a State Act, unless the contrary intention appears. On this basis, s 27 encompasses Commonwealth and State declarations. 22 There is no definition of "statutory declaration" in the Act to provide a contrary intention. There is, however, the 1.21 definition in the Regulations. There would be no purpose in defining "statutory declaration" in reg 1.21 merely to include a Commonwealth declaration because that has already been provided for by s 27 of the Acts Interpretation Act and s 7 of the Commonwealth Act ( Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at [71] ). 23 Section 27 applies subject to a contrary intention. A contrary intention is evidenced by the 1.21 definition, which purports to exclude a State declaration. There is no other apparent reason for defining "statutory declaration" in reg 1.21. Accordingly, s 27 does not apply to "statutory declaration" in Div 1.5 to include a State declaration. He did not do so. The task of the Tribunal was to determine ' whether the evidence presented to it satisfie [d] the description called for in the delegated legislation ' ( Cakmak 132 FCR 183 at [52] per the Full Court; Minister for Immigration and Citizenship v Ejueyitsi [2007] FCAFC 89 at [24] ). For the reasons given, the evidence did not satisfy that description. The Federal Magistrate was not in error in finding that the Tribunal had correctly concluded that the appellant had not satisfied the requirements of reg 1.24 of the Regulations in relation to his claims of domestic violence. I agree with Hill J in Morgan v Minister for Immigration & Multicultural Affairs [1999] FCA 1059 at [11] that the fact that a declaration was not made under the Commonwealth Act but under a Victorian Act means that, were the matter to go back to the Tribunal, the Tribunal would have to find against the appellant for this reason. Such referral is, therefore, futile. 25 The appeal is dismissed. The appellant is to pay the Minister's costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | partner visa appellant sought to prove domestic violence by the provision of statutory declarations made under state legislation "statutory declaration" defined by the migration regulations 1994 (cth) to mean a declaration "under" the statutory declarations act 1959 (cth) in div 1.5 contrary intention in reg 1.21 as to the inclusion of state declarations under s 27 of the acts interpretation act statutory declaration made under state legislation is not a statutory declaration "under" the commonwealth act appeal dismissed "statutory declaration" "under" migration words and phrases |
All parties have been in breach of the Court's orders. 2 The proceedings were commenced by application and statement of claim filed on 3 October 2006. I indicated in an earlier judgment ( Tadros v J & R Investment Services Pty Ltd [2007] FCA 1041) that the statement of claim was not in a satisfactory form. Directions were made on 9 July 2007 granting the applicant leave to file an amended statement of claim before 27 July 2007. Provision was made for the filing of defences and any necessary reply to a defence. An amended statement of claim was filed, out of time, on 31 July 2007. In response, the first to fourth respondents filed a notice of motion on 24 August 2007 to strike out the amended statement of claim. The sixth respondent filed a notice of motion seeking security for costs but did not, as required by the directions earlier made, file a defence. Neither did the fifth respondent. In addition the applicant filed a notice of motion, also on 24 August 2007, that the proceedings be transferred to the Supreme Court of New South Wales. There were no proceedings pending before that court which might provide a foundation for the request to transfer the proceedings (see s 86A of the Trade Practices Act 1974 (Cth) and s 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)). On 29 August 2007 I dismissed that notice of motion. 3 I listed the other notices of motion (to strike out the amended statement of claim and for security for costs) on 15 October 2007. On 15 October 2007 the parties were not ready. The matter was adjourned to 12 December 2007. I will not extend this judgment by describing the interlocutory skirmishes in which the parties indulged themselves both in the period shortly before the hearing listed for 12 December 2007 and at earlier times. The parties did not comply with the Court's directions and with relevant requirements of the Federal Court Rules . The notices of motion were not in a satisfactory position to be heard. However, the parties on that day sought some time in which to engage in immediate negotiations. The Notice of Motion for strike out as filed by the 1 st , 2 nd , 3 rd and 4 th Respondents is adjourned generally with liberty to restore on two (2) days notice. The Applicant has leave to file and serve by 4pm 1 February 2008 a Notice of Motion for leave to file a Further Amended Statement of Claim and Amended Application. The Applicant pay the costs of the Motion for Strike Out in the amount of $22,000.00 by 4pm 25 January 2008 on delivery to the office of the solicitor for the 1 st , 2 nd , 3 rd and 4 th Respondents. Should the Applicant fail to comply with Order 3 herein, then Order 2 is vacated and the whole of the Amended Statement of Claim is struck out. 4 On 7 March 2008 the parties informed me that order 3 had not been complied with. The consequence was that pursuant to order 4 the amended statement of claim was struck out. The only matter remaining before the Court concerned any question of costs (see O 62 r 3(1) of the Federal Court Rules ). The fifth respondent sought an order for costs and it was not opposed by the applicant. The sixth respondent sought an order for costs which was opposed. Counsel for the first to fourth respondents informed me that he wished to make an application 'for an unusual costs order' but said no more at that time about its character. The applicant pay the costs of the fifth respondent including reserved costs, as agreed or taxed. The first to fourth and sixth respondents file any evidence and written submissions on which they wish to rely on the issue of costs by 4pm on 28 March 2008. The applicant file any evidence and written submissions in response on the issue of costs by 4pm on 24 April 2008. Matter is listed for hearing on the issue of costs at 10:15am, on 3 June 2008 on the respondents' estimate of half a day. The applicant remained silent. On 28 May 2008, two months in breach of the timetable which was fixed in consultation with the parties, and which allowed more time to the respondents than had been sought, the solicitors for the first to fourth and sixth respondents wrote asking to vacate the date fixed for hearing on 3 June 2008. That request was not agreed to by the applicant. As a consequence the hearing has gone ahead today. 6 At the hearing of the matter this morning I refused leave to Mr Robinson, who appeared for the first to fourth and sixth respondents, to file in court a further affidavit from Mr Lahood, the sixth respondent, in support of an application for costs. I also declined to receive into evidence two letters which he sought to tender. I did so because the respondents were in serious and unjustified breach of the orders made on the last occasion. I was not prepared merely to overlook the matter. Had I done so a further opportunity would need to be given to the applicant to marshal some evidence in reply. The disposition of the proceedings would have been further delayed. I am satisfied such a course of events should be avoided. 7 Mr Robinson nevertheless sought an order for the costs of the first to fourth and sixth respondents (excluding costs of the notices of motion to strike out which were earlier agreed) on an indemnity basis. He sought, further, that Mr Ardino, solicitor for the applicant, be made personally liable for the costs. Should the applicant be ordered to pay further costs? 2. Should any further costs be paid on an indemnity basis? 3. Should Mr Ardino be made personally liable for any further costs? 9 In addition, it is necessary to make some final order dealing with the remnants of the application which remains before the Court. Should the applicant be ordered to pay further costs? I am satisfied that the first to fourth and sixth respondents are in default within the meaning of O 35A of the Federal Court Rules . No evidentiary foundation was offered for the 'unusual order for costs' which I was told would be sought within the time which I allowed. They failed to file the written submissions which they were directed to file. I am satisfied therefore that it would have been open to the Court to deny the claim for costs on the basis of the default. 11 Nevertheless, I gave Mr Robinson leave to file in Court and rely upon short written submissions which he could in any event have put to the Court orally. I found them helpful although I indicated I would disregard any assertion for which there was no evidentiary support. Mr Altan, who appeared on this occasion for the applicant, properly conceded that on ordinary principles the applicant could not resist an order for costs, at least on a conventional party/party basis, if the costs already agreed were excluded. 12 On balance, I am satisfied that despite the default by the remaining respondents, there is a proper foundation for an order for further costs against the applicant. The statement of claim originally filed was not in a satisfactory form. Nevertheless, the applicant obtained asset preservation orders from a duty judge late in December 2006 on the basis of the statement of claim. On 11 July 2007 I set those orders aside ( Tadros v J & R Investment Services Pty Ltd [2007] FCA 1041). The amended statement of claim filed on 31 July 2007 was also not in a satisfactory form. I have no doubt if it had not been dealt with by consent on 12 December 2007 it would have been struck out in whole or in part. The respondents have inevitably borne the burden of responding to the applicant's initiatives. In the circumstances, and not without some hesitation, I am satisfied that the remaining respondents should be protected by some form of further costs order. Should an order for costs be made on an indemnity basis? These principles remain a reliable guide. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. Finn J said at [6], inter alia, 'the application was a hopeless one and ought never have been brought in the form it was' . 16 I am not able to reach such a conclusion in the present case. The respective merits of the parties' positions were never explored. Defences were never filed and I have no way of knowing exactly how much of the factual foundation for the applicants' complaints may have been either in dispute or conceded. The present case is not a suitable one for the award of indemnity costs. In that case a costs order was sought personally against a solicitor. His Honour granted the application in part. I accept the proposition that the jurisdiction is to be exercised with care and discretion and only in clear cases. The mere fact that litigation fails is plainly no ground for its exercise. There has to be something which amounts to a serious dereliction of duty: Edwards v Edwards [1958] P 235 at 248. It is not necessary to ground the power to order costs against a solicitor in the existence of any duty to the opposing party and whether it can be so grounded is open to doubt: Orchard v South Eastern Electricity Board [1987] 1 QB 565 at 571 but cf Lord Denning MR in Kelly v London Transport Executive [1982] 1 WLR 1055 at 1064-1065; [1982] 2 All ER 842 at 850-851. There is no basis to conclude that he has acted otherwise than on the basis of his instructions. The principal basis upon which an order was sought against Mr Ardino personally was that he had declared his client's impecuniosity. That circumstance does not make him a surety for his client. I could not be satisfied that he has been derelict in his duty to the Court notwithstanding the unsatisfactory elements of the proceedings to which I have referred. The claim for costs against Mr Ardino personally must therefore be refused. Mr Altan was not able to resist such an order. I am satisfied that the proceeding commenced by the applicant by the application filed on 3 October 2006 should be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | statement of claim struck out pursuant to earlier consent orders for non compliance with orders application for costs by the respondents respondents in breach of orders and in default further evidence not admitted costs sought on an indemnity basis and against solicitor personally costs ordered on a party/party basis only practice and procedure |
The application before the Federal Magistrate sought judicial review of a decision of the Refugee Review Tribunal ("Tribunal") of 29 July 2005 and handed down on 18 August 2005 to refuse to grant a protection visa to the applicant. Before the Tribunal the applicant claimed that he began to practise Falun Gong in March 1999 but that he practised secretly, that his cousin was in prison because he introduced him to Falun Gong, and that he had been informed by his parents that the Public Security Bureau (PSB) had visited his home to investigate and arrest him. The applicant also claimed that he had been detained from 17 May 2002 until 6 October 2002 due to his practice of Falun Gong. The applicant submitted to the Tribunal a photocopy of a photograph of himself holding a Falun Gong badge. The Tribunal found that the applicant's knowledge of facts about Falun Gong was incommensurate with his claims that he was a Falun Gong practitioner. It observed, following its questioning of the applicant, that he did not know the founder of Falun Gong, the number of exercises, the main text or when Falun Gong was banned by the Chinese Government. For example, when asked if he was a Falun Gong practitioner at the hearing, the applicant claimed that he did not practise but thought about Falun Gong whilst sleeping. He said that every morning from 4.30 until 5.00 he listened to Falun Gong lessons and thought about Falun Gong when he was going to sleep. 4 The Tribunal did not accept that the applicant was ever a Falun Gong practitioner or was involved in any Falun Gong activities. Nor did it accept that he was ever detained, that his cousin was in prison because the applicant introduced him to Falun Gong or that the PSB had visited the applicant's home. It did not accept that the applicant had suffered any of the claimed harm. 5 The Tribunal considered the applicant's claims were fabricated, especially noting that the applicant's claim of detention was only provided at the hearing but had not been mentioned in the statement lodged by him with his application. It was put to him that this might indicate that this claim was fabricated. He did not respond. As to the photograph, the Tribunal noted that it was difficult to see the badge and whether it was him or not. Furthermore, the facsimile date on the photograph was contrary to the applicant's claimed date of receipt. Consequently, no weight was given to the photograph. It was therefore not satisfied the applicant had suffered any Convention-related harm, or that there was any real chance of such harm occurring to the applicant in the reasonable future. 6 On 18 August 2005 the Tribunal delivered its decision affirming the decision of the delegate of the Minister not to grant a protection visa. The application was first mentioned before Lloyd-Jones FM on 26 October 2005, and adjourned for further directions to 30 March 2006. On that date it was adjourned to 28 August 2006. 8 The court record shows that the applicant did not appear when the matter was listed on 28 August but appeared later. When he did not appear his application was dismissed. He then turned up. The Court called the matter on again and the earlier order was vacated. The applicant was told by the Federal Magistrate that the matter would come on again in September and he would receive notification of the actual date. On this day the applicant filed a Notice of Change of Address for Service disclosing an address in Bankstown, New South Wales. 9 About two weeks later, on 12 September 2006, the Court wrote to the applicant at the Bankstown address, advising him that the matter had been listed for directions for 11.30 am on 25 September 2006 and stating that if he did not attend then orders might be made in his absence. 10 On 25 September the matter was listed before the Federal Magistrate at 11.30 am. It was called on at 11.37 am but the applicant did not appear. The matter was held in the list and called again at 12.06 pm. Again there was no appearance by the applicant. The Federal Magistrate dismissed the application for non-appearance by or on behalf of the applicant under the provisions of Rule 13.03A(c) of the Federal Magistrates Court Rules : Federal Magistrate's Reasons at para [4]. 11 A copy of the judgment of dismissal of 25 September 2006 was sent by the Court under cover of a letter to the Bankstown address on 5 October 2006. I have sighted a copy of this letter on the Court file. It is to be noted that the dismissal decision, according to the applicant in his affidavit in support [3] was received by the applicant. At the hearing before me the applicant said that he had not received notification of the dismissal order made on 25 September 2006. When I invited him, through his interpreter to read paragraph [3] of his affidavit in support of the motion he then said that in fact he had received such notice. The change in his explanation was he said due to his being poorly educated. 12 On 3 November 2006 the applicant filed a notice of motion to set aside the decision of 25 September 2006 and to have the matter reinstated. (2) On 28 August 2006 I attend the court for a directions hearing and I was told that I would need to attend a new direction hearing in sometime around October 2006, and that the Court will send letter advising me the new direction hearing date. (3) I change my address to Bankstown and I asked people living at my previous address to forward my letters to me. I only received a decision from the Court saying that my application was dismissed on 25 September 2006. I was not aware that there was a directions hearing on 25 September 2006, because the court told me earlier that it would be in October. At the request of the applicant the matter was adjourned to 24 November 006 to enable the applicant to have the services of an interpreter in the Fujian language. Again the applicant appeared in person on that day, assisted by the interpreter in the Fujian dialect. He said he had, by his migration agent, notified the Court of this further change of address. He said his migration agent had told him he had attended to this. There was however no such change of address noted on the Court file. In his affidavit the applicant deposed that he had been told by "the Court" that the new date for listing of his original review application would be in October. He did not specify any particular date in October. When asked by the learned Federal Magistrate who at the Court had told him this he did not answer. When I asked him he said it was the Federal Magistrate at the reconvened hearing on 28 August 2006. 15 His Honour was not satisfied of the claim by the applicant that he had told his migration agent who then notified the court of the applicant's change of address. In any event a letter, as I have mentioned, dated 12 September 2006 was mailed to the applicant at the Bankstown address. It notified him of the 25 September 2006 hearing. Importantly a copy of the judgment of dismissal was sent to the applicant by letter dated 5 October 2006. The applicant says he got this. 16 The applicant did not file any amended application in respect of his substantive claim although he had had the benefit of legal advice from a barrister. The Tribunal did not make a genuine and realistic attempt to make the decision in a bona fide manner in that the Tribunal failed to consider the fact that the applicant is illiterate, which may affect his ability to study Falun Gong, of which the applicant claims to be a follower. 2. Important evidence ignored by the Tribunal: the applicant submitted a photocopy showing him with a Falun Gong badge. This evidence was not accepted by the Tribunal merely because the facsimile date showing on the paper contradicts to the applicant's claim that he received the copy two days before the hearing. The applicant claims that he received the facsimiled copy by post from China two days before the hearing. 18 This, in my opinion, was the correct approach. 19 The learned Federal Magistrate was not satisfied that the explanation for his failure to appear was satisfactory. The Court wrote to him at his address for service that he had provided only about a fortnight earlier. The Applicant says that he told his migration agent who said he had advised the Court, but there is no evidence to corroborate that assertion. I am not satisfied that it is true. Contrary to the Applicant's claims, the Tribunal did consider the fact that he cannot read (at Court Book page 58) but was not persuaded by that explanation (at Court Book page 63). The Tribunal was entitled to make the finding that it did about the copy of the photograph on the basis of the evidence. As to whether the Tribunal made an attempt to deal with the review in a bona fide manner, in so far as the application alleges a breach of good faith, I am unable to discern any evidence in support of that claim. The Full Court of the Federal Court set out in SBBS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 361 ; (2002) 194 ALR 749 at [42] - [48] the principles applicable to a determination of whether the decision constitutes a bona fide attempt to exercise the power of review (see also SBAU v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 1076). An allegation of bad faith is a serious matter involving personal fault on the part of the decision maker. The allegation is not to be lightly made and must be clearly alleged and proved. The circumstances in which the Court will find an administrative decision maker had not acted in good faith are rare and extreme. This is especially so where all that the applicant relies upon is the written reasons for the decision under review (SBBS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 361 at [43] - [44] . In this case, I can find no evidence of a lack of a bona fide attempt to exercise the power of review by the Tribunal. The Applicant's grounds for review do no more than seek to challenge the Tribunal's factual findings, but merits review is not available to an Applicant in an application for judicial review. There was evidence available to the Tribunal that would justify the Tribunal's factual findings. I am aware that the Applicant is not legally represented. My independent examination of the material does not disclose any arguable case of jurisdictional error. In my view, the Applicant's substantive application has no reasonable prospects of success. 22 On 15 December 2006 the applicant filed an application for leave to appeal, a supporting affidavit and a draft notice of appeal. The application for leave to appeal asserts that the "grounds of the application appear in the annexed affidavit". The affidavit effectively repeats the ground raised in the draft notice of appeal and also asserts that if the applicant returned to the PRC he would be persecuted as a result of his practise of Falun Gong. This latter assertion, as the first respondent submitted, amounts to a re-statement of his refugee claims and does not constitute a proper ground to be raised on an appeal. This evidence was not accepted by the Tribunal merely because the facsimile date showing on the paper contradicts to the applicant's claims that he received the copy. The Tribunal also failed to invite the applicant to explain on such contradiction. I will nonetheless deal with the ground as stated. The Tribunal indicated to the applicant that the copy is very unclear and that indeed it is difficult to see the badge and whether it is him or not. The Tribunal asked the applicant when he received this copy. He said it was sent to him "the day before yesterday" from his hometown. The Tribunal put to the applicant that the copy has a facsimile date of "Feb. 25 2003 01.11" contradicting his claim that the copy was sent to him the day before yesterday. It was open to the Tribunal to do so. The contradiction in the dates was put to the applicant by the Tribunal. No jurisdictional error is evident. The applicant did not cause it to be satisfied as to the applicable criteria: SJSB v. Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 215 and SZBCS v. Minister for Immigration [2005] FMCA 25. 26 In any event, a lack of good faith is a serious allegation involving "a lack of an honest or genuine attempt to undertake the task and involves a personal attack on the honesty of the decision maker": SCAS v MIMIA [2002] FCAFC 397 at [19] . I find no support for such an allegation. To the extent that this ground may be regarded as an allegation of bias, the applicant has failed to meet the requirement that bias be firmly and distinctly made and clearly proved: MIMA v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 530 per Gleeson CJ and Gummow J. 27 The ground of appeal relied upon cannot succeed. 28 I have carefully considered the reasons of both the Tribunal and the Federal Magistrate as well as the grounds before me and I am unable to discern any jurisdictional error on the part of the Federal Magistrate. 29 I am of the opinion that no arguable ground of appeal is raised by the applicant, or putting it another way, the decision below is not attended by sufficient doubt to warrant an appeal going forward leave to appeal will be refused: SZDGN v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1543. I am also of the view that no substantial injustice would arise upon such refusal assuming the decision below to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. This is because the substantive grounds for review of the Tribunal's decision, in my opinion, adopting as I do the Federal Magistrate's reasons, have no reasonable prospects of success. 30 It follows in my opinion that in this case leave to appeal should be refused. The application will be dismissed with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application for protection visa application for leave to appeal from decision of federal magistrate dismissal pursuant to federal magistrates rules 13.03a(c) for non-appearance whether futile to grant leave whether lack of bona fides on part of refugee review tribunal whether evidence ignored. migration |
The primary mechanism for achieving this result is the prohibition of actions which have, or are likely to have, adverse consequences for identified aspects of such environment or heritage. Those aspects are hereinafter referred to as "protected matters". The principal operative provisions are found in Part 3 and, in particular, Division 1. 2 Division 1 is divided into subdivisions A to I. Subdivision A deals with World Heritage properties. Section 12 prohibits actions which have, will have, or are likely to have a significant impact on the World Heritage values of a declared World Heritage property. However, if the Minister has, pursuant to Part 9 of the EPBC Act, approved the relevant action, the prohibition will not apply. The EPBC Act provides a mechanism for determining, in advance, whether a proposed action will be "controlled" by any provision of Part 3. If the Minister has decided, pursuant to Part 7, that a proposed action is not so controlled, then such action is not prohibited. Similar provisions in other sub-divisions deal with National Heritage places, wetlands, threatened species and communities, listed migratory species and other matters. The provision is a controlling provision for the action. If the proponent believes that the proposed action is not a controlled action, he or she may similarly refer the proposal to the Minister for a decision. Pursuant to s 74, upon receiving such a referral the Minister must give notice to various persons and invite public comment. The applicant seeks review of two decisions by the Minister's delegate pursuant to s 75 of the EPBC Act. In each case the delegate decided that the referred proposal was not a controlled action. The first referral (received by the Minister on 7 April 2005) concerned a proposal by the second respondent ("Bowen Coal") to develop a new coal mine near Moranbah (the "Isaac Plains project"). The second referral (received by the Minister on 13 April 2005) concerned a proposal by the third respondent ("QCoal") to develop a new coal mine near Collinsville (the "Sonoma project"). I will outline each proposal and the reasons for the delegate's decision in each case. Given the limited extent and poor condition of remnant habitats within the study area, it is not anticipated that the study area represents critical habitat for any rare, threatened or migratory species. Furthermore, the project requires disturbance of "not of concern" remnant vegetation only. Considering the mitigation measures that will be employed, it is not anticipated that the project will lead to significant impacts on rare, threatened or migratory species, communities or populations listed under the EPBC Act. The applicant responded, raising concerns about certain mammals, birds and tortoises, threatened ecological communities, wetlands, land clearance and water quality. In most cases, it asserted that more investigation was necessary in order to ensure that the proposed development would have no unacceptable impact. Two other areas of concern were addressed. The first concerned World Heritage Areas, specifically the Great Barrier Reef World Heritage Area and the Wet Tropics Heritage Area. The applicant urged consideration of the fact that over the proposed nine year life of the mine, 18 million tonnes of coal would be won and exported. Australia has international obligations to uphold. He prepared a minute in which he advised the delegate to determine that the proposal was not a controlled action. The proposed action incorporates measures to minimise impacts on the quality of water being discharged into the Isaac River. The Shoalwater and Corio Bays Ramsar site lies about 50 to 100 km north of the mouth of the Fitzroy River. The ecological character of the Ramsar site will not be affected given the minimal nature of discharges and distances/dilution factors involved. See s 528. Such sites are mentioned in Subdivision B of Division 1 of Part 3. 17 Under the heading 'Issues' , the officer concluded that 'significant impacts on matters protected under the EPBC Act are not likely' . He then dealt specifically with threatened species including, in particular, vegetation and animal habitats, the Squatter Pigeon, reptiles, including the Fitzroy tortoise, various plants and migratory species. In each case he concluded that significant impacts were not likely. The nature of induced climate change from the referred coal mining operation, and impacts on world heritage values, are speculative. This submission raised concerns regarding loss of habitat for threatened and migratory species and impacts upon the Shoalwater and Corio Bays' Ramsar site, and considered that the proposal should be a controlled action. I found that there is no likelihood of the proposed action having a significant impact on a matter protected by any provision of Part 3 of the EPBC Act other than, potentially, sections 18 and 18A (Listed threatened species and ecological communities), and sections 20 and 20A (List of migratory species). I formed the view that significant impacts on the heritage values of the Great Barrier Reef World Heritage Area or on the ecological character of the Shoalwater and Corio Bays Ramsar site are not likely given the nature and location of the proposed action. In this respect, I found that the mine area is within the catchment of the Isaac River, which flows south into the sea at Rockhampton (a distance of about 300 kms). I considered that the nature of any indirect impacts on world heritage values or the ecological character of a Ramsar site associated with the referred action are speculative. The applicant submitted that the absence of any such express reference suggests that those matters were not considered. I will return to this question. I observe, however, that in par 12, Mr Flanigan clearly referred to two classes of possible impact. He first considered possible impact via the Isaac River, presumably as the result of pollution. He then considered 'indirect impacts' . In cross-examination he said that he used the term 'indirect impacts' to include the issue of greenhouse gas emission and climate change. That he considered those matters also appears from the note which he made on the Departmental minute. Such matters were referred to in the minute as '(s)econdary or consequent impacts' . 23 Mr Flanigan has sworn an affidavit in these proceedings. In it he explained the process by which he considered the greenhouse gas and climate change issues. He holds an honours degree in geography. In reading for that degree he studied geomorphology, climatology and ecology. In such studies he addressed the possible effects of rising sea levels and the accumulation of greenhouse gases in the atmosphere. He has made many delegated decisions under the EPBC Act dealing with coal mining, oil and gas projects, loading facilities and power stations, including a decision or decisions concerning development in the Bowen Basin. He described himself as having 'a sound general knowledge and understanding of the issues associated with greenhouse gas emission and climate change' . There is no reason to doubt that statement. He set out in some detail his process of reasoning in this case. As he said in cross-examination, 'It takes longer to write it down and get it in writing than to think it' . I infer that Mr Flanigan meant that on the basis of his training and experience, he has previously considered and formed general views about these matters, and that such previous consideration informed these decisions. 24 In its submission concerning the proposal, the applicant had addressed these issues in a broad way, asserting little more than that the burning of 18 million tonnes of coal would contribute, to some extent, to the production of greenhouse gases, and that this might contribute to climate change which might, in turn, produce an impact of the kind contemplated in Part 3. Such an expression of concern should not necessarily have led to a full scientific investigation and definitive determination of the matter. The decision-maker must always consider whether further investigation is necessary having regard to his or her duty under the relevant legislation. 25 Where a person has specialized training and expertise in a particular area, and has dealt with a variety of problems which commonly arise in that area, it is inevitable that he or she will bring past experience to bear upon similar problems. Of course, the decision-maker must consider all relevant aspects of the matter in hand, especially those which may differentiate it from cases which he or she has previously considered. It asserted that such action would not impact on any World Heritage properties, National Heritage places, wetlands of international significance, Commonwealth marine areas, Commonwealth land, Commonwealth Heritage places, Commonwealth or State reserves, critical habitats or regional forest areas. QCoal also did not expect that the proposal would have significant impact on any threatened species, ecological communities or their habitats. The proposal would involve some clearing of existing vegetation, 68 per cent of which was regrowth. Riparian vegetation and an environment buffer zone beyond the riparian vegetation were to remain undisturbed. 27 Again, the applicant made submissions. It held 'concerns regarding all species listed in the Threatened Species List in the EPBC Act Protected Matters Report obtained on 15 April 2005' . However the applicant made submissions concerning only two aspects which, it said, highlighted 'the need for further environmental assessment' . These were the squatter pigeon and a threatened ecological community. The precise nature of the ecological community is not entirely clear, but that may not matter for present purposes. Under the heading 'World Heritage Areas' the applicant suggested that global warming was already 'impacting on matters of national environmental significance' with specific reference to the Great Barrier Reef and the Wet Tropics World Heritage area. It asserted that consideration had to be given to the impact on global warming of the coal to be mined in the project, most of which would be exported. Under the heading 'Greenhouse Gas Emissions' the applicant asserted that Australia had an obligation under the Convention on Biological Diversity. There was detailed reference to ice melting in the Antarctic and elsewhere. There was also discussion of effects on wildlife, particularly birds, and water quality. 28 A minute was prepared by the Departmental officer who had advised in connection with the Isaac Plains project. More specifically, in relation to possible impacts on matters of NES, concerns were raised regarding the Squatter pigeon (southern), black box (Eucalyptus raveretiana) and the listed endangered ecological community Brigalow, (Acacia harpophylla). The nature of induced climate change from the referred coal mining operation, and impacts on world heritage values are speculative. The quantum contribution to induced climate change directly attributable to the referred action is minute and not likely to be measurable against the context of existing and reasonably foreseen contributors. A 'Supporting Advice' was attached to the paper. It dealt with numerous aspects of the proposal, but not with greenhouse gas emission or climate change. On 10 May 2005 Mr Flanigan decided that the proposed action was not a controlled action and subsequently, the applicant sought reasons. Those reasons were dated 21 June 2005. In par 13 Mr Flanigan dealt with the Great Barrier Reef World Heritage Area. Again, he seems to have distinguished between direct and indirect impacts. I am not sure whether the applicant challenges that assertion. 35 In cross-examination, Mr Flanigan agreed that greenhouse gases would be emitted as a result of the mining operation itself. Apparently gases caught in the coal seam are released during mining. Other greenhouse gases would be emitted as a result of the transportation of the coal. Those emissions come from the means of transport rather than the coal. Burning of the coal will also produce greenhouse gases. Mr Flanigan said that he addressed all of those aspects. He considered that burning the coal would produce much greater greenhouse gas emission than would the mining process or transportation. 36 I derived little assistance from the cross-examination of Mr Flanigan. It was primarily designed to permit Mr Flanigan to comment upon matters to be put in final submissions. That was entirely proper. I should refer to one aspect of the cross-examination. I therefore enquired as to its relevance to the three issues about which I had permitted cross-examination. Counsel said that it went to credit, and that it concerned Mr Flanigan's understanding of his obligations. I indicated that I would not allow questioning of that kind, by which I meant the process of putting to the witness observations made in judicial decisions (presumably concerning quite different proposals) to see whether he "accepted" them. I have explained this interlocutory ruling because my meaning may not be entirely clear from the transcript. 38 I saw no reason to doubt Mr Flanigan's truthfulness or reliability as a witness. In particular, I saw no reason to doubt that his affidavit accurately reflected the basis upon which he made his decisions or that the annotation on the minute was made at the time of the decision and was based on the same reasoning process. As I have said, it is possible that some parts of his reasoning were based on expertise and past experience. That does not, in any way, undermine the validity of his decisions. Greenhouse gases and climate change are matters of great public controversy. It would be surprising if somebody in Mr Flanigan's position had not considered them and formed general views as to their significance in his work. ' The second ground was that in making the decision Mr Flanigan erred in law in that he treated the expression "all adverse impacts the action is likely to have on the matter protected by each provision of Part 3", in s 75(2) of the EPBC Act as not including the adverse impacts the [proposals] are likely to have on the matters protected by Part 3 of the EPBC Act due to the mining, transport and use of the coal from the mines emitting a large amount of greenhouse gases contributing to global warming ...' . 40 In its submissions the applicant had focussed on the effect of greenhouse gas emission and climate change on the Great Barrier Reef World Heritage Area and Ramsar wetlands. However, in its application for review, the applicant did not identify which of the protected matters identified in Part 3 were likely to suffer significant impact as a result of either development. Argument proceeded on the basis that s 12 was the relevant controlling provision. It relates to World Heritage properties of which the Great Barrier Reef World Heritage Area is one. Section 16 concerns Ramsar wetlands. The applicant's submissions focussed on greenhouse gas emission, leading to climate change but, as in the application, it paid little or no attention to the actual effect on any identified protected matter. Part 3 focuses upon impact on such matters. The likely significance of the impact of any action will vary, depending upon which protected matter is being considered. In other words, it will usually be erroneous to speak of a "significant impact" for the purposes of Part 3 as if a particular action and its consequences might affect all protected matters in the same way and to the same extent. Mr Flanigan did not adopt this potentially erroneous approach in his reasons, but he did so, to some extent, in his affidavit, presumably influenced by the form of the application for review. In argument the parties all addressed the matter on that basis. Whilst such an approach has the potential capacity to cause error, there is no suggestion that any such error infected Mr Flanigan's decisions. 41 The applicant's first ground of review (outlined above) is somewhat misleading. It purports to rely on subpars 5(1)(e) and 5(2)(b) of the ADJR Act which concern failure to take account of relevant considerations. However the applicant's complaint seems to be that Mr Flanigan failed to consider whether either project would have, or was likely to have, a significant impact upon any protected matter: in other words, that he failed to address the proper question, rather than that he failed to take account of relevant considerations in so doing. The second ground alleges that Mr Flanigan acted on a misconstruction of s 75 in that he did not consider the adverse impacts of greenhouse gas generation and climate change 'on the matters protected by Part 3 of the EPBC Act'. The two grounds raise the same issue, namely whether Mr Flanigan addressed the question posed by s 75. 42 The alleged error is said to be disclosed by the absence from Mr Flanigan's reasons of any detailed discussion of the greenhouse gas and climate change issues. The applicant, at least tacitly, submitted that I should reject Mr Flanigan's affidavit as an ex post facto rationalization of his decisions rather than as an honest account of his reasons. However it is clear that in each case the Departmental officer raised the greenhouse gas issue for his consideration, although limited to the consequences of burning the coal. Mr Flanigan asserted that he also considered greenhouse gas emissions resulting from the mining and transportation processes. Given his training and experience in the area, it would be surprising if he were not aware of all of these potential sources of greenhouse gases. I accept that Mr Flanigan's reference in his reasons to the so-called "indirect" impacts on World Heritage values were to greenhouse gas emission from all sources and its potential for causing climate change. In other words he considered the possibility that greenhouse gas emission might cause climate change and consequential effects upon protected matters. 43 Understandably, the applicant sought to advance its case by pointing to the paucity of detail concerning these matters in the reasons. It may well have been better had Mr Flanigan said rather more than he did. However, as I have previously observed, the applicant raised the matter as one of general concern. Mr Flanigan concluded that the possibility of increased concentration of greenhouse gases in the atmosphere resulting from each project was speculative and merely 'theoretically possible' . There was no suggestion that the mining of coal pursuant to these proposals would increase the amount of coal burnt in any particular year, or cumulatively. It was not suggested that in the absence of coal from these sources, less coal would be burnt. Mr Flanigan also considered that if there were any such increased emissions, the additional impact on protected matters would be very small and therefore not significant. 44 Given my acceptance of Mr Flanigan's evidence, it follows that I accept that he considered the possible impact of greenhouse gases generated in the extraction, transportation and burning of coal won from each proposed mine and concluded that there was no significant impact for the purposes of Part 3. The applicant must fail on each of its first two grounds. 45 The other grounds of review are somewhat garbled. One suspects that they were drafted so as to utilize as many as possible of the individual grounds identified in s 5 of the ADJR Act, regardless of whether they were fairly applicable in this case. The applicant also sought to colour its argument concerning those grounds by reference to five factors said to indicate the proper approach to the task prescribed by s 75. 46 Firstly, the applicant referred to par 15AB(2)(d) of the Acts Interpretation Act 1901 (Cth) (the " Acts Interpretation Act "). That section, in effect, provides that in construing an act a court may have regard to 'any treaty or other international agreement that is referred to in the Act' . By subs 520(3) of the EPBC Act, the Governor-General is authorized to make regulations 'for and in relation to giving effect to any of the following agreements ...' . Relevantly, such "agreements" include the World Heritage Convention, the Ramsar Convention, the Biodiversity Convention and the Framework Convention on Climate Change done at New York on 9 May 1992. Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing such measures, taking into account that policies and measures to deal with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost. To achieve this, such policies and measures should take into account different socio-economic contexts, be comprehensive, cover all relevant sources, sinks and reservoirs of greenhouse gases and adaptation, and comprise all economic sectors. Efforts to address climate change may be carried co-operatively by interested Parties. Part 3 of that Act is a mechanism adopted by the Parliament for the purposes of protecting certain aspects of the Australian environment and heritage. It chose to provide such protection in circumstances in which an action has, will have, or is likely to have, a significant impact upon a protected matter. I see no basis for undermining the requirement that there be, at least, a likely significant impact in order to engage Parts 8 and 9. The thrust of the applicant's argument in this regard, as in others, seemed to be that 'likely' in s 12 and the other proscriptive provisions of Part 3 should be read as "possible" or, perhaps, as "barely possible". I reject that approach to the construction of those sections. 51 It seems that global warming has been nominated as a key threatening process pursuant to s 183. However that offers no justification for construing s 12 as prohibiting conduct which is not likely to have significant impact on a protected matter. 52 The third factor said to be relevant to the approach taken under the Act is the existence of Part 8. It provides various methods for assessing the impact of individual controlled actions. It was said that in deciding whether or not a particular action is a controlled action (that is, whether or not any provision of Part 3 controls it), regard should be had to the fact that in the event that it is a controlled action , it will be subject to a further process of assessment and evaluation pursuant to Part 8, prior to any approval being given pursuant to Part 9. All of that may be so, but as far as I can see it does not detract from the use, in the various controlling sections in Part 3, of the notion of 'likely' significant impact. Clearly, an action is only to be assessed pursuant to Part 8 if it is a controlled action. The criteria for the application of Parts 8 and 9 to a proposed action are those found in Part 3, not the views of the decision-maker as to the merits of applying Parts 8 and 9 to that action. . In any event it has not been established that either project will cause serious or irreversible environmental damage. Mr Flanigan has decided that there is no likely significant impact. 55 Finally, the applicant sought to make much of the fact that the threats posed by the emission of greenhouse gases are cumulative. It was argued that it was inappropriate to seek to identify the actual effect attributable to the action in question, as opposed to the general threat posed by greenhouse gas emission and climate change. However the EPBC Act required Mr Flanigan to address the impact of the proposed action, not the impact of the world-wide burning of coal. Secondly it was said that the impact of each action ought not be assessed having regard to the whole history of greenhouse gas emissions, but rather in comparison only to other contemporary emissions. Thus small coal mines might be preferred to larger mines. I see no merit in this argument. The relevant impact must be the difference between the position if the action occurs and the position if it does not. 56 Having discussed these general matters, I turn to the remaining grounds for review. Ground 3 claims an error of law in that Mr Flanigan failed to take 'a common sense approach to causation of the greenhouse impacts appreciating that the purpose of the inquiry is to attribute legal responsibility for impacts to matters protected by Part 3 of the EPBC Act in light of the subject, scope and objects of the Act. To my mind the purpose of the Act is to prevent or minimize such adverse impact. Be that as it may, there is no reason to believe that Mr Flanigan adopted other than a 'common sense approach' to the issue of causation. Causation is, of course, not mentioned in s 12 or the other analogous sections in Part 3. However it was submitted that there is necessarily a causal relationship between an action and any relevant impact. That is probably so, but I see no reason to introduce notions of causation into the process prescribed by s 75. It is not necessary to go beyond the language of the relevant sections. In any event Mr Flanigan accepted the possibility that the coal might be burnt, thereby producing additional greenhouse gases which might cause climate change. The point at which he disagreed with the applicant was as to the likelihood of any adverse impact upon a protected matter and the extent thereof. 58 Ground 4 claims an error of law in that Mr Flanigan 'failed to treat the issue of causation, generally, and failed to construe references to "a significant impact", in particular, in the context of the objects and purpose of the EPBC Act including the function of Part 3 and section 75 thereof in the statutory environmental impact assessment process established by the EPBC Act. ' I have already indicated that I consider this argument to be misconceived. 59 Ground 5 claims an error of law in that Mr Flanigan 'failed to consider the greenhouse impacts operating cumulatively with other contributors to global warming. ' Mr Flanigan clearly addressed that issue. Indeed, it was the point of his decision. 60 Ground 6 claims error of law in that Mr Flanigan 'equated a finding that such an impact was extremely small, taken on its own, with its being insignificant. ' While the adjectives "small" and "insignificant" have different meanings Mr Flanigan was clearly satisfied that any possible impact would be insignificant. 61 Ground 7 claims an error of law in that Mr Flanigan 'treated it as a prerequisite for such a conclusion that the greenhouse impacts "set in train climate change processes that may have impacts on matters protected by Part 3" when such processes are already in train and capable of being contributed to by the greenhouse impacts of the project. He did not accept that either project would do so. There is nothing in this point. 63 Ground 8 claims an error of law in that Mr Flanigan 'having found that the greenhouse impacts would be likely to increase the concentration of greenhouse gases in the atmosphere, he ignored that finding to conclude that there was no possibility, in reality, that any impact on climate in the vicinity of matters protected by Part 3 could ensue. He was obliged to do so. 65 Ground 9 claims an error of law in that Mr Flanigan 'treated as a prerequisite for such a finding that the particular impact on matters protected by Part 3 of the EPBC Act be measurable, specifically identifiable; and demonstrable. Again, that is what the section required. 67 Ground 10 claims that the decisions were improper exercises of the relevant power because Mr Flanigan failed to take a relevant consideration into account, namely that global warming is included as a key threatening process on the list established under s 183 of the EPBC Act and therefore failed to consider the serious threat that global warming poses when assessing greenhouse impacts from the proposed mines. 68 I have already dealt with this argument. It is not necessary to say any more about it. 69 Ground 11 claims improper exercise of the power in that Mr Flanigan took into account an irrelevant consideration, namely uncertainty as to the manner in which the coal would be used. This criticism appears to assume that it would have been possible to find out how the coal would be used and to assess the consequent greenhouse gas emission effect, and/or to attach conditions to the development pursuant to Part 8 and 9. All of this may be true, but it seems to me that the matter was disposed of upon the basis that, on at least one scenario, all of the coal would be burnt. Whether or not contracts for the sale of the coal were already in place, I do not know. Nor do I know whether or not any potential, ultimate consumers would be less likely to produce greenhouse gases or likely to produce less greenhouse gases, than would others. One imagines that there is a possibility that the coal would be stockpiled rather than burnt, or perhaps burnt in circumstances in which greenhouse gas emission was reduced or eliminated, either by existing technology (if there is any such technology) or by technology yet to be developed. However I do not understand that Mr Flanigan placed any great weight upon the fact that the ultimate fate of the coal was unknown. In any event, it could not be said that such consideration was irrelevant to the task in hand. 70 Finally, ground 12 claims that there was no evidence upon which the delegate could have been reasonably satisfied that greenhouse gas emissions were not likely to have a significant impact on the protected matters. In his affidavit, Mr Flanigan gave some indication of the factual basis of his decision. As I understand it, counsel for the applicant did not seek to cross-examine him concerning that aspect. There was good reason for his not doing so. The applicant's primary case was that Mr Flanigan did not consider these matters at all. Cross-examination as to the factual basis of the decisions could well have undermined the applicant's prospects of succeeding on that primary ground. The ground of lack of evidence has not been established. 71 In the circumstances none of the grounds of review is established. I have adopted this approach because it appears to have been the approach adopted by Mr Flanigan. However I am far from satisfied that the burning of coal at some unidentified place in the world, the production of greenhouse gases from such combustion, its contribution towards global warming and the impact of global warming upon a protected matter, can be so described. The applicant's concern is the possibility that at some unspecified future time, protected matters in Australia will be adversely and significantly affected by climate change of unidentified magnitude, such climate change having been caused by levels of greenhouse gases (derived from all sources) in the atmosphere. There has been no suggestion that the mining, transportation or burning of coal from either proposed mine would directly affect any such protected matter, nor was there any attempt to identify the extent (if any) to which emissions from such mining, transportation and burning might aggravate the greenhouse gas problem. The applicant's case is really based upon the assertion that greenhouse gas emission is bad, and that the Australian government should do whatever it can to stop it including, one assumes, banning new coal mines in Australia. This case is far removed from the factual situation in Minister for Environment and Heritage v Queensland Conservation Council Inc [2004] FCAFC 190 ; (2004) 139 FCR 24. I will hear submissions as to costs. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | application for review decision pursuant to environmental protection and biodiversity conservation act 1999 failure take account of relevant considerations failure to address the proper question environmental protection proper construction of s 75 environmental protection and biodiversity conservation act 1999 administrative law environmental law |
They also claim that the respondent has passed off his goods as the applicants' goods and has engaged in conduct that is misleading and deceptive conduct or likely to mislead and deceive. The first applicant is a member of the HIT Entertainment group of companies and the second applicant is wholly owned subsidiary of the first applicant. 2 On 1 February 2006 the applicants commenced this proceeding by filing and serving an application and statement of claim. I am satisfied by affidavit evidence filed by the applicant that on 6 February the application and statement of claim were served on the respondent personally at 15 Shirley Street, Noble Park, Victoria. The application and the accompanying letter from the applicants' solicitors stated that the applicant should attend the Federal Court in Sydney on 7 March 2006. The letter also advised that if the respondent was unable to travel to Sydney he should approach the Victorian Registry of the Federal Court to arrange a video link. It gave the telephone number of the writer and the Victorian Registry. 3 On the Court's initiative the first directions hearing was moved from 7 to 14 March 2006 and the Court advised both parties in writing of the change. At the directions hearing on 14 March 2006 the respondent did not appear. Mr Teasdale, who appeared for the applicants, indicated that, based on the respondent's non-appearance, he would be filing a Notice of Motion seeking default judgment against the respondent under O 35A of the Federal Court Rules . The matter was stood over until 6 June for further directions or for hearing of the Notice of Motion should one be filed. 4 The Notice of Motion was filed on 25 May. It was personally served on the respondent on 26 May 2006. No appearance has been filed for the respondent and he again failed to appear. Although I had told the applicants at the directions hearing on 14 March that I would hear any notice of motion for a default judgment on 6 June, the notice of motion was stamped "for directions only". The motion was served on the respondent before the mistake was picked up. On 26 May the solicitors for the applicant wrote to the Court pointing out the problem and stating that on 6 June they would seek leave for the motion to be heard on that date. Copies of this letter were sent to the respondent by express post and by registered post. In the circumstances I saw no injustice to the respondent in hearing the notice of motion. I am satisfied that he was properly advised of the date and purpose of the hearing, which he ignored at his peril. 5 Order 35A applies where a party is in default, which is the case here; O 35A r2(2)(b). It permits the Court to give judgment against the respondent in default under r3(2)(c) and r3(2)(d). However, the applicants have elected to proceed under O 35A r3(2)(d) and accept that, in accordance with the principles stated in Australian Securities Commission v Macleod (1994) 54 FCR 309 at 314, I must satisfy myself on the evidence before me (uncontested though it may be) that their claims have been made out and I am justified in making the orders sought. On 6 June, after hearing submissions made by Ms Gay, the solicitor for the applicants and considering the evidence to which Ms Gay took me I reached that level of satisfaction and made the requested orders. I said that I would provide reasons at a later date; these are my reasons. This evidence has satisfied me that, for reasons given below, the applicants have made out their claims and that I am justified in making the orders sought. I shall refer to these trade marks collectively as the Bob the Builder Marks. 11 The second applicant is a wholly-owned subsidiary of the first applicant, and is the registered proprietor of the following trademarks in respect of several classes of goods: 618252 (a graphic including the words "Thomas the Tank Engine & Friends"); and 903053 (a graphic including the words "Thomas & Friends"). I shall refer to these trade marks collectively as the Thomas Marks. The first applicant is the licensee of the Thomas Marks in Australia. 12 The applicants claim that the respondent's conduct, which was not authorised by the applicants, infringed their trademarks. The statement of claim sets out detailed particulars of the claims which are supported by the evidence of Mr Douglas, Ms Dani Muntz and Ms Gay. Ms Muntz gave evidence that she had observed Mr Lodin at his stall in the Caribbean Gardens & Market in Scoresby, Victoria, offering the offending goods for sale. Ms Slocum's evidence supports the claim that the respondent's activity was not authorised by the applicants. Mr Douglas gave evidence to the same effect as Ms Muntz and identified the relevant goods as counterfeit because of their poor quality and general appearance. Ms Gay confirmed Mr Douglas's account. 13 Apparently, prior to October 2004, t he applicants filed a notice of objection with the Australian Customs Service pursuant to s 132 of the Trade Marks Act 1995 (Cth) in relation to the importation of goods which have the Bob the Builder Marks and the Thomas Marks applied to them or in relation to them. In October 2004 the Customs Service notified the solicitors for the first applicant that pursuant to this notice it had seized two consignments of children's wear containing denim jackets, overalls, jeans and other clothing bearing marks identical to or substantially similar to the Bob the Builder Marks and the Thomas Marks. Photographs of the offending items were sent to Ms Slocum who identified them as counterfeit. In doing so she relied on the fact that the tags and labels were not consistent with the guidelines given to authorised users, the inferior quality of the merchandise and information obtained from the authorised clothing licensee in Australia. 14 The designated owner of these consignments was Bakhtyar Amani. The evidence of Mr Douglas establishes that the respondent identified Bakhtyar Amani as his cousin and admitted to using his cousin's name to try and get the consignment through Customs. Mr Douglas gave the respondent copies of two Notices of Consent to Forfeit Goods from Australian Customs in the name of Bakhtyar Amani. 15 On 20 October 2004 the solicitors for the applicants were notified that Mr Armani had forfeited the consignments. In October 2005 Customs seized two further consignments that contained similarly offending goods. Those consignments, which were addressed to the respondent, were also forfeited. 16 I am satisfied on the basis of this evidence that the claim of trade mark infringement is made out. Ms Slocum has been General Counsel for the HIT Entertainment group since March 2001. She gave details of the responsibilities of that position which give her a detailed knowledge of the businesses of the applicants and also described the history of both characters. Her account of the history of Bob and Thomas showed that both characters have had wide exposure in a variety of media in Australia and the United Kingdom and that associated merchandise is sold throughout the world. For the same reasons I am of the view that the applicants are entitled to the declarative and injunctive relief they seek. 23 I am conscious that injunctive relief should only be granted if there is a real likelihood that the respondent will persist in his unlawful conduct. I am satisfied that this criterion is satisfied here. The respondent has persisted in his attempts to import infringing goods for well over a year. Ms Dani Muntz states that as recently as 21 May 2006 she observed the respondent at the Caribbean Gardens & Market selling items bearing the Bob the Builder Marks and the Thomas Marks and two jackets purchased at that time were exhibited to her affidavit. 24 The applicants also seek an order that the respondent deliver up the counterfeit goods to them. I have found that the sale of such goods causes damage to the reputations of the applicants. Given the respondent's past behaviour I am satisfied that without this relief there is a real possibility that he will attempt to dispose of any goods currently in his possession. This would cause further loss and damage to the applicants and might well prompt further proceedings which should be avoided if possible. I am therefore satisfied that it is appropriate to make the order sought. 25 The applicants also seek an order that the respondent pay damages to be determined by the Court but would like some time to consider if they wish to pursue such damages. I am satisfied that damages are appropriate and am prepared to allow the applicants a reasonable time to consider their position on this issue. 26 Finally, there is no reason why costs should not follow the event in the usual way and therefore the respondent should pay the applicants' 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 Stone. | trade marks infringement importation of infringing articles offering for sale and sale of infringing articles misleading and deceptive conduct passing off false representations that infringing articles were authorised by owners of trade marks application for default judgment intellectual property trade practices practice and procedure |
The first applicant and the second applicants (other than Kids Holdings Pty Ltd) wish to have the quantum of the second applicants' claims, if they succeed on liability, determined after all other issues and questions in the proceeding (being all applicants' claims on liability and the quantum of the first applicant's claim, if it succeeds on liability) have been determined. The respondent, Colliers International Consultancy and Valuation Pty Ltd, opposes the application. 2 The substantive application in the proceeding is made under the Trade Practices Act 1974 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the accrued jurisdiction of the Court. Put simply, the critical issue is whether the respondent provided false and misleading valuations which caused the first applicant and certain of its shareholders (the second applicants) to suffer considerable financial loss with respect to a failed resort development. 3 The course proposed by the first applicant and the second applicants (other than Kids Holdings Pty Ltd) is unusual. It is not uncommon for a trial to be split so that liability is determined before quantum, damages or compensation. But it is unusual for a trial to be split so that one applicant does not have the trial split with respect to its claim, while splitting the trial with respect to the other applicants' claims. These circumstances alone do not dictate that the trial should not be split. However, the Court must tread warily in this area. But it is a procedure that should be adopted with caution and can be fraught with difficulties. In such circumstances, splitting the trial can save the Court and the parties the time and expense of dealing with ultimately redundant issues. Here, the respondent's liability for all applicants' claims and quantum of the first applicant's claim could not be described as preliminary issues or questions. However, that does not mean they cannot be determined separately from the quantum of the second applicants' claims. Indeed, it is even possible for an order under O 29 r 2 to be made 'after the event' of the trial, where the Court has only, at that stage, dealt with issues of liability; see Council of the City of Sydney v Goldspar Australia Pty Ltd [2006] FCA 641 at [5] to [6] per Gyles J. 5 The premise which underlies the general course of not splitting trials is that 'it is ordinarily appropriate that all issues in a proceeding be disposed of at the one time'; see Liberty Financial Pty Ltd v Scott [2003] FCA 226 (' Liberty Financial ') at [35]. 'It is incumbent upon the applicant [for the O 29 r 2 order] to show why there should be a departure from that course'; see Liberty Financial [2003] FCA 226 at [35] per Weinberg J. 6 The critical consideration when determining an application to split a trial is whether splitting the trial will result in 'savings in time and expense' (see Tepko Pty Limited v Water Board [2001] HCA 19 ; (2001) 206 CLR 1 at [168] per Kirby and Callinan JJ and Dovuro Pty Limited v Wilkins [2003] HCA 51 ; (2003) 215 CLR 317 (' Dovuro ') at [142] per Hayne and Callinan JJ) such that it is 'just and convenient' for the order to be made; see also Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 at [9] per Branson J. 7 Counsel for the first applicant and the second applicants (other than Kids Holdings Pty Ltd), Mr Solomon, contends that the assessment of the quantum of the second applicants' claims will depend on working out the amount, if any, each second applicant will receive from the liquidation of Meadow Springs. He says that such amounts will need to be deducted from the amount each second applicant invested in acquiring shares in Meadow Springs, plus interest, to quantify their losses. Mr Solomon contends that it is appropriate to make this calculation after an assessment of the damages, if any, payable to Meadow Springs and concurrently with any directions the Court may give concerning the application of damages awarded to Meadow Springs. 8 Mr Solomon submits that any additional issues surrounding the quantum of the second applicants' claims will not require much evidence. If that is the case, it appears to me that little time and expense will be saved by splitting the trial. 9 The primary reason for this application concerns an agreement between the liquidator of Meadow Springs and a receiver and manager (Mr G Carrello) purportedly appointed by a creditor about the representation of Meadow Springs at the trial. That agreement is conditional on this application being granted. Dismissal of this application, in the absence of successful mediation of that issue, would require the Court to determine the competing claims of the liquidator and the receiver to represent Meadow Springs. Mr Solomon points to authorities, such as Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Limited (1998) 193 CLR 603 at [55], [97] and [124], which refer to the public interest in disputes being settled. However, the public interest does not require a Court to give effect to a settlement where it would not be appropriate to do so. A Court should not act otherwise than judicially and in good conscience simply to rubber stamp an agreement between those with an interest in litigation. 10 This is not an appropriate case to split the trial in the manner proposed by the first applicant and the second applicants (other than Kids Holdings Pty Ltd). There is no evidence that any significant time and expense will be saved by the Court granting the application. The first applicant and the second applicants (other than Kids Holdings Pty Ltd) have not discharged the onus of proving that the course proposed is just or convenient so as to displace the usual position that all issues and questions in a trial should be dealt with at the same time. Further, as counsel for Colliers submitted, in cases such as this, where claims in the accrued jurisdiction include negligence, it is not desirable to split the question of liability from the question of quantum; see Dovuro [2003] HCA 51 ; 215 CLR 317 at [142] . 11 The first applicant and the second applicants (other than Kids Holdings Pty Ltd) and Colliers have each raised competing claims about the utility of determining separately the quantum of the second applicants' claims, if they succeed on liability. It is not necessary to resolve that debate now because I do not consider that there would be any significant saving of time and expense in the course proposed by Mr Solomon's clients. 12 The application for an order under O 29 r 2 is dismissed. The respondent should have its costs of, and incidental to, that application. | application under o 29 r 2 of the federal court rules 1979 (cth) proposal to split trial in relation to second applicants only whether just and convenient whether savings in time and expense no significant savings in time and expense demonstrated application dismissed practice and procedure |
It alleges that by making each of what is called the first SIRT 1 Australian application and the second SIRT 1 Australian application, Sirtex was knowingly concerned in those breaches. Particulars are given of the facts relied upon to establish the relevant state of mind which it is said that Sirtex had or which a reasonable person would have had in the circumstances. Dr Panaccio was a later addition to [16A] which originally had referred only to Mr Karlson and promised further particulars after interrogatories and discovery. Paragraph 16A(a)(iv) particularises the basis upon which Dr Panaccio's state of mind is asserted in support of the attributed state of mind of Sirtex. It is not suggested for the University that the use of the word "including" in [16A(a)(iii)] authorises it to put its case on the basis of the knowledge of individuals other than those specified in those particulars nor should it be so read. The second respondent is entitled to know the identity of its directors or officers whose state of mind is to be attributed to it. 2 The evidence closed on 20 June 2007 after 45 days of hearing spread over 4 months commencing on 15 March 2007. Submissions in closing were due to commence on 3 July 2007 but by consent, because of delays in the completion of lengthy written submissions, the closing arguments have been adjourned to commence on 23 July 2007. Sirtex's closing written submissions in answer to those of the University are due imminently. The University now seeks to amend its particulars in relation to [16A] by including another director of the second respondent, the former Chairman of the Cancer Research Institute Inc, Mr Dane Gorn. This is said to be on the basis of evidence given by Mr Gorn who was one of the last witnesses in the case. 3 The University says that on the basis of that evidence and various documentary materials the Court should allow it to have resort to his state of mind as part of the basis upon which the pleaded state of mind of Sirtex is supported in its closing submissions. Sirtex says that the application is late, is based substantially on material available to the University before Mr Gorn gave his evidence and is unfairly prejudicial. 4 In my opinion, although there may be elements of Mr Gorn's evidence which throw up the kind of case which the University now seeks to make in relation to his state of mind, much of the basis of that case as referred to in the proposed additional particulars turns on documentary material. The oral evidence which was specifically referred to in submissions, and I don't say that that was exhaustive, resulted from inferential statements about the interpretation and rationality of things that happened which were put to Mr Gorn and to which he assented. Those responses were by way of inferences on evidence already available. 5 In my opinion, it is now too late in the day for these additional particulars to be included as part of the University's case in relation to the state of mind of the second respondent. I come to that conclusion having regard to the history which I have just mentioned and the likelihood, in my opinion, of unfair prejudice which it is difficult to quantify at this stage. It would certainly require consideration which may yet have to occur, given the very recent notice of this amendment, of the necessity to recall Mr Gorn and beyond that the possibility that other evidence might need to be called going to his state of mind at the relevant times. I will therefore refuse the application to amend the particulars by including particulars relating to Mr Gorn. That applies to [16A] and, therefore, by inference to its incorporation by reference in [146A]. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | trial pleadings particulars state of mind of corporate respondent reliance upon state of mind of named officers evidence completed 45 day trial parties completing written submissions application to amend particulars to include reliance upon state of mind of additional director of corporate respondent based substantially upon mattes of inference from documentary material unquantifiable unfair prejudice amendment refused practice and procedure |
2 The second appellant claims protection as a family member of the first appellant's family. 3 The matter was called this afternoon at approximately 2.15pm and then later during the afternoon, between 2.15pm and 2.30pm. There was no appearance by either the first or the second appellant. The Court is assisted this afternoon by the presence of an interpreter. On the failure of the appellants to appear, a telephone call was made to a telephone number for the appellants. 4 A conversation took place by which the first appellant advised the interpreter who thus advised the Court that the first appellant had forgotten about the hearing today, was at least an hour away from the Court and would not be able to attend this afternoon and did not propose to attend this afternoon. Accordingly, in the light of the failure of the appellants to attend the court, the first respondent seeks judgment in the matter by seeking an order that the appeal be dismissed with costs. 5 There is a sequence of correspondence which goes to the question of whether the appellants were properly put on notice of the proceeding today. The first is a letter dated 23 January 2007 from the Federal Court under the signature of Jennifer Farrell, National Appeals Registrar to the first appellant by which the Court notified the first appellant and thus both appellants that the matter would be heard and determined on 28 February 2007 at 2.15pm before myself at the Law Courts Building, Queens Square, Sydney. I mark that letter 'Exhibit 1'. 6 There is a further letter dated 15 February 2007 addressed to the first appellant from the Australian Government Solicitor by which the author of that letter referred to the present proceedings and enclosed by way of service upon the appellants a sealed copy of the appeal book filed on behalf of the first respondent. That letter reminded the first appellant and thus both appellants that the hearing of the appeal is listed before myself at 2.15pm on 28 February 2007 at the Law Courts Building, Queens Square, Sydney. I mark that letter 'Exhibit 2'. 7 There is a further letter dated 23 February 2007 from the Australian Government Solicitor to the first appellant by which there is a further reminder of the hearing date although in that particular letter the reference is made to the hearing of the appeal before his Honour, Tracey J. Nevertheless, the time 2.15pm is nominated as is the day, Wednesday 28 February 2007, as is the place, Law Court Building, Queens Square, Sydney. I mark that letter 'Exhibit 3'. 8 There is thus three examples of written communication advising the appellants of the date and time for the hearing of the appeal. It is therefore no excuse that the appellants have forgotten about the appeal. 11 Accordingly, in default of appearance on the part of the first and second appellants, I dismiss the appeal with costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an appeal from a judgment of federal magistrate scarlett affirming a decision of the refugee review tribunal. migration |
Mr Foti is a director and shareholder of the company. On 5 November 2009, Mr Scott James Salisbury appointed administrators to the company under Part 5.3A of the Corporations Act 2001 (Cth) ("the Act"). Mr Salisbury is also a director and, through a company he controls, a shareholder of the company. Mr Foti has issued an application under s 447A of the Act seeking an order that the administration of the company is to end. Mr Foti claims that such an order should be made because provisions of the Act are being abused (s 447A(2)(b)). In particular, he claims that Mr Salisbury, in appointing the administrators, had an improper purpose or a purpose collateral to the purposes for which the power could be exercised. Mr Salisbury opposes the application. He does not contend that an improper purpose is not a basis upon which an order under s 447A(1) and (2) may be made, but he claims that Mr Foti has not established that he had such a purpose. The administrators have appeared, but they have not taken part in the argument. The administrators have prepared a report for the assistance of the Court and that report has been put before me. It is not a report to creditors under s 439A of the Act, although it has some similarities to such a report. Many of the conclusions and opinions expressed in the report are provisional because the administrators have not completed their investigations. On 26 November 2009, I made an order that the application of the plaintiff that the administration of P & S Investments Pty Ltd be brought to an end be refused. I said that I would deliver reasons and these are my reasons. The company carries on a business involving the purchase, development and sale of properties. It has not commenced any new projects since June of this year. As I have said, the company's two directors are Mr Foti and Mr Salisbury. The company's issued capital consists of four $1 ordinary shares, two of which are held by Mr Foti and his wife and the other two of which are held by S J Salisbury Investments Pty Ltd. Mr Salisbury is the sole director, secretary and shareholder of S J Salisbury Investments Pty Ltd. For present purposes, there is no need to draw a distinction between Mr Salisbury and his company. There is evidence before me which indicates that the business and affairs of the company were conducted in a way similar to the way in which the business and affairs of an ordinary partnership are conducted. The business and personal relationship between Mr Foti and Mr Salisbury has broken down. Mr Foti's application for the company to be wound up is made under s 459A of the Act and he seeks the leave of the Court to make the application as a director of the company (s 459P(1) and (2)). S J Salisbury Investments Pty Ltd filed a notice of appearance in the proceeding in its capacity as a contributory of the company and it opposed the application on the ground that the company was not insolvent. In its notice of appearance it contended that the Court should decline to exercise its discretion to wind up the company on the basis that it was not in the best interests of the creditors or shareholders of the company for the company to be wound up and on the basis that the application had been brought for an improper purpose. On 14 October 2009, Mr Foti amended his Originating Process to include a claim under s 461(1)(k) and s 462(2)(c) of the Act. In other words, he claimed, as a contributory of the company, that it should be wound up on the ground that it is just and equitable to do so. On 11 November 2009, Mr Foti issued an application seeking an order that there be summary judgment on his winding up application. Mr Foti made it clear during his submissions that had I made an order that the administration end, he would then ask me to deal immediately with his application for summary judgment. On 4 November 2009, a mediation was held before a Registrar of this Court. The mediation did not lead to a resolution of the proceeding. It is clear and it was common ground between the parties at the time this application was argued that the company is insolvent. In their report, the administrators express the view that the company may have been insolvent in June 2009 and possibly before that date. In terms of assets, and putting to one side possible recovery actions against directors and interests associated with them, the company's main assets are two apartments in a project called in the evidence the Tivoli Apartments and Hotel Redevelopment Project. Those apartments have been on the market since August 2008 but they have not been sold. One of the apartments is let. The apartments were, until 5 November 2009, subject to security interests in favour of the Bank of South Australia, as a division of St George Bank Limited, ("the Bank") securing a loan by the Bank to the company of approximately $1.6 million. On 5 November 2009, Mr Salisbury became the assignee of the Bank's debt and he holds the security interests. There is also a lien over the apartments securing an alleged debt of approximately $763,000 to a business called Built Environs. Liability for this debt is disputed by both Mr Foti and Mr Salisbury. If the claim by Built Environs is established, there is and will be no net equity in the two apartments. If the claim fails, it is at present unclear whether there is and will be any net equity in the two apartments. The administrators suggest it is possible that there may be net equity in the two apartments of between $50,000 and $300,000. The company has a number of other possible creditors. I say possible creditors because a number of the alleged debts are disputed by the directors. I start with possible creditors who are unrelated to the directors or interests associated with them. According to the administrators' report and the proofs of debt lodged, they total $4,336,532.48. Of this amount, the amount admitted for voting purposes at the first meeting of creditors by the administrators was $541,451.55. A number of the major debts are disputed by either both the directors, or one of them. The related party claims involve Mr Foti and Mr Salisbury or interests associated with them. Each director strongly disputes the claims of the other. Mr Foti claims that the company owes him an amount of $2,094,837.42. The administrators admitted for voting purposes at the first meeting of creditors an amount of $609,202. Mr Salisbury claims the company owes him an amount of $7,576,625 (including the secured debt). The administrators admitted for voting purposes at the first meeting of creditors an amount of $1,928,471. Mr Foti claims that conduct by Mr Salisbury in relation to two transactions was improper and, in fact, led to the company's insolvency. The first transaction involved land at Wallaroo owned by the company (with others) which was sold in August 2009. Mr Foti claims that, in breach of duty, Mr Salisbury claimed the sum of $320,000 from the proceeds of sale which moneys should have been paid to the company. The second transaction involved property on King William Street. This land was not owned by the company but rather owned by another company which owed a large debt to the company. Mr Foti claims that, in breach of duty, Mr Salisbury claimed the sum of $777,959 from the proceeds of sale which moneys should have been paid to the company in discharge of the debt owed to it. In their report, the administrators set out details of other possible unreasonable director-related transactions (see s 588FDA of the Act. Including the above transactions, they total $3,247,894 and involve substantial amounts, both in the case of Mr Foti and in the case of Mr Salisbury. The evidence is to the effect that Mr Salisbury wishes to put a proposal to creditors with a view to the execution of a deed of company arrangement. At the time submissions were heard, the terms of a proposal were not firmly fixed. In their report, the administrators summarised the "key terms of the proposal" as follows: Salisbury would contribute a specific sum (now known to be $242k) ('the Fund') within 14 days after a resolution being passed by creditors pursuant to Section 439C(a) of the Act; This proposal is subject to the current application to wind up the Company being dismissed by the Court or otherwise discontinued. Salisbury will not seek to prove in respect of the debts owed to him in his capacity as secured creditor or otherwise and these claims total $7.576m with $1.928 admitted for voting at the first meeting of creditors; In return for payment of the Fund the Company will issue Salisbury shares in accordance with its constitution at a par value of $1 per share being the amount subscribed (i.e. 242,000 shares, thereby holding 242,002 of the 242,004 shares in the Company after the issue); Salisbury in his capacity as secured creditor will be bound by the DOCA until the payment of the Fund. Based on the admitted debts for voting purposes at the first meeting, Salisbury considers the established creditors in a DOCA would be approximately $1.15m including Foti interests of $609k. The fund would be available to these creditors. The submissions made to me proceeded on the assumption that a company could issue shares as part of a deed of company arrangement. That assumption may be made for present purposes, although it was never tested. In their report, the administrators set out their provisional views on the advantages and disadvantages to creditors of accepting Mr Salisbury's proposal and the likely return to creditors, and the advantages and disadvantages to creditors of the company going into liquidation and the likely return to creditors. The administrators' views are provisional. Under Mr Salisbury's proposal, the likely return to creditors ranges from about 2 cents to 14 cents in the dollar, whereas, should the company be placed in liquidation, the likely return to creditors ranges from nil to 25 cents in the dollar. The funds had been provided to the company by the Bank by way of a commercial bill facility which is due to expire on 30 November 2009. As I have said, the company's liability to the Bank was secured by a registered mortgage over properties including the two apartments. The company's liability to the Bank was also secured by two fixed and floating charges, the first dated 2 November 2001 and the second dated 20 September 2007. In addition, both Mr Foti and Mr Salisbury, as the directors of the company, had guaranteed the repayment of the company's debt to the Bank. Mr Salisbury and interests associated with him have been and are represented by Finlaysons, solicitors. Finlaysons wrote to the Bank on 30 October 2009. We expect that the bank would consider this to be an event of default. Based on the limited financial information provided to the Court by Mr Foti, it seems to be common ground that P & S does not have current assets in the nature of cash or other readily convertible assets, to pay the debt out at that time. He is making arrangements to pay to our trust account the total amount due to the bank which he is prepared to tender to the bank on the basis set out in his letter and the enclosed draft deed. By notice dated 5 November 2009, Mr Salisbury appointed Martin David Lewis and David William Kidman administrators of the company. By deed dated 5 November 2009, the bank has assigned in favour of Scott James Salisbury of 474B Anzac Highway, Camden Park, South Australia, 5038 ( the assignee ) all of its rights and interests in the facilities provided by it to the company and the securities in return for the assignee paying to the bank the amount outstanding by the company in respect of such facilities. (3) An order may be made subject to conditions. I refer to Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 ; Milankov Nominees Pty Ltd v Roycol Ltd (1994) 52 FCR 378 which cases dealt with s 447A as it was in the Corporations Law . Section 447A(2) provides an example of an order that may be made under s 447A(1). The Court may order that the administration of a company is to end, and the circumstances in which the Court may make such an order are set out in s 447A(2). One such case is where the Court is satisfied that a provision of Part 5.3A of the Act is being abused. In this case, Mr Foti claims that the provision of Part 5.3A which is being abused is the provision which gives a chargee the power to appoint an administrator (s 436C). Mr Foti claims that that provision is being abused because Mr Salisbury exercised the power for an improper purpose. Mr Foti claims that an improper purpose is one which is foreign to the purposes which lie behind the appointment of an administrator under Part 5.3A. The purposes which lie behind the appointment of an administrator are to be gleaned from a consideration of Part 5.3A as a whole. Section 435A is of particular importance. They may decide that the company will enter into a deed of company arrangement or that the administration will end or that the company will be wound up (s 439C). Voting by related creditors may be supervised by the Court (s 600A). Mr Foti accepts that he carries the onus of establishing that Mr Salisbury had an improper purpose in appointing the administrators. He acknowledges that there is no direct evidence of that fact and he asks the Court to draw an inference of an improper purpose. Both parties referred to the decision of the High Court in Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509 (" Williams v Spautz "). The case is not directly on point, but it does contain an analysis of the common law doctrine of abuse of process where the abuse is said to be the bringing of proceedings for a collateral purpose. Mr Foti accepts that he must show not only that Mr Salisbury had an improper purpose, but also that it was his predominant purpose. Before examining the evidence, it is convenient to consider some of the cases which have addressed the circumstances in which the Court will find that an administrator was appointed for an improper purpose. In Aloridge Pty Ltd (prov liq apptd) v Christianos [1994] FCA 972 ; (1994) 13 ACSR 99 , Burchett J made an order under s 447A of the Act that the administration of a company end. A provisional liquidator had been appointed to the company and he was actively pursuing a number of disputes on behalf of the company, including a dispute about the charge held by the person who had appointed the administrator. In light of the facts, Burchett J drew the inference that the appointment of an administrator was made not for the purposes for which the Act makes provision, "but in order to wrest control of the affairs of the company away from the provisional liquidator in the hope that the administrator might prove more compliant" (at 102). In determining the purposes for the appointment of an administrator, Burchett J had regard to the object of Part 5.3A set out in s 435A. In Spacorp Australia Pty Ltd v Fitzgerald (2001) 19 ACLC 979 , Beach J made an order bringing the administration of a company to an end. He concluded that the action of a creditor of the company in appointing administrators was an abuse of process. The creditor had served a statutory demand on the company pursuant to s 459E of the Corporations Law . On an application by the company, the statutory demand was set aside. The creditor appealed and was successful. The company appealed to the Court of Appeal, and the time for compliance with the statutory demand was extended pending the determination of the appeal. At that point, the creditor appointed administrators to the company. Beach J found that, in the circumstances, the appointment of administrators was an abuse of process. All the more so when it was well aware of the fact that the appeal was on foot and that the Court of Appeal had stayed the time for compliance with the statutory notice until after the hearing and determination of the appeal. Barrett J referred to the decision of the High Court in Williams v Spautz and said that a consideration of purpose meant that it was appropriate to examine first the proper purposes of Part 5.3A of the Act. Examination of Part 5.3A as a whole shows that there are several purposes which together contribute to the widely stated object. The provisions imposing the various moratoriums show that there is a purpose of allowing time for unpressured but reasonably prompt consideration of possible reconstruction possibilities. The provisions as to creditors meetings and creditor decision-making, including those concerning deeds of company arrangement, show that there is a purpose of allowing reconstruction possibilities to be pursued in such a way that, if creditors so desire, a legacy of debt may be left behind and winding up, which would normally be the product of an intolerable debt burden, may be avoided. Implicit in that, of course, is the proposition that the company will thereby be permitted to return to the mainstream of commercial life. Another purpose is that if the company is not capable of returning to the mainstream of commercial life, there will be some better outcome for creditors than that available in an immediate winding up. The importance of keeping that purpose in mind, in a case such as the present, was emphasised by Sundberg J in Dallinger v Halcha Holdings Pty Ltd (1995) 60 FCR 594 ; 134 ALR 178 ; 18 ACSR 835. There is, at best, mere lip service to the purposes of Part 5.3A , the overriding purpose and motivation being the avoidance technique to which I have referred. In particular, there is not and could not be any real purpose of rehabilitating the company as a commercial concern. Nor can improved returns to creditors through the proposed deed of company arrangement be regarded as anything but purely speculative. The improper purpose of the director and appointor in that case was to manipulate the "relation-back day" to his benefit. I should say at this point that counsel for Mr Foti did not seek to argue that Mr Salisbury's purpose was one involving the manipulation of the relation-back day. Mr Foti claims that Mr Salisbury had two improper purposes in appointing the administrators. As I have said, he acknowledges that, if one is made out, it must be the predominant purpose, and, if both are made out, then they must be the predominant purposes. First, it is alleged by Mr Foti that Mr Salisbury's purpose in appointing the administrators was to gain control of the company. He submitted that Mr Salisbury seeks to gain control by the share issue which forms part of Mr Salisbury's proposal for a deed of company arrangement. He pointed to the fact that if the share issue proceeds, Mr Salisbury will hold 242,002 of the 242,004 shares forming the issued share capital of the company. I asked counsel for Mr Foti to identify the benefit which would enure to Mr Salisbury if he put himself in this position. He said that Mr Salisbury would then be in a position to take the lion's share of any residual equity in the two apartments. It seems to me that this is a case in which there is no one circumstance which points to a proper or improper purpose. All the circumstances of the case must be considered. I have considered all of the circumstances and I do not think they support a conclusion that Mr Salisbury's purpose in appointing the administrators was to gain control of the company. There is evidence before me that Mr Salisbury considered that the two apartments would not realise anywhere near their true value if they are sold by a liquidator or secured creditor. Experience suggests that there is a reasonable basis for that belief. To purchase the secured debt and to place the company in administration was one way of avoiding that result. Mr Salisbury's proposal for a deed of company arrangement involves him providing funds to the company which would see a return to creditors. Although the proposed return is modest, it has the advantage of being certain in terms of amount and time of payment. As far as the share issue is concerned, it does not seem to me to be at all surprising that Mr Salisbury would insist on some consideration for the money he proposes to advance. On the evidence before me, a share in the company would not be worth the one dollar he proposes to subscribe and, in fact, the shares may prove to be utterly worthless. Furthermore, on the evidence before me, it is highly speculative to say that there will be net equity in the two apartments available to shareholders. At the moment, there are appraisals which are not formal valuations and which were conducted on a "sight unseen" basis and there is uncertainty as to whether Built Environs will establish its claim. In all these circumstances, it seems to me that the evidence does not support a conclusion that Mr Salisbury's purpose, let alone his predominant purpose, in appointing the administrators was to gain control of the company through the issue of shares. Secondly, it is alleged by Mr Foti that Mr Salisbury's purpose in appointing the administrators was to avoid investigations and possible actions by a liquidator in relation to transactions in which he was involved and, in particular, the transaction involving the King William Street property and the transaction involving the Wallaroo land. As I have said, the report of the administrators suggests that there are transactions involving Mr Foti's interests and transactions involving Mr Salisbury's interests which call for further investigation. The possibility of claims by a liquidator against Mr Salisbury calls for careful consideration of his purpose in appointing the administrators. There is no doubt that Mr Salisbury's action in paying out the substantial debt owed to the Bank was a significant step and it was followed by the appointment of the administrators. Mr Foti points to Mr Salisbury's secret negotiations with the bank and the fact that the mediation was occurring at about the same time and submitted that I should draw an inference adverse to Mr Salisbury from these facts. It is not clear to me what precise inference Mr Foti is asking me to draw and without more I am not prepared to draw any inference from these facts. It may be that Mr Salisbury simply decided to keep his options open in case (as happened) the mediation failed. Of course, I do not know what happened at the mediation. Mr Foti also points to the fact that the creditors may receive a greater return on a liquidation than they may receive under Mr Salisbury's proposal. He points to the administrator's report in this respect. There are two answers to this submission. First, the administrators' views are provisional and are based on information not necessarily available to Mr Salisbury at the time he exercised the power of appointment. Secondly, and this is perhaps related to the first point, Mr Salisbury's proposal (if it proceeds) has the advantage to creditors of certainty as to payment and amount. Mr Salisbury's purpose is to be determined according to all the circumstances. There is evidence that he wished to provide a return to creditors and to secure an orderly sale of the company's remaining assets, namely, the two apartments. Even if it is proper to infer that he was aware of the possibility of claims being made against him should the company be placed in liquidation, I do not think the evidence supports a conclusion that his purpose in appointing the administrators was to avoid claims against him by a liquidator. Certainly, the evidence does not rise to the level of supporting a conclusion that, if that was his purpose, it was his predominant purpose. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application that administration be brought to an end under s 447a of corporations act 2001 (cth) because administrators appointed for improper purpose where administrators appointed by director by reason of that director discharging company debt and acquiring a charge over the company's assets where director proposed deed of company arrangement in which he would contribute funds and forgo debts in exchange for shares in the company where application to end administration made by only other director and shareholder whether predominant purpose of appointing administrators was to gain control of company or to avoid investigation by liquidator corporations |
It is a sequel to two Notices of Motion which were the subject of decision in Bonnell v Deputy Commissioner of Taxation [2008] FCA 60. The earlier motions were referred to at [46] and [48] of that judgment of 8 February 2008. The proceedings be dismissed pursuant to section 31A of the Federal Court Act 1976 and Order 20 rule 2 of the Federal Court Rules . Alternatively, the proceedings be stayed pursuant to Order 20 rule 2 of the Federal Court Rules . Further and in the alternative, the statement of claim be struck out pursuant to Order 11 rule 16 of the Federal Court Rules , and the application be dismissed. Granting leave to the applicant to file and serve an amended statement of claim in the form of exhibit NM1 on the hearing of the notice of motion filed 5 March 2007. Grants leave to the applicant to file and serve a Notice For Discovery on the respondent on or before 29 February 2008 requiring the respondent, within 28 days after service of the Notice, to give discovery with verification of documents relating to the exercise, or possible exercise, by the Commissioner, whether before or after 29 July 2004, of the discretion conferred upon him by s 227(3) of the Income Tax Assessment Act 1936 (Cth) ('the Act') to remit the whole or any part of the additional tax payable by the applicant under s 226K of the Act and referred to in the Notice of Amended Assessment issued on 29 July 2004. Grants leave to the applicant to amend the Application filed 10 October 2006 by filing and serving an Amended Application on or before 18 April 2008. Grants leave to the applicant to amend the Statement of Claim filed 10 October 2006 by filing and serving an Amended Statement of Claim on or before 18 April 2008. Orders that, in the event that an Amended Statement of Claim is not filed on or before 18 April 2008, the Statement of Claim filed 10 October 2006 shall, without further order, be struck out. Orders that, in the event that an Amended Application is not filed on or before 18 April 2008, the application filed 10 October 2006 shall, without further order, be dismissed generally. Orders that the applicant pay one half of the respondent's costs of the applicant's Amended Notice of Motion filed 11 April 2007 and that such costs may be taxed and shall be payable forthwith. Orders that the respondent's Notice of Motion filed 9 March 2007 be dismissed. Orders that there be no order as to costs in respect of the respondent's Notice of Motion filed 9 March 2007. The Notice for Discovery also called upon the respondent to give discovery with verification of a number of documents which related to other matters. On 16 April 2008 an order was made setting aside paragraphs 1(k), 1(l), 1(q), 1(r), 1(s), 2, 3 and 4 of the Schedule to the Notice for Discovery. The Court also ordered that a revised expression of subparagraph 1(q) could stand as part of the Notice for Discovery. On 16 April 2008 a further order was made extending the time for compliance with the Notice for Discovery until Monday 21 April 2008. In addition an order was made substituting the date 26 May 2008 for 18 April 2008 in orders 2, 3, 4 and 5 as made on 8 February 2008. In the foregoing context, the applicant filed an Amended Application on 26 May 2008 and an Amended Statement of Claim on the same day. The original Application had been filed on 10 October 2006. When the earlier motions were heard a proposed Amended Application was considered as was a proposed Amended Statement of Claim (see prayers for relief 1A and 1 at [3] above). However, neither of those documents was ever filed, no leave to do so having been granted. That this motion be heard with expedition. That proposed order 2 in the Amended Application be struck out, or alternatively summarily dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). That proposed order 2 in the Amended Statement of Claim (filed 26 May 2008) be struck out pursuant to rule 16 of Order 11 of the Federal Court Rules . That the paragraphs 36 and 37 of the Amended Statement of Claim be struck out and that in consequence the balance of the Statement of Claim be struck out. That the Amended Application be summarily dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). The applicant pay the respondent's costs of the motion. The applicant pay the respondent's costs, including reserved costs. Such other orders as the Court deems necessary or desirable. The facts and matters and statements of legal principle as recorded in the earlier judgment should be treated as having been restated in full in these reasons. By way of introduction, it is necessary to refer to the Notice of Amended Assessment issued on 29 July 2004 whereby the Commissioner disallowed the claimed deduction by the applicant of an amount of $5 million with the consequence that tax of approximately $2.4 million became payable in respect of the applicant's amended taxable income for the year of income ended 30 June 1999. In accordance with s 226K of the Assessment Act, the appellant became liable to pay additional tax, by way of penalty, in the sum of $606,250.00, none of which was remitted by the Commissioner in accordance with s 227(3) of the Assessment Act (see [11]-[12] of the earlier judgment). In the Statement of Claim filed 10 October 2006 a number of allegations of fact were made by the applicant (see [45] of the earlier judgment). One of the allegations was to the effect that the Notice of Amended Assessment was invalid because the amendment decision to impose penalties was not a bona fide attempt by the Respondent or the Respondent's officers to exercise the Respondent's power to amend. In an email dated 5 December 2005 the applicant had said 'one of the allegations I have made consistently is that the levying of penalties against me was done for an improper purpose'. At [121] of the earlier judgment the matter so alleged by the applicant was rejected, but the possibility of an alternative allegation being sustained, was entertained. Such an allegation in respect of the "levying of penalties" cannot be sustained in these proceedings. However, an allegation that a decision taken by the Commissioner in exercise of his discretion under s 227(3) of the Assessment Act not to remit the whole or any part of the additional tax payable by the applicant by way of penalty under s 226K of the Assessment Act was taken for "an improper purpose" may be sustained. On my understanding it is this second allegation which underpins the case which the applicant now wishes to bring. Section 227(2) empowered the respondent to incorporate notice of the assessment of additional tax payable under s 226K in a notice of amended assessment under s 170(1) of the Assessment Act. The power of remission, which is central to the issues presently before the Court, was contained in s 227(3) of the Assessment Act. It permitted the Commissioner, in his discretion, to 'remit the whole or any part of the additional tax payable by a person under a provision of this Part'. The Commissioner contended that he addressed the discretion conferred upon him by s 227(3) of the Assessment Act and made a decision not to remit any part of the additional tax payable by the applicant prior to the issue of the Notice of Amended Assessment on 29 July 2004. This amendment resulted from a disallowance of the applicant's claimed deduction from his assessable income of $5 million by way of contribution to, I assume, the 'Bonnell No. It is clear that the Commissioner had the power, under s 227(3) of the Assessment Act, to remit the additional tax or part thereof before the Commissioner made the assessment of the additional tax as required by s 227(1). ... 116 There is no evidence to suggest that the applicant has called on the Commissioner to exercise the discretion conferred on him by s 227(3) in the applicant's favour. What is clear is that if the Commissioner addressed his discretion before 29 July 2004, he did not exercise it in the applicant's favour. As previously indicated (at [13]) the Commissioner contends that he did address the discretion before the issue of the Notice of Amended Assessment on 29 July 2004 and that he made a decision not to remit any part of the additional tax payable by the applicant. However there is no evidence to support that contention and no evidence to indicate that the applicant was ever informed of that fact, if it was the case. In The King v Murray; Ex parte Proctor [1949] HCA 10 ; (1949) 77 CLR 387 at 400 Dixon J, as his Honour then was, treated the Hickman provisos as being satisfied if 'there has been an honest attempt to deal with a subject matter confided to [in a case such as the present, the Commissioner] and to act in pursuance of the powers of the [Commissioner] in relation to something that might reasonably be regarded as falling within [the Commissioner's] province'. The validating provision cannot be so construed if the impugned act by the repository of the power is not referable to the power given to the repository or exceeds the power which can constitutionally be given to the repository. Rather taxpayers are to be confined to the objection and appeal remedy now contained in Pt IVC of the TAA: see Kordan's case at [1]. [30] Sections 175 and 177 are, though, subject to the rule of construction enunciated in R v Hickman; Ex parte Fox & Clinton, in relation to privative clauses: DCT v Richard Walter [1995] HCA 23 ; (1995) 183 CLR 168 ; 29 ATR 644 ; 95 ATC 4067 ; see also, Sunrise Auto Ltd v FCT (1995) 61 FCR 446 ; 32 ATR 347 ; 95 ATC 4840 ; with the consequence that an assessment will lose the protection of ss 177(1) and 175, and its validity will be open to challenge, if it is not made in compliance with the Hickman principle: Briglia v FCT (2000) 44 ATR 166 at 168; ATC 4247 at 4249 and the cases referred to therein. [31] For present purposes it can be said that that principle will not be breached if in making the assessment in question (1) there was a bona fide attempt by the Commissioner to exercise the power of assessment; (2) that attempt related to the subject matter of the ITAA 1936; and (3) it was reasonably capable of reference to the Commissioner's power of assessment: but see Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 per Spigelman CJ where additional possible elements in the principle are considered. In the present case the assessments in question have been impugned principally in reliance on the first of these propositions (bona fide attempt) although it is alleged as well that the third of the propositions (reasonably capable of reference to the power of assessment) was not satisfied. It is, thus, not particularly surprising that applications directed at setting aside assessments on the basis of absence of good faith have generally been unsuccessful. Indeed one would hope that this was and would continue to be the case. As Hill J said in San Remo Macaroni Company Pty Ltd v Commissioner of Taxation [1999] FCA 1468 ; 99 ATC 5138 at 5154 it would be a rare case where a taxpayer will succeed in showing that an assessment has in the relevant sense been made in bad faith and should for that reason be set aside. [33] It is unsurprising that the above view has been expressed. A premise of the rule of construction embodied in the Hickman principle is that, but for the privative clause in question (here s 175 with its s 177(1) overlay), a decision taken in the exercise of a power to which the clause relates might otherwise be invalidated in judicial review proceedings because, for example, the decision-maker "has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority": Hickman's case at 615. To the extent that it is effective the clause saves from invalidation an assessment that would otherwise be potentially reviewable for defect or irregularity: Richard Walter, above, at 180. Something more is required. [34] It is likewise unsurprising that courts have shrunk from attempting a comprehensive exposition of what is and is not countenanced by the formula "a bona fide attempt to exercise [a] power". Rather the burden of the formula has been illustrated by example as in the observations (i) "[p]lainly enough, an incorrect assessment does not demonstrate an absence of bona fides": Briglia at 4250; or (ii) "once the Commissioner forms the view that there is no substantial possibility that the item of income is assessable income of a person, it could not be a bona fide exercise of the assessing power to assess that person to tax in respect of that income. Likewise here where it is conceded that there is no possibility at all that the assessments made were correct, there can be no assessment": Darrell Lea Chocolate Shops Pty Ltd v FCT (1996) 72 FCR 175 at 187; 34 ATR 491 at 502; 97 ATC 4040 at 4050. [35] The formula likewise has been illustrated by resort to some alternate formula which is appropriate to the particular context in which it is used. In R v Comr of Taxation (WA); Ex parte Briggs (1986) 12 FCR 301 , for example, the formula used (at 308) was "a genuine attempt to ascertain the taxable income of the taxpayer" in a setting in which it was conceded that the Commissioner never intended to, and did not, embark upon the process of ascertaining the taxpayer's income. And references commonly have been made to the terminology of "abuse of power" to characterise what was not a bona fide exercise of a power: see eg Richard Walter, above, at 219. [36] What is clear both from the premise of the Hickman principle itself and from judicial treatment of the "bona fide attempt" formula is that, in the setting of ss 175 and 177(1), the cases will be rare and extreme in which a bad faith assessment will be able to be made out for Hickman purposes. Often, I do not say invariably, they will be cases (i) where, knowingly, the assessment power has been exercised for an improper purpose; or (ii) where the purported assessment involved no actual attempt to ascertain or calculate the taxpayer's income as, for example, where the assessment was made on facts "known ... to be untrue": Darrell Lea Chocolates, at 188. [37] Given its possible significance in this proceeding, I should also note that uncertainty arising from, or deficiency in, the information available to the Commissioner will not of itself preclude a bona fide attempt to assess being made: see Richard Walter, above, at 200-201. In the case of a determination under s 136AD(4), an insufficiency of information available to the Commissioner can be the very trigger justifying resort to that provision. [38] Finally, whether or not a denial of natural justice can in some circumstances defeat the bona fides requirement: cf O'Toole v Charles David Pty Ltd [1991] HCA 14 ; (1991) 171 CLR 232 at 305; or else some other requirement of the Hickman principle: O'Toole, at 287; Vanmeld's case, above, 105ff; Aronson and Dyer, Judicial Review of Administrative Action, 689ff (2nd ed, 2000); and on natural justice and "jurisdiction" see Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 75 ALJR 52 ; are not matters into which I need inquire in this proceeding. What came to be known as the principle of "Wednesbury unreasonableness" was developed in the case law by analogy to the principles controlling the exercise of powers of discretions vested in trustees and others. [13] However, several points should be made here. First, given the equitable nature of their origins described above, principles of public law concerning impropriety in the exercise of statutory powers have not had the focus upon what might be called the "red blooded" species of fraud which engages the common law. It is extremely rare for public authorities to be found guilty of intentional dishonesty: normally they are found to have erred, if at all, by ignorance or misunderstanding. Yet the courts constantly accuse them of bad faith merely because they have acted unreasonably or on improper grounds. Again and again it is laid down that powers must be exercised reasonably and in good faith. But in this context "in good faith" means merely "for legitimate reasons". Contrary to the natural sense of the words, they impute no moral obliquity. It is not a discretion which, if exercised, will impose a burden. Rather, it is a discretion which, if exercised, will provide relief from a burden. Copies of the documents discovered by the respondent were tendered in evidence on the hearing of the current Notice of Motion and became Exhibit NMB. As part of the Office's consideration of the matter a telephone hook-up took place between a number of officers including the Assistant Commissioner, Small Business, Aggressive Tax Planning and the Senior Tax Counsel on 12 July 2004. That is to say, that on the evidence available: • The established facts support the position that Mr Bonnell was not an employee of Windoval P/L for the purpose of Section 82AAA. • the fund was not a fund established for the purposes of provision of superannuation benefits. • The contributions were not made for the purpose of providing superannuation benefits. • that Mr Bonnell had not "retired". Prepare letter to issue to Bonnell stating that his response has not provided a sufficient basis to alter the opinion as outlined in the Position Paper. Also to advise him that the deduction would be disallowed and an amended assessment would issue in due course. Also, section 170AA/GIC interest is to be charged. Namely, that the fund would be a superannuation fund, the contributions would be made for the purposes of providing superannuation benefits and that Mr Bonnell would be an employee of Windoval Pty Ltd for the purposes of section 82AAA. The remission of penalty under a shortfall section will be exercised in only exceptional circumstances. Somewhat surprisingly, no document appears to have been discovered by the respondent answering the description of being a document recording the decision made by the respondent not to remit additional tax imposed by s 226K of the Assessment Act in connection with the amended income tax assessment of the applicant for the year of income ended 30 June 1999, nor does it appear that any document has been discovered recording the reasons for such a decision. He submitted that a tender of the bundle of documents comprising Exhibit NMB at a final hearing would not, without explanation or further evidence, prove the basis for the decision and an absence of bad faith. No onus would rest upon the respondent requiring her to prove an absence of bad faith. Be that as it may, the applicant submits that the documents comprising Exhibit NMB do not provide a sufficient evidentiary basis for an order for summary judgment under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (the 'Federal Court Act'), a matter to which I will return later. A. In or about late July 2004, the Respondent disallowed the $5 million deduction claimed by the Applicant in his return for the year ended 30 June 1999, and inter alia assessed additional tax payable by the Applicant in accordance with s.226K of the Act in the sum of $606,250. In or about late July 2004, the Respondent decided that the additional tax imposed upon the Applicant under s.226K of the Act was not to be remitted under s.227(3) of the Act ("Remission Decision"). On or about 29 July 2004, the Respondent purported to issue to the Applicant a Notice of Amended Assessment for the year of income ended 30 June 1999 which included the additional tax. At the time that the Remission Decision was made the Respondent knew all of the facts alleged at paragraphs 1 to 31 above. could only make it if and to the extent that it related to the subject matter of the Act; and iii. could only make it if and to the extent that it was reasonably capable of reference to the powers given to the Respondent under s.227(3). failed to have regard to any matter material to whether the power conferred by s.227(3) should be exercised; iii. failed to adhere to his publicly announced policy in relation to the remission of penalties against participants in CIS fund arrangements; iv. acted on the assumption that the Applicant was a promoter of CIS fund arrangements; v. sought to punish the Applicant for the advice which he had given to the Applicant's clients in connection with implementing CIS fund arrangements; vi. acted upon a suspicion or belief that the Applicant had obtained the Ruling improperly. vii. acted upon an assumption that the Applicant was an associate of First Assistant Commissioner Petroulias. During the course of his submissions on 27 June 2008 senior counsel for the applicant made an application for leave to amend the Amended Statement of Claim filed 26 May 2008 by inserting the words 'In breach of each of the matters pleaded in paragraph 36(i), (ii) and (iii) of paragraph 36' in paragraph 37 before the words 'In making the Remission Decision'. The proposed amendment was opposed by senior counsel for the respondent but only in part. The respondent's opposition was to the inclusion of references to (ii) and (iii). The applicant pressed for leave to amend paragraph 37 in the manner originally proposed by him. Had the matter been free from consent I would have dismissed the application in its entirety. However, given the consent of the respondent to a partial amendment an order was made on 27 June 2008 to the effect that the Amended Statement of Claim filed 26 May 2008 be amended by inserting before the words 'In making the Remission Decision', the words 'In breach of the matter pleaded in paragraph 36(i)'. This matter is discussed later in this report. At this juncture, it should be noted that there was some doubt as to the bone (sic) fides regarding the issue of this ruling due to the involvement of the then Assistant Commissioner of Taxation, Strategic Intelligence and Analysis, Mr Nick Petroulias. As part of a joint investigation into possible fraudulent activities perpetrated by Petroulias ... Bonnell was interviewed by the Australian Federal Police ... [see page 5] ... On 9 September 1998, Bonnell applied to the Tax Office, via Petroulias, for a ruling regarding a non complying CIS arrangement or scheme. On 29 September 1998, a favourable Private Binding Ruling (ruling) was issued to Bonnell in relation to his scheme for the 1999 and 2000 years. The ruling was prepared by a junior officer ... working for Petroulias. ... ... Due to considerable doubt concerning the bona fides of a number of rulings with which Petroulias was associated, Bonnell was interviewed by the Australian Federal Police ... and had documents seized under AFP warrants. It would appear that the AFP has not identified any criminal activities in the dealings between Bonnell and Petroulias. ... [see page 11] ... Bonnell used his personal ruling as a basis for promoting similar arrangements to high wealth individuals. This promotional activity culminated in a referral to the Aggressive Tax Planning area ... for further review ... . Over 370 taxpayers have been identified as participating in the arrangements promoted by Bonnell. All other identified participants have had their assessment adjusted to disallow claims made under S82AAE. the general law, the PBR or the public ruling). However, this assumes that the PBR was issued in good faith ...[pages 12-13] ... The Tax Office Prosecutions area were also pursuing a prosecution against Bonnell for his failure to respond to the S264 Notices, dated 1 August 2001 ... Bonnell was found guilty and was fined $700 plus Costs of $59. Bonnell appealed against this conviction and the severity of penalty. The appeal was heard on the 3 April 2003. The District Court dismissed the appeal and ordered Bonnell to supply the information by 16 June 2003. [see page 15] ... The prosecution for non compliance with ... Notices issued on 27 May 2002 was initially heard in the District Court on 3 June 2003. Potential risk is assessed to be High --- likely adverse media with some loss of support. Given associations between the taxpayer and Petroulias, issues affecting the bona fides of the PBR have an immediate and consequent impact on current prosecution action. These are issues of extreme sensitivity and an early allocation of TCN is requested. The fact is that this matter is happening now and it has real potential to have a significant adverse impact on the community's perception of how the ATO administers the Rulings system. In a worst case scenario these factors in conjunction with the Petroulias association could potentially lead to a challenge of (sic) the Commissioner's credibility. 29 July 2004. There is nothing to suggest that the Commissioner's discretion was exercised favourably to the applicant. Hence, I would assume, the use of the expression 'purported to issue' in paragraph 34 of the Amended Statement of Claim filed 26 May 2008. The applicant acknowledged that there was 'no case directly in point which could be relied upon by way of precedent' to support this submission. In relation to the operation of s 226K and s 227(1) of the Assessment Act it may be observed that s 226K provided that 'the taxpayer is liable to pay, by way of penalty, additional tax equal to 25 per cent of the shortfall or part' in the event that the preconditions set out in the section were satisfied. It is common ground in the present case that either the preconditions were satisfied or it is not open to the applicant to say that they were not satisfied. Section 227(1) of the Assessment Act is mandatory in its terms and requires the Commissioner to 'make an assessment of the additional tax payable' by a person under a provision of Part VII, relevantly, in the circumstances of this case, s 226K. The respondent accepts that, notwithstanding the wording of s 226K, the liability imposed by that section to pay, by way of penalty, additional tax could not be enforced without an assessment first being made under s 227(1), regardless of whether that assessment was incorporated in notice of any other assessment as permitted by s 227(2) of the Act or not. A copy of Exhibit NMC is attached to these reasons as Appendix 'A'. It may be seen that the additional tax of $606,250.00 referred to in the Notice of Amended Assessment became due and payable on 2 September 2004. I would construe the expression 'This amount is payable by 02 SEP 04' as so providing. The Commissioner's discretion to remit the whole or any part of the additional tax was a discretion which operated in respect of additional tax 'payable by a person under a provision of this Part' and, but for the qualification contained in the second part of s 227(3), was only engaged after an assessment had been made under s 227(1) of the additional tax and, arguably, after the additional tax had become 'due and payable' under s 204 of the Assessment Act. The second part of s 227(3) had the effect of permitting the Commissioner to exercise his discretion to remit the whole or any part of the additional tax payable by a person such as the applicant before the Commissioner made the assessment of the additional tax payable as required by s 227(1) of the Act. However, in my opinion, the Commissioner's discretion to remit the whole or any part of the additional tax payable by a person under a provision of Part VII did not allow the Commissioner any discretion in respect of the determination of the amount of the additional tax payable. That was governed by the relevant provision of Part VII, in this case s 226K. Section 227(3) simply empowered the Commissioner to remit, or forgive, the whole or some part of such additional tax. The applicant's reliance upon cases dealing with assessment and 'plucking figures out of the air', making 'bona fide judgments on a taxpayer's taxable income' and 'colourable assessments' have no relevance to the matter presently before the Court. Section 226K of the Assessment Act determines the amount of the additional tax payable by the applicant by way of penalty. The Commissioner has no discretion in relation to that determination. The current proceedings cannot be used to mount a collateral attack on the assessment of the amount of the applicant's amended taxable income and of the tax payable thereon nor can it be used a vehicle for a collateral attack on the assessment of the amount of the additional tax payable by the applicant under s 226K of the Assessment Act. The current Application must be confined to the exercise of the power of remission or forgiveness of the additional tax payable by the applicant by way of penalty, or part thereof. The applicant's submission that an exercise of discretion under s 227(3) of the Assessment Act is 'part of the assessment process' is misconceived and has been previously rejected (see, inter alia, [85], [126] and [127] of the earlier judgment). However an opportunity should be afforded to the applicant to file and serve an Amended Application. The claims for relief in such an application would have to be confined to the applicant's challenge to the Commissioner's exercise or failure to exercise his discretion under s 227(3) of the Assessment Act. It could not 'contest the validity of' the assessment in accordance with s 170(1) of the Assessment Act of the amount of the applicant's taxable income and of the tax payable thereon or the validity of the assessment under s 227(1) of the Assessment Act of the additional tax payable by the applicant under s 226K of the Assessment Act. 127 Were the Application and the Statement of Claim to remain in the form of the documents filed on 10 October 2006, it would plainly be appropriate to order that the proceedings be summarily dismissed. Nothing in the present proceedings can affect the amended assessment by the Commissioner of the amount of the applicant's taxable income and of the tax payable thereon resulting from the disallowance of the claimed deduction of $5 million under s 170(1) of the Assessment Act. However, the applicant should not, in my opinion, be denied an opportunity to put his house in order and bring his application into line with the case which he has indicated he wishes to bring in relation to the Commissioner's exercise or failure to exercise his s 227(3) discretion favourably to the applicant. 128 Turning to the proposed Amended Statement of Claim which is Exhibit NM-1, I am of the opinion that paragraph 36 should be struck out and further that paragraphs 33A, 34A, 35, 35A and 35B should be struck out but with an opportunity afforded to the applicant to replead his case in a manner consistent with these reasons for judgment and his declared limitation of his case to one brought within the Hickman provisos in relation to the s 227(3) exercise of discretion issues, under s 39B of the Judiciary Act . 129 In the foregoing circumstances, leave ought not to be granted to the applicant to file and serve an Amended Statement of Claim in the form of Exhibit NM-1. However, leave should be granted to the applicant to file and serve a Statement of Claim consistent with these reasons following the giving of discovery by the respondent as contemplated above. To better understand the sentence, it is necessary to turn to the terms of ss 166, 170(1), 173 and 174 of the Assessment Act. That subsection allows a Notice of Assessment of additional tax payable under a provision of Part VII of the Assessment Act to be 'incorporated' in a notice of 'any other assessment made in respect of the person' under the Assessment Act. The applicant's submission that a consequence of the alleged invalidity of a decision by the Commissioner under s 227(3) not to remit additional tax which may be made in breach of one or other of the Hickman provisos 'taints and renders invalid the whole of the Notice of Amended Assessment' does not bear analysis. Any invalidity of a decision reached by the Commissioner in the exercise of his discretion under s 227(3) of the Assessment Act could not affect that part of the Notice of Amended Assessment which records the Commissioner's assessment of the applicant's amended taxable income ($5,936,606) and of the tax payable thereon ($2,780,806.82). The fact that an assessment of additional tax under s 227(1) of the Assessment Act may have been incorporated in the Notice of Amended Assessment of the applicant's amended taxable income and of the tax payable thereon could not affect the validity of the other parts of the Notice of Amended Assessment. I'm happy to have the document admitted on this application subject to the same limitations on [,] upon the same basis as it was admitted on the last occasion. If all that is sought to be achieved by this tender is for the respondent to gain, in respect of the amended assessment, such protection as sections 175 and 177 afford, then I don't have a problem, because the whole debate between the parties in the written submissions starts from the premise that there is - those clauses are in effect in combination a prohibitive [privative] clause, and we've got to get around them. But if my assumption is correct, I have no problem with the tender. That service occurred in the context of a creditor's petition having been served on the applicant, seeking the making of a sequestration order in respect of his estate, earlier in the day on 10 October 2006. The claims for relief in such an application would have to be confined to the applicant's challenge to the Commissioner's exercise or failure to exercise his discretion under s 227(3) of the Assessment Act. It could not 'contest the validity of' the assessment in accordance with s 170(1) of the Assessment Act of the amount of the applicant's taxable income and of the tax payable thereon or the validity of the assessment under s 227(1) of the Assessment Act of the additional tax payable by the applicant under s 226K of the Assessment Act. Furthermore, the applicant does not seek to do so. The applicant became liable to pay additional tax by way of penalty by dint of s 226K of the Assessment Act and the Commissioner was obliged by s 227(1) of the Assessment Act to make an assessment of that additional tax. (3) For the purposes of this section, ... a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. A party pleading shall give particulars of any fraud ... [or] wilful default ... on which he relies. Section 31A made provision for the Court to give summary judgment for an applicant in relation to the whole or any part of a proceeding upon it being satisfied that the respondent had no reasonable prospect of successfully defending the proceeding or that part of the proceeding. More importantly for the purposes of the present case, it also provided for a judgment in the nature of summary dismissal of the whole or any part of a proceeding on the application of a respondent, in the event that it was satisfied that the applicant had no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. The effect of s 31A was to soften the test for a successful application for summary judgment as stated by the High Court in Theseus Exploration N.L. v. Foyster [1972] HCA 41 ; (1972) 126 CLR 507 ('Theseus Exploration') and also the test for a successful application for summary dismissal as stated by Barwick CJ in General Steel Industries Inc. v. Commissioner for Railways (N.S.W. ) [1964] HCA 69 ; (1964) 112 CLR 125 ('General Steel Industries'). See also Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60 ('Jefferson Ford') at [45], [57], [63], [124]). The Explanatory Memorandum circulated by authority of the Attorney-General in relation to the Migration Litigation Reform Bill 2005 (Cth) revealed the purpose of the new s 31A of the Federal Court of Australia Act . 22. Subsection 31A(3) provides that for the purposes of giving summary judgment, a proceeding or part of a proceeding, or a defence to a proceeding or part of a proceeding, need not be hopeless or bound to fail for it to have no reasonable prospect of success. This moves away from the approach taken by the courts in construing the conditions for summary judgment by reference to the 'no reasonable cause of action' test, in Dey v Victorian Railways Commissioners ... and General Steel Industries Inc v Commissioner for Railways (NSW) ... [both of which were summary dismissal cases]. These cases demonstrate the great caution which the courts have exercised in regard to summary disposal, limiting this to cases which are manifestly groundless or clearly untenable. 23. Section 31A will allow the Court greater flexibility in giving summary judgment and will therefore be a useful addition to the Court's powers in dealing with unmeritorious proceedings. Furthermore the use of the word 'unmeritorious' in the Explanatory Memorandum and both of the second reading speeches, along with the use of the word 'unsustainable' in both of the second reading speeches, indicates that a cautious approach should still be adopted to the exercise of the Court's powers under s 31A. However, in my respectful opinion, the preconditions for the exercise of the relevant power, which require value judgments to be made in the absence of a full and complete factual matrix and full argument thereon, lead me to the view that a discretion is reposed in the judge hearing the relevant application to grant summary judgment. The concept of a party having "no reasonable prospect of successfully prosecuting a proceeding" has some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff. It remains a matter for a judge hearing a summary dismissal application to exercise some discretion as to whether questions of law that have been raised are so difficult that they ought not to be decided summarily. In the present case, the questions of statutory construction have been fully argued, if they were not already so argued in April 2007. There can be no utility in reserving them for further consideration at a final hearing of these proceedings. The factual matters that remain outstanding could not alter the effect, if any, of an exercise of a discretion to remit under s 227(3) of the Assessment Act, made otherwise than in good faith or either of the other Hickman provisos, on the Notice of Amended Assessment issued on 29 July 2004. In my opinion such an exercise of discretion, even if otherwise than in good faith, could not 'taint' or 'invalidate' the Notice of Amended Assessment. Somewhat surprisingly, no evidence was adduced by the applicant to verify the facts and matters alleged in the Amended Statement of Claim filed 26 May 2008, beyond the tender of the Media Releases referred to in the Particulars provided under paragraphs 17 and 30 thereof. providing practitioners and their clients with certainty of treatment by the Respondent. It is true that the evidence contained in the bundle of documents produced by the respondent in response to the Notice for Discovery suggested that the Commissioner may have had doubts about the propriety of a number of rulings with which Mr Petroulias had been associated and may have considered the applicant to have been a promoter of tax schemes directed at taking advantage of rulings, which had been provided by or influenced by Mr Petroulias, nevertheless, no evidence was led to support any suggestion of impropriety on the applicant's behalf, beyond his failure to respond to s 264 notices dated 1 August 2001, for which failure to respond he was charged and convicted. The Court's power, as I would see it, is, relevantly, to dismiss an application under Order 20 rule 5(2) of the Federal Court Rules or to give judgment for a respondent against an applicant under s 31A(2) of the Federal Court Act . In my opinion the inclusion in the Amended Application filed 26 May 2008 of those words to which the respondent takes exception in paragraphs 2 and 3 of the Notice of Motion filed 6 June 2008, constitute an abuse of process. They take the Amended Application outside the grant of leave of 8 February 2008. In any event the claims in question and in particular the claim in paragraph 2 of the Amended Application is unsustainable for the reasons set out in detail above. At the least, the respondent is, in my opinion, entitled to an order that the Amended Application be dismissed in relation to prayer for relief number 2. In relation to the Amended Statement of Claim filed 26 May 2008 claims for relief are made which are repetitive of the claims for relief made in the Amended Application. Those claims are embarrassing and should be struck out. It goes without saying that the second prayer for relief included at the end of the Amended Statement of Claim is itself an abuse of process for the same reasons as were given in respect of prayer for relief 2 in the Amended Application. In my opinion, paragraph 36 of the Amended Statement of Claim is not bad as a matter of pleading. Given the amendment that was made on 27 June 2008 to paragraph 37 of the Amended Statement of Claim filed 26 May 2008 the case for striking it out is less clear. However, whilst it is superficially sufficient to enable a case to be made out of lack of good faith on the part of the Commissioner in relation to the exercise by him of his discretion to remit additional tax under s 227(3) of the Assessment Act, it fails, in my opinion, to give appropriate particulars under Order 12 rule 2 of the Federal Court Rules . Paragraph 37 does not indicate, for instance, how it is said that the respondent acted arbitrarily or capriciously or without any intelligible basis. Similarly, there is no identification of any matter said to be material to whether the Commissioner's discretion should be exercised or not to which the Commissioner is said to have failed to have regard. No particulars have been provided as to what constituted a failure, in the applicant's case, of the Commissioner to adhere to his publicly announced policy in relation to the remission of penalties against participants in CIS fund arrangements. Again there are no particulars as to how the Commissioner is said to have acted on the assumption that the applicant was a promoter of CIS fund arrangements. No particulars have been provided as to how it is alleged that the respondent sought to punish the applicant. No particulars are provided as to any suspicion or belief of the respondent that the applicant obtained on or about 29 September 1998 a ruling improperly and as to how the respondent is said to have acted upon such a suspicion or belief. Finally, no particulars were provided to support the allegation that the Commissioner had an assumption that the applicant was an associate of Mr Petroulias upon which the respondent is said to have acted in the exercise of a discretion under s 227(3) of the Assessment Act in relation to the additional tax payable by the applicant by way of penalty under s 226K of the Assessment Act. In the circumstances, I am inclined to the view that the applicant has had more than an ample opportunity to properly plead and particularise his case. His failure to do so, especially in respect of paragraph 37 of the Amended Statement of Claim, should lead to the making of orders striking out paragraph 37. However, I am of the opinion that relief should be granted under s 31A(2) of the Federal Court Act . I am satisfied that were prayer for relief 2 to remain in the Amended Application, the applicant would have no reasonable prospect of successfully prosecuting that part of the proceeding. Judgment should be given for the respondent against the applicant in relation to the relief sought in paragraph 2 of the Amended Application filed 26 May 2008. This, relevantly, leaves for consideration paragraph 1 in the Amended Application. In my opinion the lack of relevant evidence advanced by the applicant to support its case, on the hearing of the motion and the paucity of the evidence relied upon by the applicant indicate that the applicant has no reasonable prospect of successfully prosecuting the claim for relief contained in paragraph 1 of the Amended Application either. Were it to transpire that no exercise of discretion under s 227(3) occurred in about July 2004 that would be the end of the matter. If there was a positive exercise of discretion to refrain from remitting the whole or any part of the additional tax payable by the applicant under s 226K, then there seems to me to be no way that such an exercise of discretion could be rendered invalid, having regard to the material presently before the Court. In the foregoing circumstances I am of the opinion that the respondent is entitled to summary dismissal of the whole of the matter in accordance with s 31A(2) of the Act. (2) The applicant pay the respondent's costs of the motion. (3) The applicant pay the respondent's costs of the proceedings, including reserved costs. | remission of additional tax payable by way of penalty under a provision of part vii of the income tax assessment act 1936 (cth) whether an invalid exercise of discretion to remit within the hickman provisos could invalidate a notice of amended assessment of the amended taxable income of a taxpayer and of the tax payable thereon into which notice of assessment of additional tax has been incorporated under s 227(2) of the act whether the commissioner's discretion to remit additional tax under s 227(3) of the act stands apart from the commissioner's obligation to make an assessment of the additional tax payable under s 227(1) of the act practice and procedure summary dismissal striking out of pleadings inadequate particulars taxation |
On 11 September 2001 a series of terrorists attacks took place on the mainland of the United States of America ("the US") as a result of which there was significant loss of civilian life. On 9 October 2001, the President of the US wrote to the Speaker of the House of Representatives and the President Pro Tempore of the Senate and informed the Congress that at 12.30 pm on 7 October 2001 US armed forces had commenced combat operations against Al Qaida terrorists and their Taliban supporters in Afghanistan. Pakistan shares a border with Afghanistan. Shortly before the commencement of the US combat operations on 7 October 2001 Mr Habib was present in Pakistan. There is no dispute that by 5 October 2001 Mr Habib had been detained by Pakistani authorities. There is also no dispute that in early October 2001 the Commonwealth of Australia ("the Commonwealth") became aware of that state of affairs. On 26 and 29 October 2001 Mr Habib was interviewed in Islamabad by an officer of the Australian Security Intelligence Organisation ("ASIO"). This interview took place in the presence of around two Pakistani officers, two US officials and a number of other foreign officials. The week before, on 22 October 2001, during a meeting held in Pakistan, a US official raised with an ASIO officer and a member of the AFP the possibility of Mr Habib being transferred to Egypt. The Commonwealth claims that the ASIO officer and ASIO's Director-General of Security separately advised representatives of the US government that the Commonwealth could not agree to Mr Habib's transfer. This advice followed consultation by the ASIO officer and ASIO's Director-General of Security with a number of departments of the Commonwealth, including the Department of Prime Minister and Cabinet. It is not disputed that in or around mid November 2001 Mr Habib was taken to Egypt. The Commonwealth admits that it was aware in November 2001 that it was likely Mr Habib had been taken to Egypt and that it became aware in early 2002 that he was almost certainly there. There is no agreement between Mr Habib and the Commonwealth about what happened to him in Egypt. At some point Mr Habib was transferred from Egypt to Afghanistan. When this occurred and how long he was in Afghanistan is presently unclear. It is clear, however, that Mr Habib was, by this stage, in the custody of the US. This is apparent because on 23 April 2002 the War Crimes Office of the US Department of State informed the Australian Embassy that it was likely that Mr Habib would be transferred to Guantanamo Bay and that it understood that he was being held as an unlawful combatant. There is no dispute that Mr Habib had arrived in Guantanamo Bay by approximately 3 May 2002. Nor is there any dispute that he remained there for two and a half years until 27 January 2005 incarcerated and uncharged. What happened to Mr Habib during those two and a half years is the subject of dispute between the parties. However, both parties accept that Mr Habib was visited by Australian officials during his incarceration. This included consular officials and officers of ASIO and the AFP. He was questioned by some of these people on several occasions. On 27 January 2005, Mr Habib was repatriated to Australia without charge. The account I have just given is of the matters which are not controversial. For completeness, it is to be noted that both sides make allegations which are disputed in part or in whole by the other. I will be turning to Mr Habib's allegations presently. It is sufficient to note for now that he alleges that he was tortured in Pakistan, Egypt and Guantanamo Bay and that the Commonwealth knew of this and either did nothing or did too little to stop it from taking place. He makes two other particular allegations which it will be necessary to consider closely. One of these is a contention that the Commonwealth passed information to the Egyptians which information was then used in his torture; the other, that he was interrogated by officers of the Commonwealth whilst shackled to the floor in Guantanamo Bay. On the Commonwealth's side of the ledger it contends that it did a great deal to assist Mr Habib behind the scenes. It sets out in its amended defence, in considerable detail, a number of communications passing between the Commonwealth and the US on the topic of Mr Habib's incarceration, many of them at the very highest levels. Neither the correctness of Mr Habib's claims of torture nor the Commonwealth's claims that it did, in fact, assist him presently fall for determination. On 16 December 2005 he caused a writ of summons to issue out of the High Court on which was endorsed a statement of claim. The High Court remitted that proceeding to this Court on 26 April 2006. It is that proceeding with which the present application by the Commonwealth is concerned. The application is made by an amended notice of motion filed 21 July 2008 and seeks the summary dismissal of the proceeding. The current form of Mr Habib's pleading is the third further amended statement of claim which I shall refer to as 'the pleading'. Leave to file the pleading was granted on 7 October 2008 but, as was made clear on the occasion of that grant of leave, this was on the basis that the Commonwealth's complaints about the pleading's predecessor would be taken as standing against the pleading: Habib v Commonwealth of Australia [2008] FCA 1494 at [12] . The Commonwealth's motion for summary dismissal was heard by me on 9 and 10 October 2008. At that time, Mr Habib propounded a further pleading styled the "Proposed Fourth Further Amended Statement of Claim". I shall refer to that document as 'the proposed pleading'. Final written submissions were received on 28 October 2008. (4) This section does not limit any powers that the Court has apart from this section. It will be seen that the provision requires an assessment of the prospect of Mr Habib's proceeding being successful. If this prospect is less than reasonable the Court may give judgment on the proceeding to the respondent. The insertion of subsection (3) has altered the pre-existing position that only proceedings which are hopeless or bound to fail should be dismissed. Nevertheless, it is a jurisdiction to be exercised with caution: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 236 ALR 720 at 731 [45] per Rares J. The Commonwealth also applies to strike out various portions of the pleading pursuant to O 11 r 16 which relates to pleadings said not to disclose a reasonable cause of action or which are otherwise embarrassing. In relation to both s 31A and O 11 r 16 it is appropriate to assume in Mr Habib's favour that he would succeed at trial in proving each and every allegation of fact contained in the pleading. The Commonwealth's argument is that, even making that assumption, the proceeding cannot succeed. The structure of the pleading is as follows. Paragraphs 5 to 49 make allegations of fact (most of which are summarised above). Paragraph 50 alleges that Mr Habib has suffered loss and damage as a result of those events. Paragraph 51 alleges that the conduct of the Commonwealth involved a breach of a fiduciary duty alleged to be owed to Mr Habib. Paragraphs 52 to 54 allege that the conduct of the Commonwealth was in breach of a duty it owed to him as an Australian citizen which required it to take reasonable steps to assist him in circumstances where he was being illegally detained and tortured by overseas authorities. Paragraph 55 and following allege various acts of defamation. Paragraph 4 appears to contain allegations of harassment and intimidation in addition to the other allegations contained in paragraphs 51 to 55. During the course of the hearing Mr Barker QC, who appeared for Mr Habib, propounded some additional causes of action which were contained in the Proposed pleading. For completeness, it should be noted that a written submission filed on Mr Habib's behalf on 9 October 2008 contends (at paragraph 11) that the pleading contains allegations of "direct torts such as assault". However, this allegation is not present in the current pleading. Its successors appear to be the present paragraphs 5 and 51 of the pleading. I can discern in those paragraphs no allegation of assault or battery against the Commonwealth. Neither pleading gives any indication of what facts are said to constitute the harassment and intimidation. However, paragraphs 40 to 48 of the pleading contain allegations that the Commonwealth has followed Mr Habib and intimidated him. In particular, it is said that he has been denied his passport, that the Commonwealth has provided assistance to the publisher of the Daily Telegraph in relation to Mr Habib's defamation claim against that publisher and that it has deliberately sought to prevent this proceeding from being given a trial date. The Commonwealth denies that such facts could constitute the tort of intimidation. There are three elements to this tort. First , there must be a demand made of the plaintiff by the defendant coupled with a threat to either the plaintiff or a third party: Stratford (JT) & Son Ltd v Lindley [1965] AC 269 at 283 per Lord Denning MR. Secondly , the threat issued by the defendant must be to commit an unlawful or illegal act. The illegality required need not be criminal; indeed, it has been held that a threat to breach a contract is a sufficient threat for the purposes of the tort: Rookes v Barnard [1964] UKHL 1 ; [1964] AC 1129. Thirdly , it must be shown that the plaintiff complied with the demand: Stratford at 283. There are, I think, insuperable obstacles to Mr Habib's intimidation claim. Although he uses the word "intimidation", he does not allege that the Commonwealth sought to coerce him into a particular course of action, still less that he was in fact coerced. In that circumstance, a case based on that tort of intimidation cannot succeed. I turn then to the harassment claim. Strictly speaking, there is no such tort. However, there is an action on the case for the intentional but indirect infliction of harm. In Wilkinson v Downton [1897] 2 QB 57 the defendant told the plaintiff that her husband had been seriously injured in an accident and that she should go and fetch him. This was completely untrue. On hearing the statement the plaintiff suffered a violent shock to her nervous system initially involving vomiting but subsequently producing permanent physical consequences. Some of these involved serious mental illness and included weeks of physical suffering. It was argued for her that she is entitled to recover this as being damage caused by fraud, and therefore within the doctrine established by Pasley v. Freeman (1789) 3 T. R. 51 and Langridge v. Levy (1837) 2 M. & W. 519. I am not sure that this would not be an extension of that doctrine, the real ground of which appears to be that a person who makes a false statement intended to be acted on must make good the damage naturally resulting from its being acted on. Here there is no injuria of that kind. I think, however, that the verdict may be supported upon another ground. The defendant has, as I assume for the moment, wilfully done an act calculated to cause physical harm to the plaintiff --- that is to say, to infringe her legal right to personal safety, and has in fact thereby caused physical harm to her. That proposition without more appears to me to state a good cause of action, there being no justification alleged for the act. This wilful injuria is in law malicious, although no malicious purpose to cause the harm which was caused nor any motive of spite is imputed to the defendant. It is, however, clear that in Australia a distinction is drawn between psychological harm (mere distress) and psychiatric harm (physical injury). The tort in Wilkinson v Downton is confined to cases of physical injury which may include nervous shock (such as suffered by Mrs Wilkinson) but does not include mere mental distress or anguish. The authors of The Law of Torts in Australia (4th ed, OUP, 2007) devote an extensive section advocating a change to this position. They note the existence in the US of a right to recover where a case involves "extreme and outrageous intentional invasions of one's mental and emotional tranquility" citing Alcorn v Anbro Engineering Inc 468 P2d 216 (1970) at 218 [4] per Burke J. This limitation is thought to arise out of cases like Wilkinson v. Downton [1897] 2 Q.B. 57 and Janvier v. Sweeney [1919] 2 K.B. 316. The law of harassment has now been put on a statutory basis (see the Protection from Harassment Act 1997) and it is unnecessary to consider how the common law might have developed. But as at present advised, I see no reason why a tort of intention should be subject to the rule which excludes compensation for mere distress, inconvenience or discomfort in actions based on negligence: see Hicks v. Chief Constable of the South Yorkshire Police [1991] UKHL 9 ; [1992] 2 All E.R. 65. The policy considerations are quite different. I do not therefore say that Khorasandjian v. Bush was wrongly decided. But it must be seen as a case on intentional harassment, not nuisance. Of course, Lord Hoffman was considering whether an action in nuisance should lie where a building (the Canary Wharf tower) caused television interference. The authors of The Law of Torts in Australia also point to a decision of McDonald J in Gimson v Victorian Workcover Authority [1995] 1 VR 209 at 226-7 where a pleading was permitted to go forward to trial in which mere mental distress was alleged. More recently, however, the Victorian Court of Appeal has considered the issue in Giller v Procopets [2008] VSCA 236. In that case the defendant showed, or threatened to show, to others video footage depicting himself and the appellant, his former de facto partner, engaged in sexual activity. One of the claims was that those actions constituted the tort in Wilkinson v Downton . The appellant did not suffer psychiatric harm as a result of the threat but she did suffer severe emotional distress. Ashley and Neave JJ held that the tort did not extend to mental distress: [164]-[166], [471]-[477]. Maxwell P reached the opposite conclusion: [26]-[37]. The ratio decidendi of Giller is that the tort in Wilkinson v Downton is not available unless there is actual physical injury and that extreme mental distress does not constitute physical injury in the requisite sense. It would be inappropriate for me to depart from Giller unless convinced it was plainly wrong: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 ; (2007) 230 CLR 89 at 151-152 [135] . Whilst I can see the force of some of the criticisms which have been made of the present position I could not possibly say that Giller was clearly wrong. Accordingly, I am bound to follow it. Turning to the allegations contained in paragraphs 40 to 48 of the pleading there is, I think, this difficulty. (Emphasis added. The words "seriously wounded and injured" when first appearing are in contradistinction to the words "suffered great pain of body and mind, mental and psychological shock and distress" which follow. The natural reading is that the first phrase is concerned with physical injury; the second with mental anguish. I accept that the words "otherwise seriously wounded and injured" may also contain an allegation of physical injury. However, for two reasons I do not read those words as applying to the harassment claim. First , it is unclear from paragraph 50 which of the very many allegations contained in paragraphs 5 to 49 of the pleading (of which only paragraphs 40 to 48 appear to be concerned with harassment) are connected to which of the losses alleged in paragraph 50. Secondly , it is apparent from the proposed pleading that the harassment claim is no longer pressed on the basis of events following Mr Habib's return to Australia. I assume the words "material time" refer to the period after Mr Habib was picked up in Pakistan until his release from Guantanamo Bay. This must be taken to be so because the allegations contained in the pleading relating to the events which occurred upon Mr Habib's return to Australia, with the exception of the defamation allegations, have been omitted from the Proposed pleading. It will be apparent from this that "mental damage" (which I take to be an allegation of psychiatric harm) is said to have been suffered but by reason of the incarceration, torture and ill treatment. It is not alleged that the harassment and intimidation pleaded in paragraph 25 is the cause of the harm alleged in paragraph 26. Even apart from that deficiency, the Proposed pleading does not plead the constituent element of the tort so that, for example, there is no allegation that the Commonwealth intentionally inflicted indirect harm on Mr Habib. I am therefore faced with two quite different harassment cases each being seriously flawed. The current pleading does not allege psychiatric damage sufficient to constitute physical harm. While the mental and psychological distress it does allege is capable of being seen as flowing from the Commonwealth's behaviour towards Mr Habib upon his return to Australia, the decision in Giller renders this claim untenable. On the other hand, the proposed pleading suggests that the harassment is constituted by the Commonwealth's actions prior to his arrival back in Australia but that harassment is not said to be causative of any loss. Both pleadings are deficient in form. It is plain, I think, that the harassment allegation must be struck out. The question is whether leave to replead should be granted. I deal with that issue at the end of these reasons. It will be seen that this paragraph picks up all of the factual allegations contained in paragraphs 5 to 49. Many of those paragraphs have nothing to do with fiduciary duty. For example, paragraph 6 alleges that Mr Habib was not charged with an offence and paragraph 17 alleges that the Egyptian authorities had a reputation for torture. There are other examples which I need not set out. The Commonwealth submitted that no fiduciary duty could arise. There is, of course, no complete or comprehensive statement of what constitutes a fiduciary. Phipps v. Boardman [1966] UKHL 2 ; [1967] 2 A.C. 46 , at p. 127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions "for", "on behalf of", and "in the interests of" signify that the fiduciary acts in a "representative" character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. The Commonwealth's submission was that it could not possibly be said that it had acted for, or on behalf of, Mr Habib. This submission is too simplistic. It is accepted that there is some kind of duty owed by the State to its overseas nationals. For example, in Mutasa v Attorney General [1980] QB 114 at 118-120 Boreham J spoke of the Crown having a duty to protect a citizen from unlawful detention but of that duty being one of imperfect obligation and thus unenforceable. So too, in China Navigation Company Ltd v Attorney General (1931) 40 Ll L Rep 110 at 112 Rowlatt J spoke of an alleged duty to assist a citizen against piracy as being but a "political" duty: cf. Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at 593-594 [62] - [66] per Tamberlin J. Thus, it is a little glib to say that there was no aspect of the relationship between Mr Habib and the Commonwealth which could involve it in potentially "acting" on his behalf. Indeed, to read the Commonwealth's amended defence is to see numerous activities which very much give the impression that the Commonwealth took a large number of steps on Mr Habib's behalf. Whether it undertook to do so in the requisite sense may be doubted but is probably triable on the basis that the undertaking can be inferred from the assistance which was rendered. It is in that context difficult, at a pleading level, to see on whose behalf the Commonwealth was acting if not Mr Habib's. No doubt at any trial the Commonwealth might be able to show that it was not taking those steps on Mr Habib's behalf but for some other reason. The existence of that possibility does not, however, render the point liable to be struck out. The amended defence includes many examples of such assistance. - c. above very seriously; Australian media liaison officers would be authorised to advise the Australian press of the matters outlined in a. - c. above; and Australia's concern was to confirm officially whether the applicant was in Egypt and, if so, to offer him consular access. A similar situation obtains, at least in part, for the period Mr Habib was detained at Guantanamo Bay. 22.17.2. on 3 January 2005, an officer from the Australian Embassy in Washington spoke to US Deputy Secretary of Defense (Paul Wolfowitz) to state that the prosecution needed to make a decision about whether there was sufficient information to charge the applicant urgently. If the applicant was not to be charged, the officer requested that he be released. 22.17.3. on 5 January 2005, an officer from the Australian Embassy in Washington was informed by a senior official from the US Department of Defense that the Appointing Authority had not approved charging the applicant. The officer informed the senior official from the US Department of Defense that the respondent's position was that the applicant should be repatriated. Both undertook to look into the treatment of the applicant. One of the officials advised that he had asked Central Command to investigate. 22.18.47. on May 20 2004, the Australian Ambassador in Washington (Michael Thawley) wrote to the US Deputy Secretary of Defense (Paul Wolfowitz) seeking an official investigation into allegations of abuse of the applicant while in US custody including prior to his arrival in Guantanamo Bay. 22.18.48. on 21 May 2004, officers from the Australian Embassy in Washington received oral advice from a staff member at Guantanamo Bay that the applicant's psychiatric evaluation had been completed and his mental state had been evaluated as satisfactory. 22.18.49. On 21 May 2004, the Australian Ambassador in Washington (Michael Thawley) spoke to the US Deputy Secretary of Defense (Paul Wolfowitz) and requested that there be progress on the applicant's case. 22.18.51. on 24 May 2004, officers from the Australian Embassy in Washington met with senior US government officials to discuss the applicant's case. I reject therefore the submission by the Commonwealth that it is not arguable that it undertook to act on Mr Habib's behalf in the exercise of its powers. However, the Commonwealth's submission that the claim based on a breach of fiduciary duty should not be permitted to advance to trial should be accepted for three other related, but distinct, reasons. The first concerns the respective roles of the judicial and executive branches of government; the second, equity's approach to matters of State; and the third, conceptual deficiencies in the claim based on a conflict of interest. The fiduciary duty alleged seeks to have this Court hold that the executive branch should have conducted its relations with Pakistan, Egypt and the US differently; more precisely, that instead of acting in the way that it did it should have acted on his behalf and for his benefit. That the Commonwealth has the power to conduct foreign relations is undoubted. It is conferred by s 61 of the Constitution on the Queen and is exercisable by the Governor-General as her representative. No doubt that power bears many similarities to the similar prerogative power possessed by the Queen in her capacity as the sovereign of the United Kingdom. As Gummow J pointed out in Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 19 FCR 347 at 369 the question in this country is not the content of the prerogative but rather the meaning and operation of s 61. This has the immediate consequence that the question of whether the executive power extends to a particular topic is a question about the operation of s 61 and hence is a matter involving the interpretation of the Constitution within the meaning of s 76(i). And, because s 61 in turn is concerned with the maintenance of the laws of the Commonwealth, it follows that the executive power is subject to those laws. In consequence, the scope and ambit of the executive power existing under s 61 may, in a particular case, require an examination of the extent to which Commonwealth legislation has intruded into, or perhaps more accurately regulated, that power. In such a case, there would not only be a question of interpretation of s 61 but also, potentially, a matter arising under a law of the Parliament within the meaning of s 76(ii) of the Constitution . In either event, it is plain that the question of the extent of the executive power is consigned to the Chapter III courts. In that regard, at a functional level, the situation is not so very different to the treatment given by the English courts to the question of the extent of the prerogative. For, at least since the Case of Proclamations (1611) 12 Co Rep 74; 77 ER 1352, the courts of that country have asserted, and the other branches of government have eventually accepted, the final role of the courts in determining the ambit of that prerogative. Just as a Commonwealth law may delimit the scope of the executive power, so too it is well established that the prerogative may be excluded by statute. Attorney-General v De Keyser's Royal Hotel Ltd [1920] UKHL 1 ; [1920] AC 508 is an example of where a statute was found to have curtailed the prerogative. In Australia, Barton v Commonwealth [1974] HCA 20 ; (1974) 131 CLR 477 is an example where a statute was found not to have that effect; the Full Court of this Court's decision in Schlieske v Minister for Immigration and Ethnic Affairs (1988) 84 ALR 719 is a contrary example. There is no question that the executive power extends to the conduct of foreign relations. However, if there be Commonwealth laws which regulate the conduct of those foreign relations then the executive power is limited thereby and those limits are justiciable. For example, Chapter 8 of the Criminal Code (Cth) makes criminal a series of war crimes and crimes against humanity based, in part, on the Third and Fourth Geneva Conventions. It is beyond doubt that the executive power of the Commonwealth does not run to authorising such crimes under the guise of conducting foreign relations. Here Mr Habib's allegation is that the Commonwealth breached its fiduciary duty to him by exercising the power in s 61 other than in his interests. At least in that context no issue arises as to whether the power is sufficiently extensive. Indeed, the argument proceeds on the assumption that the power exists. However, where s 61 is used to conduct foreign relations, it has generally been accepted that an examination of the manner of its exercise is beyond review by the courts. There are a number of different aspects to that broad principle. First , it is plain that the courts will absolutely abide the executive's views on questions such as the accession of foreign territory, the recognition of a foreign sovereign or the recognition of foreign States and ambassadors: see Chow Hung Ching v The King [1948] HCA 37 ; (1948) 77 CLR 449 at 467 per Latham CJ. Secondly , generally speaking, the issues which arise between nation States are unlikely to generate matters within the meaning of ss 75 and 76 of the Constitution for the rights and obligations in that plane do not form part of domestic law: Re Ditfort at 370 per Gummow J. Thirdly, for related reasons, such questions are usually unable to bring forth a plaintiff who has standing: Re Ditfort at 369. Fourthly , complaints about the conduct of Australian international relations are likely to take a court into an area which involves the consideration of undertakings or obligations depending entirely on political sanctions. Where that occurs it is generally thought there is no matter in the requisite sense: Re Ditfort at 370. For example, a complaint by an Australian exporter that trade sanctions had been negligently imposed on a country to which it exported would immediately involve this Court in the consideration of matters which it is institutionally unsuited to resolve: Gerhardy v Brown [1985] HCA 11 ; (1985) 159 CLR 70 at 138-139 per Brennan J. In the peculiar facts of this case, it is only the fourth of these concerns which is pertinent. Mr Habib clearly has standing and there is a very precise measure against which he seeks to compare the Commonwealth's conduct, namely, his own interests. However, recognition of the duty alleged impermissibly encroaches on the function and province of the executive branch. To accede to the duty alleged would require this Court to conclude that, in the conduct of Australia's alliance with the US (and in its affairs with Pakistan and Egypt), the Commonwealth was bound to disregard its own interests and, instead, act only in Mr Habib's interests. This proposition is impossible to accept. Another way of arriving at the same result may be to observe that equity would not impose a fiduciary duty obedience to which would fetter foreign policy. I have no doubt that a contract entered into by the Commonwealth which purported to bind it to some particular foreign policy posture would be unenforceable: Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71 ; (1977) 139 CLR 54 at 75 per Mason J; A v Hayden [1984] HCA 67 ; (1984) 156 CLR 532 at 543 per Gibbs CJ; City of Subiaco v Heytesbury Properties Pty Ltd (2001) 24 WAR 146 at 157-159 [43]-[50] per Ipp J with whom Malcolm CJ and Wallwork J agreed. Whilst it is true that equity can often achieve outcomes which the common law or statute appear not to countenance --- the doctrine of part performance is an obvious example --- I do not think that the Chancellor's foot treads the boards of the world stage. I reject therefore the duty alleged on two bases. Its existence does not present a matter for consideration by this Court since it takes the Court into the exclusive domain of the political branches; even if that were not so, there are no prospects of establishing that equity would impose a fiduciary duty on the exercise of such a function. Even assuming those obstacles could be overcome, Mr Habib's case on the breach of the alleged duty is conceptually deficient for the purpose for which his advisers seek to advance it. In the present case a choice to decline to take steps favourable to the Applicant inevitably placed the Respondent in a position of conflict given the trust the Applicant placed in the Respondent with the Applicant abandoned to obvious unlawful detention and "rendition". But the nature of the "position of conflict" was left unexplained. Equity imposes upon fiduciaries a duty of undivided loyalty: Maguire v Makaronis [1997] HCA 23 ; (1997) 188 CLR 449 at 465 per Brennan CJ, Gaudron, McHugh and Gummow JJ. The duty is the obligation to avoid being placed in a position where that undivided loyalty might be challenged. The breach of duty arises merely from being placed in the position of conflict and does not require that the conflict be acted upon. Thus the 'no conflict' rule is infringed where a fiduciary occupies a position where his self-interest and the duty to the beneficiary conflict: Warman International Ltd v Dwyer [1995] HCA 18 ; (1994) 182 CLR 544 at 557 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ. It is also infringed where the fiduciary takes upon herself conflicting obligations: Breen v Williams (1996) 186 CLR 71 at 135 per Gummow J. Mr Habib's submissions left unexplained what the interest or duty was that the Commonwealth had which conflicted with its duty to him. Without such an articulation the bare elements of the claim have not been specified. That is sufficient to dispose of this aspect of the matter. However, had the duty or interest been identified it may well have underscored the non-justiciable nature of the allegation. For, presumably, the duty the Commonwealth had under s 61 in conducting foreign relations was the duty to act in the national interest; if it had an "interest" in the requisite sense, it was that same interest. For reasons already given, it is the executive, responsible to Parliament, which determines what is required by that interest, not this Court. These are conceptuality distinct duties. The duty alleged in the pleading is a legal duty to take reasonable steps where a citizen is detained by a foreign power so as to ensure that the citizen is, broadly speaking, properly, justly and humanely treated. As such the duty operates on the manner in which the Commonwealth exercises its powers. The duty alleged in the proposed pleading is somewhat different. It is a duty to take reasonable care to consider whether to intervene in the affairs of Pakistan, Egypt or the US by requesting them to deal justly with Mr Habib. I have no doubt that the first duty does not exist, in the sense that it is not a "duty at law", although it may exist as an unenforceable political duty of imperfect obligation: Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at 593-594 [62] - [66] per Tamberlin J. To embark upon a substantive consideration of whether the foreign policy steps taken by the Commonwealth were reasonable would involve this Court in directly examining the merits of Australian foreign policy. For reasons already given, such a duty cannot be countenanced. The duty propounded in the proposed pleading is in a different category. It seeks to avoid the difficulties inherent in pursuing a remedy which requires this Court to pass on the adequacy or otherwise of Australian foreign policy. Instead, it contends only that the Commonwealth owed Mr Habib a duty to consider whether to intercede with the foreign States on his behalf. It is apparent that this novel duty has its origins in this Court's decision in Hicks v Ruddock [2007] FCA 299 ; (2006) 156 FCR 574. In that case Tamberlin J refused to strike out a judicial review action brought by a Guantanamo Bay detainee against the Attorney-General. He sought to review the Commonwealth's decision not to intervene on his behalf with the US to seek his release. He did so on the basis that the Commonwealth had taken into account certain irrelevant considerations. Tamberlin J refused to strike the case out. The duty pleaded in the proposed pleading arguably does not fall foul of the difficulty outlined in Re Ditfort . To hold that the Commonwealth should have considered whether to intercede on Mr Habib's behalf does not, arguably, involve an impermissible examination of the merits or otherwise of foreign policy. However, Mr Hicks' and Mr Habib's cases are conceptually very different. Mr Hicks sought judicial review of a decision and habeas corpus. Mr Habib seeks damages in tort. Inherent in the claim in tort is much more than Mr Hicks' claim to have the Commonwealth reconsider its position. It is a claim of wrongful conduct causing damage. It must necessarily travel further than a mere claim for reconsideration --- which claim Hicks v Ruddock holds to be arguable --- and into territory which requires the Court to reach a conclusion on what the outcome of that reconsideration should have been. That difficulty manifests itself at the level of damage. Since the claim pleaded is one in negligence an allegation of loss is an indispensable component of the cause of action. However, the alleged failure by the Commonwealth to consider whether to intercede on Mr Habib's behalf cannot of itself have caused loss, unless performance of the alleged duty to consider would have made a difference to Mr Habib's position. The proving of loss will therefore involve a contention that had the Commonwealth considered whether to intercede that it would in fact have interceded (or perhaps that there was a real chance that it would have done so). Indeed, Mr Habib must go further and claim that if the Commonwealth had decided to intercede, that the US (or Egypt or Pakistan) would have acted on any request made by the Commonwealth to release him or treat him more humanely (or that there was a real chance that they would do so). Mr Habib does not presently make any such allegation and that is sufficient to dismiss the claim. However, even if such an allegation were to be made, I would not permit the case to advance any further. This is because the subject matter of either inquiry would be inappropriate for curial proceedings. The first would require an analysis of how the Commonwealth would have acted had it decided to consider interceding on Mr Habib's behalf. That would involve this Court in a hypothetical consideration of what, presumably Cabinet, would have done when carrying out foreign policy. I do not think that such an inquiry is a proper one for a court. The second would require this Court to determine what the response of the US, Pakistan and Egypt would have been to any request the Commonwealth might have made. The task of carrying out that inquiry is outside the competence of the judicial branch. No such cause of action should be permitted to proceed. Such a cause of action may be viable in the United Kingdom: see R v North and East Devon Health Authority; Ex parte Coughlan [2001] QB 213. However, it is not open for me to entertain the argument for it has been held on high authority that Australian law knows no action based on substantive legitimate expectations: see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 at 21 [66] - [67] per McHugh and Gummow JJ, 48 [148] per Callinan J. See also Rush v Commissioner of Police [2006] FCA 12 ; (2006) 150 FCR 165 at 186-187 [82] per Finn J. The Commonwealth submits that such a pleading does not allege the elements of the tort of misfeasance in a public office. It is difficult to fault that submission. The tort was discussed by the High Court in Northern Territory of Australia v Mengel [1995] HCA 65 ; (1994) 185 CLR 307 at 345-348 per Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ. It may be that element (a)(ii) will be satisfied where an official recklessly disregards the means of ascertaining the extent of his or her power: Mengel at 347. There is no suggestion in this case that the Commonwealth itself deliberately harmed Mr Habib. All of the actual harm appears to have been caused by the Pakistani, Egyptian and US authorities. So viewed, the matter cannot involve intent to harm in the sense identified in Mengel . This allegation might sustain an allegation of misfeasance in a public office if it could be alleged that so acting was beyond the executive power of the Commonwealth and that the officials involved recklessly disregarded the means of ascertaining the limits of their authority. As I have previously said, because s 61 of the Constitution extends the executive power of the Commonwealth to the maintenance of the laws of the Commonwealth, it is beyond that power to facilitate a breach of those laws. Thus, if it could be said that the provision of intelligence by the Commonwealth to the Egyptian authorities for use, to the knowledge of the Commonwealth, in Mr Habib's torture was contrary to Commonwealth law then at least one element of Mengel would be satisfied. During the course of the hearing discussion took place about the operation of the Third and Fourth Geneva Conventions (which deal respectively with the protection of prisoners of war and civilians during armed conflicts). Prior to 26 September 2002 the Geneva Conventions Act 1957 (Cth) made "grave breaches" of those Conventions a Commonwealth crime. "Grave breaches" under both Conventions included torture and inhuman treatment (Article 130 and 147 respectively). The Act had extra-territorial operation according to its tenor: s 6(2). Section 11.2(1) of the Criminal Code (Cth) had the effect of making it an offence to aid, abet, counsel or procure the commission of those crimes. On 26 September 2002 the offences created by the Geneva Conventions Act 1957 (Cth) were removed from that Act and re-enacted as Chapter 8 Division 268 of the Criminal Code (Cth). There may be an argument that these offence provisions had the consequence that neither the executive power of the Commonwealth under s 61 of the Constitution , nor any other source of statutory power such as s 8 of the Australian Federal Police Act 1979 (Cth) or s 17 of the Australian Security Intelligence Organisation Act 1979 (Cth), conferred lawful authority to aid, abet, counsel or procure the torture or inhuman treatment of Mr Habib. With that in mind, I granted leave to Mr Habib's counsel to put on further submissions about the relationship between the Geneva Conventions and the tort of misfeasance in a public office. A written submission was received connecting the Third and Fourth Geneva Conventions to the negligence case but, contrary to the grant of leave, not to the misfeasance in a public office case. The Commonwealth submitted, correctly I think, that no case was being put by Mr Habib based on the Geneva Conventions insofar as the tort of misfeasance in a public office was concerned. I am bound to accept that submission. There is, therefore, no occasion to consider whether Mr Habib was a prisoner of war covered by the Third Geneva Convention, or a civilian covered by the Fourth Geneva Convention, an enemy combatant (as the Commonwealth submitted at the hearing) or simply a person not covered by either Convention because there was no armed conflict in Pakistan at the time Mr Habib was detained (as the Commonwealth submitted in writing). Nor is there any need to consider the impact of Article 5 of the Third Geneva Convention which, on one view, requires the protection of that Convention to be afforded to a person whose status is unclear until such time as that status is determined by a competent tribunal: cf Hamdan v Rumsfeld 548 US 557 (2006) at 630 per Stevens J delivering the opinion of the court; Hamdan v Rumsfeld 344 FSupp2d 152 (DDC 2004) at 161-162 per Robertson J. In the circumstance where none of the constitutive elements of the tort have been pleaded, no explanation of how such a cause of action might operate proffered and an invitation to explore the interaction between the Geneva Conventions and Mengel unaccountably declined, it seems to me that the action must be struck out. In this context, it is also useful to consider the allegation in paragraph 21 of the proposed pleading that Commonwealth officials interviewed Mr Habib at Guantanamo Bay whilst he was shackled in chains. Whether such actions amount to aiding and abetting within s 11.2 of the Criminal Code (Cth) need not be decided. However, one question which might arise is the extent to which the construction of Division 268 is informed by matters of international law. In that regard, the advance report of the Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism has indicated that "even the mere presence of intelligence personnel at an interview with a person who is being held in places where his rights are violated, can be reasonably understood as implicitly condoning such practices": Martin Scheinin, UN Doc A/HRC/10/3 (2009) at 19. However, the nature of any such debate does not presently fall for decision. Finally, the Commonwealth made a broad submission that the act of State doctrine operated to prevent this Court from examining the rights and wrongs of the acts of a foreign State. Over a century ago the doctrine was held to form part of "the settled law of all civilized countries": Potter v Broken Hill Pty Company Ltd [1906] HCA 88 ; (1906) 3 CLR 479 at 495 per Griffith CJ. More recently it has been described by the High Court as a long-recognised principle of international law: Attorney-General (UK) v Heinemann Publishers Pty Ltd [1988] HCA 25 ; (1988) 165 CLR 30 at 40 and by a judge of this Court as a rule of private international law: Petrotimor Companhia de Petroleos SARL v Commonwealth of Australia [2003] FCAFC 3 ; (2003) 126 FCR 354 at 415 [159] per Beaumont J. The Commonwealth's submission that the act of State doctrine exists must be accepted: Petrotimor at 366-369 [33]-[45] per Black CJ and Hill J, 415-416 [159]-[160] per Beaumont J. Each of Mr Habib's claims would require a conclusion that a foreign State had committed grave wrongs. However, I would not regard the act of State doctrine as necessarily applicable to a claim based on misfeasance in a public office. This is because it is arguable that there is an exception to the principle where the acts of the foreign State in question constitute grave breaches of international law: Kuwait Airways Corporation v Iraqi Airways Company (Nos 4 and 5) [2002] UKHL 19 ; [2002] 2 AC 883 at 1080-1081 per Lord Nicholls (with whom Lord Hoffman agreed at 1105 [125]), 1101 [113] per Lord Steyn, 1109 [140] per Lord Hope; Petrotimor at 369 per Black CJ and Hill J; cf. Oppenheimer v Cattermole (Inspector of Taxes) [1976] AC 249 at 278 per Lord Cross. Indeed, as Lord Steyn explained at 1101 [113] in Kuwait Airways , the doctrine rests, in part, on the absence of available standards by which to judge the actions of the foreign state involved. Where the potential allegation is that the US and Egypt have committed grave breaches of the Geneva Conventions a clear standard is available: cf. Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at 584-585 [21] - [23] per Tamberlin J where the potential interaction between the act of State doctrine and the Third and Fourth Geneva Conventions was examined. For those reasons, I do not think it can be said that the doctrine prevents a misfeasance suit potentially going forward. Indeed, on one view of things, it may well lie in the heart of the exceptions. Apart from the defamation claims, it does not disclose any properly pleaded cause of action. The question is whether there should be a grant of leave to replead. The claims of intimidation, breach of fiduciary duty, breach of the duty of assistance, breach of the duty to consider whether to assist Mr Habib and the action based on substantive legitimate expectations cannot, in my opinion, succeed under any circumstances and I decline to grant leave to permit any further ventilation of them. In relation to the harassment and misfeasance claims, the Commonwealth submitted that there should be no further grant of leave to replead. At the forefront of this submission was its observation that the pleading was so poorly drawn that it could not engender any confidence that anything better might yet emerge in the future. This pessimism was supported by the submission that the pleading was the third further amended statement of claim and that the same sub-standard quality of pleading was evident in each of its predecessors. There is a great deal of force in these submissions. The Commonwealth also submits that no case --- even at the hearing or in the written submissions following the hearing --- was being put about the Geneva Conventions. This is not strictly true since an attempt was made to link those Conventions to the negligence case. However, that created a case which made no sense at all. The Commonwealth submits enough is enough. Be all of that as it may, it seems to me that there is the possibility that Mr Habib has a case for misfeasance in a public office and, perhaps, harassment in the Wilkinson v Downton sense. Particularly where there has been so far only one strike out application I do not think that I should deny leave to replead unless I am satisfied that the defects in the statement of claim are incapable of being cured. I am not satisfied of that in the case of the two causes of action I have mentioned. I do not see any basis upon which I may dispose of the defamation allegations as I cannot say they are incapable of succeeding even if they seem out of place in a case such as this. My conclusion, therefore, is that the pleading must be struck out but that there should be a grant of leave to replead the claims with respect to misfeasance in a public office, harassment and defamation. In relation to those matters, particularly the first, it is to be emphasised that the pleading raises issues which are of considerable technical complexity involving as they do the interaction between constitutional and administrative law and the law of tort. Although I have not acceded to the Commonwealth's argument as to the adequacy, from a technical perspective, of the pleadings it may be safely assumed that the next pleading will be held to proper standards. The claim is struck out. The applicant is to have leave to replead in the terms I have mentioned. The new pleading is to be provided within 21 days following which there will be a directions hearing. The parties are to bring in short minutes. Costs are reserved. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. | summary judgment whether defects in pleading incapable of being cured whether leave to replead should be granted executive power s 61 of the constitution circumstances in which exercise of executive power amenable to review fiduciaries whether commonwealth owes fiduciary duty to its nationals whether content of any such duty justiciable negligence whether commonwealth owes duty of care to its nationals misfeasance in a public office whether aiding and abetting commission of criminal offence amounts to misfeasance harassment whether tort of harassment extends to mental distress practice and procedure constitutional law equity torts |
Condition 8202 applied to that visa, being relevantly a requirement related to satisfactory academic results (Item 8202(3)(b) in Sch 8 of the Migration Regulations 1994 (Cth) ('the Regulations')). 2 The applicant received a notice ('the Notice') under s 20 of the Education Services for Overseas Students Act 2000 (Cth) ('the Students Act'), following receipt by the Department of notification from her education provider that she had breached a condition of her student visa. The particulars given by the Notice were '[s] tudent dismissed 24 May 2004 due to unsatisfactory academic performance '. 3 It is not suggested that the breach had not occurred. The applicant did, however, have extenuating and exceptional circumstances on which she sought to rely to explain the breach. 4 The Notice stated that she must report personally to a compliance officer at a named office of the Department. She did so. 5 Subsequently, the Department issued a written notice of intention to cancel her visa pursuant to s 119 of the Migration Act 1958 (Cth) ('the Act'). A Delegate of the Minister found that the applicant had not complied with Condition 8202 because of unsatisfactory academic performance and cancelled the visa pursuant to s 116 of the Act. Section 116 of the Act relevantly provides that the Minister may cancel a visa if its holder has not complied with a condition of the visa (s 116(1)(b)). If such a condition has not been complied with and there exists prescribed circumstances (s 116(3)), the Minister must cancel the visa. One such prescribed circumstance is that the holder of a Student (Temporary) (Class TU) visa has not complied with Condition 8202 (reg 2.43(2)(b)(ii) of the Regulations). 6 The applicant sought review of that decision by the Migration Review Tribunal. The Tribunal accepted the reasons given by the applicant for her difficulties in achieving satisfactory results due to her personal situation at the time, which included a termination of pregnancy. The Tribunal accepted the difficulties she said arose from the marking system of the College at which she was then studying. However, having found that a breach of Condition 8202 had occurred and in the absence of any discretion to act otherwise, the Tribunal affirmed the decision to cancel the visa. 7 There is no dispute in this application that the marking system at the College required a high standard to pass or that the applicant's personal situation during the relevant term of study resulted in difficulties for her in studying. Although the applicant has returned to China, she cannot return to Australia for 3 years and will have the visa cancellation "on her record" if this application is unsuccessful. 8 By a further amended application filed in the Federal Magistrates Court under s 39B of the Judiciary Act 1903 (Cth), the applicant sought a declaration that Condition 8202(3)(b) of Sch 8 of the Regulations is invalid and a writ of certiorari to quash the Tribunal decision. This application to review the Tribunal's decision was referred to this Court by Emmett FM. A second further amended application was filed in this Court. The matter was then adjourned pending the anticipated judgment of the Full Court in Minister for Immigration and Multicultural and Indigenous Affairs v Zhou (2006) 125 FCR 115, which concerned one of the issues raised by the applicant in these proceedings. 9 Put shortly, the grounds of the second further amended application are based on the alleged invalidity of condition 8202(3)(b) and a denial of procedural fairness to the applicant. It is not in dispute that, if Condition 8202 is valid and there was no failure to accord procedural fairness, this application must fail. 10 In order to understand the alleged denial of procedural fairness, it is necessary to consider s 20 of the Students Act. Section 20(1) provides that a registered provider of overseas student courses must send the student a written notice if he or she has breached a student visa condition relating to attendance or satisfactory academic performance. That notice must state, inter alia, that the student is required to attend in person before an officer of the Department to explain the breach and set out the effects of s 137J and s 137K of the Act (s 20(4)(b) and (d) of the Students Act). 11 Section 137J of the Act provides for automatic cancellation of a visa if a notice issued pursuant to s 20(1) of the Students Act is not complied with. A student whose visa is cancelled under that section may, however, apply in writing to the Minister for the cancellation to be revoked (s 137K of the Act). In dealing with an application under s 137K, the Minister may revoke the visa cancellation if the breach of visa condition was due to exceptional circumstances (s 137L(1)(b)). 12 The applicant criticises the form and substance of the Notice. Further, the applicant complains that, by complying with the Notice, she was unable to apply for revocation of the automatic cancellation of the visa on the grounds of her exceptional circumstances (s 137L(1)(b)). I reserved my decision. On 26 October 2006, the applicant sought leave to file a third further amended application. By the proposed amendment the applicant sought writs of certiorari directed to the Delegate (in addition to the Tribunal) and orders quashing both the Tribunal and Delegate decisions. 14 There is no basis for permitting the latest amendment and leave to amend should be refused. Apart from the general discretionary factors that would apply to an application to amend after the conclusion of the hearing, the applicant elected to seek merits review in the Tribunal of the Delegate's decision. The fact that such a review cured, in a legal sense, any defect in the hearing before the Delegate attributable to a denial of natural justice is now settled ( Zubair v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248 ; (2004) 139 FCR 344; Uddin v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 218 ; (2005) 149 FCR 1 (special leave to appeal refused); Humayun v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 35 ; (2006) 149 FCR 558 at [30] ; Cheng v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1028 at [67] ). There is no reason to permit the applicant to amend to seek orders against the Delegate. The academic result is to be certified and therefore assessed as "at least satisfactory" by the education provider. Those words give the education provider a measure of discretion ( Hamayun at [19]). • Section 505 of the Act provides for regulations which may provide that the Minister may, to paraphrase, "get" the education provider to make an assessment of satisfactory academic result and have regard to that assessment and take it as correct, but only when deciding whether an applicant for a visa satisfies Condition 8202. This, it is said, does not extend to the holder of an existing visa. • Does the inclusion of s 505 indicate a legislative intent to limit the regulation making power to prescribe criteria for holders of visas? • Does the Act permit the making of regulations providing for Condition 8202? Mr Gormly appears for the applicant. That delegation, he submits, extends only to the purpose of deciding whether an applicant satisfies the particular criterion. He relies on the Explanatory Memorandum to the Migration Laws Amendment Bill (No 2) 1992 at [33]) that states, with reference to the introduction of s 182, the predecessor to s 505, the section allows for regulations to be made with respect to the matters to which the Minister may have regard ' when deciding whether an applicant satisfies a particular criterion '. The Explanatory Memorandum also states that the section ' puts beyond doubt the validity of such regulations made before the commencement of [the proposed s 182]'. 22 I accept that s 505 refers to the Minister's decision whether an applicant for a visa satisfies the criterion and not whether an existing visa holder satisfies the criterion. That is, s 505 is a regulation making power concerned with the time when the Minister is considering the grant of a visa, not the cancellation of a visa. Accordingly it does not apply to the regulation providing for Condition 8202. Does the inclusion of s 505 indicate a legislative intent to limit the regulation making power to prescribe criteria for holders of visas? Mr Johnson, who appears for the Minister, draws attention to the introductory words of s 505: ' To avoid doubt ' and submits that there is no indication in s 505 of a limitation on the power set out in s 504. It follows from his submission that s 505, which particularises the content of regulations with respect to criteria for applicants for a visa, provides an indication that the legislature intended to provide for regulations of that nature. 24 Mr Gormly, who appears for the applicant, submits that the fact that there is a specific provision in s 505 for the power to make those regulations means that the regulation making power of s 504 does not extend to the subject matter of criteria for holders of visas. He submits that, as s 505 provides specifically for regulations for the purpose of imposing criteria on visa applicants, there must be specific provision for criteria on holders of visas. That is, that s 505 recognises that the general regulation making power of s 504 does not extend to the imposing of such criteria. He relies on the introductory words "to avoid doubt" to support the need for specific provision of delegation of opinion or assessment or finding about a specified matter for the purposes of conditions. 25 The words of s 505 mean what they say. To avoid doubt, there is specific provision for the Minister to delegate the matters set out in s 505. Those are matters of fact to which the Minister is to have regard or to take to be correct in deciding whether an applicant for a visa satisfies the criterion. That does not derogate from the power that exists by reason of s 504. Section 505 can be viewed as providing specifically for a "sub-set" of regulations permitted by s 504. Does the Act permit the making of regulations providing for Condition 8202? Section 41(1) provides that the regulations may provide that visas, or visas of a specified class, are subject to specified conditions. Condition 8202 is such a specified condition. 27 The Minister submits that it is a state of fact whether the student passed or failed or achieved satisfactory results and there is nothing in the Act that reserves to the Governor-General or to the Minister the task of deciding if an academic result is at least satisfactory. The applicant submits that this is not a delegation of a determination of fact but an exercise of delegated legislative power in the unfettered specification of the criteria that constitute satisfactory academic results. The discretion, Mr Gormly says, is in the hands of the education provider and not in the Minister. 28 Mr Gormly relies upon what he describes as '[t] he mandatory and automatic effect of the Act's cancellation provisions ' to submit that the terms of Condition 8202(3)(b) amount to an abdication of the Governor-General's power under ss 41 and 504 of the Act to make regulations "specifying conditions". He submits that, by the education provider determining and applying its own academic standards, there has been an impermissible abdication to the education provider. That, he contends, is supported by the role of the education provider in initiating the automatic cancellation of the visa under s 137J of the Act in its obligation to issue notices under s 20 of the Students Act where there is a breach of Condition 8202. Section 41(1) of the Act provides that regulations may provide that a visa is subject to conditions. It makes general and unrestricted provision for regulations providing for visas being subject to conditions. It follows that the Act provides for the power to make regulations to impose conditions on, and prescribe criteria for, visas or visas of a specified class. 31 Section 504 of the Act provides that the Governor-General may make regulations not inconsistent with the Act. Mr Gormly accepted, however, that if s 505 applied to holders of visas, the Act would make it clear that the Minister is entitled to have the assessment done by another body. His submission is that without specific provision in the Act, there has been an invalid sub-delegation of power. 33 The applicant's submission is that Condition 8202(3)(b), which provides for the requirement that the visa holder achieves an academic result that is certified by the education provider to be at least satisfactory, is ultra vires the Act as an impermissible sub-delegation to an "education provider' of the legislative power to specify visa conditions given by ss 504 and 41(1) of the Act. 34 Mr Gormly relies upon the conclusion by French J in Turner v Owen (1990) 26 FCR 366 that delegating to the Minister the power to prohibit goods, which in his opinion ' are of a dangerous character and a menace to the community ' constituted an unlawful delegation because those words ' are not indicative of a factual criterion or class description limited by any intelligible boundary ' and were legislative in character (at 389). French J concluded that the regulations in that case impermissibly asked the Minister to prohibit, rather than the Governor-General. 35 Mr Gormly argues that academic standards can never be fully objectified such that their application is a matter of mere administration. He points out that different institutions prescribe different rules and standards. The certification, he submits, is not merely administrative; it is not purely routine and non-discretionary. Mr Gormly submits that the education provider, by reason of its certification of an academic result "to be at least satisfactory" for the purposes of Condition 8202 and its issue of a s 20 notice under the Students Act, impermissibly performs a "migration function" without regard to the objects of the Act. Condition 8202(3)(b) is, he submits, ultra vires (cf Ellis v Dubowski (1921) 3 KB 621 at 625). It makes the education provider the decision maker on the terms of the visa condition and on a breach of that condition, resulting in automatic cancellation. Mr Gormly submits that the result is an invalid sub-delegation ( Conroy v Shire of Springvale and Noble Park (1959) VR 737). That is not the case. Condition 8202 does not delegate to the education provider the specification of visa conditions. Condition 8202 imposes a consequence in relation to the visa in the event that a certificate does not exist. The relevant visa condition is specified in Condition 8202. That criterion requires a certification of satisfactory academic results. The certification exists or it does not. That is a question of fact. 37 Here, the delegation is not of the decision to decide whether a visa holder satisfies the criterion. Section 41 provides that the regulations may provide that visas are subject to specified conditions. Condition 8202 is such a condition specified in the Regulations. The Minister decides whether to grant a visa, subject to satisfaction that the criteria are satisfied (s 65). The Minister decides whether a visa holder satisfies the specified condition (s 116(1) of the Act, reg 2.43(2)(b)(ii) of the Regulations). Further, as a matter of reality, an academic result that, for a specified course, is "at least satisfactory" is limited ' by an intelligible boundary ' and is not legislative in character (cf Turner at [389]). 38 Section 505, which refers specifically to such matters for visa applicants, does not delegate the whole of power to decide whether an applicant for a visa satisfies the relevant criterion. The section provides for the making of regulations under which the Minister, when required to decide whether an applicant for a visa satisfies a specified criterion, may obtain the opinion, assessment, finding or decision of a specified person or organisation and have regard to it and to take it to be correct. 39 The sub-delegation in s 505 is not of a legislative but of an administrative character. It is not the delegation of a wide field of operation but, rather, a narrow question of fact. 40 A sub-delegation under s 504 is of the same character. The Act does not reserve any of the delegated functions in Condition 8202 to the Governor-General. The Governor-General has exercised the power conferred by the Act to make regulations, within the limits laid down by the Act ( Twinn v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 242 ; (2005) 147 FCR 490 at [22] ). The authorisation given by s 504 encompasses the making of regulations by the Governor-General to allow administrative functions to be undertaken by the Minister for the purposes of the regulations ( Twinn at [23]). For the purposes of deciding whether an applicant for a visa satisfies the condition for a visa, the regulations may make provision for the Minister to have consideration of the matters enunciated in s 505 of the Act. The fact that this was particularised in s 505, "to avoid doubt", indicates a statutory acknowledgment that the power to make regulations in respect of those matters already existed by reason of s 504 and s 41(1) of the Act. 41 Once the Minister is satisfied that the condition has not been met, there is a mandatory cancellation by reason of s 116(3) but that does not convert the sub-delegation into an effective abdication of powers (see generally Pearce D and Argument S, Delegated Legislation in Australia (3 rd ed, Butterworths, 2005) Ch 23). 42 On its proper construction, the Act permits the opinion or assessment of the education provider to be provided for in the regulations, to be provided to the Minister and had regard to and be considered correct in the decision making of the Minister (see discussion in Racecourse Co-operative Sugar Association Ltd v Attorney-General of the State of Queensland [1979] HCA 50 ; (1979) 142 CLR 460 at 481 per Gibbs J). 43 The fact that the scheme of the Act results in an absence of discretion in the cancellation of a visa where the Minister has decided that the requirements of Condition 8202 has not been satisfied under s 116 does not determine that there has been a delegation of the power to specify visa conditions to the education provider. It does not convert the specification by the Governor-General of conditions pursuant to s 41 into an impermissible delegation of the specification of the visa condition. Specifically, he contends that the Notice implies that there exists a discretion on the part of the Department, so that an explanation for the breach will be taken into account. It does not, he observes, inform the applicant that her visa will be cancelled if a breach of condition did occur and she attends to "explain" that breach in response to the Notice. The applicant was thereby deprived of the opportunity of not responding to the Notice, awaiting the automatic cancellation of her visa and then applying to the Minister under s 137K of the Act, where exceptional circumstances can be taken into consideration (s 137L(1)(b)). This represents the alleged practical unfairness of the denial of natural justice. 45 According to the Regulations then in force, the reality was that, if the student attended to explain the breach, it was an admission that the breach occurred and there was no discretion for the Minister to do other than cancel the visa (cf reg 2.43(2)(b)(ii)(B) of the Regulations, now in force). The best position for a student who had exceptional circumstances beyond his or her control was not to attend but rather to make an application to the Minister under s 137K and s 137L of the Act for revocation of the cancellation on the basis that the breach was due to exceptional circumstances. The Notice does not inform the student of this potential course of action. 46 Mr Gormly places considerable reliance on Morsed v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 88 ALD 90 at [22]---[24] where the Full Court observed that a s 20 notice in relevantly indistinguishable terms was, for this reason, misleading. 47 Mr Gormly acknowledges that the Act provides, by s 357A, for its procedures to be an exhaustive statement of the natural justice hearing rule before the Tribunal. He contends that as the Notice was not a notice served under the Act but under the Students Act and, as that notice did not apply to the substantive right considered by the Tribunal and its validity was not part of the hearing before the Tribunal, that section does not apply. 48 Further, in Mr Gormly's submission, Minister for Immigration and Multicultural and Indigenous Affairs v Ahmed [2005] FCAFC 58 ; (2005) 143 FCR 314, Zubair , and Uddin have no application because the Tribunal in this case could not cure the denial of procedural fairness occasioned by the Notice. The Notice was not part of the hearing before the Tribunal. To the extent that existing authority of this Court suggests otherwise, Mr Gormly seeks to distinguish this case which, he says, raises matters not considered by the Full Court in Zhou and Zubair or by Siopis J in Cheng. However, the Tribunal decision was based on the failure to comply with Condition 8202. The Tribunal referred to the applicant's explanation for the breach of that condition but noted that it had no discretion, by reason of s 116(3) of the Act and reg 2.43(2)(b) of the Regulations, to do other than affirm the decision to cancel the applicant's visa. The Court is reviewing the decision of the Tribunal, which has no role to play in the processes of s 20 of the Students Act. 2. It is now settled by Zhou and Cheng that there is no legal interaction between the processes of s 20 of the Students Act and a cancellation under s 116 of the Act. 3. It is not contended that the Notice did not comply with s 20 of the Students Act. In any event, Morsed does not say that there is a breach of procedural fairness by the Tribunal where a notice issued pursuant to s 20 of the Students Act is misleading. 4. Even if it were misleading, the Notice did not affect the power of the Delegate to effect a visa cancellation under s 116 ( Humayun at [30]). Further, the Tribunal conducted a merits review and any defects in the decision of the Delegate were cured by that review ( Zubair ; Cheng at [67]). 5. The question whether there could be a cure for any deficiency in the Notice that gave rise to a denial of natural justice could not affect the operation of s 116 of the Act. Such a denial could not result in jurisdictional error on the part of the Tribunal. 6. No denial of natural justice or breach of statutory requirements can be established on the part of the Tribunal. The Notice is misleading for the reasons given in Morsed at [22]---[25]. 52 Mr Gormly adopts the characterisation of the defects in the s 20 notice in Morsed and relies upon the denial of procedural fairness resulting from that notice with its attendant effect on the opportunity for the applicant to rely on exceptional circumstances to avoid cancellation of her visa. He refers to Minister for Immigration and Multicultural Affairs; ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 at [34] and submits that, because of the consequences of compliance with the Notice, the contents of the Notice cannot be quarantined from the procedural fairness requirements of a cancellation under s 116(3) of the Act. The failure to accord procedural unfairness cannot, he says, be cured by merits review by the Tribunal because of the lack of discretion on the part of the Delegate and the Tribunal. 53 In Zhou , the applicant's visa was cancelled under s 116 of the Act on the grounds that she had breached Condition 8202 of her visa. The Full Court considered whether alleged defects in a s 20 notice under the Students Act are material to the resolution of an appeal from a decision of the Tribunal to affirm a cancellation decision under s 116 of the Act. The Full Court determined that, even where the s 20 notice and the response to it give rise to the delivery of the notice of intention to cancel the visa under s 119 of the Act (at [41] and [43]), there is no implied limitation on the operation of s 116 (at [42]) and no ' legal interaction ' between the s 20 notice under the Students Act and the exercise of power in s 116 of the Act. Invalidity of the s 20 notice can have no invalidating effect on the s 119 procedure (at [40]). 54 In Cheng , Siopis J addressed submissions that the Tribunal fell into jurisdictional error in failing to consider whether the Delegate had denied the applicant procedural fairness by reason of an allegedly misleading s 20 notice. As here, the alleged denial of procedural fairness was relevantly based on the failure of the applicant's expectation of being able to raise matters relating to her medical and personal circumstances as a means of preventing the cancellation of her visa, when there was an alternative course available where those circumstances could be raised as grounds for reinstating her visa (at [69]). His Honour applied Zhou and observed at [65] that '[i] t does not avail the applicant to impugn the procedural fairness of a process which is legally unrelated to the process which led to the impugned decision, namely, the cancellation of the visa under s 116 of the Act '. The processes are, as pointed out by his Honour at [72], ' legally separate '. 55 That conclusion follows from Zhou . 56 The decision under review in this case is that of the Tribunal. It is not suggested that the Tribunal failed to accord procedural fairness in its own procedures. Questions of procedural fairness must be considered by reference to the Tribunal's decision to affirm the Delegate's decision made under s 116 of the Act ( Cheng at [74]). 57 The Minister submits that, as the hearing before the Tribunal is a merits review, the Tribunal can, in a legal sense, "cure" any defects leading to the decision of the Delegate under review ( Zubair ; Ahmed ; Uddin ; Hamayun ). Mr Gormly submits, however, that the Tribunal cannot cure any defects in the Notice because it formed no part of the Tribunal's review of the decision to cancel made under s 116. He submits that this was not considered in Cheng and that this inability on the part of the Tribunal to cure the denial of procedural fairness invalidates the Tribunal decision. 58 This submission cannot be correct and ignores the reasoning in Zhou and Cheng . The Full Court in Zhou stated comprehensively at [39] that alleged defects in a s 20 notice are not material to an appeal from a decision of the Tribunal to affirm a cancellation decision under s 116 of the Act. Siopis J in Cheng specifically considered and rejected a submission that the Tribunal fell into jurisdictional error by failing to consider an alleged denial of procedural fairness on the part of the Delegate by reason of a s 20 notice being misleading. The s 20 notice has no role in the Tribunal decision. It is irrelevant to the Tribunal's review of the Minister's decision to cancel the visa under s 116, a decision with a different statutory basis. Once it is irrelevant and the question for this Court is jurisdictional error on the part of the Tribunal, the applicant cannot succeed on the basis of a denial of natural justice concerning the Notice. 60 Consistent with the decision in Zhou and Cheng , no jurisdictional error has been established on the part of the Tribunal in its review of the Minister's decision to cancel the applicant's visa pursuant to s 116 of the Act. 61 It follows that the application should be dismissed with costs. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | cancellation of student visa under s 116 of the migration act 1958 (cth) condition 8202 s 505 of the act provides for regulations for applicants for, not holders of, a visa power to make regulations under s 504 and s 41(1) of the act whether condition 8202 ultra vires condition 8202 does not delegate to educational course providers the power to specify a visa condition condition 8202 not invalid for impermissible delegation representations made in notice issued pursuant to s 20 of the education services for overseas students act 2000 (cth) alleged procedural unfairness defects in a notice under s 20 of the students act are not material to the tribunal decision under review application dismissed migration |
2 The appellants claim to be citizens of Bangladesh who arrived in Australia on 15 February 2006 and applied to the Department of Immigration and Multicultural Affairs for a Protection Visa on 22 March 2006. The Minister's Delegate decided to refuse the grant of the visa on 19 May 2006 and notified the appellants of the decision and their review rights by letter dated 19 May 2006. The Delegate refused the visa application as in the Delegate's view, the applicants were not persons to whom Australia owed protection obligations under the Refugee Convention and thus under the Act. 3 According to the Protection Visa application, the male appellant is 37 years old. He has a wife and two sons who are included in the application. The appellants, husband and wife, say they were born in Dhaka, Bangladesh. The male appellant says that he belongs to the Bengali Ethnic Group and his religion is Hindu. The male appellant travelled to Germany, Malaysia and Switzerland in 2005 and came to Australia in 2006. The appellants travelled to Australia on Indian passports issued in 2001 which remain valid until 2011. Those passports gave their place of birth as Nadia for the husband and Calcutta for the wife. 4 The reasons of the Tribunal set out the background information in relation to the circumstances causing the appellants to leave and come to Australia. Briefly, in a statement lodged by the appellants' migration adviser, the male appellant says he is a Hindu born in a district of Bangladesh. His father operated a small grocery shop as well as a transport business. He said that when his grandfather died there was conflict within the family and the appellant's father lost his interest in the grocery shop. The appellant explained to the Tribunal that in 1990 he went to live in Calcutta in India. The family has resided there since with two children born in India. 5 The appellants travel on Indian passports and are concerned about the imminent and growing prospect of arbitrary relocation out of India and into Bangladesh of him and his family. The appellant's migration adviser told the Tribunal that there is a growing arbitrary program of so-called return of Bangladesh nationals to Bangladesh regardless of religion. The male appellant attended a hearing before the Tribunal on 16 August 2006 and was asked a number of questions by the Tribunal to clarify aspects of the appellant's activities; whether the appellant had been involved in any political movements; the work the appellant undertook; the circumstances surrounding demands made upon the appellant for money consequent upon draft legislation which proposed the deportation of Bangladesh nationals; and other matters. 6 The Tribunal examined the evidence and reached a number of conclusions about the various claims and the circumstances giving rise to the claimed fear of return to Bangladesh. Those fears essentially went to concern about the religion of the appellants and particularly that of the male appellant as a Hindu, police harassment of the male appellant, lack of social acceptance of Hindus and other matters relating to the business. The Tribunal in its reasons considered whether serious harm was a prospect on all of the evidence available to the Tribunal. 7 The Tribunal considered the circumstances of the appellant's sister who also appeared at the hearing and provided an affidavit. That material did not support any obvious harassment or persecution in respect of her own circumstances. The appellant's brother also gave evidence which failed to support such a conclusion and the evidence of the appellant's wife put to the Tribunal was found to be evidence "in very general terms". 8 As a result of all of these matters, the Tribunal was unable to be satisfied that the appellant held a well-founded fear of persecution for a Convention reason. The appellant challenged those findings of the Tribunal in proceedings before the Federal Magistrates Court and filed an application which recited a series of grounds of appeal in support of the application. There were three grounds. The language of the grounds is internally confusing. The first ground put to the Magistrates Court was that the Tribunal "failed to internalise the circumstantial grounds of the review application and in weighing both the subjective claims of the review application and in reviewing the huge supporting facts and documents and such has breached sections 426(2) , 426 (3), 427 (4) and 440 (2)(b) of the [Migration] Act" . 9 The second ground contended that the Tribunal failed to pay attention to evidence that was put before the Tribunal, in arriving at its decision. This failure was said to constitute a breach of s 430(1)(c) and (d) of the Act and that such a ground was susceptible of review under s 476(1)(a) , (e), (f) and (g) of the Act. 10 The third ground contended that the Tribunal ignored "evidence and its finding in the face of contradicting independent evidence constitutes jurisdictional error being a breach of procedural fairness, which is an essential condition of the exercise of the decision-making power". There seems to me to be no particular merit in reciting each of the conclusions reached by Orchiston FM on each of these matters. An analysis of the process of reasoning adopted by the Federal Magistrate fails to reveal any error in the analysis and treatment of the grounds of challenge contended for before the Federal Magistrates Court of Australia. An assessment of the reasons of the Tribunal against the background of the Federal Magistrate's reasoning and the disposition of each of those contentions fails in my view to reveal any error on the part of the Federal Magistrate. 12 The appellants appeal to this Court and in doing so have relied upon three grounds. The first paragraph is a general statement of appeal from the whole of the judgment of Orchiston FM. The appeal grounds are recited as grounds 2, 3 and 4. The single judge of the Federal Magistrates Court in his Honour's judgment delivered on 5 February 2008, failed to find error of law, jurisdictional error, procedural fairness and relief under s 39B of the Judiciary Act 1903 . The learned Federal Magistrate has dismissed the case without considering legal and factual errors contained in the decision of the Refugee Tribunal. The Federal Magistrate made a legal, factual, and jurisdictional error in not applying the principles laid down by the full court of the Federal Court in Randhawa v Minister for Immigration Local Government and Ethnic Affairs (1994) 52 FCR 437. 14 The first is that they are placed at the highest level of abstraction possible and fail to coherently state any error on the part of the Federal Magistrate either in the process of reasoning adopted by Orchiston FM or otherwise in reaching the dispositive conclusions reflected in the reasons for judgment. There seems to be a practice adopted in relation to appeals under s 24 and s 25 of the Federal Court of Australia Act 1976 from decisions of the Federal Magistrates Court of Australia in migration matters, for those assisting otherwise unrepresented appellants to formulate the Notice of Appeal to this Court either at a high level of abstraction or alternatively on the footing that it is appropriate to simply formulate grounds of appeal on the footing that the primary judge fell into error by failing to find the contended error on the part of the Tribunal. 15 This is an entirely unsatisfactory way of formulating grounds of appeal to this Court as a challenge to the decision of the primary judge. In effect, such an appeal is simply an attempt to, put anecdotally, "have another go" in this Court on the same footing as that below. The failure to formulate proper grounds would in itself be a basis for dismissing the appeal. However, of course, the appellant is unrepresented and is assisted by an interpreter. From the perspective of the appellant, I accept that the approach to this Court is to invite the Court to consider and thus determine whether there is demonstrated error on the part of the Federal Magistrate by failing to properly assess or deal with the contentions of error on the part of the Tribunal. 16 I do not accept that this is an appropriate way to proceed as a matter of proper principle in isolating properly formulated grounds of appeal to this Court. However, in terms of seeking to do justice between the parties, I have examined the appeal record to determine whether there are identifiable errors in the reasons of the Federal Magistrate that appear to a supervisory appellate court to warrant intervention even though the grounds of appeal before this Court are flawed. 17 Having said that, in examining the reasons of the primary judge against the background of the challenge identified in the grounds articulated or identified in the application before the Federal Magistrates Court, I can find no error in relation to any of those matters. It seems to me that the Federal Magistrate has quite carefully and closely analysed each and every contention including an assessment of the written submissions which were put before the Federal Magistrate in support of the three grounds which were, in themselves, set out in reasonably elliptical terms. The male appellant claimed to fear persecution for reasons of his religion. He claimed to fear harm from Islamic fundamentalists. The Tribunal found that the appellant had not suffered Convention related persecution and on the basis of independent country information rejected the appellant's claim of a well-founded fear of persecution in Bangladesh noting that the appellant did not claim to have any political affiliation in Bangladesh. These findings were open to the Tribunal; involved the interpretation of factual matters before the Tribunal; and are not susceptible of review by the Court ( NAHI v MIMA [2004] FCAFC 10 at [11] --- [13]; Applicant NABD of 2002 v MIMA [2005] HCA 29 ; (2005) 216 ALR 1 at [8] per Gleeson CJ; NBKT v MIMA [2006] FCAFC 195 ; (2006) 156 FCR 419 at [81] and [84]; MIEA v Wu Shan Laing [1996] HCA 6 ; (1996) 185 CLR 259 at 272). So the Federal Magistrate correctly found. 18 Although I have given some emphasis to the inadequacy of the Notice of Appeal, I have, in terms of doing justice between the parties, reviewed the reasons of the Federal Magistrate against the background of the reasons of the Tribunal to satisfy myself as to whether there is any error which would justify intervention by this Court. I am satisfied that there is no such error. It follows, therefore, that the appeal must be dismissed with costs. The first and second appellants shall pay the costs of the first respondent of and incidental to the appeal to be taxed or otherwise agreed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of grounds of appeal contending that a federal magistrate fell into error by failing to find jurisdictional error on the part of the refugee review tribunal migration |
2 On 15 November 2005, Goldberg J made orders requiring the defendants to make further discovery in certain respects, and other interlocutory orders. I shall refer to the details of those terms further below. 5 On 10 October 2006, the plaintiff submitted for taxation a bill of costs in relation to each of the orders made on 15 November 2005 and 6 March 2006. By correspondence to the Registrar dated 6 November 2006, the defendants resisted the plaintiff's application for taxation of its bills, relying upon the terms of settlement and upon O 62 r 14 of the Rules. 6 On 15 January 2007, the Deputy District Registrar ("the Registrar") wrote to the parties with reference to the plaintiff's bills of costs. He referred to Order 63 r 3(3) and to the judgment of Finn J in O'Neill v Mann [2000] FCA 1680 at [20] . The requirement for leave appears to arise by operation of Order 62 r 3(3). In the present case, no such leave has been granted. Accordingly, I do not propose taxing the plaintiff's bills of costs. 7 By notice dated 27 February 2007, the plaintiff has sought a direction that the Registrar tax the bills of costs. The motion was opposed by the defendants. 8 In the course of the hearing of the plaintiff's motion on 28 March 2007, it became apparent that a Notice of Discontinuance had not been filed pursuant to the leave given by Young J on 15 May 2006. All parties and, it seems, the Registrar, were working on the basis that his Honour's order had the effect of discontinuing the proceedings of its own force. I believe that was a misapprehension. 9 The subject of discontinuance is covered by O 22 of the Federal Court Rules . As is apparent from the terms of rr 2 and 5, the method of discontinuance is the filing of a notice to that effect by the party making a claim for relief. Until such a notice is filed, the proceeding has not been discontinued. Of the four ways in which a proceeding may be discontinued set out in O 22 r 2(1), the court is involved only in the fourth: discontinuance by leave at any time. The court was so involved in the circumstances of the present case. The court's only function under O 22 r 2 was to give leave to discontinue. The act of discontinuance --- the filing of the notice --- still had to be performed by the party to whom leave was given. 10 As I have said, the terms of the order made by Young J on 15 May 2006 were not only that the plaintiff have leave to discontinue the proceeding, but also that "the proceeding is discontinued forthwith". Those were the terms of the consent order filed under the procedure provided for in O 35 r 10. I consider that the words of the order, to the extent that I have quoted them in this paragraph of my reasons, were ineffective in that they dealt with a matter which was not the function of an order of the court under the Rules. I consider that those words were surplus, and should be ignored. 11 I raised these concerns with the parties on 28 March 2007, and indicated to them that I considered that, as a matter of law, the proceeding had not been discontinued, and remained on foot. As a result, the plaintiff sought leave to file in court a Notice of Discontinuance pursuant to O 22 r 2. There was no opposition to the grant of that leave, and I granted it. The matters of substance arising out of the Registrar's refusal to tax the plaintiff's bills of costs then proceeded on the footing that the proceeding had been discontinued. 12 The plaintiff's entitlement to have its bills of costs taxed gives rise to questions arising both under the Rules of Court and under the terms of settlement dated 26 April 2006. Mr McNamara, who represented the plaintiff, accepted that, if the terms of settlement, on their proper construction, provided that the plaintiff would not be entitled to recover its costs of the interlocutory proceedings to which I have referred, that would be a sufficient basis for me to decline to direct the Registrar as sought in its Notice of Motion. 13 I shall consider first the position arising under the Federal Court Rules . The effect of the provisions of the rules to which I have referred appears to be quite clear: subject only to O 62 r 3(3), in the circumstances the plaintiff was entitled to have its bills of costs taxed without further order by the court. However, r 3(3) deferred that entitlement until the principal proceeding was concluded. That has now happened (indeed, the parties and the Registrar were working the basis that it happened on 15 May 2006), with the result that there would appear to be no further basis upon which the Registrar might decline to tax the plaintiff's bills. 14 I do, however, need to consider two possible qualifications to the plaintiff's entitlement as I have described it. The first is the judgment of Finn J in O'Neill v Mann to which the Registrar referred. In that proceeding, the applicant had the benefit of an interlocutory costs order in his favour (as has the plaintiff here). Some time later, the applicant sought the leave of the court under O 22 r 2(1)(d) to discontinue the proceeding. The application was resisted by the respondent on the ground that it would effectively permit the applicant to extract himself, without penalty, from a proceeding in which he might ultimately be ordered to pay the respondent's costs. With respect to discontinuance as such, Finn J took the view that it would be salutary for the proceeding to be brought to an end. However, his Honour clearly saw the force of the respondent's arguments. The benefit which the applicant sought had a particular irony in that, if he were given leave to discontinue, he would still, it seems, have had the benefit of the interlocutory costs orders made in his favour. In the result, Finn J gave the applicant leave to discontinue, but made that leave conditional upon the applicant undertaking not to take steps to have those interlocutory costs taxed. 15 Far from constituting an authority for the proposition that, without the leave of the court, a party who discontinues by leave cannot secure the taxation of costs already ordered in his favour, Finn J's judgment in O'Neill v Mann is intelligible only by reference to a contrary proposition, namely, that, in the absence of some special order, a party who discontinues by leave would in the normal course be entitled to proceed to taxation with respect to any interlocutory costs orders which had been made in his favour. It was because Finn J did not consider it just or appropriate that the applicant in O'Neill v Mann should have the benefit of such orders, while at the same time avoiding the scrutiny of the merits of his substantive claims, that his Honour extracted an undertaking from him. Absent that undertaking, the applicant would have been entitled to proceed to taxation with respect to the interlocutory costs orders in his favour. 16 The other qualification arises under O 62 r 14, upon which the defendants relied. As a matter of construction, he was obliged to submit that any party in any proceeding in whose favour costs had been awarded at an interlocutory stage was obliged to ensure that a reference to those costs was included in the order finally disposing of the proceeding, otherwise the entitlement to those costs would be lost. If this is a correct reading of O 62 r 14, and if the rule has been observed otherwise than in the breach, one would expect to find numerous references to interlocutory costs orders contained in many final orders made by this court. 18 The question is whether Mr Currao's is the correct reading of O 62 r 14. The rule appears never to have been the subject of consideration by the court. It has been in the Rules from the outset, but had no analogue in the Rules of the Supreme Court of New South Wales or the Supreme Court of Victoria. However that may be, this brief comment in Lunn, repeated without elaboration by Perry J in Vergola , seems to be one of the only two recorded attempts to give a practical connotation to a provision of the kind that finds expression in O 62 r 14 of the Federal Court Rules . 19 The other recorded attempt appears in the recent book Law of Costs (2003), in which Associate Professor Dal Pont expresses the view (at p 432) that O 62 r 14 is intended to reflect the long-standing position that reserved costs do not follow the event of the proceeding as a whole unless an order to that effect is made upon determination of that proceeding: see British Natural Premium Provident Association v Bywater [1897] 2 Ch 531. However, as Dal Pont later points out (pp 434-435), under the Rules of this Court, that traditional position has been reversed (in the absence of an order to some other effect): see O 62 r 15. In those circumstances, I do not think that the terms of r 14 are to be explained by reference to reserved costs. 20 I consider that the submission made by Mr Currao should be resolved by considering whether it is a purpose of r 14 that the failure of the beneficiary of an interlocutory costs order to include a reference to those costs in the final order should have the effect of extinguishing forever that party's entitlement to enforce that order: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355, 390. Many of the provisions of O 62 are in the nature of directions, either to the parties or to the taxing officer, as to the procedure to be followed to make claims for costs and to determine the entitlement arising under, and the proper amount to be allowed on, those claims. Rule 14 is of such a character. It makes the final order the appropriate place to gather up, as it were, all the interlocutory costs orders made along the way. This enables the court, where appropriate, to make adjustments and allowances such as, for example, where the unsuccessful party wishes to set off the amount of costs which may be due to him or her on an interlocutory order against the amount of the final judgment which he or she would otherwise be obliged to pay in full. 21 In a conventional situation in which a proceeding is finally determined by judgment, I consider that O 62 r 14 should be construed as obliging the beneficiary of interlocutory costs orders to bring those orders into account at the point of where final orders are made (or least where they are entered). In this sense, "shall" means "shall" in the rule. However, even in such a case, I do not consider that the failure of such a party to do so should, as a matter of law, be regarded as extinguishing the entitlement arising under the interlocutory orders. He or she no doubt would have to show cause why the court should, in effect, re-open the proceeding if it were later discovered that if, by reason of a slip or oversight, the interlocutory orders had not been brought into account, but, if cause were otherwise shown, it ought not to be regarded as a complete defence to such a party's attempt to enforce such orders that the parties' rights in that regard had been wholly extinguished by a failure to comply with r 14. 22 Once court orders have been made in favour of a party, that party has a right, while those orders stand, to have them complied with. In the present case, the plaintiff's right was vested by the making of the interlocutory orders in question and the operation of O 62 r 7(1)(a) (subject, of course, to the operation of r 3(3) on the matter of timing only). As a matter of construction, I do not think that the purpose of r 14 was to defeat that right. I think its purpose was procedural or mechanical, in the way I have explained. The omission of any reference to the costs orders in the orders made by Young J on 15 May 2006 did not produce the result that the plaintiff's right was extinguished. 23 I turn next to the terms of settlement executed on 26 April 2006. In those terms, the recitals referred to the present proceeding, to the relief sought by the plaintiff in the proceeding, and to the parties' agreement to resolve and settle the proceeding, and the Supreme Court proceeding to which I have referred, and "to release and discharge each other from all or any claims arising out of the subject matter" of those proceedings. The recitals formed part of the terms of settlement. (b) it transfers to the Defendants all of its rights, title and interest in the Unsold Goods or so much of them remaining in the possession of the Defendants ("the Residual Goods"). Save for O 32 r 3(1)(b) which is irrelevant to the present situation, I am not aware of, and counsel were not able to refer me to, any provision of the Federal Court Rules which provides for a proceeding to be "struck out". Clearly the parties were here speaking in the vernacular, and intending that the proceeding would be terminated, but making no particular reference to the formal means by which that would be achieved. It was not suggested that an application for leave to discontinue fell outside the parties' agreement that the proceeding "be struck out by consent", and I am prepared to treat the mode by which the proceeding was terminated as broadly in conformity with that agreement. 26 The more difficult question concerns the meaning of the words "with no order as to costs". I consider that the most obvious meaning is that, upon termination of the proceeding, no order would be made as to costs. That is what occurred. Mr Currao submitted that the parties had effectively agreed that no costs order of any kind should survive the termination of the proceeding. I do not believe the words can reasonably carry that construction. The plaintiff had an established entitlement to its costs pursuant to orders made in the interlocutory stages of the proceeding, and I consider that, if the parties proposed that that right would be extinguished, clearer words than the general ones contained in clause 4 of the terms would have been required. After all, upon analysis, the defendants' proposition is not that there should never have been an order as to costs --- a manifest impossibility since the orders had already been made --- but rather than the plaintiff would agree not to proceed to taxation in relation to the existing orders in its favour. That is not what clause 4 of the terms says, and I can think of no reason to force the words of that clause beyond their natural meaning, which was that no order as to costs should be made upon the occasion that the proceeding was terminated. 27 Mr Currao also submitted that the release contained in clause 6 of the terms operated so as to preclude the plaintiff from presenting its bills for taxation. He submitted that, by seeking to obtain recovery under the costs orders which it held, the plaintiff was making a "claim ... in respect of or arising out of the subject matter of the ... Federal Court proceeding". Mr McNamara submitted that the presentation of the plaintiff's bills for taxation did not constitute the making of a claim, and that, even if it did, such a claim was not in respect of or rising out of the subject matter of this proceeding. 28 I would accept Mr McNamara's submission that, in presenting its bills for taxation, the plaintiff would not be making a claim in the relevant sense. Its entitlement to costs has been established conclusively by orders of the court. That entitlement was, in effect, a closed event before the terms of settlement were executed. In my view, a "claim" of the kind to which clause 6 refers is something other than, and naturally anterior to, the process by which the beneficiary of a court order seeks to have that order complied with. 29 I also agree that the plaintiff's entitlement to costs of the two interlocutory proceedings in which it succeeded should not be regarded as being "in respect of or arising out of the subject matter" of the proceeding. I accept that that entitlement arises out of the proceeding, but clause 6 of the terms is clearly intended to be narrower. The plaintiff succeeded on its interlocutory motions because the court, apparently, took the view that the defendants' discovery had been deficient in some respects. This was a procedural matter, not involving or arising out of the subject matter of the proceeding. 30 I have decided the questions arising under the terms of settlement without the need to refer to the exchanges of correspondence between the parties in the course of their negotiations whereby they finalised those terms. Mr Currao in particular sought to rely upon those exchanges in support of the proposition that the terms of settlement should be construed as though the settlement sum for which they provided comprehended all aspects of the defendants' money obligations resulting from the settlement, including those arising under the interlocutory costs orders to which I have referred. I was addressed at some length on the current state of the law as to the extent to which evidence of pre-contractual negotiations might be admitted in aid of the construction of the terms of settlement. To the extent that I admitted evidence of this kind, I found it of no real assistance in deciding the questions which arose upon the construction of the terms of settlement. The statements made by the parties in their negotiations were usually self-serving, often argumentative, and generally productive of more questions than answers apropos the construction of the final document to which the parties subscribed their names. It was apparent, as one would expect, that, in their negotiations, the parties took great care over the wording of the final terms of settlement. They did so, I infer, because, being concerned with significant commercial questions, they expected that the terms themselves would, once executed, regulate their respective rights and obligations. I am quite unpersuaded to take an approach which is to any extent inconsistent with that expectation. 31 In the circumstances, I consider that the plaintiff is entitled to have its bills of costs taxed, and that the terms of settlement constitute no impediment to that process. The parties agreed that the costs of the plaintiff's Notice of Motion dated 27 February 2007 should follow the event. I shall order that the defendants pay the plaintiff's costs of that motion, and I intend that the plaintiff be entitled to have those costs taxed together with the costs of the two previous interlocutory motions with which these reasons have been concerned. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. | interlocutory orders for costs proceeding discontinued without reference to those orders whether costs could be taxed notwithstanding absence of any such reference federal court rules , o 62 r 14 terms of settlement stipulating "no order as to costs" proceeding discontinued by leave without reference to costs orders made on interlocutory applications proposal to tax costs under those orders whether precluded by terms of settlement costs costs |
Sections 425 , 425A and 426 , all of which fall within Division 4 of Part 7 , deal with the extending of invitations to applicants for review 'to appear' and the content of such invitations. The sections use expressions such as '... must invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review', '... must give the applicant notice of the day on which, and the time and place at which, the applicant is scheduled to appear' and '... must notify the applicant ... that he or she is invited to appear before the Tribunal to give evidence ...'. However, any shortcomings of the Tribunal in respect to the provision of a corresponding hearing will fall to be determined according to the rules of natural justice, the content of which must be ascertained in the context of the relevant statutory power and the limitations on the natural justice hearing rule imposed by the Act under s 422B. 4 What is required by procedural fairness is a fair hearing not a fair outcome. The particular content to be given to the requirement to accord procedural fairness will depend upon the facts and circumstances of the particular case (see SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at 598 [25] - [26] ). 5 Under s 427(1)(b) of the Act the Tribunal is empowered to adjourn a review from time to time. 6 In the instant case the Tribunal extended an invitation to the appellant 'to come to a hearing of the Tribunal to give oral evidence and present arguments in support of your claims. You can also ask the Tribunal to obtain oral evidence from another person or persons'. The appointed time for the hearing was 1.30 pm on Thursday 2 June 2005. 7 A hearing took place on 2 June 2005 which was attended by the appellant who gave oral evidence with the assistance of a Bengali speaking interpreter. The appellant was accompanied by his adviser Md Zahirul Hoq Mollah but he did not stay for the whole of the hearing. There is no evidence to indicate when, precisely, the hearing commenced, although it may be observed that it was appointed to commence at 1:30 pm. There is evidence to suggest that it concluded at 4:01 pm. 8 In response to the question 'Why did you leave that country? Student wing chatra leage (sic). When asked to explain the apparent inconsistency the appellant apparently said that 'he was not feeling very well at that moment so he mixed it up'. 10 The Tribunal's decision on the appellant's Application for Review dated 29 June 2005 was handed down on 21 July 2005. The Tribunal Member affirmed the decision of the Minister's Delegate not to grant the appellant a Protection Visa. At times his evidence was illogical, implausible and inconsistent. At other times he was evasive and hesitant, and finally he demonstrated a lack of knowledge about his party. It thus finds that he was not a credible witness. When the Tribunal put to the applicant that it was illogical for the case to be filed before the events which were the subject of the case even occurred, the applicant stated that the case was filed the day before the incident because it was planned that he would be arrested. ... The Tribunal ... does not find it plausible that the case would have been filed before the events which were to be the subject of the case had even occurred as there would be no basis for the case had it been filed then. It finds that his claims are utter fabrication. What is important is the procedure which was followed in reaching those conclusions. 14 The ' FINDINGS AND REASONS ' section of the Tribunal's decision were recorded on about five pages of typed script. On three separate occasions within those findings and reasons reference was made by the Tribunal Member to the appellant's assertion of ill health which had been summarised earlier by the Tribunal Member in the manner indicated above at [9]. On the basis of the prescription and written referral the applicant submitted at the hearing and the Tribunal's conversations with Dr Deva, the Tribunal accepts that the applicant consulted a doctor on the morning of the hearing, was prescribed medication and referred for a lumbar spine examination. However, there is no medical evidence before the Tribunal to indicate that the applicant was afflicted with a condition either when he prepared his protection visa application or during the hearing which affected his ability to accurately recall information or give oral evidence and present arguments. The Tribunal did not detect anything in the applicant's manner at the hearing either before or after he claimed to have been unwell which suggested that he was experiencing any physical or mental discomfort during the hearing. On the contrary, he appeared very focussed and composed throughout even when serious problems with his evidence were put to him. Further, if the applicant was unwell and was thus having difficulty recalling matters, the Tribunal expects that he would have said so immediately in response to the Tribunal's questions. However, the applicant only claimed to have been unwell when problems with his evidence were put to him. Therefore, the Tribunal does not accept that the applicant's ability to recall past events, give oral evidence at the hearing and present arguments or provide accurate information in his protection visa application was affected by some physical or mental condition. However, when the Tribunal put to him that this was not consistent with the letters he had submitted and that the BNP was not in power at the time the case was allegedly filed ... he claimed he was unwell .... The Tribunal has not accepted that any illness affected the applicant's ability to give evidence. The Tribunal has not accepted that the applicant's ability to give evidence was impaired by any condition. The Tribunal asked the applicant why he was only presenting the report at that point when the Tribunal had put problems about his evidence to him and not at the beginning of the hearing. The applicant responded that he had not faced this type of "interview" before and did not realise "the situation would be bad". Asked if he told his agent that he was not feeling well and had been to the doctor, the applicant said he had not. The Tribunal queried why he did not think to tell his agent or the Tribunal that he was not feeling well given he claimed to fear for his life and was coming to a hearing to decide his fate. He replied that he "did not realise before" and it was the first time he was facing the Tribunal. The Tribunal questioned how that affected his ability to recall past events, the applicant repeated that he had backpain which was getting worse, chest pain and a runny nose. The Tribunal again asked how that affect his ability to recall past events, to which he replied that he was not feeling well and so could not recall exact dates. The addresses on both documents were the same, the signatures of the doctor on each document appear the same thus it seemed to the Tribunal that they were the same doctor but that the doctor's name had been written differently on the two documents. The Tribunal asked what the medication was that had been prescribed, the applicant replied that he did not know what it was for, he said he had back pain and the doctor asked him to have a chest x-ray. Dr Deva was informed that the applicant was attending a Tribunal hearing and had indicated that he had pain which affected his ability to recall matters and give evidence. Dr Deva stated that he was not convinced about the applicant's pain. He said he had seen the applicant about 3 months before and prescribed some medication but the applicant had returned that day seeking something stronger. Dr Deva stated that he was not convinced the pain was genuine and even if he had back pain it would not affect his thinking. Asked if he wanted to tell the Tribunal anything he wanted it to take into account when assessing whether his ability to give evidence was affected, the applicant stated that the doctor had not made a final decision about the pain but said the applicant had to get an xray before he could say whether the pain was genuine or not. It is quite obvious that Dr Deva had forms provided for use by him when referring patients to 'REDFERN XRAY' which showed his second name 'Kumara' as part of his surname. In the circumstances, it would have been inappropriate for the Tribunal Member to draw any inferences adverse to the appellant from the production of the two forms which showed Dr Deva's name expressed differently. 20 What is important is that the Tribunal Member's decision was plainly affected by Dr Deva's response to the Tribunal Member who, when seeking information specifically about the appellant, was told by Dr Deva 'that he was not convinced about the applicant's pain' and that 'he was not convinced the pain was genuine' and further Dr Deva's opinion that even if the appellant had back pain it would not affect his thinking. 21 In my opinion the conclusion is inescapable that the Tribunal was bound to give particulars of the information gleaned from Dr Deva to the appellant in writing inviting his comment upon it in accordance with s 424A(1) of the Act. 22 Under s 424A of the Act it is incumbent upon the Tribunal to give notice in writing to an applicant of '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'. 23 The question which arises in the instant case is whether the information obtained by the Tribunal Member from Dr Deva during the adjournment of the hearing referred to above, which was apparently discussed orally with the appellant following the resumption of the hearing, was information that the Tribunal considered would be the reason, or a part of the reason, for affirming the decision under review. 24 On 17 August 2005 the appellant filed an Application seeking constitutional writ relief in respect of the decision of the Tribunal in the Federal Magistrates Court of Australia. On 29 November 2005 the appellant filed an Amended Application in the Federal Magistrates Court. The Tribunal erred in law not asking the applicant the right questions. That letter dated 3 June 2005 made no mention of the information obtained by the Tribunal from Dr Deva. The Tribunal's letter elicited a written response from the appellant dated 16 June 2005 but it is unnecessary, for present purposes, to make reference to the information that was given and the responses which were provided. 26 At the hearing before Federal Magistrate Nicholls on 19 September 2006 the appellant sought to read an Affidavit which purported to annex a transcript of the hearing before the Tribunal on 2 June 2005. Counsel for the respondent Minister objected to the Affidavit. The Federal Magistrate decided that the transcript in the form attached to the Affidavit should not be admitted into evidence. However, he gave the appellant an opportunity to provide a transcript in an admissible form with the proper evidentiary context. He also gave the Respondent Minister leave to file any further Affidavit and transcript in reply. The appellant did file an Affidavit of an experienced legal secretary who was competent in transcribing material. Her transcript produced from two tapes generated by the Tribunal was filed with the Federal Magistrates Court on 9 October 2006. That transcript was plainly incomplete in that it makes no mention of the questions which appear to have rattled the appellant and no mention of the discussion with Dr Deva which the Tribunal Member in her reasons indicated had been the subject of discussion with the appellant upon the resumption of the Tribunal hearing. I will be calling the Hearing Officer to turn off the tapes. I am asking you to explain that obvious inconsistency, you made no mention of the Beanibazar College in your protection visa application. I didn't mention in my application because at that time I was very sick, I thought I will add it later bit (sic) it is my mistake. He was mentally sick at the time. I can't remember everything. I do have concerns whether you have been a truthful witness and I have some concerns about the documents you have provided which I have put my issues and concerns to you. ... Is there anything you want to say about that? 31 Federal Magistrate Nicholls dismissed the appellant's Application with costs fixed in the amount of $7,200. It is clear on a plain reading of the Tribunal's decision record that this issue was relevant to the Tribunal's concern, as Dr. Allars has submitted, as to whether it should continue with the hearing, not whether it went to the applicant's credibility or his claims more generally. As such that it could not be said that the information obtained from the relevant doctor was information which formed a part of the reason for affirming the delegate's decision. The Tribunal's concern was quite properly whether the applicant's ability to present his claims, both in his protection visa application, and the hearing, was affected by his claimed medical condition. It was open to the Tribunal, as it did, to accept the applicant's evidence as it related to having consulted the doctor and being prescribed medicine. But it was equally open to find that there was no evidence before it that this, or any relevant medical condition, existed as at the time of the making of the application for a protection visa. Nor, critically, whether such an condition (given that it related to a "lumbar spine examination") would have prevented, or more properly affected, the applicant's ability to give evidence at the hearing. Further, the Tribunal was entitled, in all the circumstances, to take into account the applicant's demeanour at the hearing and that the applicant only raised the issue of the medical evidence after the Tribunal had put to him questions relating to problems with his evidence. Further, and in my view critically, the presentation by the Tribunal of this issue coming as it does at the beginning of its "Findings and Reasons", clearly shows a separation in the Tribunal member's mind between the need to focus on whether it was fair to continue the hearing, and the separate issue once it had settled that question, of the applicant's credibility. I cannot see that the Tribunal's findings on the credibility of the applicant's claims was related, even in part, to the medical evidence provided by the applicant. The two issues are clearly separate in the Tribunal's analysis. I should also note that the claims as to his condition were made by the applicant himself (particularly the claim as to his mental condition as at the time of making the protection visa application) and all information provided by the applicant to the Tribunal as such fell within 424A(3)(b). In all therefore I agree with Dr. Allars's submission and this aspect of the complaint is also not made out. Such information was specifically about the appellant. It was not given by the appellant to the Tribunal for the purpose of the Application, rather, it was obtained by the Tribunal. It cannot be said that it was obtained purely and simply to enable the Tribunal to determine whether or not it was reasonable to adjourn the hearing before it. On three separate occasions in the Tribunal's ' FINDINGS AND REASONS ' the Tribunal made findings that the inconsistencies in the appellant's account of past events and other matters could not be explained by some physical or mental condition which impaired his ability to give evidence. Such a finding materially affected the Tribunal's assessment of the appellant and his claims in respect of his alleged fear of persecution and the foundation for it. 34 Given the view which I have formed in respect of the Tribunal's failure to give particulars in writing to the appellant of information in accordance with s 424A(1)(a) of the Act, it is unnecessary to consider in greater detail the other issues raised in the Notice of Appeal. Suffice it to say that apart from the s 424A issue I have been unable to discern any relevant jurisdictional error on the part of the Tribunal. 35 In the circumstances, the appeal should be allowed, the orders in the Court below set aside and constitutional writ relief granted. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | failure by tribunal to give notice in writing to an applicant of medical opinion concerning the applicant obtained by the tribunal during an adjournment of the tribunal hearing migration |
After hearing further submissions, Weinberg J determined the question of costs on 11 April 2006 by ordering that the second respondent ('Mr Spencer') pay the applicant's costs of the proceeding, such costs to be taxed in default of agreement. 2 It is unnecessary to set out all of the orders made by Weinberg J on 8 February 2006. They included declarations, findings of fact pursuant to s 83 of the Trade Practices Act 1974 (Cth), injunctions and other orders. Mr Spencer was represented by counsel on 8 February 2006 and consented to the making of the orders. The liquidators of the first respondent ('Contact Plus') did not oppose the making of the orders. 3 By notice of motion dated 27 April 2006, the applicant now moves the Court for orders that Mr Spencer be punished for contempt of court for non-compliance with paragraphs 12 and 13 of the Orders. Within 14 days of the date of these orders, Spencer provide each person with whom Contact Plus has entered into an agreement similar in terms to the Clark Franchise Agreement, the Plaisted Franchise Agreement or the Davy Franchise Agreement with a disclosure document which complies with the requirements of clauses 6 and 6B(1) of the Franchising Code of Conduct. Within 14 days of the date of these orders, Spencer provide each person with whom Contact Plus has entered into an agreement similar in terms to the Clark Franchise Agreement, the Plaisted Franchise Agreement or the Davy Franchise Agreement with a copy of these orders. On the same day, these documents were also served on Mr Spencer's solicitors. The Orders followed a mediation which was held on 24 November 2005. Mr Spencer attended the mediation. At the end of the mediation, he signed each page of proposed court orders and an attached agreed statement of facts. Mr Spencer knew that the terms of those documents would be embodied in Court orders. 6 On or about 8 February 2006, Mr Spencer was informed by his counsel that the Orders had been approved by the Court and that a timetable had been set to determine the outstanding costs issue. Mr Spencer swore an affidavit dated 16 February 2006 in relation to the costs issue in which he referred to the Orders as having been made on 8 February 2006. Mr Spencer acknowledged in evidence that he knew the terms of the Orders and that they had been made on 8 February 2006. 7 On 22 March 2006, Mr Spencer was served with a sealed copy of the Orders. Paragraph 9 of the Orders states that 'the facts referred to in the attached Statement of Agreed Facts are findings of fact for the purposes of s 83 of the Act. ' The statement of agreed facts was attached to the Orders that were served on Mr Spencer. 8 Prior to 22 March 2006, Mr Spencer had not received a sealed copy of the Orders. First, I was required to notify any other parties with whom the First Respondent had entered into licensing agreements with as to the terms of the orders within 14 days of the orders (paragraph 12). Secondly, I was required to provide a disclosure statement (paragraph 13). Rightly or wrongly I believed that I would do that once I had received a copy of the orders of the Court. The fact that the time period apparently commenced to run when the orders were pronounced in court was something I did not appreciate. In any event I believed that correct compliance required me to serve the official copies of the orders issued by the Court. 10 On 6 April 2006, Mr Spencer sent identical emails to a number of people who had entered into franchise agreements with Contact Plus ('the 6 April email'). The password will then be sent. We have agreed to give you a copy of these orders. The writer was never provided with a copy of the ACCC disputes procedure until the Minister for small business intervened, three years later. The Ombudsman is investigating on our behalf. The password was not provided with the email; it would only be disclosed if the recipient of the email provided stipulated information to Mr Spencer. At least two recipients of the email, Ms Ford and Ms Byron, did not reply to the 6 April email by providing the information requested and did not gain access to the attached PDF file. 12 On 12 April 2006, the solicitors for the applicant, Deacons, wrote to Mr Spencer's solicitor concerning Mr Spencer's compliance with the Orders. In the letter, Deacons stated that in its view Mr Spencer's 6 April email did not constitute compliance with the Orders. Deacons also said that the applicant may make an application to the Court to commit Mr Spencer for contempt, unless evidence of compliance or rectification of the non-compliance was provided by 19 April 2006. 13 Mr Spencer responded to Deacons' letter directly by an email to Mr Tom Jarvis of Deacons on 13 April 2006. Amongst other things, the email stated that the PDF file was password protected to protect the document from unauthorised access. Alternatively, if request [sic] by you, I will forward the document passwords to you, and you can forward it to your clients. Please respond. As you have ignored our previous correspondence, we once again send you this attachment in accordance with our agreement. This is a necessary precaution as you have not acknowledged that this email address is the personal email address of ... . 15 On 19 April 2006, Deacons forwarded identical letters to Mr Spencer and his solicitor. The letter stated, inter alia, that delivery of a document which could only be accessed by use of a password did not constitute delivery of that document in accordance with the Orders. Deacons also stated that if Mr Spencer failed to deliver a copy of the Orders and the disclosure document to the required recipients by 4.00 pm on 21 April 2006, the applicant may make an application to the Court without further notice. 16 On 19 April 2006, Deacons received four further emails from Mr Spencer. In one of those emails, Mr Spencer stated that he had sent copies of the Orders to the required recipients by post. 17 On 19 April 2006, Ms Ford and Ms Byron received a letter from Mr Spencer enclosing a CD ROM. 18 On 20 April 2006, Deacons advised Mr Spencer and his solicitor by letter that it did not regard the delivery of a document (whether by email or by post) that can only be accessed by use of a password as constituting delivery of that document in compliance with the Orders. 19 Later on 20 April 2006, Ms Ford, Ms Byron and others received an email from Mr Spencer advising them of the password to access the PDF file. However, neither Ms Ford nor Ms Byron attempted to open the attachments to the earlier emails. 20 An officer of the applicant, Mr James Small, attempted to use the password provided by Mr Spencer to open and print the attachments to Mr Spencer's emails of 6 and 14 April 2006 and the contents of the disk that Ms Ford received from Mr Spencer on 19 April 2006. Mr Small was able to open and print out the attachments to the 14 April email and the contents of the disk, but he was unable to open the attachments to the 6 April email. When printed, the last page of the Orders was missing and there was no attached statement of agreed facts. 21 On 21 April 2006 and 28 April 2006 respectively, Ms Ford and Ms Byron received an incomplete copy of the Orders together with a form of disclosure document by registered post. The Orders were missing the last page and there was no attached statement of agreed facts. Section 31(1) confers upon the Court the same power to punish contempts as the High Court possesses. The section effectively declares that this Court has the contempt powers which are inherent in the judicial power of the Commonwealth: Re Colina; Ex parte Torney [1999] HCA 57 ; (1999) 200 CLR 386 at 395 [16] per Gleeson CJ and Gummow J. 23 The contempt charges in this case were laid in accordance with O 40 r 5 and r 6 of the Federal Court Rules . Counsel for Mr Spencer, Mr Bailey, argued that service of the Orders on Mr Spencer was irregular having regard to the provisions of O 37 r 2(1). However, that argument fails to take account of r 2(5). Sub-rule (5) permits a judgment or order to be enforced against a person by committal for contempt, notwithstanding that service has not been effected in accordance with r 2, where the person has notice of the judgment or order either by being present when the judgment is pronounced or when the order is made, or by being notified of the terms of the judgment or order by telephone, telegram or otherwise. In this case, Mr Spencer was represented by counsel when the Orders were made by Weinberg J. He had previously consented to and signed copies of the relevant orders. And shortly after the Orders were made, he was notified by his solicitor of the terms of the Orders. There was no failure to comply with O 37. 24 The applicant carries the onus of proof. The charges must be proved beyond reasonable doubt: see Witham v Holloway [1995] HCA 3 ; (1995) 183 CLR 525 (' Holloway' ) at 534; Australian Competition and Consumer Commission v INFO4PC.com Pty Ltd [2002] FCA 949 ; (2002) 121 FCR 24 (' ACCC v INFO4PC' ) at 27-28 [4]. 25 Any contempt of court, including any wilful disobedience of the orders of the Court, is a very serious matter. This is the way in which the Court preserves respect for its role and the rule of law. Without the enforcement of court orders the whole process of adjudication becomes a hollow exercise. If a losing party can defy the orders of the Court then such disobedience renders futile, in the perception of the community, the remedy secured by the successful party. Orders are not made simply to suggest or advise persons that they ought to keep to the law as proclaimed but to ensure that the law is carried out as determined by the decision pursuant to which the order is made. Defiance of court orders diminishes the authority of courts and removes the incentive of parties, if such conduct is left unpunished, to comply with the requirements of the courts. 26 It is not necessary to prove any subjective intent to disobey an order of the Court: ACCC v INFO4PC at 28 [10]; ACCC v Hughes at [20]. A deliberate commission or omission in breach of an injunctive order constitutes wilful disobedience and will amount to a contempt. Such a contempt is usually classed as a civil contempt. Depending on the circumstances, a deliberate act in disobedience of an order can amount to a criminal contempt. A contempt which is the result of an act of defiance, resulting in a deliberate breach of a court order, can be described as contumacious and as criminal in character: see Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46 ; (1986) 161 CLR 98 (' Mudginberri' ) at 108; Holloway at 530. Gillard J said that the true meaning of the High Court's observation in Mudginberri is that if the evidence revealed that the breach was casual or accidental and unintentional, that would be relevant to whether or not the court should exercise its contempt jurisdiction. If the court is of the view that the charge of contempt is trivial or minor and lacks substance, or that the alleged contempt was casual or inadvertent and unintentional, even though technically established, the court would have a discretion to decline to exercise its jurisdiction. This accords with the views expressed by the Court of Appeal in Victoria in Re Perkins; Mesto v Galpin [1998] 4 VR 505 at 512-513. 28 Thus, it will be sufficient to establish a contempt if it is proved beyond reasonable doubt that the person in question was aware of the order and intentionally did an act, or omitted to perform an act, with the result that there was a breach of the order. An honest belief that a failure to act does not constitute a breach of an injunction is not a defence, but it may be relevant to penalty: see McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 at 313-314; ACCC v INFO4PC at 28 [10]. This was not disputed by counsel for Mr Spencer. On and from 8 February 2006, Mr Spencer knew the terms of the Orders (including their incorporation of the agreed statement of facts), that they had been made on 8 February, and that they required him to provide specified documents to particular people within 14 days of the making of the Orders. He did nothing to comply with the Orders until after 22 March 2006. 30 Mr Spencer gave evidence that he believed he need only take steps to comply with the Orders after he had been served with a sealed copy of them. Although I am prepared to accept this evidence, I do so with some hesitation because the evidence demonstrates that, from the outset, Mr Spencer had a grudging attitude towards compliance of the Orders. 31 Mr Spencer and his solicitor did nothing to facilitate the timely service of the Orders. Between 15 February and 22 February 2006, Mr Jarvis telephoned Mr Spencer's solicitor, Mr St John Heath, several times and left detailed messages for him in an unsuccessful attempt to arrange a mutually convenient time for service of the Orders. Mr Heath did not return these calls. The Orders were eventually served on Mr Spencer by a process server on 22 March 2006. There is no evidence that Mr Spencer discussed or checked his beliefs about the operative date of the Orders with his counsel or solicitor. 32 If the only issue in the case were Mr Spencer's non-compliance between 8 February and 6 April 2006 because of his misapprehension as to the effective date of the Orders, the applicant submitted that it may have taken a different course. But it submitted that the subsequent acts of non-compliance by Mr Spencer are much more serious and they cannot be described as technical in nature. I agree. 33 The Orders required Mr Spencer to provide a full and complete copy of the Orders, including the attached statement of agreed facts, and the disclosure statement to particular people. For the moment, I will focus on the requirement in paragraph 13 of the Orders. The plain and natural meaning of paragraph 13 of the Orders is that Mr Spencer was to provide a complete copy of the Orders in a form that could be read by the recipients. The document that Mr Spencer provided, by way of an attachment to his emails and by way of a disk, could not be read by the recipients because of Mr Spencer's deliberate actions in relation to the password. 34 Counsel for Mr Spencer submitted that paragraph 13 speaks of the obligation to 'provide' a copy of the Orders and this could encompass the provision of a copy by email or CD ROM. While this is so, counsel's submission on this point is misconceived. The non-compliance alleged against Mr Spencer does not relate to the provision of the document by email or CD ROM rather than by a hard copy. The provision of a complete copy of the Orders by way of an attachment to an email, provided the attachment can be accessed and read, would have been an appropriate way of complying with the Orders. However this is not what occurred. In his 6 April email, Mr Spencer provided documents in a form that was password protected, withheld the password, and notified the recipients of the email that he would only provide the password if they provided him with sensitive personal information, including their current telephone number. His 14 April email differed only in that it said the password could be obtained from Mr Jarvis, and in its offer of a hard copy by mail. In his letter of 19 April 2006, which enclosed a password protected CD ROM, he informed the recipients that they could obtain the password from Mr Jarvis on proof of their identity. It was only on 20 April 2006 that the recipients received an email from Mr Spencer advising them of the password. 35 A person in Mr Spencer's position must strictly observe the terms of a Court order. It is not necessary for the Court to prescribe the manner in which the required result is to be achieved. It is sufficient if the Court clearly specifies that the respondent is to carry out a particular course of conduct: see ACCC v INFO4PC at 28 [7]. There was nothing unclear or ambiguous about paragraph 13 of the Orders. Mr Spencer's obligation was to provide the documents in a form that could be accessed and read by the recipients. Mr Spencer did not comply with this requirement and his non-compliance was deliberate. 36 It must be borne in mind that the persons to whom Mr Spencer was required to provide the documents were former franchisees of Contact Plus. Those persons had had a very unhappy experience with Contact Plus and Mr Spencer. Mr Spencer had threatened to commence legal proceedings against a number of the former franchisees: see Australian Consumer and Competition Commission v Contact Plus Group Pty Ltd (in liq) [2006] FCA 396 at [29] . The content of the 6 April email shows that Mr Spencer maintained considerable ill-will towards the intended recipients of the email. It also reveals that he felt aggrieved by the outcome of the proceedings and was antagonistic towards the applicant and the addressees of the email. 37 Paragraph 9 of the Orders provided that the facts set out in the attached statement of agreed facts constitute findings of fact for the purpose of s 83 of the Act. An obvious purpose of paragraph 13 of the Orders was, therefore, to inform those persons to whom the Orders were to be sent of the findings of fact that had been made against the respondents. Once informed of the findings of fact, they could take them into account in determining whether any, and if so what, action should be taken by them against the respondents to protect or assert their rights. The excision of the agreed statement of facts from every copy of the Orders that Mr Spencer provided must be seen in this light. I find that the excision of the agreed statement of facts was intentional. 38 In the course of cross-examination, Mr Spencer was asked to explain why it would not have been easy for him to send the Orders by email, without being password protected. Since 2003 I have constantly had this thing on my back. Constantly. No let up. These people have vexatiously sent emails on mass distribution lists. The copies were submitted in all this paperwork. They have been vexatious about this whole case right through. They are --- Ms Ford and Byron are not part of the ACCC action but they have been watching, commenting and even appearing at the back of one of my pre-motion hearings. They are aware of everything that has been going on and they cannot wait to stick it up me. Consequently this. To answer the question is that sending by email is not --- it is like throwing a dart. Closing your eyes and throwing at a dart board. Because the email address is alive today does not mean to say it has been redirected. It was a commercial email address, fordrec. I have no idea whether in the last two years I have had any contact with this lady whether she has moved, sold her business or whatever. If her email address was jillford@bigpond my answer to this gentlemen would have been --- I would have been more at ease sending it to a personal email address but not a commercial email address. --- And my answer was I had no idea whether that email address was still active and I wanted to find out. His answer was: 'Absolutely not, your Honour, because I knew that they would do exactly what they did and use it against me. ' I reject the denial in the first part of this answer. 40 Having carefully considered all of the evidence, I find that Mr Spencer took a series of steps, deliberately, to render it difficult for the recipients of the emails to access and read the terms of the Orders. He knew that the email recipients would be most unlikely to provide him with their personal details, including their current telephone number. He thought it most unlikely that they would take the steps he required to obtain access to the password. He knew that this would tend to defeat the purpose of the Orders, while allowing him to claim that he had technically complied with them. I am also satisfied that Mr Spencer deliberately excised the agreed statement of facts from the Orders. He did so because, as he said in evidence, he did not want the relevant persons to be able to use the agreed statement of facts against him. 41 I reject Mr Spencer's evidence that he attached the password merely because he wanted to find out whether the recipient's email addresses were still live. The terms of the 6 April email show, as Mr Spencer accepted in evidence, that there was no doubt in his mind that the people to whom he was making those statements were the people to whom he was required to send the Orders. 42 I also reject Mr Spencer's evidence that the only reason why the attachments and the CD ROM were password protected was that his software defaulted so as to set a password. Mr Spencer said that he did not know at the time how to adjust the security setting. If the password arose by default, there was no reason for Mr Spencer not to include the password in his first email, or to attach the conditions he did for accessing that password. The password was a device that Mr Spencer used to deflect the operation of the Orders. He was motivated by a desire to ensure that the intended recipients of the Orders would not be able to use the documents against him. 43 Initially, counsel for Mr Spencer submitted that, if there be any non-compliance, it was technical and was not done with any intention on the part of Mr Spencer not to comply with the Orders. I disagree. I consider Mr Spencer's non-compliance was wilful. He took deliberate steps to deflect and, to some extent, defeat the intended operation of the Orders, while maintaining a veneer of compliance. 44 Towards the end of his submissions, counsel for Mr Spencer acknowledged that the facts showed that there was 'a sort of grudging compliance' by Mr Spencer. However, counsel added that at the end of the process Mr Spencer accepted that he had to give hard copies and that is what he did. In my view, this submission understates the seriousness of Mr Spencer's non-compliance. It is also incorrect to say that at the end of the process Mr Spencer fully complied with the Orders. The hard copy documents that he eventually supplied by registered mail were incomplete. The most significant aspect of this incompleteness was the exclusion of the agreed statement of facts. The Code requires a disclosure document to be provided prior to the making of a franchise agreement and at the end of each year during its term. The document relates to the business that will be conducted, or is being conducted, under the franchise agreement by the franchisee. 48 In light of these provisions, the meaning and operation of paragraph 12 of the Orders is somewhat uncertain. The persons to whom Mr Spencer was required to provide a disclosure document were those persons with whom Contact Plus had entered into a franchise agreement similar in terms to certain specified franchise agreements. At the time the Orders were made, there were no relevant franchise agreements on foot and no franchise relationships were in prospect. The former franchisor, Contact Plus, had been placed in liquidation. Mr Spencer was not in a position to exercise any powers or functions as a director or executive officer of Contact Plus. 49 In his affidavit sworn 17 May 2006, Mr Spencer deposed that it did not occur to him when agreeing to the consent orders at the mediation that he might have difficulty in complying with paragraph 12 of the Orders. When he began to implement the Orders on and after 6 April 2006, Mr Spencer found the provision of the disclosure statement problematic in that it could not be provided by Contact Plus and, as much of the information he needed for the disclosure statement was now held by the liquidator, he had to negotiate with the liquidator's office as to what could be provided. 50 It is unclear whether paragraph 12 of the Orders is referring to the disclosure statement that ought historically to have been given at some prior date to the persons who entered into a franchise agreement with Contact Plus, or a disclosure statement that is to speak as at the date of the Orders or at a date 14 days after the making of the Orders. The applicant submits that paragraph 12 contemplates a disclosure statement that speaks as of the date the Orders were made. It argues that the disclosure statement must be framed by reference to knowledge possessed by Contact Plus and Mr Spencer as of 8 February 2006. In my opinion, there are problems with this construction of paragraph 12. Those problems are magnified when regard is had to the required content of a disclosure statement: see Annexures 1 and 2 of the Code. 51 Counsel for Mr Spencer submitted that it is a condition of proving civil contempt that the terms of the relevant order are clear, unambiguous and capable of compliance: see Advan at [31]. In his submission, paragraph 12 of the Orders is unclear and ambiguous, and there is real doubt whether it was capable of being complied with by Mr Spencer on or after 8 February 2006. 52 The applicant contended that the relevant form of disclosure document was the longer form in Annexure 1, but it proceeded to analyse Mr Spencer's compliance against the short form document in Annexure 2. It submitted that the document that Mr Spencer provided by way of a disclosure statement did not, on any view, comply with the requirements of Annexure 2. In particular, it submitted that it did not comply with Items 1 to 4, 9, 10 and 15 of Annexure 2 of the Code. In addition, the applicant argued that the previous franchise agreements contained ongoing obligations that survived termination, and it said that these obligations were not properly addressed in the short form disclosure document prepared by Mr Spencer. The applicant also submitted that Mr Spencer had made no attempt to contact the applicant, or to approach the Court, to clarify the nature and scope of his obligations in respect of the disclosure document: see ACCC v Hughes at [26]. 53 To some extent, the applicant acknowledged that there were difficulties with paragraph 12 of the Orders. Notwithstanding its contention that there are deficiencies in the disclosure document provided by Mr Spencer, it does not press for an order that a further revised disclosure document be provided by Mr Spencer. 54 I am satisfied that there are difficulties with paragraph 12 of the Order. It is unclear what it requires of Mr Spencer. Once Mr Spencer appreciated the difficulties he confronted in complying with paragraph 12, the appropriate course for him to take would have been to raise those difficulties with the applicant and with the Court. But in all the circumstances, I am not prepared to find that Mr Spencer committed a contempt by the way in which he endeavoured to comply with paragraph 12 of the Orders. Imprisonment is reserved for the most serious criminal contempt cases and is not appropriate here: see Keeley v Mr Justice Brooking [1979] HCA 28 ; (1979) 143 CLR 162 at 179; Gallagher v Durack [1983] HCA 2 ; (1983) 152 CLR 238 at 245; Hickey at 245-246 [38]-[39]. 56 The applicant seeks a declaration that Mr Spencer is guilty of contempt by reason of his breach of the Orders and an order that he be fined $10,000 for that contempt. Ordinarily, the Court's power to impose a fine is exercised where the disobedience of the Court's orders is wilful and not merely casual, accidental or unintentional. I have found that the contravention of paragraph 13 of the Orders was wilful. 58 In deciding the amount of any fine, the Court will take into account the contemnor's financial means: Smith v The Queen (1991) 25 NSWLR 1. The Court may suspend a fine on terms. In fixing the appropriate penalty, the Court will also take into account whether or not there is genuine contrition and whether or not a full and genuine apology has been given. 59 Having regard to my findings, I consider that the present case warrants a substantial penalty. There is an element in Mr Spencer's conduct that borders on defiance of the Orders. He deliberately adopted a series of steps that were designed to deny the benefit of the Court's Orders to the intended recipients of the documents. In my view, a penalty must be imposed that demonstrates to Mr Spencer, and to others, that the Court's orders cannot be disobeyed with impunity. In all the relevant circumstances I believe I should be excused. I consider that Mr Spencer has not shown any remorse for the fact that he wilfully disobeyed the Orders. Indeed, he has not acknowledged that he is in contempt of court. Through his counsel, Mr Spencer expressed his wish to 'rectify any remaining problems with his compliance with the orders. ' In evidence, Mr Spencer added that he would 'rectify any and all points that the Court... says that I have not complied with in the orders. ' I do not regard Mr Spencer's statement as one that affords any indication of regret, remorse or contrition about his contempt: it is merely an offer to do what Mr Spencer is in any event obliged to do under the Orders: see Australian Prudential Regulation Authority v Simiton (No 3) [2006] FCA 397 at [14] - [15] ; ACCC v INFO4PC at 57-58 [155]. 62 I have concluded that the appropriate penalty is to impose a fine of $8,000 on Mr Spencer in respect of the contempt constituted by his wilful breach of paragraph 13 of the Orders. This penalty is within the range suggested by the authorities: see ACCC v Globex; ACCC v INFO4PC ; and Australian Competition and Consumer Commission v Jayco Pty Ltd [2003] FCA 94. 63 I have taken account of Mr Spencer's personal circumstances. Mr Spencer said that he is currently unemployed and is not remunerated for the work he does as a director of CPG Recruitment Pty Ltd ('CPGR') or Debtregister Pty Ltd ('Debtregister'). He holds himself out to be the chief executive officer of Debtregister, although he said in evidence that he also fills the roles of marketing manager, software developer or whatever he wanted to call himself. He said the work he carries out for CPGR includes the preparation of quarterly BAS statements and the pursuit of various debts allegedly owed to CPGR. He said that the only person earning an income in CPGR is his wife, who is supporting him and his family. 64 In my view, Mr Spencer has not been forthcoming about his personal position and financial circumstances. There is, on the whole, insufficient evidence to suggest that the resources available to Mr Spencer would be inadequate to meet a fine of $8,000. Nor do I consider that the imposition of a fine of $8,000 would impose undue hardship upon him. 65 In fixing the penalty at $8,000, I have also taken account of the order I propose to make in relation to costs. 67 Costs can be awarded on an indemnity basis where it is warranted by the interests of justice. In many contempt cases, the court has concluded that justice requires that the respondent pay the applicant's costs on an indemnity basis: Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358; and ACCC v INFO4PC at 58 [160]-[162]. 68 The applicant brought these proceedings by notice of motion to ensure compliance with the Orders and consistently with its charter to act in the public interest: ACCC v Globex at 43,105 [84]. The applicant has been forced to take these extra steps to enforce its rights after they have already been adjudicated by the Court. 69 Mr Spencer had a duty strictly to comply with paragraph 13 of the Orders. He failed to do so and he is still in breach. He failed to take the necessary steps to comply with the Orders, notwithstanding correspondence from the applicant's solicitors warning that his failure amounted to a contempt. He was given ample opportunity to comply with the Orders. 70 I consider that it is appropriate in the interests of justice in this case to make an order that Mr Spencer pay the applicant's costs of and incidental to the notice of motion on an indemnity basis. I do not consider that my finding that the charge of contempt is not made out in respect of paragraph 12 of the Orders warrants me taking a different view as to costs. 72 The remaining question is what course should be taken in relation to the further operation of paragraph 12 of the Orders. While the applicant submitted that paragraph 12 has been breached, it did not press for an order that would have the consequence that Mr Spencer is required to take further steps to comply with paragraph 12 of the Orders. In the circumstances, I propose to order that paragraph 12 of the Orders be vacated. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young J. | jurisdiction to punish contempt service and enforcement of orders under federal court rules where final orders by consent required respondent to provide documents to specified persons where emails and cd-rom provided were password protected where password not supplied and conditions imposed to obtain password where incomplete documents provided whether non-compliance with orders was technical whether non-compliance with orders was deliberate and wilful contempt established consideration of appropriate penalty indemnity costs order order required provision of disclosure document under trade practices (industry codes franchising) regulations 1998 (cth) where respondent company in liquidation whether order was sufficiently clear and unambiguous and capable of compliance whether respondent in contempt for non-compliance with requirements of disclosure document no contempt established order vacated contempt of court practice and procedure |
The principal asset of the association is shares in Sirtex Medical Ltd (Sirtex). Sirtex is a public company which holds intellectual property rights said to have been developed, inter alia, by Dr Bruce Gray, formerly Professor of Medicine and Head of the Department of Surgery at the University of Western Australia (the University). 2 CRI has become involved in litigation brought by the University against Dr Gray and Sirtex. The University asserts its entitlement to the shares in Sirtex held by CRI on the basis that the intellectual property rights held by Sirtex in truth belong to the University. 3 A difficulty has arisen with the participation of CRI as a respondent in this litigation. The difficulty arises because of uncertainties about its membership and the recent purported election to its board of Dr Gray, one of his solicitors and his sister. Concern about these issues have led to the appointment of a receiver of the shares in Sirtex held by CRI. Directions have previously been made requiring the receiver to call a meeting of members to consider, inter alia, a settlement agreement said to have been reached between CRI and the University in the course of mediation in these proceedings when the purported board of management was differently composed. 4 Because of the governance issues affecting CRI and the uncertainty of its membership the receiver has now applied to the Court to expand his powers. For the reasons that follow I propose to accede to that application and to give the receiver the power to conduct these proceedings on behalf of CRI and, if appropriate, to settle them on terms approved by the Court. I will also make orders relating to the remuneration of the receiver and CRI's former solicitors. It is also suing two organisations with which he is associated, a listed public company Sirtex, and an incorporated association, CRI. At the heart of the University's action is its allegation that Dr Gray developed new technologies for treating cancer whist a member of the University's staff and that he subsequently obtained intellectual property rights and benefits flowing from those technologies in breach of his contractual and fiduciary duties to the University. The technologies, one of which is described as the "DOX-Sphere Invention", involve the use of ceramic microspheres to deliver localised treatment for cancer to specific organs. The acquisition of the intellectual property rights by Sirtex including, in the case of the DOX-Sphere Invention, by assignment of the rights from CRI, and the issue of shares in Sirtex to Dr Gray and to CRI have brought both of those entities into the dispute. It also seeks an order that CRI transfer the shares and options to the University. 7 On 2 June 2006 I made an order that CRI be restrained until further order from dealing in any shares held by it in Sirtex and from exercising any options held by it in relation to Sirtex. 8 On 31 July 2006 a mediation conference was conducted before Deputy Registrar Stanley in which the University was represented by its solicitors, as was CRI. At that meeting the University agreed to settle its action against CRI on the basis that CRI transfer the Sirtex shares held by it into a trust to be called The Cancer Research Trust. However on 19 September 2006, at a directions hearing, Mr Tottle representing CRI, informed the Court that a question had arisen about the legal capacity of the CRI board from whom he had been receiving his instructions. Since then a new board has purportedly been appointed by resolution of a meeting of CRI held on 27 September 2006. It is said to comprise the first respondent, Dr Gray, Mr David Sanders, a partner in Lavan Legal which is Dr Gray's solicitor of record in these proceedings and Dr Gray's sister, Ms Bethwyn Daebritz. This development gave rise to obvious concerns, which I expressed in Court, about the extent to which the affairs of CRI may be conducted in the pursuit of interests other than those related to its objects which are public charitable purposes and, in particular, purposes related to cancer research and education. 9 Dr Gray questioned the validity of the settlement agreement relied upon by the University which in turn filed a motion, on 29 September 2006, seeking its enforcement. On 3 October 2006, on the return of that motion, I raised the possibility that because of the obvious governance difficulties affecting CRI it might be necessary to consider the appointment of a receiver. The matter was adjourned to 5 October 2006 and further debate took place. 10 On 5 October 2006 I decided, acting under s 57 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), to appoint Mr Mark Conlan as the receiver of the shares in Sirtex held by CRI. As receiver, he would have power to exercise all of CRI's rights as a shareholder in Sirtex and would be entitled to investigate the enforceability of the agreement said to have been made with the University. I also required that a meeting of CRI be convened by the receiver who would have all the powers of the board and a member of CRI for that purpose in order to enable the meeting to consider and determine whether the agreement which had been made should be ratified or whether some alternative course should be taken in relation to the resolution of the litigation. I authorised the receiver so appointed to obtain independent legal advice to enable him to properly discharge his functions in that regard. The receiver was to be entitled to reasonable remuneration and costs and to an indemnity out of the assets of CRI in respect of those costs. Freezing orders previously made on 2 June 2006 and 7 July 2006 were varied to the extent necessary to give effect to the orders made on 5 October 2006. 11 On 27 November 2006 the matter came back to Court with submissions filed on behalf of the receiver seeking an expansion of his powers. At that time the issue as to the membership of CRI and who comprises its board of management remained unresolved. The receiver had formed the view that there appeared to be no current members of CRI. Mr Tottle, of Tottle Partners who had conduct of the proceedings on behalf of CRI on instructions from the purported members of the previous board, said in an affidavit sworn 20 November 2006, that in August 2006 he considered it necessary that the persons who were instructing his firm on behalf of CRI as members of the board of management seek independent advice in relation to the implementation of the agreed settlement terms and that that advice be paid for by CRI. The persons concerned, Ms Mirmikidis, Ms Oakley, Ms Ainsley and Mr Jones, had acted in a voluntary capacity in respect of the work undertaken by them in connection with the management of CRI's affairs. 12 The receiver asked that his powers be widened by appointing him as receiver and manager "... of all the assets and undertaking of the third respondent, including without limitation the shares in the second respondent held by the third respondent". The orders sought extended to the power to conduct the proceedings on behalf of CRI, to determine the position that it should take in the proceedings, to instruct solicitors to appear and to file and serve any documents in the proceedings, and, subject to the approval of the Court, to enter into and give effect to any agreement for the resolution of all or part of the proceedings so far as they affect CRI. Other orders relating to the receiver's remuneration were also sought. 13 At the hearing on 27 November 2006 Mr Bennett, who acts for Dr Gray in his capacity as first respondent, pointed out that no notice had been given to the persons claiming to constitute the current board (including Dr Gray) of the application to expand the receiver's powers. Orders were then made that the receiver for CRI file and serve on Dr Gray any affidavits in support of his proposed expanded powers on or before 1 December 2006. Any claim for privilege in relation to any aspect of the receiver's affidavit or exhibits were to be notified to the receiver by Dr Gray by 5 December 2006 and to the University by that time. There was then a further direction that any party seeking to file any affidavit in reply to the receiver's affidavit do so by 7 December 2006. The matter was stood over to 8 December 2006. On 30 November 2006 the orders were varied by consent to require the receiver to serve the affidavits on CRI. 14 On 8 December 2006 the matter came on for hearing on the question of the receiver's powers. Mr Vaughan sought leave to appear for Dr Gray, for Ms Daebritz and for Mr Sanders claiming to be the CRI board. He had only been instructed the previous day. He sought an adjournment. Considerable debate ensued. Dr Gray, Ms Daebritz and Mr Sanders have leave to file submissions and affidavits relevant to the question of the expansion of the receiver's powers on or before 14 December 2006. The question of the expansion of the receiver's powers be stood over for further oral argument and decision on 19 December 2006 at 2.15pm WDST. The current powers of the receiver are extended to the extent necessary to enable them to investigate the possibility of a resolution of the third respondent's involvement in these proceedings so far as it affects the ownership of the shares held by the third respondent in the second respondent. 15 Since that time a number of affidavits have been filed. I heard further argument on 19 December 2006 and reserved judgment on the question of the receiver's powers until today. The receiver also sought orders relating to his remuneration. They are summarised below. 1. Her affidavit was sworn in support of the University's motion filed 29 September 2006 for specific performance of the settlement agreement which it said was made between it and CRI on 31 July 2006. A copy of the Agreed Settlement Terms, signed by legal representatives for the parties, was exhibited to her affidavit. Ms Hodgson referred to consent orders, made on 2 August 2006, in order to give effect to the Agreed Settlement Terms, that timetabled directions relating to the proceedings against CRI be suspended until the first directions hearing after 30 September 2006 and that CRI be excused from attending any directions hearing scheduled between the date of that order and 30 September 2006. 18 The solicitors for CRI and the University jointly instructed Mrs Elizabeth Heenan of Marks & Sands Lawyers to prepare a trust deed to give effect to the Agreed Settlement Terms. However by a letter dated 28 September 2006 from Tottle Partners to Mrs Heenan which was exhibited to Ms Hodgson's affidavit, Tottle Partners advised Mrs Heenan that issues had arisen as to the authority of the board of CRI to settle the proceedings with the University and also whether the Agreed Settlement Terms were enforceable against CRI. Her affidavit of 3 October 2006 was by way of response to the University's motion of 29 September 2006. She said she was informed by Dr Gray, and believes, that he is a member of CRI. On 27 September 2006 she attended the annual general meeting of CRI which, according to Dr Gray, was convened by him in his capacity as a member of CRI. He informed her that before the meeting there had not been any directors' meeting or annual general meeting convened for the purpose of electing directors since 2001 and that there had been no valid directors since 2004. At the meeting, according to Ms Hughes, David Sanders, a partner in the law firm Lavan Legal, Dr Bruce Gray and his sister, Bethwyn Daebritz were appointed directors. A motion was put to "members" that CRI agree to establish a new trust to be managed by a board comprising members of CRI, the University and WAIMR. That motion was "unanimously defeated". According to Ms Hughes, no other meeting of members has been held since July 2006. Following the meeting of members, a meeting of the purported board of CRI was convened. Mr Sanders was appointed chairman. Dr Gray was appointed treasurer and his sister was appointed secretary. Ms Hughes said that neither Dr Gray nor Mr Sanders had seen or executed any formal deed of settlement. 3. A consent was also filed by Mr GF Totterdell. 4. He deposed that the conduct of the proceedings on behalf of Sirtex is managed by a litigation committee comprising three non-executive directors of Sirtex. Mr Price receives his instructions from the litigation committee. 22 On 22 August 2006 the litigation committee determined that Sirtex should apply for leave to file a cross-claim against Dr Gray and CRI. On the same day Dr Gray stood down as chairman of Sirtex and Mr Hill was elected as his successor. On 10 September 2006 Dr Gray wrote to the company secretary of Sirtex requesting that a motion for the removal of Mr Hill as a director of Sirtex be considered at the 2006 annual general meeting of Sirtex which was scheduled for 24 October 2006. He also requisitioned, in conjunction with other shareholders, a meeting for 6 October 2006 to consider the same motion. 23 Dr Gray wrote to the shareholders of Sirtex on or about 11 September 2006 attaching a notice of the requisitioned meeting fixed for 6 October 2006. The meeting was said to have been convened pursuant to s 249F of the Corporations Act 2001 (Cth) by Dr Gray, Ms Daebritz, a company called Pine Ridge Holdings Pty Ltd, a Mr Wark and Westwood Properties. 24 In his letter to shareholders Dr Gray listed various complaints against Mr Hill. He referred to the proposed cross-claims by Sirtex against himself and CRI. In the meantime, as shareholders I urge you to send an emphatic message to the board to rethink the disastrous lack of strategy in Sirtex's defence to this monstrous action by the University of Western Australia. The strategy should marshal the collective resources of me, the Cancer Research Institute and your company against this avaricious, opportunistic claim by Professor Alan Robson representing the University of WA. 25 Subsequently a letter was sent by the non-executive directors of Sirtex to shareholders responding to Dr Gray's letter. That letter was dated 18 September 2006. It led to the issue of a writ in the Supreme Court of Western Australia by Dr Gray against the directors Hill, Boyce and Eady claiming damages for defamation and misleading and deceptive conduct contrary to the Fair Trading Act 1987 (WA). 5. He referred to the sale of the 100,000 Sirtex shares held by CRI and their payment into his firm's trust account and the payment out of legal fees incurred up to and including 31 July 2006. 27 Mr Tottle said in his affidavit that on 2 August 2006 he formed the view that the persons who were instructing his firm on behalf of CRI as members of its board of management should seek advice from a law firm other than Tottle Partners in relation to certain aspects of the implementation of the Agreed Settlement Terms and that that advice be paid for by CRI. He knew that those persons, Ms Mirmikidis, Ms Oakley, Ms Ainsley and Mr Jones had acted in a voluntary capacity in respect of the work undertaken by them in relation to the management of CRI's affairs. He referred them to Mr Lemonis of the firm Fairweather & Lemonis. A sum of $5,000 was paid into that firm's trust account on account of its anticipated fees and disbursements. 28 On 21 August 2006 an issue was raised about the legal capacity of those who had been instructing Tottle Partners on behalf of CRI. Mr Tottle said that the issues as to who are members of CRI and who comprise its Board of Management remain unresolved. He was unable to obtain instructions on any substantive aspect of the conduct of the litigation. His firm had been prepared to remain on the record on behalf of CRI because he considered that they could provide some ongoing assistance to CRI and to the Court, albeit there were limitations as to the nature of the assistance that could be provided. His firm was prepared to continue on the record for CRI provided that some provision be made for payment of legal costs. 29 Mr Tottle's affidavit evidence was supported by that of a solicitor working in his firm, Yin Chieh Fang sworn 24 October 2006. 6. A resolution in identical terms was proposed by Dr Gray for consideration at the annual general meeting of 24 October 2006. Mr Price attended the meeting of 6 October 2006 as did Mr Bennett who is counsel for Dr Gray in these proceedings. Mr Conlan, the receiver of the Sirtex shares held by CRI, was not represented at the meeting. The meeting was chaired by Dr John Eady, the deputy chairman of Sirtex and was ultimately adjourned to the same time, date and place as the annual general meeting of 24 October 2006. Mr Price referred in his affidavit to claims that Mr Bennett had said after the adjournment that Dr Gray had been given a proxy by CRI to vote its Sirtex shares at the meeting and that, notwithstanding the appointment of the receiver, he could still vote on those proxies as he saw fit. These claims were based upon an article allegedly quoting Mr Bennett which appeared in the Australian Financial Review of 9 October 2006 and a statement made by a Professor Jeremy Davis, a shareholder of Sirtex, which was exhibited to Mr Price's affidavit. There was also evidently some dispute as to whether the Sirtex meeting had been validly adjourned. Sirtex sought from Dr Gray a copy of the proxies which he had for the purposes of the meeting but these proxies were not provided. 7. He decided that, in order to carry out his duties under the orders of the Cour, and particularly in order to call a meeting of members, he would need to attempt to resolve who were the members of CRI. He had a series of meetings with various parties on dates between 10 October 2006 and 21 November 2006. He also sent out letters to interested parties requesting information which might assist him in determining membership. 32 A member of Mr Conlan's staff, Mr Felton, contacted the bookkeeper to CRI, Mr Ben Saracini, and inquired whether he had financial records of the association and any membership mailing lists. Mr Saracini informed Mr Felton that he held no membership list or mailing list of CRI members. At the request of Dr Gray he had on one occasion forwarded notices of a CRI annual general meeting to members but was unsure when that had occurred. 33 On 6 October 2006 two members of Mr Conlan's staff visited the offices of Tottle Partners to assess what books and records of CRI were held and available for inspection, particularly in respect of membership. On 17 November 2006 with Mr Felton he attended at the offices of Tottle Partners and inspected the CRI discovered documents. He obtained copies of those he considered relevant to the issue of membership and board membership of CRI. 34 Among the documents which Mr Conlan exhibited to his affidavit were a copy of the CRI Constitution and a copy of each of the pages in its minute book relating to annual general meetings from 18 October 1994 to 6 December 2004. Copies of selected pages from a cashbook kept by CRI recording membership fees received between 1 July 1991 and 28 June 1996 were included along with copies of various applications for membership of CRI. Audited financial statements for the financial years ended 1995 to 2005 were exhibited. A document entitled "Membership List" dated 12 October 1995 was also exhibited. 35 From his analysis of CRI board minute meetings, it appeared to Mr Conlan that the CRI board met monthly during the period July 1994 to November 1998 and three or four times annually from November 1998 to December 2003. It met seven times in 2004. 36 Mr Conlan referred to relevant parts of rule 5 of the CRI Constitution relating to membership. It appears that membership is open to all persons subject to approval by the board (5.1). The board is empowered to establish criteria for membership including a schedule of membership fees (5.2). All resolutions or rules relating to members are to be affixed to the Rules (5.3). Any person is eligible to be a member by payment of the required annual subscription as determined by the board and as prescribed in the schedule of membership fees (5.5). Each member is to pay to the treasurer annually on or before 1 July or such other date as the board determines, the amount of the subscriptions determined by the board and prescribed in the schedule of membership fees (5.6). Clause 5.9 provides for the cessation of membership upon delivery of notice in writing of resignation or resolution by the board to expel the member from the association. 38 The secretary of the association is required to keep and maintain a register of members in accordance with s 27 of the Associations Incorporation Act 1987 (WA) (5.10). On the basis of that exercise he expressed his belief that the latest payment of $80 for a 10 year membership was entered in the cashbook on 18 July 1995 and that all ten year memberships had expired at the latest by 18 July 2005. Audited financial statements for the year ended 30 June 1997 recorded membership fees for that year totalling $50. Mr Conlan was not provided with CRI's 1996/1997 financial year cashbook records. He was unable to identify which members paid those membership fees. Neither was he able to see any resolution in the minutes, other than that dealing with Mr O'Neil, which dealt with any changes to the Constitution to provide for life membership. 41 The most recent CRI board minutes in Mr Conlan's possession were those for a meeting held on 25 October 2004. They were actually dated 25 October with no reference to a particular year, but they referred to minutes of a meeting held on 1 September 2004. Business conducted at the meeting held on that date suggested that the 25 October board minutes were for a meeting held on 25 October 2004. The board then comprised, according to those minutes, Dr Gray as chairman, Ms Mirmikidis as vice chairperson, P Jones, S Oakley, R Ainsley and G Anderson as treasurer. G Anderson was an apology. The minutes record that the board purported to resolve that an annual general meeting be called for Monday, 6 December to formulate a proposal to dispose of the remaining CRI assets. Further, the board resolved to support a resolution to gift the assets of CRI to the Walter and Eliza Hall Institute of Medical Research. 42 Mr Conlan inspected unsigned minutes purporting to be of an annual general meeting held on 6 December 2004 recording that a resolution was passed to donate all the assets of CRI to the Walter and Eliza Hall Institute to be used for purposes associated with cancer research. In his affidavit he questioned the validity of that resolution as all persons present at the meeting were apparently expired members of CRI. 44 Mr Conlan then referred to the meeting held on 27 September 2006 at which David Sanders, Bruce Gray and Bethwyn Daebritz were purportedly appointed as directors of CRI. Mr Conlan has not been provided with minutes of the annual general meeting at which those three people were elected, nor of the board meeting. He has not been provided with a list of people in attendance or with notices of the meeting or with a list of those to whom a notice of the meeting was sent. Based on those facts he was not in a position to call a meeting of the members of CRI as it did not appear to him that there were any members. 8. He said he was a founding member of CRI. In or about 1994 he completed a document entitled "Will You Join Us and Make Payment in the sum of $200.00 to the Association". CRI was then called "Friends of the Cancer Institute". He made the payment of $200 in order to become a life member. He said he was on the board of CRI at the time and recalled discussing that they would introduce a category of life member. He referred to a copy of his application form which appeared in Mr Conlan's affidavit. 46 Dr Gray exhibited what he said was a list of the members of the association as at November 2001. He said it was a list of members kept as required by the Associations Incorporation Act . He drew attention to the fact that his registration as a member was jointly with his wife and was said to expire in 2004. He produced copies of proof of payment of his membership fees for the years 1992, 1995 and 1996. He claimed also to have made numerous other donations to the Institute which could have been attributed to membership fees. 47 Dr Gray said that at the annual general meeting held on 23 December 2002 Ms Mirmikidis, Mr Gorn, Mr O'Neil, Ms Oakley and Ms Ainsley were present in addition to himself. He did not know whether he held proxies. It appears, however, that he chaired the meeting. This may be inferred from the fact that he signed the minutes. He referred to Mr Conlan's contention that that meeting was not valid because of want of a quorum. He said, however, that at the time he was a financial member of CRI. He was a continuing member of the board of CRI and the board did not resolve under r 5.5 for the payment of any annual subscription fee. Accordingly, he said there was no relevant date fixed by the board for the purpose of r 5.7. On that basis he contended that he was a continuing member of CRI as were each of the persons who paid for life membership. 48 Dr Gray said that on 3 September 2006 he sent to each of the persons whom he believed were members of the association a notice convening an annual general meeting. He exhibited to his affidavit copies of the documents sent by him to the members. He sent the notice to each of the persons appearing on the register of members whose membership expired after December 2002. He attended the meeting. His wife attended by telephone. His sister attended the meeting and so did Mr David Sanders and Ms Anna Hughes of Lavan Legal. He said that he held proxies from six persons to whom he had given notice of the meeting. On that basis he contended that a quorum was present. Therefore, a Proxy Form is enclosed for each family member. He said that after the appointment of the receiver he convened a meeting of the board of CRI for Tuesday, 24 October 2006. He exhibited to his affidavit a copy of the minutes of that meeting. The persons in attendance were himself, Dr Gray and Ms Daebritz. The minutes record his advice, which the board accepted, that because control of the shares had been placed in the hands of the receiver it would be inappropriate for any new member to be accepted into the association until after the authority of CRI had been returned to "the membership". The minutes recorded that the board considered its previously expressed desire and that of the membership at the annual general meeting to extend an invitation of membership to Ms Mirmikidis, Ms Oakley and Ms Ainsley and agreed that it would be appropriate to accept their membership "... due to the extenuating circumstances in their case". 51 There were changes to the Constitution which were said to have been adopted at the annual general meeting. These changes, as appeared from Dr Gray's affidavit of 8 December 2006, would have reduced the size of the board from a minimum of eight persons to a minimum of three. They would also have reduced the quorum for a general meeting to five members "present in person or by proxy". As appears below however, they do not seem to have been passed by a special resolution as is evidently required by the Associations Incorporation Act . Ms Daebritz produced what she claimed was a copy of the current members' register. A further meeting was held on 8 November 2006 between Mr Sanders, the receiver, Mr Conlan, and Mr Tottle. The membership list produced by Ms Daebritz was discussed. It was said that Mr Tottle was of the view that all the people on the list, which was dated 2 November 2001, were members. He proposed that the receiver proceed on that basis and convene a meeting of members required by the Court order. Mr Sanders confirmed that the CRI board was "currently of the view that all people on that register were still members except those whose membership was shown as having been due for renewal prior to the date of the register". 53 In the event, the receiver formed the opinion, which he communicated to Mr Sanders, that there were no members of CRI. 54 A meeting of the purported new board was held on 24 November 2006. Those present were Mr Sanders, Ms Daebritz and Dr Gray who attended by telephone. Ms Daebritz would provide Mr Sanders with the documents she had as secretary of CRI. 55 Correspondence ensued between Mr Vaughan, who was instructed to act on behalf of the three purported board members, and Mr Lemonis, the solicitor acting for those who had formerly acted as members of the board. One of the items of correspondence exhibited to Mr Sanders' affidavit was a letter to him from Mr Tottle dated 9 October 2005. Mr Tottle's view was that the 2002 resolution had the effect of continuing the membership of those persons recorded as financial members as at November 2001 in the membership list and waiving the requirement for the payment of membership fees for those members and other members whose membership expired in 2002, 2003 and 2004. The Cancer Research Institute Inc should then call a Special General Meeting to dissolve the Institute. The Walter and Eliza Hall Institute and Peter MacCallum Cancer Centre will be approached to ascertain how those entities might use the donation from the Cancer Research Institute Inc. The beneficiary of the donation would have total control over the donation. 57 Dr Gray also exhibited minutes of the annual general meeting of CRI said to have been held on 6 December 2004 in which it was resolved to donate all assets of CRI to the Walter and Eliza Hall Institute to be used for purposes associated with cancer research. It was also resolved to dissolve the Institute as soon as all contingent obligations had been met. According to Dr Gray's affidavit, this decision was made because he was no longer involved in cancer research and the research team who had been working with him at CRI had been dissolved. 58 Dr Gray also exhibited minutes of what was said to be the annual general meeting of CRI held on 27 September 2006. Those present were himself, Julie Anne Gray (by telephone), his sister, Ms Daebritz, his solicitor, Mr Sanders, and another solicitor, Anna Hughes, working in Mr Sanders' firm. The minutes also recorded that signed and dated proxies had been received from certain life members, including Julie Anne Gray. It discussed a proposal that a new trust be established and that the assets of CRI be vested in that trust for use in cancer research. This was not a motion which Dr Gray himself supported. 11. He referred to two different styles of membership application documents. He had found no records in the documents of any discussion by the board of directors of CRI of the introduction of a category of life membership. The Rules do not contain provisions for such a category. By virtue of its transitional provisions set out in schedule 2 and given effect by s 48 , that Act applies to associations in existence at the time of its commencement. 68 An incorporated association under the Act may alter its rules by special resolution but not otherwise (s 17(1)). A special resolution requires a majority of not less than three fourths of the members of the association who are entitled, under the Rules of the association to vote (s 24(1)). The resolutions passed at the purported annual general meeting of 27 September 2006 to amend Rules 6 and 14.7 of CRI relating to the size of the board and the quorum at a general meeting were said to have been carried unanimously. However there is no evidence that they were passed by a special resolution. Indeed the minutes do not suggest that that question was even addressed. 70 Section 31 of the Act provides for the winding up of an incorporated association by the Supreme Court on a variety of grounds. One of those is that the incorporated association has fewer than six members or that it has been inoperative for not less than 12 months. An association may also be wound up by the Supreme Court if it has, by special resolution, resolved that it be wound up or if the Supreme Court is of the opinion that it is just and equitable that it should be wound up (s 31). The surplus property of an incorporated association cannot be distributed to its members or former members or otherwise than to an incorporated association or for charitable purposes. There is provision for the lodgment of a distribution plan with the Commissioner by the association's committee (s 33). It has its origins, however, as an equitable remedy. An order in the nature of an equitable remedy can be made under s 23 of the Act. The class of circumstances in which such power may be exercised is not closed. Nor are the purposes for which a receiver may be appointed and the powers and conditions attaching to such an appointment. There may be many circumstances of considerable diversity which would warrant such an order and it is important that the discretion not be unnecessarily confined by any particular line of cases to which it has been applied. 72 Examples of cases in which receivers have been appointed on an interlocutory basis can be multiplied. Relevantly, a court may appoint a receiver to a trust in order to protect trust property. Such an appointment may be made where the trust is "in a state of disarray" --- Martyniuk v King [2000] VSC 319 at [14] (Warren J). Her Honour there observed, citing Halsburys Laws of England (4 th ed, Vol 39, par 827), that the general ground upon which a court appoints a receiver is ultimately in every case the protection or preservation of property for the benefit of persons who have an interest in it. 73 A receiver may be appointed to a body to conduct litigation on its behalf. In Vouros as Liquidator of Cadima Express Pty Ltd v Deputy Commissioner of Taxation [1999] NSWSC 1143 ; (1993) 33 ACSR 527, Austin J dismissed an application for the appointment of a receiver to a company in liquidation to conduct litigation on its behalf. The power may be exercised where the body is effectively paralysed by internal dissension or where for one reason or another those charged with its management are unable to be identified or, if identified, are unable to act for one reason or another. To the extent that CRI holds its Sirtex shares free of any trust in favour of the University, it holds them for the purposes set out in its Constitution . The assets so held cannot be applied to the private benefit of the members. The circumstances may be seen as somewhat analogous to a charitable trust. The public interest served by the association's objects is protected by its own rules relating to the disposition of its assets on a winding up. These are reinforced by like provisions in the Associations Incorporation Act . 76 It is apparent from the evidence that there is considerable room for debate about the membership of CRI, whether it has any members and, if so, who they are. I do not consider, given the apparently incomplete and somewhat conflicting nature of the CRI membership records, that it is possible to determine its membership within any reasonable certainty and within a reasonable time. 77 Whatever their legal status in the association the persons presently claiming to be the board of CRI are not appropriate persons to make decisions about its conduct in relation to the present litigation. One of them, Dr Gray, is being sued by the University in his personal capacity. The chairman is his solicitor. The other member of the board is his sister. Dr Gray's letter to Sirtex shareholders about the alignment of the interests of CRI with those of himself and Sirtex is suggestive of an inability to distinguish between his interests and that of CRI. 78 CRI is a respondent in a complex piece of litigation brought against it by the University. The trial of the action is set down for hearing for six to eight weeks commencing on 12 March 2007. CRI must either resolve its dispute with the University or contest the case. The decision about what it should do should be consistent with its objects. The decision cannot be taken by the present purported board who are inescapably affected by conflict of interest. 79 In my opinion the only reasonable course, given the difficulties in identifying the membership and the governance difficulties, is to invest in the receiver the wider powers which he seeks. 80 Clothed with those powers the receiver can appoint a solicitor of record who can be confident of his authority to act. The receiver should not, on that account, require two sets of solicitors, one to represent CRI and one for himself. His concerns in exercising the powers conferred upon him must be aligned to those of CRI. There should be no need for two sets of lawyers' fees to be incurred in such a case. He seeks an indemnity out of the assets of CRI, including without limitation, the shares in Sirtex held by CRI. 82 In my opinion, the receiver should be remunerated at a reasonable rate calculated by reference to the hourly rates exhibited to his affidavit of 8 December 2006. His remuneration should be assessed by a Registrar of the Court on a periodic basis to ensure that the work being done and the time taken to do it is reasonable and that it is being done at an appropriate level within the receiver's firm. The orders he proposes in his minute are appropriate subject to a more frequent periodic report than he proposes. I am also prepared to make the order he proposes to enable Tottle Partners and Fairweather & Lemonis to be paid for their services to date. I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | respondent to proceedings membership uncertain validity of appointment of board members questioned intractable conflict of interest in board members charitable objects assets only applicable for relevant charitable objects power of court to make interlocutory appointment of receiver receiver to conduct litigation or resolve it whether power should be exercised receiver appointed incorporated associations |
The application is made by a notice of motion dated 23 April 2009 and supported principally by three affidavits of Kelvin Andrew Reidy affirmed on 23 April, 24 April and 19 May 2009 respectively. Mr Reidy is a solicitor employed by the first applicant, the Construction Forestry Mining and Energy Union. The background to this proceeding is as follows. The first and second applicants commenced the proceeding as a representative proceeding under Part IVA of the Federal Court of Australia Act by an application and statement of claim filed on 27 February 2008. The first and second applicants sued on their own behalf and as representative parties within the meaning of Part IVA of the Act on behalf of the persons named as the third to thirty-fifth applicants in the schedule attached to the application ("the group members"). • The second applicant and the group members were employed by Contract Blinds pursuant to contracts of employment that were subject to the terms of the Award. • Contract Blinds had breached the Award and the contracts of employment by underpaying the entitlements of the second applicant and the group members, occasioning loss and damage to them. Specifically, Contract Blinds had not paid a shift loading of 30% on the ordinary rate of pay to persons working shifts finishing after midnight and at or before 8.00am, as it was required to do under the Award. Further, Contract Blinds was in breach of the contracts of employment as a result of a failure to pay the whole of the superannuation contributions to which the second applicant and the group members were entitled, because Contract Blinds had calculated superannuation contributions by reference to the underpaid wages. • Further, after the Union notified Contract Blinds of its failure to pay the 30% shift loading, in breach of the contracts of employment and s 792 of the Workplace Relations Act 1996 (Cth), Contract Blinds reduced the ordinary rate of pay of the second applicant and the group members and commenced to pay 30% shift loading on the reduced rate of pay. • Further, in breach of the contracts of employment and s 792 of the Workplace Relations Act , Contract Blinds unilaterally altered the shift arrangements worked by the second applicant and the group members. By way of relief, the applicants sought, amongst other things, orders for compensation under s 807(1)(b) of the Workplace Relations Act , orders for payments under s 719(6) of that Act, penalties under ss 807(1)(a) and 719 (1), and injunctive relief under 807(1)(c). The respondent filed a defence dated 2 May 2008, which was subsequently amended. Particulars of pleadings and alleged loss and damage were given. Discovery was completed. On 14 November 2008, pursuant to ss 33J and 33X of the Federal Court of Australia Act , the Court approved the form of the Opt-Out Notice that was to be given to the group members in accordance with the process set out in the affidavits of Mr Reidy of 24 October 2008 and 12 November 2008. These affidavits contemplated a process whereby the Opt-Out Notice was translated into certain languages for the benefit of the group members with first languages other than English. A copy of the Opt-Out Notice (with an appropriate translation) was to be given to the group members at a meeting called for this purpose. Interpreters were to be present to ensure that questions raised by the group members were conveyed to a solicitor also present at the meeting. Any of the group members not attending the meeting was to receive the Opt-Out Notice (with an appropriate translation) by personal service. In an affidavit of 10 December 2008, Mr Reidy confirmed that these steps had been taken. The solicitor and interpreters in attendance at the meeting of group members also deposed to the course of that meeting. On 2 December 2008, one of the group members, Nestor Aguda, opted out of the representative proceeding. Subsequently, in an affidavit of 26 March 2009, Mr Reidy stated that there were nine additional persons not included in the proceeding who were members of the Union and employees of Contract Blinds with claims like those of the group members. By agreement between the parties, the claims of these nine persons were included in a mediation conducted on 25 February 2009, as a result of which the dispute was resolved and a deed of settlement executed. This deed was expressed to be subject to Court approval. Steps were taken removing Nestor Aguda as a group member from the representative proceeding and adding the nine additional individuals to the group members. It is unnecessary to rehearse these steps here. On 24 April 2009, the Court approved the form of the Notice of Proposed Settlement to be given to the group members as required by ss 33X(4) and 33Y (2) of the Federal Court of Australia Act . For the purpose of giving the Notice of Proposed Settlement, the Court approved a process similar to that previously used for giving the Opt-Out Notice. In an affidavit of 19 May 2009, Mr Reidy stated that each of the group members had been given a Notice of Proposed Settlement appropriately and in conformity with the Court's order. The Notice of Proposed Settlement allowed any of the group members to object to the settlement or the terms of settlement by filing a Notice of Objection with the Court by 19 May 2009. No objection was filed. In an earlier affidavit of 23 April 2009, Mr Reidy informed the Court that the Union would not look to the second applicant or any of the group members for any amount as contribution towards its costs and would not seek an order under s 33ZJ of the Federal Court of Australia Act for reimbursement of its costs. Mr Reidy also set out the mechanism pursuant to which the $280,000 was to be distributed, including that Contract Blinds would pay half of the $280,000, less applicable taxes, within 24 days of the Court approving the settlement, and the balance within 4 months of the first payment. I turn now to consider whether settlement of the proceeding ought to be approved under s 33V of the Federal Court of Australia Act . The relevant principles are now well settled: see, for example, Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258 per Branson J; Williams v FAI Home Security Pty Ltd (No 4 ) [2000] FCA 1925 ; (2000) 180 ALR 459 at 465-6 [19] per Goldberg J; Neil v P & O Cruises Australia Ltd [2002] FCA 1325 at [6] - [7] per Weinberg J; Jarrama Pty Ltd v Caltex Australia Petroleum Pty Ltd [2004] FCA 1114 at [10] per Crennan J; Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 at 317-8 [37]-[42] per Sackville J; Crawford v Bank of Western Australia Ltd [2005] FCA 949 at [16] - [21] per Lee J; Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 at [18] per Young J; Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 at 332 [30] and [31] per Jessup J; and Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 at [17] --- [20] per Gordon J. The Court must assess whether the proposed settlement is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. In making this assessment, the Court may, and ordinarily will, take into account the amount offered to the group members, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the amount nominated in the settlement offer, the terms of any advice from counsel and any independent expert, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement: see Williams v FAI Home Security [2000] FCA 1925 ; 180 ALR 459 at [19] . The Court must also be satisfied that the settlement has been made in the interests of the group members as a whole, and not merely the interests of the first and second applicants and the respondent: see ACCC v Chats House 71 FCR at 258. Counsel for the applicants has submitted that the proposed settlement is fair and reasonable, having regard to the claims made on behalf of the group members, and should therefore be approved. The respondent indicated its agreement with the orders proposed by the applicants. In his affidavit of 23 April 2009, Mr Reidy deposed that, based on the agreed amount of settlement, the second applicant and the group members would recover 85.15% of their claims. An opinion of senior and junior counsel concerning the settlement was exhibited to Mr Reidy's affidavit as a confidential exhibit. This opinion was supportive of the settlement. All group members have been appropriately notified of the settlement and none have made an objection to it. Mr Reidy deposed to having answered a query raised by the group members with the second applicant (who is shop steward for the Union at Contract Blinds), noting that no further query had been forthcoming. I have considered various factors bearing on the settlement, including: (1) the claims made by the applicants for themselves and on behalf of the group members, including the quantum of the claim made on behalf of each of the group members; (2) the prospects of success as best they may be divined, particularly from the nature of the claims and the pleadings; (3) the opinion of counsel and the affidavits of Mr Reidy; (4) the likely complexity, duration and cost of proceeding to trial plus the anxiety for all concerned; (5) the usual risks and delay associated with proceeding to trial and judgment; (6) the settlement mechanism for claim quantification and the absence of any objection by any group member; and (7) the favourable settlement amount against the total sum claimed, being about 85.15%. This last-mentioned factor is a most important one, and weighs heavily in favour of the approval of the settlement. Some other considerations also support the settlement; and others might be thought neutral. None can be said to weigh very much against the settlement. I am satisfied that the settlement is fair and reasonable and in the interest of all claimants, including the group members as a whole. The settlement should therefore be approved. Accordingly, I approve the settlement of this proceeding pursuant to s 33V of the Federal Court of Australia Act . I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | representative proceedings under part iva of the federal court of australia act 1976 (cth) whether court should approve settlement of proceedings under s 33v applicable principles settlement fair and reasonable, and in the interest of all claimants including group members settlement approved practice and procedure |
That company is now called Loptran Pty Ltd. The company was known as Woomax Pty Ltd for the period July 2004 to October 2005 and prior to that period the company was known as "The Black Ink Agency Pty Ltd". The company is the trustee of the Black Ink Unit Trust. 2 For present purposes, I will describe the company as Loptran. All steps required by the Corporations Act 2001 so as to enliven the power to make an order that Loptran be wound up in insolvency have been satisfied. 3 On the hearing of the application I gave leave to Mr Michael Norris, a director and secretary of Loptran, to appear on the hearing of the issues so as to speak to a proposal contained in a letter dated today by Media Corporation Australia Limited addressed to Mr J Walsh. The administrators of Loptran also appear and they abide by the order that might be made by the court, although they have expressed some observations arising out of preliminary investigations conducted in the administration and those remarks are contained in a preliminary report dated 15 February 2006, Annexure A to the affidavit of Justin Denis Walsh sworn 15 February. This morning, a further report became available dated 16 February, which is an update of those observations. 4 Mr Norris resists the making of a winding-up order on the basis that the parent company, Media Corporation Australia Limited, an unlisted public company which is the holding company for Loptran, has sufficient assets to discharge the debts of Loptran. A program of realising assets to provide sufficient net proceeds of sale to discharge those debts was to be undertaken. 5 The formulation of the proposal, as it has emerged today at approximately 1.00pm, involves a number of elements reflected in the letter dated 17 February 2006. I do not propose to record the elements of that proposal in these reasons, but suffice it to say that the core of the proposition is that radio station assets of Media Corporation Australia Limited would be vested by that company in a new company called NewRadio Pty Ltd, and the creditors of Loptran would be offered the opportunity to "swap" their debt of $2.5 million for a proportionate shareholding in NewRadio Pty Ltd based on NewRadio's asserted valuation of the radio station assets of $15 million. 6 Other elements are reflected in the letter. The creditors' shares so taken up in substitution or in swap for the debt would be a different class of share to those held by Media Corporation Australia Limited. The letter sets out the offers which would then be available to creditors who own these shares in NewRadio Pty Ltd, providing them with a chance to remain as long-term shareholders or sell their shares under a particular set of proposed arrangements. 7 That proposition has emerged today in support of the notion that the proposal will, firstly, inject some certainty into an earlier proposal raised yesterday before the District Deputy Registrar, and, secondly, that it will provide the creditors of Loptran with a threshold of certainty concerning their provable debts which would be in their interests, as opposed to or in comparison with the consequences for them of a winding up. On 15 February, Mr Walsh swore an affidavit in the proceedings. Mr Walsh, together with his partner, Mr Kieran Hutchison are the joint and several administrators of Loptran. 8 The annexed report of the administrators expresses a number of preliminary opinions arising out of investigations conducted by them. The main factors which, at this stage, indicate that Loptran may have been insolvent for potentially up to 12 months prior to our appointment are as follows. " - See page 11 of annexure A. A preliminary review of the payments made by the company within the relevant period, that is six months prior to 18 August 2005, has indicated 15 potential unfair preferences with the potential total value of approximately $313,000, and a further 10 actions with a total value of approximately $264,000 identified for further investigation. " - See page 12 of annexure A. At section 9 of the report of 15 February, the administrators discuss the potential for a deed of company arrangement to be entered into which may provide the creditors with a better outcome that a distribution arising out of the winding up of Loptran. The administrators note that Mr Norris has indicated his intention to proceed with developing a proposal. However, at least as at 15 February 2006, no proposal for a deed of company arrangement had been submitted to the administrators. " - See page 14 of annexure A at section 10. " - Also see section 10. However, at this preliminary stage, it would appear that, if the proposal can be implemented, the return to creditors will be significantly higher under Mr Norris's proposal than if Loptran was wound up. In particular, there is uncertainty as to whether MCAL has the ability to provide the funds under the DOCA. Accordingly, MCAL will need to provide sufficient funds to meet the claims of these creditors, plus the costs of the voluntary administration and the deed of company arrangement. I mention that matter only because it reflects - although no doubt there are commercial issues which would affect the urgency with which a proposal might be agitated - that the proposal has come late in the day after many, many months and to put the matter metaphorically, at five minutes to midnight, before the period expires within which a winding-up order might be made unless there is an extension. 19 In considering the question of whether I ought to extend the time, I am influenced by the fact that ultimately what I have before me, notwithstanding that Mr Norris says a great deal of effort has been dedicated in the last 24 hours to formulating a more concrete proposal, is simply a proposal by letter formulating a suggestion that certain assets might be vested in an entity and the creditors of the company, who are owed their debts in an insolvent circumstance might "swap" their debts for "shares" with consequential arrangements which might enable those shares to be realised in certain circumstances. I also note that the class of shares held by creditors will be different to those held by MCAL. 20 It seems to me that a proposition which ultimately involves creditors being invited to substitute their dollar value debts (provable debts) for a shareholding in a company ranking differently, having different classes of rights, and having no precise and documented formulation of the proposal is one which ought not, in the interests of the creditors generally, be accepted. Having regard to all of the matters in these Reasons, I am persuaded to the view that it is in the interests of the creditors that Loptran be wound up in insolvency. The Administration end. That Woomax Pty Ltd now known as Loptran Pty Ltd be wound up in insolvency under the provision of the Corporations Act 2001 . That Justin Denis Walsh be appointed liquidator for the purposes of the said winding-up. The Plaintiff's costs of the application fixed in the sum of $983.40 be reimbursed as a priority out of the funds in the liquidation. | insolvency application to wind up on ground of insolvency leave granted to appear to a director of defendant/respondent corporation consideration of a proposal to formulate arrangements for assets to be made available to satisfy debts consideration of proposal to swap debts of the creditors for shares in a corporation consideration of reports of administrators exercise of discretion in the making of the order. corporations law |
Leave to appeal was granted by Edmonds J. He arrived in Australia on 20 April 2000 and lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs at Sydney on 11 May 2000. In his application for a protection visa, the appellant claimed to have been involved in activities of the Russian Democratic Party in Samara since 1998. He claimed to have been approached by the Russian Security Service (FSB) in November 1999 and asked to inform upon the activities of the Democratic Party in Samara. 3 The appellant said that, under coercion, he agreed to inform upon the Democratic Party, but subsequently provided false reports to the FSB. After providing two false reports in December 1999 and January 2000, the appellant said that in February 2000 he was called to the offices of the FSB, told that the FSB knew his reports were false, and detained and beaten for three days. The appellant says he was released on condition that he would provide truthful information about the Democratic Party to the FSB in the future. 4 The appellant claimed that in February 2000 he applied for an international passport and sought a visa for any western country. With his son's assistance, he provided documents vouching for his financial status, and was granted a tourist visa to Australia, where he arrived in April 2000. 5 A delegate of the first respondent refused the appellant's application for a protection visa on 26 June 2000. On 21 July 2000, the appellant applied to the Tribunal for a review of that decision. I note that on the application for review to the Tribunal, the applicant indicated that he had a migration adviser named ' Yevgen Kyselov ' of Nesk Immigration Services, and the interpreter's declaration was completed indicating that the application forms had been translated by Mr Kyselov to the appellant. 6 On 13 June 2002, almost two years after the appellant's application for a review was lodged, the Tribunal sent the appellant an invitation to attend a hearing. In a decision handed down on 1 October 2002, the Tribunal affirmed the decision of the Department to refuse the appellant a protection visa. 8 On 1 July 2003, the appellant applied to the Federal Court for a review of a decision of the Tribunal. For some reason which remains unclear, that application was made to the Federal Court registry in South Australia, despite the fact that the appellant was living in Sydney, and had been since his arrival in Australia. The application was made by Mr Mark Clisby, solicitor for the appellant. An affidavit from Mr Clisby filed in the Federal Magistrates Court proceedings states that the proceedings in Adelaide were instituted after a reference from the appellant's migration agent. Although Mr Clisby does not name the migration agent, it appears that by this time the appellant's migration agent was a Mr Fahmi Hussain since the documents signed by the appellant which were attached to the affidavit of Mr Clisby were countersigned by Mr Hussain. This is consistent with the evidence of the appellant. 9 On 6 November 2003 an application was made for the proceedings in South Australia to be transferred to the Federal Magistrates Court at Sydney. On 14 November 2003, Mansfield J ordered that the application for transfer be refused and the matter be listed for hearing on 12 February 2004. On 1 February 2004, Mr Clisby filed a notice of discontinuance of the proceedings. The sole basis for his statement seems to be the fact that he had received documents signed by the appellant. 12 For approximately the following 11 months, no further action was taken. However on 24 January 2005, the appellant applied for a review of the Tribunal's decision to the Federal Magistrates Court in Sydney. An amended application was filed in April 2005. On 1 July 2005 the respondent filed a notice of motion seeking that the appellant's application be dismissed as an abuse of process pursuant to Pt 13 r 13.10 of the Federal Magistrates Court Rules 2001 . 13 On 26 July 2005, Raphael FM heard the respondent's notice of motion. At that hearing the appellant claimed that he ' had no real understanding of what was happening between himself and the migration agent and the solicitor and that he should therefore have an opportunity of having his case heard ': see the judgment of Raphael FM at [5]. I am not prepared to discount the fact that the applicant may have paid this migration agent a very large sum of money or that he may not have received value for those payments. It has been made clear by Dowsett J in B41 of 2003 v Minister for Immigration [2004] FCA 30 that failures of a migration agent do not constitute grounds for alleging jurisdictional error on the part of the Tribunal. It may be that if the applicant has been badly served by his migration agent, the Minister will hear sympathetically an application under s 48B of the Migration Act 1958 (Cth) ('the Act'). In the meantime court proceedings relating to the decision must be brought to an end. 17 The appellant applied for leave to appeal from the decision of Raphael FM on 2 August 2005. Edmonds J delivered judgment on the application for leave to appeal on 30 September 2005 and granted leave to the appellant: see SZFOG v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1374. Edmonds J, after considering numerous authorities relating to abuse of process, found that it was arguable that Raphael FM erred in dismissing the appellant's case as an abuse of process when there had been no hearing on the merits. His Honour referred in particular to the fact that, in contrast to the facts in the present appeal, several of the authorities relied upon by Raphael FM involved an issue estoppel: see at [18] of the reasons of Edmonds J. Accordingly, I must be guided by the principles expressed in House v The King [1936] HCA 40 ; (1936) 55 CLR 499 in relation to an appeal from an exercise of discretion. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. However, the correct issue was squarely raised in the judgment of Edmonds J relating to leave to appeal and has been dealt with in the submissions of the first respondent. In view of the fact that the appellant is unrepresented and does not speak English, and of the importance of the matters in dispute, I consider it appropriate that the Court consider this issue, even though it has not been specifically raised in the notice of appeal. 20 At this hearing, the appellant provided some evidence relating to the reasons for discontinuing the Adelaide proceedings and for the delay in instituting these proceedings. However, whilst I consider the appellant to have been a generally reliable witness, I do not consider that I can take fresh evidence on these matters into account in determining whether his Honour's discretion miscarried. 21 There are two questions of principle which I consider are raised by the judgment of Raphael FM. The first is whether his Honour misinterpreted the authorities in respect of dismissal for abuse of process in determining that the application should be dismissed. The second is the question of whether Raphael FM could properly take into account the fault of the migration agent (if proven) in determining how to exercise his discretion. Their Honours made plain that the court would only be so satisfied in an exceptional or extreme case. Mahoney JA adopted a similar approach, while formulating the appropriate test in slightly different words. His Honour considered that the question for the Court of Appeal was whether, in all the circumstances, the continuation of the proceedings before the Tribunal would involve unacceptable injustice or unfairness. In our view, the approach adopted by the members of the Court of Appeal was correct. However, as Edmonds J pointed out in his reasons for judgment on the grant of leave to appeal, this decision (and another decision to which it referred, namely Wong v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 242 ; (2004) 146 FCR 10) were both decided in circumstances where a second application to the Federal Magistrates Court had been lodged after the first application had been heard and dismissed by the Court . That is clearly distinguishable from the present case, in which the appellant's application for judicial review has never had a merits hearing, and the first respondent conceded as much. 24 The first respondent, however, says that Raphael FM relied upon Walton v Gardiner rather than Applicants S503 . I disagree with the first respondent that Walton v Gardiner indicates that a case should be dismissed as an abuse of process where proceedings of the same nature have previously been discontinued, even where no determination on the merits has taken place. I would respectfully adopt the reasoning of Edmonds J in respect of this matter. It appears to me that the words ' disposed of ' in the passage from Walton v Gardiner cited above are intended, in all the circumstances, to mean ' dismissed '. I do not consider they necessarily decide the question in respect of cases where a notice of discontinuance is filed before a merits hearing has taken place. 25 The first respondent refers also to the decision in A42 of 2003 v Minister for Immigration [2004] FMCA 1002 , affirmed by Jacobson J in this Court ( Applicants 42/2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 207) and refused special leave to appeal to the High Court by Heydon and Crennan JJ ( Applicants A42 of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCATrans 967). In that case, it was decided that it was appropriate to dismiss an application for review as an abuse of process in circumstances where an earlier application for an order nisi had been dismissed by consent (without a merits hearing taking place). 26 I accept that there may be some circumstances in which, despite the fact that no hearing on the merits of the application has occurred, the re-institution of proceedings will be considered an abuse of process. That situation is clearly recognised by each of the decisions in A42 of 2003 . However I make two observations about A42 of 2003 . Firstly, that case involved a substantially longer and more convoluted litigation history, on which the grounds for dismissal for abuse of process were considerably stronger. In that sense it is in part distinguishable from the present case. Secondly, the existence of cases which suggest that it may in some circumstances be appropriate to dismiss an appeal as an abuse of process where no merits appeal has been heard does not relieve the Federal Magistrate from the requirement to exercise his discretion. 27 I do not consider that every time an application is discontinued before a hearing has taken place and proceedings of the same nature are subsequently instituted, it must necessarily follow that the re-instituted proceedings are an abuse of process. The question whether an abuse of process has occurred is a matter of discretion, and it is a discretion which, in my opinion, should be cautiously exercised in circumstances where no issue estoppel arises. Whilst the High Court indicated in Walton v Gardiner that proceedings may be stayed as an abuse of process even where there is no issue estoppel if their continuance would be ' unjustifiably vexatious and oppressive ', the Court also made it clear that this should only occur in an extreme or exceptional case. 28 In my opinion, upon a plain reading of the reasons of Raphael FM, his Honour did not exercise a discretion at all. The passage from his Honour's reasons, reproduced at [14] above, suggests that his Honour considered that the law required the strike out of the application simply because a second application had been filed. I consider this proposition is incorrect. The authority relied upon by his Honour ( Applicant S503 ) was clearly distinguishable from the present case and, furthermore, an allegation of abuse of process must be considered specifically upon the facts of the particular case. His Honour may have been entitled to strike out the application after considering all of the circumstances, but it was not a foregone conclusion that the application was an abuse of process. In view of the observations of the High Court that the power should be used only in exceptional and extreme cases, I would have doubts about the appropriateness of dismissing the application at all. 29 Accordingly, in my opinion, the exercise of his Honour's discretion was affected by an error of principle. That is the statement by his Honour (reproduced at [15] above) that failures of a migration agent do not constitute grounds for alleging jurisdictional error on the part of the Tribunal. In support of this proposition Raphael FM cited the decision of Dowsett J in B41 of 2003, in the matter of an application for a Writ of Mandamus, Prohibition and Certiorari against Refugee Review Tribunal [2004] FCA 30. 31 B41 was a case in which the appellant alleged that he had failed to attend the Tribunal hearing because of advice from his migration adviser that it was not necessary for him to do so. The appellant also alleged that his migration adviser had not passed on copies of letters of invitation to the Tribunal. In that case, Dowsett J held that failures by a migration agent could not be a basis for an allegation that the Tribunal failed to afford the appellant procedural fairness. 32 The principle enunciated by Dowsett J was clearly correct, and is supported by numerous other authorities: see NADK of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 184 ; SZEYH v Minister for Immigration and Multicultural Affairs and Anor [2006] FCA 93 ; (2006) 150 FCR 397; Al-Mehdawi v Secretary of State for the Home Department [1990] 1 AC 876. For an allegation of procedural unfairness to be made out, it will usually be the case that fault must be established on the part of the decision-maker (although I note the observations of Gleeson CJ in Hot Holdings Pty Ltd v Creasy and Ors [2002] HCA 51 ; (2002) 210 CLR 438 at [22] where his Honour observed that procedural fairness can occur without any personal fault on the part of the decision-maker). 33 However, the question under consideration in the present case was of a different nature altogether. The fault of the migration agent was raised not in respect of an allegation of procedural unfairness in the decision of the Tribunal. Rather, it was raised as an explanation for the discontinuance of the proceedings and their subsequent reinstatement. In my opinion, this was a valid consideration for Raphael FM in deciding whether the proceedings were an abuse of process. In answering that question, it was necessary for Raphael FM to determine whether the continuation of the proceedings would be ' unjustifiably vexatious and oppressive '. It seems to me that in making that determination, the reasons for the past conduct of the proceedings were highly relevant. 34 In this respect, I consider this case to be in part analogous with other applications for the Court to excuse non-compliance with procedural rules, such as the granting of an extension of time where an application has not been filed within the appropriate time period. It is not uncommon in these cases for the Court to take into consideration any fault on the part of legal representatives and generally, subject to a requirement of fairness to his or her opponent, a party will not be deprived of rights of access to the Court because of the fault of an advisor. 35 The fault of a migration agent has in fact been taken into account in at least one application for an extension of time in which to file an appeal in this Court: see SQMB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 979. In that case, Lander J was satisfied that the applicants were unaware that they had brought proceedings in this Court, and that the failure to file the notice of appeal in time was the fault of his migration agent: see at [51] and [52]. His Honour held that, given those factors, the interests of justice dictated that the applicants should be granted an extension of time. 36 I see no reason why the faults of a migration agent should not similarly be taken into account in an application for dismissal on the grounds of abuse of process. The knowledge and culpability of the appellant in these proceedings is, in my opinion, a material factor in deciding whether the prejudice to the first respondent can be justified in all the circumstances. Of course, any misconduct of a migration agent must be proven. In these proceedings, however, the appellant provided oral evidence of his migration agent's conduct to the Federal Magistrates Court. There are certainly many curious features in the history of these proceedings which appear to be difficult to reconcile with an appropriate standard of behaviour on the part of the appellant's migration agent. Raphael FM was sufficiently concerned by the evidence given by the appellant that he referred the papers to the Migration Agents Review Panel for consideration. Nonetheless, his Honour clearly indicated that he did not consider that this matter had any bearing on his determination that the matter was an abuse of process. In my opinion, this was an error of principle which also justifies the quashing of his Honour's decision. Given that the transcript of the proceedings before Raphael FM is in evidence and based upon his Honour's factual findings contained in his reasons for judgment, I consider that I am in a position to do so. 38 Raphael FM did not make any specific factual finding in respect of the behaviour of the appellant's migration agent. However, as referred to at [36] above, it is clear from his Honour's reasons that he was concerned by the appellant's evidence about the agent. His Honour considered these allegations of misconduct were sufficiently credible to warrant a referral of the file and the transcript to the Migration Agents Review Panel. In my opinion, his Honour's concerns should weigh against the striking out of the appellant's application as an abuse of process. 39 I also consider the fact that the appellant has not had a merits hearing to be significant. This is a factor which, as discussed above, was not fully taken into account by Raphael FM in his consideration. In my opinion, this is also a significant factor weighing against the striking out of the application. 40 A third factor to consider is the appellant's delay in bringing his application for a review of the Tribunal's decision. The current application was filed in January 2005, over 26 months after the Tribunal's decision was handed down. On its face, this period of delay is significant and in some circumstances, with no justification, might be sufficient of itself to warrant a dismissal. However, if the appellant's claims are believed, the delay attributable to the misconduct of the migration agent would account for at least 18 months. Raphael FM did not make any specific findings on the credibility of the appellant. Further, his Honour clearly believed enough of the appellant's evidence to refer the matter to the Migration Agents Review Panel. Given these circumstances, I do not think the above exchange can be considered determinative, and I consider the appellant should be given the benefit of the doubt. 41 In all of the circumstances, I do not believe that this is a case which warrants dismissal as an abuse of process. Given the allegations of misconduct by the appellant's migration agent, which appear to me, and which evidently appeared to Raphael FM, to have some substance, and given that the appellant has not had the opportunity to have the merits of his appeal heard, I consider that the matter should be allowed to proceed. Accordingly, I will order that the respondent's notice of motion seeking strike out of the appeal be dismissed, and that the matter be remitted to the Federal Magistrates Court for determination. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. | judicial review dismissal as abuse of process proceedings instituted subsequent to discontinuance of proceedings reviewing same tribunal decision no merits hearing no merits hearing misconduct by migration agent alleged whether federal magistrate applied an incorrect principle re-exercise of discretion. migration |
They have been the subject of previous interlocutory decisions: Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32 at [1] (" ASIC No. 1 ") at [1] and Australian Securities and Investments Commission v Mining Projects Group Ltd (No 2) [2008] FCA 951 (" ASIC No. 2 ") at [5]. Those reasons for decision adequately describe the nature of the proceedings. 2 For present purposes, it is sufficient to refer to Finkelstein J's description of the proceedings in ASIC No. The defendants are Mining Projects Group Limited (MPG), a minerals exploration company, and two of its directors, Mr Frost and Mr Revelins. ASIC contends that in breach of s 1041H MPG made misleading public announcements about the mineralisation and exploration potential for uranium mining at Niue Island in the South Pacific. The nub of the complaint is that the potential was overstated. The directors are alleged to have knowingly procured the breach and thereby contravened ss 180 and 181 , the directors' duties sections. There are also claims that the directors engaged in insider trading (s 1043A) and improperly used company information (s 183). The only relief sought against MPG is a declaration that it contravened s 1041H. But ASIC seeks the imposition of pecuniary penalties against the directors (s 1317G) and an order that they be disqualified from managing a corporation (s 206C). The substance of the Blackburn Adverse Comments is alleged to be such as would raise questions about the potential mineralisation and exploration of the Niue Island. ASIC further pleads that although the Blackburn representations were recorded in emails from Blackburn to one of the directors of MPG and were "adverse", the ASX released a company announcement about the Niue Island Project issued by MPG ("the Principal Announcement") which, inter alia , did not include one or more of the Blackburn Adverse Comments (par 20). 4 On 24 January 2008, the proceedings were set down for hearing on 16 June 2008 (a date fixed by consent) with an estimate of 10 days. On 11 June 2008, the second and third defendants, the two directors referred to in [2], filed an affidavit from Mr Stoker, a geologist, and an affidavit from a Mr Whitehead, a scientist, each exhibiting a report. Senior Counsel for the defendants conceded that "these [were] lengthy and complex reports ... [that] take digestion time". Senior Counsel stated that they took him a day just to read them. That was not surprising. The reports comprised 171 pages and were concerned with complex and technical subjects. I was informed that the affidavits were served on ASIC by the directors under cover of a letter in which the directors sought to maintain the penalty privilege or privilege against self incrimination. 5 The parties came before me for urgent directions. ASIC wanted to know whether the affidavits and reports exhibited to them would form part of MPG's own case at trial. If not, ASIC was willing and able to open its case on 16 June 2008. The response from Senior Counsel for MPG and the directors was twofold. First, he said that MPG did intend to rely upon these reports at the hearing, and secondly, he said that in addition to those two expert reports, two additional expert reports (from Messrs Rutter (a geophysicist) and Lawrence (a geologist)) were still to be filed and served. At that time, Senior Counsel for MPG informed the Court that one of those additional reports, comprising 161 pages, was to be filed and served that afternoon and that the other would be available no earlier than the second day of trial. 6 In light of those developments and submissions, the trial date was vacated. These reasons for decision are concerned with determining which party or parties (if any) should pay the costs thrown away by reason of the trial date being vacated. ASIC submits that MPG should pay ASIC's costs thrown away and, in addition, seeks an order pursuant to O 62 r 3(2) of the Federal Court Rules that those costs be paid forthwith. The defendants, on the other hand, seek an order that ASIC pay their costs thrown away. 7 For the detailed reasons which follow, I consider that MPG should pay ASIC's costs thrown away by reason of the trial being vacated but that those costs should not be paid forthwith. 9 The first directions hearing was held on 20 February 2007. At that hearing, Senior Counsel for the defendants sought a variety of orders against ASIC directed at gaining access to material that they assumed was then in the possession of ASIC. Finkelstein J refused. Instead, his Honour made orders allowing the defendants to seek further and better particulars of the claim and, after considering those particulars, for the defendants to file defences. Orders for discovery were also made. Each of the defendants filed a defence and ASIC and MPG each filed a list of documents. 10 After the defences were filed, two issues arose - whether penalty privilege or privilege against self incrimination would ordinarily relieve the directors from any obligation to provide further details of their defence and, secondly, assuming the privileges could be relied upon, whether the directors had waived, in whole or in part, their right to assert either privilege by filing detailed defences. Those applications were heard and determined by Finkelstein J: see ASIC No. 1 (2007) 164 FCR 32 at [1]. Each of their defences opens with a statement that the director "claims and reserves his right to claim penalty privilege in the proceeding. " No such statement was made by MPG for it is accepted that a corporation cannot claim the benefit of penalty privilege (Trade Practices Commission v Abbco Iceworks Pty Ltd [1994] FCA 1279 ; (1994) 52 FCR 96) or self-incrimination privilege (see Environment Protection Authority v Caltex Refining Co Pty Ltd ... [1993] HCA 74 ; (1993) 178 CLR 477). That MPG cannot claim the benefit of either privilege may not be of much assistance to ASIC if it successfully attacks the company's defence. If MPG's defence is defective and it is required to provide further information, it may not be able to satisfy that requirement if the only source of its information is the director defendants and they are entitled to remain silent. (Emphasis added). 11 In January 2008, the defendants sought a stay of the claims made against MPG by ASIC pending the hearing and determination of the claims made against the directors or a stay of the claims made against MPG by ASIC until the Court has made findings of fact in relation to the claims against the directors but before final orders. The application was supported by an affidavit sworn by a Mr Babbage, a non-executive director of MPG. The application was refused: ASIC No. 2 . In considering the application for stay, a number of principles informed that decision: see ASIC No. 2 at [5] to [7]. The privilege against self-incrimination and penalty privilege apply to the directors but not MPG: ASIC No. 1 at [5] and ASIC No. 2 at [7]. 2. A corporate defendant (such as MPG) may be required to provide documents and information which may tend to incriminate its officers: Trade Practices Commission v Abbco Iceworks Pty Ltd [1994] FCA 1279 ; (1994) 52 FCR 96 at 116. 3. A corporate defendant cannot invoke privilege on the grounds that an order or requirement to produce documents or information might tend to incriminate a natural person, such as a director: Microsoft Corporation v CX Computer Pty Ltd [2002] FCA 3 ; (2002) 116 FCR 372 at [32] - [33] (per Lindgren J) and ASIC No. 1 at [5]. 4. A natural person cannot complain that a corporate defendant's compliance with an order or requirement to produce documents or information might tend to incriminate him or her: Microsoft Corporation v CX Computer Pty Ltd [2002] FCA 3 ; (2002) 116 FCR 372 at [32] - [33] (per Lindgren J) and ASIC No. 1 at [5]. 5. The relevant enquiry is whether an order directed to the corporate defendant will require that a natural person tend to incriminate himself or herself: Microsoft Corporation v CX Computer Pty Ltd [2002] FCA 3 ; (2002) 116 FCR 372 at [32] - [33] (per Lindgren J) and ASIC No. 1 at [5]. No submission has been made to that effect in this case. 6. A corporate defendant cannot refuse to comply with a direction for the filing of evidence on the basis that its evidence may incriminate other natural person defendants or expose them to a penalty: Chief Executive Officer of Customs v Camile Trading Pty Ltd [2004] NSWSC 1256 ; (2004) 58 ATR 163 at 170. However, a corporate defendant will not breach such a direction if it fails to file a statement or an affidavit from a witness where that witness claims privilege: ACCC v J McPhee & Son (Australia) Pty Ltd (1997) 77 FCR 217 at 220 and ACCC v Eurong Beach Resort Ltd [2005] FCA 1134 at [10] , [12] and [13]. That is to say, compliance is not required " if the only source of the information is the director defendants and they are entitled to remain silent ": ASIC No. 1 at [5] (emphasis added). If the corporate defendant has other sources of information available from which it can comply with the direction, then it must do so. 12 There was, and could be, no dispute that MPG could choose whether or not to lead evidence. However, if MPG intended at trial to rely on a statement or affidavit from a witness that could not or did not claim privilege, it could not refuse to comply with a direction for the filing of that evidence prior to trial: see [11(6)] above. 13 Against that background, orders were made by consent for the completion of interlocutory steps including a trial date. Of particular relevance to the current dispute, ASIC was ordered to (1) file and serve a list of proposed witnesses by 29 February 2008 and (2) to file and serve any affidavits upon which it intended to rely by 4:00pm on 28 March 2008. MPG was ordered to file and serve any affidavits upon which it intended to rely by 4:00pm on 28 April 2008. 14 On 4 March 2008, ASIC filed and served its list of proposed witnesses. Mr Blackburn, MPG's consulting geologist on the Niue Island project, was not on the list. 15 On 31 March 2008, the proceedings were listed for mention. ASIC informed the Court that it would be late in filing the balance of its affidavit material and sought an extension until 7 April 2008 to file additional affidavits, including an affidavit from an expert geologist, Mr Onley. That request for an extension was not opposed. MPG was then granted an extension until 5 May 2008 to file and serve any affidavits upon which it intended to rely at trial. 16 At the same time, an application pursuant to s 169 of the Evidence Act 1995 (Cth) ("the Evidence Act ") was foreshadowed by the defendants in relation to Mr Blackburn and two other individuals because they were not on ASIC's list of witnesses which had been provided to the defendants on 4 March 2008. During the hearing of the current dispute I was informed by counsel for ASIC that prior to the foreshadowed application under s 169 of the Evidence Act , ASIC had formed the view that it was unnecessary for Mr Blackburn to be called because the documents of which he was the author and which were referred to in ASIC's claim were admissible under one or more of s 1305 of the Corporations Act and s 69 of the Evidence Act . In any event, that issue was resolved by ASIC agreeing to call Mr Blackburn and on 30 April and 2 May 2008, ASIC filed and served affidavits of Mr Blackburn. The defendants did not pursue their application in relation to the other individuals. 17 At no time, until 12 June 2008, did the defendants (and in particular, MPG) suggest that this course of events had caused them any difficulty in preparing for a trial on 16 June 2008. 18 MPG complied, at least in part, with the directions made by consent and on 9 May 2008 filed a further substantive affidavit from Mr Babbage ("the Babbage Affidavit"). Of course, the filing of the Babbage Affidavit does not make it evidence in the proceeding. That is not the purpose of filing it. What filing does, consistent with modern litigation practice, is to inform ASIC of the case that MPG may put at trial. And that is what the Babbage Affidavit does. It described MPG and the nature of its business, the roles of the respective directors in MPG, the investments and projects in which MPG was involved at the relevant time and also explained Mr Babbage's involvement in the Niue Island Project. The affidavit also dealt substantively with the fact that Mr Blackburn had been retained by MPG to provide independent expert advice about geological matters in respect of certain matters concerned with the Niue project, that he had been previously been retained by MPG and that he was aware of his reputation as an expert geological consultant. Moreover, the Babbage Affidavit goes on to set out, in some detail: (1) Mr Babbage's involvement in the announcements the subject of the proceedings; (2) Mr Babbage's awareness that MPG "would take advice about technical and geological aspects of the announcements as it had done so in making prior announcements in the resources area"; (3) the involvement of Mr Blackburn in the due diligence program that MPG had put in place; and (4) and the steps taken by MPG in reliance upon Mr Blackburn's technical advice. 19 What this necessarily truncated description makes clear is that the accuracy of the Principal Announcement and the Blackburn Adverse Comments were, and at this stage of the proceedings remain, some of the central issues in the proceedings. It is to these issues that the four new expert reports are directed. However, at no time did any of the defendants inform the Court or ASIC that it intended or even might intend to file and serve these expert reports. Of course, there was no obligation on the directors to file any evidence. MPG, too, could have stood mute, not gone into evidence and simply relied upon whatever positive case the directors ran. But if MPG intended to go into evidence, it was subject to the principles summarised in [11(6)] above. 20 What then did the defendants do? The affidavits exhibiting the reports state that the directors retained Mr Rutter, a geophysicist, on 4 June 2007, Mr Stoker, also a geologist, on 29 November 2007, Mr Lawrence, also a geologist, on 5 February 2008 and Mr Whitehead, on 9 April 2008. Moreover, the affidavit of Mr Whitehead disclosed that a preliminary written response was provided on 24 April 2008, some two weeks before the date for MPG to file and serve its material. The affidavits and reports were filed and served on behalf of the directors under cover of a letter seeking to maintain privilege. We've put ourselves at some disadvantage in terms of preparing their expert for them. He at least has a notion of what's coming, without a limitation on it. They are not entitled to that advantage. We were entitled to cross-examine their experts without them knowing what our experts were saying. That was the fact. We've given that away. In the interests of trying to resolve this matter, [ASIC] could have a quick look at it and decide whether they want [to proceed]. 21 That submission was incomplete and not wholly accurate. First, as I have already noted, at the directions hearing on 12 June 2008, what ASIC wanted to know was not about the directors' case, but whether the affidavits and reports from the four experts were intended to form part of MPG's own case at trial. The response from MPG's Senior Counsel was that they were: see [5]. That fact was further reiterated by counsel for the defendants, who not only conceded (properly) that the affidavits and reports were late, but asserted that they were provided "in the interests of trying to resolve this matter". The subsequent submission on behalf of the defendants that MPG only intended to rely upon the affidavits if they were ultimately tendered by the directors is rejected. It ignores, first, that the sole reason why the matter came before me for directions on 12 June was to ascertain whether MPG intended to rely on the reports as part of its own case and, secondly, the submissions made by Senior Counsel for MPG in response to those enquiries. 22 That is, I reject the defendants' submission that it was ASIC that sought an indulgence of the Court to enable it to consider expert reports filed in the proceeding by the directors. Rather, I consider that it was MPG that was seeking the Court's indulgence. ASIC's stated position was that it did not need an adjournment if the affidavits were not part of MPG's case. MPG's position on 12 June 2008 was that MPG did intend to rely on the reports, in which case the reports should have been filed and served by no later than 9 May 2008. To put it another way, ASIC required the adjournment as a result of MPG's conduct in seeking to rely on affidavits filed more than one month late. 23 In view of the foregoing conclusion, it is neither necessary nor appropriate to address each individual aspect of the defendants' submissions. It is sufficient to state that in a number of respects the submissions were factually inaccurate. Some statements alleged to be made by or attributed to ASIC and ASIC's counsel were taken out of context and / or misquoted. Moreover, the defendants' reliance upon ASIC's conduct in 2007 and early 2008 as providing justification for their conduct in June 2008 is misconceived. As I noted earlier, if the defendants were prejudiced or hampered by the manner in which the case was being conducted including, for example, the fact that the affidavit of Mr Blackburn was filed by ASIC on 30 April 2008, they could have made application to the Court. They did not. Instead, the defendants consented to directions and extensions of time for the filing and service of documents by ASIC and MPG. In the circumstances, MPG should pay ASIC's costs thrown away by reason of the trial date being vacated, including the costs of the directions hearings on 12 and 19 June 2008. 24 ASIC also sought an order that the costs be paid forthwith: O 62 r3(3) of the Federal Court Rules . In support of its application, ASIC referred to the fact that additional costs had been incurred in making arrangements for Mr Blackburn to give his evidence from Peru. The principles which govern the exercise of the discretion under O 62 r 3 were set out by Branson J in Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd (22 May 1998, unreported) and Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No.14) (Lindgren J, 18 August 1995, unreported) as cited in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [13] ---[20]. The effect of those cases is to suggest that courts will depart from the general rule and order payment forthwith principally where final judgment is "far away" and thus the eventuality of payment is remote. Consistent with those authorities, it is inappropriate in this case to order payment forthwith of the costs thrown away. The trial is now set for September, and final resolution of the proceeding is therefore not too far away. Moreover, the costs incurred were not quantified and the plaintiff is ASIC, a government entity with sufficient funding to meet its costs in the interim. 25 Accordingly, I will order that MPG pay ASIC's costs thrown away but make no order for immediate payment or taxation. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | application for costs of interlocutory applications to be made payable forthwith federal court rules o 62 r 3 defendants made late filings of affidavit material causing vacation of trial date costs thrown away final judgment not "far away" not appropriate that costs be payable forthwith. costs |
At that time I gave judgment by default to the Applicant, Jemella Australia Pty Ltd (Jemella Australia), in respect of its claim for the infringement of a registered trademark of which, at the time, it had a licence from the owner of that mark, Jemella Limited, the Fifth Respondent. These reasons should be read in conjunction with those which I gave at the time when the default judgment was entered. By orders made that day the Respondents, other than Jemella Limited, were directed to file affidavits directed to the subject of an assessment of damages or an account of profits at the election of Jemella Australia. Today is the day appointed for the hearing of assessment of damages or an account of profits. I am satisfied, on the material before me, that each of Mr John Gubecka, the Second Respondent, Ms Anne-Marie Rachel La Porta, the Third Respondent, and Mr Damon Jakin, the Fourth Respondent, have been given notice of today's date, being the appointed date for hearing. As it transpires, the solicitors acting for those individuals have had their instructions withdrawn. None of those Respondents appeared today when the matter was called on. It seems to me, though, that they have been given proper notice of today's hearing. I, therefore, see no injustice in proceeding to hear the matter even though they have not appeared. Of the options presented by s 126 , Jemella Australia has elected to claim profits. Its claim for profits is on the basis that the account of profits be taken in respect of what it submits is a joint and several liability on the part of the individual respondents. I should record that in October 2008, following the default judgment, the First Respondent, GHD Australia Direct Pty Ltd (GHD Australia Direct), was deregistered. The proceeding today, therefore, is for an account of profits as against Mr Gubecka, Ms La Porta and Mr Jakin. Jemella Australia did alternatively seek nominal damages under s 126. It seems to me, though, that an election involves a choice as to one or the other and that, in effect, the choice is one for the person who has brought the action rather than for the court, having regard to the language in s 126(b). Jemella Australia also seeks an order pursuant to O 62 r 4(2)(c) of the Federal Court Rules that its costs of the proceeding, including the costs of today's assessment, be fixed in a gross sum. (b) The Respondents imported into Australia hairstyling irons and associated documents and packaging, hereafter the counterfeit irons, bearing the GHD trademark without consent. (c) The Respondents advertised for sale and sold the counterfeit irons. (d) The Respondents have infringed the GHD trademark. (e) The Respondents have earned profits as a result of the infringement of the trademark. Apart from damages under the Trade Marks Act an assessment of damages was also sought under the Trade Practices Act 1974 (Cth) (Trade Practices Act). My attention has been drawn to what appears to be a slip in the orders made on 12 September 2008, in that in para 1(j) there is a reference to s 82 of the Trade Marks Act , which should be instead a reference to the Trade Practices Act . I direct that order be amended accordingly. Of the Respondents, two, Mr Gubecka and Mr Jakin, have filed affidavits pursuant to the orders made on 12 September. Ms La Porta has not, but I note that Mr Gubecka deposes to his affidavit being the subject of authorisation by her to make it on her behalf as well. I am satisfied, therefore, that each of the individual respondents has complied with the order made on 12 September 2008. In Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd (2009) 79 IPR 437, a Full Court of this Court considered the subject of the taking of an account of profits under the Trade Marks Act . That case is particularly pertinent in that it, too, was decided against the background of what one might term an imperfect evidentiary foundation. To describe the evidence in the present case in relation to the profits as imperfect is, in no way, to voice a criticism of Jemella Australia. It has done the best it can to adduce evidence on that subject and further to secure, by court order, affidavits from those whom one might think know rather more on that subject. The result, nonetheless, is an imperfection in terms of allowing a precise assessment of an account of profits. There are some principles which emerge from Liquideng (2009) 79 IPR 437 which are pertinent. Mere speculation or guesswork is not generally appropriate. Some foundation is needed. Nonetheless, the exercise of taking an account of profits calls for an allowance to be made for a lack of precision where evidence before the court is incomplete, inexact and generalised. (b) A pragmatic approach is the correct approach to take. The court should take into account the evidence before it, at least insofar as it provides indicators, limited though, they may be, as to the proper figure, rather than simply taking an open-ended approach and settling upon gross sales. (c) Where the evidence before the court gives some indications as to an appropriate figure, the proper approach is for the court to proceed and do the best it can, on the basis of what is before the court. Where it's not possible to calculate a figure, the court should give the benefit of the doubt to the holder or authorised user of the registered mark. That is because knowledge of precise costs is in the hands of the infringer. That said, simply to treat gross revenue as profits with an arbitrary discount, where the evidence suggested that there were costs, would be contrary to principle, even allowing for assessment being an inexact science. (d) No allowance should be made in respect of wages incurred by, or on behalf of the infringer. An infringing party ought not be permitted to have the benefit of remuneration or directors fees for carrying on its infringing activities. I approach the taking of the account of profits in this case on these bases. The evidence before me proves, in my opinion, that the registered mark, GHD, has become well-known, and associated with hairstyling products of a particular good repute and quality. In cases of that sort the buyer of the goods is taken to have bought them because of the mark under which they were sold. If that mark was for him an inducement, not necessarily the sole inducing cause of his buying the goods, the infringing seller is accountable to the owner of the mark for the profit he made by the sale. There is not an exact correspondence as between the affidavits of Mr Gubecka and Mr Jakin as to the number of counterfeit irons imported. Mr Gubecka's evidence is that 175 counterfeit irons were imported. Mr Jakin's evidence is that, to the best of his recollection, in the period of his involvement in the ordering and sale of the counterfeit irons about 160 were purchased. Of the two, Mr Gubecka appears to have had the greater involvement in the activities of GHD Australia Direct. I note that it is to his affidavit that invoices from a Chinese company, Mount Rise Limited, in respect of the sale of the counterfeit irons, are exhibited. Further, on the face of those invoices, the buyer is shown as Mr Gubecka, rather than Mr Jakin. I accept that Mr Jakin has done the best he can from his recollection, but it is a recollection that is unassisted by documentation. Further, the disparity may well be attributable to Mr Jakin's later cessation of involvement in the activities of GHD Australia Direct. For those reasons it seems to me preferable to act, for the purposes of assessment, on Mr Gubecka's evidence as to the number of counterfeit irons imported. The attempted importation itself was an infringement of the registered mark by use. There has been a subsequent and further infringement in the sale of the counterfeit irons, manifesting that the importation was for the purposes of sale. Mr Gubecka's evidence is that the price at which the counterfeit irons were sold --- and all of them were --- was between AUD$205 and AUD$240. That range corresponds with the recollection of Mr Jakin in part. His recollection is that the range was $190 to $230 with a "buy it now" price of $215. Again, though, Mr Jakin's affidavit attesting to that range is unassisted by documentation of GHD Australia Direct. I prefer Mr Gubecka's evidence in that regard. Again, that is not to say that I am, in any way, critical of Mr Jakin. His recollection is certainly close to the greater precision that Mr Gubecka is able to give. Jemella Australia submits that given that there is a range of sale prices before me, that it is appropriate to adopt an average of $222.50 per unit. The giving of greater precision as to the precise cost of sale of each unit is a subject uniquely in the hands of those individual respondents involved in the activities of GHD Australia Direct. In those circumstances, it seems to me, consistent with principle as recited by the Full Court in Liquideng (2009) 79 IPR 437, to give the benefit of the doubt to Jemella Australia. It also seems to me that in so doing, a fair approach is to adopt the average submitted as appropriate by Jemella Australia. Jemella Australia accepts, correctly, with respect, that on the taking of an account, allowance must be made for the cost of purchasing the counterfeit irons including, in that regard, the telegraphic transfer fee in respect of purchase costs as evident in the material exhibited to Mr Gubecka's affidavit. Adopting then the average approach, and allowing for purchase costs, it is possible to tabulate an amount of profit per unit in respect of the 175 counterfeit irons. 'Schedule A --- Calculation of Profits' to Jemella Australia's submissions which provides that tabulation is annexure "A" to the reasons for judgment. That tabulation is cast on the sales at the minimum of $205, the maximum of $240 per unit, and then gives a median sale, or what I have termed an average. The end result of that, if one looks to that average, is a profit of $12,786. There are some indications of other costs associated with the sale of the units, apart from the cost of their purchase and associated telegraphic transfer. Business activity statement data is exhibited to Mr Gubecka's affidavit. Further, from other affidavit evidence read, it is apparent that the units concerned were promoted by the use of the internet. It is not possible, in the absence of an explanation from any of the individual respondents, particularly Mr Gubecka, to give any precision at all to how much of the expenses set out in the business activity statements ought properly to be regarded as attributable to the sales of the counterfeit irons. Again, that is a subject uniquely within the province of those behind GHD Australia Direct. I apprehend though, from Liquideng (2009) 79 IPR 437, that I ought, in the face of some indications on the affidavit material before me of additional expenses, at least to make some allowance for those as best I can. Postage and handling is one, but this seems to be incorporated, in any event, into the cost of sales, so I do not propose to make any allowance for that. Another, though, are internet costs. There may well also be some costs associated with the transporting of the counterfeit irons to the post office, although these would seem necessarily to be modest. I make that observation because it seems, on the evidence, that there were bulk dispatches of counterfeit irons, rather than numerous individual trips. There must also have been some cost of storage although, again, how much should be allowed in that regard is moot. I note that Mr Jakin deposes that the business was conducted from the residence of Mr Gubecka and Ms La Porta, who is Mr Gubecka's partner. It seems to me that it gives recognition to the indications and to principle to allow some additional amount then per unit in respect of costs, other than labour costs, associated with the sale of the counterfeit irons. Doing the best I can, albeit at the expense of precision, I propose to allow $10 per unit, by way of what one might term "incidental costs" to recognise expenses such as advertising, storage and costs of transport to post office. These fall for deduction from the tabulated amount of $12,786. In total, the incidentals amount to $1750. That then leaves a net amount of $11,036.14. It seems to me that this is the amount to allow by way of an account of profits in respect of the infringements, the subject of default judgment. The question then becomes, should each or any of the individual respondents be held liable for the amount of profits assessed? On the evidence, GHD Australia Direct was effectively the alter-ego of Mr Gubecka and Ms La Porta. Ms La Porta was nominally sole director, secretary and shareholder. However, it is quite apparent, on the evidence, that Mr Gubecka had operational responsibility for the activities of GHD Australia Direct. The case is one where it has been pleaded, and default judgment has been entered, on the basis that the respondents were jointly and severally liable. Mr Jakin's involvement is more passing than that of Mr Gubecka and Ms La Porta, but it is not an insignificant involvement. It is apparent, from his own affidavit, that he was a participant in the plan to bring the counterfeit irons into Australia and to market them via the internet. It is significant that he does not depose to having received nothing from the enterprise. There has been no application by, or on behalf of any of the individual respondents to set aside the default judgment. In those circumstances, it seems to me that I should regard GHD Australia Direct as the alter-ego of each, in conformity with the case pleaded and in respect of which judgment by default was entered. An assessment of damages under the Trade Practices Act would yield no different or better result for Jemella Australia. There remains then, a question as to whether costs should be fixed? I do have evidence before me as to the amount of costs which have been incurred as between solicitor and client and by way of disbursements including, in that regard, counsel's fees. That evidence also goes to the extent of providing some guidance from an experienced solicitor as to the amounts that one might expect would be allowed on a party and party taxation. Having said that, and without descending to the detail, the overall amounts do seem to me to be rather large, both in respect of solicitor's costs and counsel's fees. It may, though, do something of an injustice to Jemella Australia to proceed on that basis and fix costs that are reasonable, in my opinion, without giving Jemella Australia a detailed opportunity to be heard in relation to costs. The appropriate way in which such an opportunity is afforded is by way of a direction for costs to be taxed. That then allows the detailed explanation to be given to an officer of the court who is familiar with the process of taxation. In making that observation, I have also taken into account that the costs of both solicitor and counsel seem to have been formulated on a time costing basis. I have nothing to suggest, and certainly do not infer, that that was anything other than a way that was authorised as between solicitor and client. Nonetheless, time costing can be conducive to inefficiency. I deliberately use the word "can" in that regard, because, again, the subject is one which ought properly to be explored, in fairness to Jemella Australia and also to the respondents, with the court's taxing officer. Another matter which I take into account in deciding that it is just to direct that costs be taxed rather than fixed is that the individual respondents have not been given notice, either of an intention to seek a fixing of costs, or of a detailed rationale upon which a particular sum was to be promoted to the court as to the reasonable sum to fix in respect of costs. I accept fully that there is a convenience associated with a fixing of costs, but, equally, it seems to me that, in fairness both to Jemella Australia and the respondents, this is not a case where I ought to proceed to fix costs today. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | trade marks infringement of trade marks determining an account of profits default of appearance by respondent imperfect evidentiary foundation as to profits court to take pragmatic approach in assessing profits trade marks act (cth) ss 126, 127 costs whether costs should be fixed in a gross sum whether reasonable to fix costs without giving applicant an opportunity to be heard or detailed rationale in advance of amount sought respondents not given notice by applicant of intention to fix costs costs sought based on time costing held costs should be taxed not fixed federal court rules (cth) o 62 r 4(2) intellectual property practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent, the Minister for Immigration and Citizenship who formed the view that the appellant is not a person to whom Australia has protection obligations under the Convention Relating to the Status of Refugees 1951 , amended by the Protocol Relating to the Status of Refugees 1967 (Convention) and accordingly refused to grant a protection visa on 14 January 2009. On 17 October 2008, the appellant lodged an application for a protection visa. On 14 January 2009, this was refused by a delegate of the Minister. On 6 February 2009, the appellant applied to the Tribunal for review of the delegate's decision. By letter dated 19 February 2009, the Tribunal invited the appellant to give evidence and present arguments before it at a hearing to be held on 1 April 2009. The appellant appeared at the hearing and gave evidence. On 16 April 2009, the Tribunal affirmed the delegate's decision to refuse the appellant a protection visa. His claims are set out in his protection visa application. No further claims accompanied the Tribunal review application. The appellant made the following claims: he was born in 1976 and grew up in the state of Tamil Nadu in India. His family were farmers and were poor; in 1996, the appellant joined a small anti-police and anti-government Communist rally, although he was not really aware about the political movement. The police arrested all the activists, including the appellant. The appellant was sent to Madurai Central jail; whilst in jail, the other activists asked him to join the youth wing of the Communist Party of India (CPI), Marxist Leninist. He became a member of the Radical Youth League (RYL). After 2 weeks all the activists were released, including the appellant; the appellant actively participated in party meetings and rallies, where they openly criticised the police and ruling political party, the AIADMK. The AIADMK was defeated by the DMK in the 1996 State elections. However, the poor people were no better off and the CPI continued to openly criticise the police and government; in February 1997, the appellant was arrested and sent to Trichy Central Jail. False charges were laid against him. He was sentenced and imprisoned for two years without bail; on 26 January 1999, he was released and subsequently became a full-time activist for the People's War Group (PWG). He was also a messenger for the Tamil Nadu Liberation Army (TNLA); in March 2000, the TNLA blasted a railway track in the Cuddalore District. The appellant was arrested on 22 August 2000 on suspicion of being involved in the incident. He was placed in Salem Central Jail and was brutally attacked by the police in prison. He was forced to confess to blasting the railway track although he was not involved; in July 2002, he was released from jail. The police threatened him and said that if he continued his political activities, he would be killed. However, the PWG said they would look after him. The appellant continued his political activities; on 17 November 2002, he was arrested and false charges were laid, including having explosives and raw materials for pipe bombs. He was released on bail because the police had no evidence against him. He was asked by the Magistrate to sign in every evening with the police; he contacted Arivazhagan, a TNLA activist, and together they worked for their political parties. The appellant continued to sign in with the police every day but after 6 months escaped. His case is still pending in Court. He hid in the Jeyankondam cashew forest where he continued to be involved in PWG and TNLA activities; on 21 September 2004, the PWG merged with another party and became the CPI (Maoist). This party was banned by the State and Central government. The State ordered the police to eliminate CPI and TNLA activists; on 11 November 2004, a large number of police came to the forest and searched for activists. The police killed Arivazhagan but the appellant managed to escape; the appellant then met Nataraj and Prabakar who were TNLA activists. They provided him with food and shelter. Together, they conducted midnight meetings in rural villages. At one place, the TNLA encouraged the people to take action against a local landlord who was treating them like slaves. These people tried to kill their landlord and the appellant escaped without injury; the police searched for him but he hid in Chennai. On 10 July 2005, the police arrested Nataraj and Prabakar but he managed to escape. Since this arrest, several PWG and TNLA activists remain missing. He remained in hiding and other party members arranged for food and shelter for the appellant; his parents arranged for his marriage which was secretly held on 3 February 2008. His parents, father-in-law and party members advised him to escape from India. His party friends arranged a passport and visa for him and he escaped to Australia on 6 September 2008. His father-in-law bribed the police at the airport to secure the appellant's departure; and the appellant has not been in contact with his family since arriving in Australia as they were harassed due to the appellant's problems. The Tribunal found the appellant was not a credible witness because it found the appellant's oral evidence to the Tribunal evasive, the claims lacking in detail and at times implausible, and also due to various inconsistencies in the evidence. The Tribunal found, at [75], the appellant's refugee claims were "completely unreliable". It did not accept that the appellant has had any association with any Communist group in India, such as the RYL, the PWG or the TNLA: [76]. It also did not accept that the appellant or his family had been harmed by the AIADMK or police in the past ([77]) and there was no real chance of the appellant facing politically motivated or any other harm if he returns to Tamil Nadu ([78]). In it he contended that the Tribunal: The Federal Magistrate rejected each of these grounds and held that the Tribunal had not: Additionally, the Federal Magistrate also found no error was revealed in the grounds pleaded in the originating application: [65] - [80]. Accordingly, the Federal Magistrate dismissed the application. The appellant does not pursue any of the grounds of review in his application to the Federal Magistrates Court in this appeal. The appellant has not filed any written submissions or provided any further particulars to support this ground of appeal. In oral submissions at the hearing the appellant said he had recently requested documents from India to verify his claims. He said the Tribunal had indicated he could provide further documents but needed to do so within seven days. He was not in a position to comply. There is, however, no reference to this in the Tribunal's decision record. The appellant made a request for time to file documents before the Federal Magistrate who pointed out, at [84], that the time do so was before the Tribunal. There is, and has been, no ground of review or appeal to date that the appellant has been denied due process in this regard. In my view, the sole ground of appeal is without substance and should be rejected. The Tribunal was required to be "satisfied" that a Convention-based reason, supported the appellant's claim to refugee status. It was not so satisfied. This is not a case where the Tribunal expressed doubt in its decision-making. The Tribunal found that "the applicant is not a witness of truth, and that his refugee claims are completely unreliable": [75]. The Tribunal disbelieved the appellant, finding that he was not a credible witness and rejecting his factual claims out of hand. It is generally understood that the primary decision-maker in considering an application such as that made by the appellant, and the Tribunal on an administrative review application, is not obliged to consider whether the applicant has discharged some onus of proof: Yao-Jing Li v Minister for Immigration and Multicultural Affairs (1997) 74 FCR 275. Rather it is for the applicant to provide evidence and argument sufficient to enable the decision-maker to establish the relevant facts: Minister for Immigration and Multicultural Affairs v Lat [2006] FCAFC 61. The decision-maker is not required to make out the applicant's case for him or her: Prasad v Minister for Immigration and Ethnic Affairs [1985] FCA 47 ; (1985) 6 FCR 155. There is then no obligation, or onus that governs the Tribunal's decision-making such that it may only make findings where it has no doubt, or that it must give the applicant "the benefit of the doubt" when making findings. In some situations, however, as in Randhawa v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 1253 ; (1994) 52 FCR 437 , an applicant may be entitled to the benefit of the doubt, for example, where they are generally credible but unable to substantiate all of their claims. The question of "doubt" may also be considered relevant in some other decision-making contexts, as discussed in Minister for Immigration and Indigenous Affairs v Rajalingam [1999] FCA 719 ; (1999) 93 FCR 220. If a fair reading of the reasons as a whole shows that the RRT itself had "no real doubt" (to use the language in Guo claimed events had not occurred, there is no warrant for holding that it should have considered the possibility that its findings were wrong. Reasonable speculation as to whether the applicant had a well-founded fear of persecution does not require a possibility inconsistent with the RRT's own findings to be pursued. A "fair reading" of the reasons incorporates the principle that the RRT's reasons should receive a "beneficial construction" and should not be "construed minutely and finely with an eye keenly attuned to the perception of error": Wu Shan Liang at 271-272, quoting Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287. Only if a fair reading of the reasons allows the conclusion that the RRT had a real doubt that its findings on material questions of fact were correct, might error be revealed by the RRT's failure to take account of the possibility that the alleged events might have occurred (or the possibility that an event said not to have occurred did not in fact occur). If the fair reading allows of such a conclusion, the failure to consider the possibilities might demonstrate that the RRT had not undertaken the required speculation about the chances of future persecution. There remains for consideration any other basis upon which it is said that his or her fear of persecution is well founded: Abebe [ Abebe v Commonwealth [1999] HCA 14 ; (1999) 73 ALJR 584 ; 162 ALR 1 ; 197 CLR 510] at [193] per Gummow and Hayne JJ. [140] There is, however, nothing in the judgments of the majority in Guo or Wu Shan Liang to require the RRT to address the specific question "What if I am wrong? " after it has made findings of fact and in the course of determining whether it is satisfied that the applicant has a well-founded fear of persecution. Indeed, I doubt that Kirby J intended to be understood as requiring that: see Wu Shan Liang at 293. In deciding whether it has a relevant satisfaction for grant of a protection visa, the Tribunal is required to bear in mind the totality of the case. That, as we have seen, includes any relevant uncertainty that it entertains as to whether claimed events in the applicant's past may ground a fear of persecution for a Convention reason. In that respect, the Tribunal is required to do no more than to satisfy itself in accordance with commonsense and the ordinary experience of mankind. ", if indeed such a question ever be appropriate. The Tribunal had no 'real doubt' that its findings were correct. It was not obliged to consider whether those findings might be wrong. On the material before it, the Tribunal was entitled to make the determination it did. The findings were made on credibility grounds. The reasons of the Tribunal do not admit of doubt. The Tribunal considered all the material evidence and were satisfied a Convention based reason was not made out. The reasons of the Federal Magistrate in holding that the decision of the Tribunal was not attended by jurisdictional error are, in these circumstances, unassailable. Finally I note that the appellant says he has recently requested further documentary evidence from India to support his claims. In the event he obtains such material, he may under the Act be able to seek, in effect, a reconsideration of his case. The Minister's solicitor on the appeal indicated to the Court that he would write to the applicant subsequent to this hearing to explain the applicant's statutory options in this regard. The appeal should be dismissed with costs. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | appeal from federal magistrate no appealable error appeal dismissed migration |
His Honour refused leave to file an amended notice of appeal and dismissed the appeal with costs. The appellant had sought to appeal against a judgment of a Federal Magistrate of 8 February 2006 dismissing a challenge to a decision of the Refugee Review Tribunal. 2 Greenwood J was exercising the appellate jurisdiction of the Court. There is no jurisdiction in this Court to entertain a purported appeal in the Court's appellate jurisdiction from a judgment of the type given by Greenwood J: see s 24(1AAA) of the Federal Court of Australia Act 1976 (Cth). Accordingly, the process filed on 29 August 2006 does not engage the Court's appellate jurisdiction and does not otherwise engage the Court's jurisdiction save to the extent that I have jurisdiction to determine whether the Court has jurisdiction. So much was established by Khatri v Price [1999] FCA 1289 ; (1999) 95 FCR 287. I have jurisdiction to exercise the power to make an order under s 23 of the Act dismissing the process filed on 29 August 2006 as incompetent. A similar conclusion was reached by Spender J in BZAC v Refugee Review Tribunal (2005) FCA 675 which was referred to with approval by Conti J in a Full Court in Applicants 325/2002 v Refugee Review Tribunal [2006] FCAFC 59. 3 The purported notice of appeal filed 29 August 2006 should be dismissed as incompetent. The appellant should pay the first respondent's costs fixed in the sum of $700. I certify that the preceding three (3) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore . | purported appeal from decision of single judge exercising court's appellate jurisdiction jurisdiction to dismiss as incompetent migration |
On 16 September 2005 he lodged an application for a protection (class XA) visa under the Migration Act 1958 (Cth) ('the Act'). On 12 December 2005 a delegate of the first respondent refused to grant a protection visa. On 17 January 2006 the appellant applied for a review of that decision to the Refugee Review Tribunal ('the RRT'). By a decision signed on 16 March 2006 and handed down on 6 April 2006 the RRT affirmed the decision of the delegate not to grant a protection visa. 2 On 21 April 2006 the appellant applied to the Federal Magistrates Court for judicial review of the decision of the RRT. On 12 December 2006 Scarlett FM dismissed that application. From that judgment an appeal is brought to this Court by Notice of Appeal dated 21 December 2006. The decision involved an error of law in that procedures required by the Migration Act and the RRT were not observed in connection with the making of the decision. The RRT did not take into account my newly provided evidence from church to the case. There was not sufficient evidence to justify the making of the decision. The criticisms which are made are of the conduct of the hearing by the RRT. It is to that issue which I shall turn in the first instance. 5 At the hearing before the RRT the appellant declared that he had assumed a false identity and that a number of claims made in his primary application were incorrect because they were intended to support that false identity. The RRT accepted this evidence and indicated, as a result, that it would 'disregard the information provided by the applicant in his written testimony and in the forms which he completed as part of his primary application'. It indicated that it would decide the matter before it on the basis of 'the testimony provided by the applicant at the hearing and any subsequent information he gave the Tribunal'. 6 The appellant claimed to be a Christian who belonged to an underground church in China and feared persecution if he returned to China because some members of his church had already been arrested. The RRT found it more likely than not that the appellant was a Christian. This is because as noted in the Country Information, and as admitted by the applicant himself, China permits some Christian groups to practice their religion as long as they are registered with the authorities. The Tribunal is accordingly not satisfied that the applicant faced or faces persecution in China because of his association with his Church activity. Far from going into hiding, he worked in the building industry and at a petrol station in public. The evidence leads the Tribunal to conclude that the applicant moved to the two Provinces in search of work, and not to hide from the authorities because of his association with his church. The Tribunal is accordingly not satisfied that the applicant faced persecution in China because of Christian beliefs or that he faces persecution in China if he returns to that country. The task of weighing such evidence and reaching factual conclusions upon it is part of the function assigned under the Act to the RRT. It is not the function of this Court, nor of the Federal Magistrates Court, to substitute any different conclusion. 11 I can see nothing in the decision of the RRT to provide any support for the first or third grounds in the appeal to this Court. 12 The second ground refers to 'newly provided evidence from church'. It is not clear whether this refers to material which was before the RRT or to entirely new material. I shall advert to both possibilities. 13 The entire content of the letter is not revealed although the RRT, in a later passage: 'notes that the letter from the church elders also stated that the applicant was forced to move [sic] "move out" because of his religion'. I shall refer shortly to an application by the appellant to provide further material at the hearing of the appeal. 16 It follows from the matters to which I have referred that the allegation of jurisdictional error in the hearing and decision of the RRT, as contained in the grounds of appeal in this Court, cannot be made out directly by reference to the proceedings before the RRT. 17 The matters relied upon before the Federal Magistrates Court were differently expressed. I am mindful of the fact that the applicant was not legally represented in these proceedings. My own reading of the Tribunal decision and supporting documents is that there is no other jurisdictional error not referred to by the applicant or the first respondent that I can discern. I am satisfied that no jurisdictional error has been made out and the decision is therefore a privative clause decision as defined in subsection 474(2) of the Migration Act . Because it is a privative clause decision it is not subject to orders in the nature of certiorari or mandamus and the application must be dismissed. In any event I see no error in the way the appellant's grounds for judicial review were dealt with. 20 At the hearing of the appeal the appellant asked me to receive some documents which he said related to his activities in Australia since his arrival. He told me the documents had not been before the RRT. I declined to receive them. Scarlett FM also declined to receive new material about his membership of a local church in Australia. They are not relevant to either the application for judicial review before the Federal Magistrates Court or the appeal to this Court. In any event, the issue which was critical for the RRT was not whether the appellant was a Christian (the RRT accepted that he was) but whether he had been, or would be, persecuted for that reason in China. 21 The appellant said at the appeal that the RRT had not asked him to provide any information. However, letters to the appellant dated 24 January 2006 (informing him that his application for review had been received) and 25 January 2006 (inviting him to a hearing before the RRT) both clearly informed him of his opportunity to provide to the RRT any documents upon which he wished to rely. 22 He said also that he only received a letter about the hearing the day before it occurred. In fact the appellant appears to have received more than one letter because the hearing date was changed on two occasions. The letters were dated 25 January, 21 February and 2 March 2006 respectively, appointing hearings on 21 February, 2 March and finally 8 March, 2006. However, he subsequently accepted that signatures appearing upon the applications for review, a letter to the RRT (declaring his true identity and forwarding documents to it) and the note to the Registrar set out above, all bore his signature. 24 I am satisfied the appellant had proper notice of the hearing and an ample opportunity to assemble and produce documents to the RRT and his assertion that he had only one day's notice of the hearing is without substance. 25 The appellant did not provide any written submissions in support of the appeal. Apart from the matters I have already mentioned the essence of his oral submissions to me was that he wished his case to be reconsidered. No jurisdictional issue arose from the matters he put. 26 As no error in the judgment of Scarlett FM has been established and no jurisdictional error in the decision of the RRT has been established the appeal must be dismissed. It is appropriate to dismiss it 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 Buchanan. | protection visa proper notice of hearing given ample opportunity to assemble and produce documents no persecution demonstrated no jurisdictional error migration |
See University of Western Australia v Gray (No 20) [2008] FCA 498 ; (2008) 246 ALR 603 ; 76 IPR 222; [2008] FCA 498 (the primary judgment). On 14 August 2008, French J ordered that the assessment of Dr Gray's and Sirtex's costs against UWA proceed by way of gross sum in accordance with O 62, r 4 of the Federal Court Rules (FCR). On 3 September 2009, an appeal by UWA against the primary judgment was dismissed: University of Western Australia v Gray (2009) 259 ALR 224 ; [2009] FCAFC 116. As a result, the time for assessing gross costs in the primary proceeding has now arrived. The assessment has been listed for a hearing on 9 --- 13 November 2009. The names of others appear on the Register and they are admitted in a State. In some other cases, the person is admitted in a State but their name does not appear on the Register. The result is that in some cases work has been done for one or other of the respondents in the conduct of the proceedings by persons who are a barrister and/or solicitor of a State, but whose name did not appear, at material times, on the Register of Practitioners maintained under s 55C(1) of the Judiciary Act . In other cases, persons performed work without being admitted as a barrister and/or solicitor in a State (or Territory). It is also agreed, or at least not contested, for the purpose of determining these questions, that Sirtex has paid all of the costs of its solicitors referred to in various affidavits made by Timothy Randolph Price and the affidavits of expert reports made by Ian Ramsey-Stewart in support of Sirtex's application for a gross sum costs order. (3) A person is not entitled to practise as a barrister or solicitor in a federal court by reason of subsection (1) unless his or her name appears in the Register of Practitioners kept in accordance with the next succeeding section as a person entitled to practise in that capacity. (5) The Chief Justice of the Supreme Court of a State or an internal Territory may direct the Registrar or other proper officer of that Supreme Court to keep a Register of Practitioners for the purposes of subsection (4) and, where such a Register is kept in a State or Territory, a person is not entitled, in a court of that State or Territory, to the right of audience referred to in subsection (4) unless he or she is registered in that Register. (6) Where a Register is kept in a State or Territory in accordance with subsection (5), a person who satisfies the Registrar or other officer keeping the Register that he or she is a person referred to in subsection (4) is entitled to be registered in that Register. (7) Where it is proved to the satisfaction of the Supreme Court of a State or Territory constituted by 2 or more Judges that a person who is registered in the Register kept in that State or Territory in accordance with subsection (5) has been guilty of conduct that justifies it in so doing, the Supreme Court may order that person's registration be cancelled or be suspended for a specified period, but the Supreme Court may, at any time, order that the registration of the person be restored or that the suspension be terminated. (8) The Registrar or other proper officer of the Supreme Court shall make such alterations and notations in a Register kept by him or her as are required by reason of orders of the Supreme Court under subsection (7). (9) Notwithstanding subsection (6), where the registration of a person has been cancelled in accordance with subsection (7) and has not been restored, or is for the time being suspended, that person is not entitled again to be registered in the Register except pursuant to an order under subsection (7). (2) Where it is shown to the satisfaction of the Chief Executive and Principal Registrar that a person would, but for subsection (3) of the last preceding section, be for the time being entitled by reason of that section to practise as a barrister or solicitor, or as both, in federal courts, the Chief Executive and Principal Registrar shall cause the name of the person, and the capacity in which he or she is to be entitled to practise, to be entered in the Register of Practitioners. (7) Where the Chief Executive and Principal Registrar causes an entry to be made in the Register of Practitioners, or causes an entry in the Register to be struck out or amended, the Registrar shall cause the ground on which, and the date upon which, the entry is so made, struck out or amended to be noted in the Register. In making this submission, the applicant makes no submission in relation to the effect, if any, of these issues on any contract for legal services between the respondents and their respective legal advisors. Also the applicant does not dispute that the respondents may be entitled to recover the costs of such persons as a clerk or managing clerk in the event they do not have the right to practise as a barrister or solicitor in federal courts at the time the work was undertaken. The applicants shortly states three reasons, which tend to overlap, in support of their submission: In relation to the first reason advanced, the applicant relies on the following authorities: Kenna v Conolly [1943] ALR 151 per Rich J at 152; Guss v Veenhuizen (No 2) ( [1976] HCA 57 ; 1976) 136 CLR 47 per Gibbs ACJ, Jacobs and Aitkin JJ at 52; Mason and Murphy JJ at 60; Minister for Works v Australian Dredging and General Works Pty Ltd [1986] WAR 235 per Burt CJ at 238; Wallace J at 240 and Kennedy J at 241, 242; Browne v Barber [1913] 2 KB 553 per Kennedy LJ at 580; Fowler v Monmouthshire Railway and Canal Company (1879) 4 QBD 334 per Cockburn CJ at 336; Mellor J at 336 and Lush J at 336; Kent v Ward (1894) 70 LTNS 612 per Lord Esher MR at 614; Smith LJ at 614 and Davey LJ at 614; Lloyd v Hill [2004] NSWSC 652 per Studdert J at [41]; Cannon St Pty Ltd v Karedis [2006] QSC 078 ; 229 ALR 699 per White J at [72]; Cannon Street Pty Ltd v Karedis (2006) 1 Qd R 505 per Williams JA at [29] and Jerrard JA at [46]. However, the applicant acknowledges Elders Trustee and Executor Co Ltd v Estate of Herbert [1996] NTSC 37 ; (1996) 132 FLR 24 may stand against the propositions they put. In relation to the second reason, the applicant relies upon Guss v Veenhuizen (No 2) [1976] HCA 57 ; (1976) 136 CLR 47 per Gibbs ACJ, Jacobs and Aitkin JJ at 52. Respondents' submissions : Put very shortly, the first respondent (Dr Gray) submits that the Court's jurisdiction, or power to award costs is unaffected by the entitlement to practise in federal courts under s 55B and s 55C of the Judiciary Act , and the Court has and retains a discretion when taxing costs or, in relation to the assessment of costs on a gross sum basis, when having regard to the nature of the work done and the identity and qualifications of persons who have done that work. The second respondent (Sirtex), in summary, submits there is a long standing and binding authority for the proposition that a successful litigant's costs already paid to an uncertificated solicitor are recoverable from the unsuccessful litigant, notwithstanding a legislative prohibition on the uncertificated solicitor recovering such costs from his client. As Sirtex has already paid the costs in dispute it is entitled to recover them according to this principle. Further, Sirtex contends that the authorities relied upon by UWA in support of its submission are distinguishable and do not support UWA's argument. Consideration : The primary inquiry that needs to be undertaken in order to answer the first question raised is whether there is any statutory provision or other established principle that disentitles a party with the benefit of a costs order in the Federal Court from recovering the costs and fees of a person who undertook work on their behalf as a barrister and/or solicitor when, at the time such work was undertaken, such person was entitled to have their name entered on the Register of Practitioners maintained under s 55C(1) of the Judiciary Act but did not, and so were not entitled under s 55B(3) of the Judiciary Act to practise as a barrister or solicitor in a federal court. Sections 55A , 55B and 55C appear in Part VIIIA of the Judiciary Act which was introduced by the Judiciary Act 1966 (Cth). It replaced s 49 which had simply conferred upon any person entitled to practise as a barrister or solicitor in any State the right to practise in any federal court. Subsections (4) --- (10) of s 55B were introduced by later amendments. In De Pardo v Legal Practitioners Complaints Committee (2000) 97 FCR 575 ; 170 ALR 709 ; [2000] FCA 335 ( De Pardo ), French J (with whom Whitlam J agreed) at [17] noted that what may be discerned in Pt VIIIA of the Judiciary Act , its statutory predecessor in s 49 and the policy disclosed by the Second Reading Speech to the amending legislation in 1966, is a scheme which is "entirely complementary to State schemes for the admission of practitioners". Practitioners' Admission Rules 1956 (Cth) were made which appear in Vol 3 of the 1956 Consolidation of Statutory Rules at p 2854. They were amended by Practitioners Admission Rules 1978 (Cth) (SR No 151 of 1978) and repealed by Practitioners Admission Rules 1982 (Cth) (SR No 119 of 1982). The Roll of Barristers and Solicitors admitted pursuant to the Rules continues. There are no current rules of the High Court under which a person may become entitled to practice in a federal court. However s 55B provides that entitlement to practise as a barrister or solicitor, or both, in the Supreme Court of a State or Territory confers the like entitlement to practise in any federal court. It also provides for the discretionary establishment of Registers of Practitioners with a right to practise in courts exercising federal jurisdiction and Territory courts exercising 'federal-type jurisdiction'. Persons who are for the time being entitled to practise in the Supreme Court of a State or Territory will have the like entitlement to practise in federal courts. To show that they are 'for the time being entitled' they will need to hold a current practising certificate from a State or Territory in any case where the State or Territory makes this a test. The Chief Justice has already issued directions to this effect, and the Bill adopts the Chief Justice's approach. Territory practitioners do not at present need to hold practising certificates and, therefore, they will be able to practise in federal courts without holding such certificates. A State solicitor who has no current practising certificate will not, however, be able to take advantage of this provision. Leaving aside the special provisions relating to Territory practitioners (s 55B(2)), the primary entitlement is qualified by the requirement that the person's name appears in the Register of Practitioners, established under s 55C and kept in the High Court (s 55B(3)). There is a derivative entitlement which flows from the primary entitlement to practise in any federal court, namely an entitlement to practise in any court of the State in relation to the exercise by it of federal jurisdiction or in any court of an internal territory in relation to a federal-type jurisdiction (s 55B(4)). The right to practise in the court of a particular State exercising federal jurisdiction or the court of a particular Territory exercising federal-type jurisdiction may be further qualified by a requirement of registration in a Register of Practitioners kept by the Chief Justice of the Supreme Court of that State or Territory (s 55B(5)). It appears no such Register has been established for any State or Territory. French J suggested that were such a Register established, the right to practise in the relevant State or Territory exercising federal jurisdiction could be lost by removal from the Register (s 55B(7)). As French J further explained at [51], the Register of Practitioners kept in the High Court will have entered in it names of persons who have a primary entitlement to practise in federal courts. Absent any current rule for admission of federal practitioners directly by the High Court, the only route to the Register of Practitioners is via admission in a State or Territory. At [52], French J noted the power of the High Court to remove from the Register the name of a person who has been guilty of conduct that justifies it in doing so (s 55C(5)). In that event, the person whose name has been removed would lose the entitlement to practise in federal courts and the derivative entitlement to practise in courts exercising federal jurisdiction outside any State or Territory in which that person had been admitted in State courts exercising federal jurisdiction or territory courts exercising federal-type jurisdiction. It would not however appear to affect the right to practise in the courts of States in which that person had been admitted, whether such courts were exercising federal or non-federal jurisdiction. French J further noted, at [53], there is no role for federal courts other than the High Court in removing practitioners from the Register of Practitioners: Yamaji v Westpac Banking Corporation (No 1) [1993] FCA 253 ; (1993) 42 FCR 431 at 432 --- 433. However, that limitation does not affect the power of federal courts to make orders affecting the supervision of the conduct of legal practitioners, where such orders are necessary to redress a breach of duty to the Court or to maintain the integrity of its procedures: Caboolture Park Shopping Centre Pty Ltd (In liq) v White Industries (Qld) Pty Ltd [1993] FCA 471 ; (1993) 45 FCR 224 at 232 --- 233. His Honour noted, at [53], that the Federal Court has an implied incidental power to ensure the observance of professional duties to the Court and the integrity of its own procedures. All of this confirms, as French J explained at [54], that the legislative scheme of Pt VIIIA of the Judiciary Act is complementary to that of state legislation. In the case of De Pardo this analysis was important to the finding of French J that the disciplinary procedures of the Legal Practitioners Act 1893 (WA) in Western Australia were not inconsistent with the provisions of the Judiciary Act and therefore invalid by virtue of s 109 of the Commonwealth Constitution . What might also be said to arise from this analysis is that the legislative scheme of the Judiciary Act Pt VIIIA is designed to impose a set of federal law requirements as to who can practise as a legal practitioner in federal courts, or in relation to matters in state or territory courts that involve the exercise of federal jurisdiction or federal-type jurisdiction, that complements, but also builds upon State (and Territory) regulations in this regard, as some of the authorities discussed below demonstrate. The two questions stated also arise against a background of detailed regulation of the legal profession over many years in Australia. There has long been legislation governing the entitlement of a legal practitioner to practise in Australian courts and to charge and recover fees, particularly where they do not hold a relevant practising certificate --- that is to say, are uncertificated. In this regard, the laws of the Australian States and Territories have tended to follow the form of such regulation first introduced by legislation in the United Kingdom. Federal law, however, did not initially deal directly with the regulation and disciplining of legal practitioners. As explained above, the legislative scheme of Part VIIIA of the Judiciary Act concerning the right of legal practitioners to practise in federal courts , while complementary to that of existing State and Territory legislation, has changed this position to some extent. The right to practise in federal courts is dependent on a person having good standing in a State or court. However, as explained above, the High Court has a supervisory jurisdiction in respect of practitioners whose names appear on the Register of Practitioners kept by the High Court, and the Federal Court is not without, what might be termed, general supervisory controls over practitioners despite having only a statutory, and not an inherent, jurisdiction in this regard. While there are powers in the High Court to deal with a person whose name appears on the Register of Practitioners kept in the Court, that has been, to this point, it seems, a fall-back position. The primary means of admitting, and removing, the names of the persons from the Register of Practitioners kept by the High Court is through the system of State regulation. If a person is no longer able to practise in a State, this has the inevitable consequence of removing their entitlement to practice in a federal court (s 55B(1)). As the examination of a number of judicial decisions below demonstrates, the laws in particular State and Territory jurisdictions governing the right of a legal practitioner to recover costs if uncertificated seem to have been interpreted in one of two ways when it comes to the recovery of party and party costs where one party has been successful in a proceeding. Either the relevant statute has been interpreted as permitting recovery by a party for costs innocently paid in fact to an uncertificated lawyer, on the basis that they are entitled to be indemnified for costs reasonably and properly incurred in the prosecution of a proceeding, regardless of the fact that the practitioner may have been uncertificated at material times; or the view is taken that, by the statute, Parliament has intended, in effect, that the debt between a client and a legal practitioner should be considered extinguished where the legal practitioner at material times was uncertificated, so that there is no sum, whether paid or not, that is capable of being the subject of indemnification under a costs order. In Fowler v Monmouthshire Canal Company (1879) 4 QBD 334 , the English Court of Appeal considered new legislation which had replaced that considered in the earlier cases of Fullalove v Parker (1862) 31 LJCP 239 , Re Jones (1869) LR 9 Eq 63 and Re Hope (1872) LR 7 Ch App 766 , of which more is said below. The new Act --- s 12 of Act 37 & 38 Vict. As a result, the uncertificated practitioner's costs could not be recovered as party and party costs. The former Act was that considered in Fullalove v Parker and the other cases mentioned. Section 26 of 6 & 7 Vict. Where such advances have been made, they cannot be recovered back; for, the debt is due, though the attorney is disabled from bringing an action to recover it. The Master of the Rolls applied Fullalove v Parker and held that the debt was still subsisting and the Act did not take away the right of the solicitor to set off the debt, or apply to its discharge, money already in his hands. Lord Romilly MR, in reciting the reasons for this earlier given in Fullalove v Parker , made it clear that the attorney, though uncertificated was entitled to retain the money so advanced and that the plaintiff would have a right to recover this from the defendant. In Re Hope , the English Court of Appeal considered that Fullalove v Parker and Re Jones applied and, at 767, said that while no person as an attorney or solicitor should carry on an action or suit without being certificated, there was nothing to prevent the client from paying the attorney and the want of a certificate could not create any impropriety on the part of the client in doing so. Kent v Ward (1894) 70 LTNS 612 and Browne v Barber [1913] 2 KB 553 held to the same effect as Fowler . In Elders Trustee and Executor Co Ltd v Estate of Herbert [1996] NTSC 37 ; (1996) 132 FLR 24 ; 111 NTR 25 the Court of Appeal of the Supreme Court of the Northern Territory dealt with the costs recovery position in the Northern Territory where uncertificated out-of-Territory legal practitioners had acted for the successful party who had the benefit of a costs order from the trial judge. Gallop J then referred to what Kearney J had held in an earlier case about the operation of s 22(4). In TNT Bulkships Ltd v Hopkins [1989] NTSC 42 ; (1989) 65 NTR 1 , Kearney J had regard to s 22(4) and held that: (1) a successful plaintiff cannot recover the costs of his uncertificated solicitor from the defendant except as to monies he has already paid to that solicitor on account of his costs in the action; (2) no costs were recoverable by the plaintiff on taxation for professional work done by a solicitor as he was not a legal practitioner in the Territory; (3) no costs were recoverable by the plaintiff for professional work done by another uncertificated practitioner, save in respect of monies paid prior to taxation; (4) s 22(4) is directed specifically at a person who is a legal practitioner but who lacks a practising certificate; (5) there was, in effect, no real question that the out-of-Territory lawyers were acting as agents. Gallop J said (111 NTR at 33) that he did not agree with Kearney J about the operation of s 22(4). However, his Honour considered that Kearney J was correct, whatever the operation of s 22(4), in deciding the costs and disbursements already paid were recoverable and that all of the old cases --- Fullalove v Parker , Re Jones , Re Hope and Fowler --- supported that proposition. With respect, it seems to me that the correct principle to be drawn from the older cases cited by Gallop J, in the light of Fowler , is that, provided the statute governing a legal practitioner's fees does not have the effect of extinguishing the debt between a legal practitioner and client because the practitioner was, at material times, uncertificated (and absent any other statutory rules governing the recovery of party and party costs), then, if the fee has been paid by the client without notice of the practitioner's disability, they can recover it as party and party costs under a costs order. Fowler elucidates this principle, although the result in that case was different from the earlier cited cases. As a result, it seems to me that the Elders case is authority for the proposition that, having regard to s 22(4) of the Territory Act at material times, the successful party to the proceeding was entitled to be indemnified, as part of its party/party costs, in respect of the charges actually paid to an uncertificated practitioner, and no more. This view is supported, in my view, by the analysis in the subsequent Cannon Street cases in the Supreme Court of Queensland. In Cannon Street Pty Ltd v Karedis [2006] 1 Qd R 505, the Queensland Court of Appeal had occasion to consider a related question concerning the entitlement of a successful party to recover its legal practitioners' costs where they were not certificated under Queensland legislation, but were on the Register of Practitioners kept by the High Court, in a case where the Queensland Supreme Court was exercising federal jurisdiction. This will depend on whether s 209(2) extinguishes the debt otherwise owing by the defendants to their new New South Wales solicitors so far as the law of Queensland is concerned or merely bars the remedy. If the former, the defendants may not recover the costs, whether or not they have been paid. If only the remedy is barred, on the indemnity principle, the defendants may recover the fees and charges on a costs assessment since they have already been paid. However, at [55], her Honour also agreed with what Wilson J held in Maggbury Pty Ltd v Hafele Australia Pty Ltd [2002] 1 Qd R 183 that s 209 extinguished such a debt. Strictly speaking, this holding of White J is obiter dicta because White J then went on to consider the effect of s 55(4) of the Judiciary Act in circumstances where the Queensland Supreme Court was exercising federal jurisdiction and noted that a solicitor is thereby granted a right of audience in the Court. Her Honour considered, at [72], that this entitled the solicitor to receive costs related to the preparation and hearing in the Court, notwithstanding the effect of the Queensland legislation. In the Court of Appeal, Williams JA delivered a judgment with which Jerrard JA agreed (but added some reasons of his own). Williams JA at [30] made it clear that s 209 of the Queensland Act properly construed did not operate to in any way restrict the right of a practitioner to recover fees where the right to appear in the State court exercising federal jurisdiction is governed by the Judiciary Act . Consequently, the decision in Cannon St Pty Ltd v Karedis ultimately depended upon the application of the Judiciary Act provisions to permit legal practitioners who were not certificated in Queensland to appear in the Queensland Supreme Court, which was exercising federal jurisdiction, by virtue of the right of audience granted by s 55B of the Judiciary Act , and to claim their costs for so doing. Incidentally, Williams JA, at [29], observed that none of the provisions of the Judiciary Act refer to a practitioner's entitlement to recover fees. However, his Honour considered that to be understandable because such an entitlement essentially comes from the contract between the client and his solicitor. His Honour did not doubt that where a statutory provision extinguishes a client's obligation to pay the fees of an uncertificated practitioner they cannot be recovered as party and party costs, in ordinary circumstances, under the Queensland law as it then stood. A question then firstly arises, in respect of the entitlement of a party to recover costs in the instant case before this Court, whether there is any relevant federal legislation the equivalent of the new legislation considered in Fowler or s 209 of the Queensland legislation considered in the Cannon Street cases, which is intended to and has the effect of extinguishing a debt between a client and a legal practitioner where the legal practitioner, at material times, was uncertificated; or whether the Federal Court of Australia Act 1976 (Cth) (FCA) and FCR properly construed operate so as to prevent the recovery of the costs of an uncertificated practitioner as part of party/party costs. No legislation the equivalent of that considered in the old English cases, or in Elders or in s 209 of the Queensland legislation has been suggested by the parties in their submissions. This perhaps is not surprising when one has regard to the complementary scheme of Federal-State regulation set out above. It has not been a feature of federal legislation to regulate lawyers for disciplinary or fee purposes in the manner of the State or Territory legislation referred in the authorities just cited. However, the absence of such regulatory controls in respect of legal practitioners is not the end of the costs story in relation to the recovery of costs in federal courts, as other authorities show. A question remains whether the costs of an uncertificated lawyer, so far as the federal Register of Practitioners is concerned, may be recovered as party and party costs by a successful litigant under the FCA and the FCR. In Guss v Veenhuizen (No 2) [1976] HCA 57 ; (1976) 136 CLR 47 , the question arose whether a solicitor (who was a member of a firm of solicitors in Victoria) who had acted in his own cause and instructed counsel to appear for him on an appeal in the High Court, in circumstances where he was admitted to practise as a solicitor in the Supreme Court of Victoria but did not have his name on the Register of Practitioners maintained for the purposes of s 55B and s 55C of the Judiciary Act , was entitled to have his bill of costs taxed to the extent of the filing fees and counsel's fees covered by it. Gibbs ACJ, Jacobs and Aickin JJ held that the solicitor was entitled to recover his costs under a rule of practice that a solicitor who acts for himself in litigation is entitled to his professional costs. In these circumstances, s 55B of the Judiciary Act was not a bar to a solicitor being allowed professional costs on the ground that they are claimed in respect of work done by him in person and not as a solicitor. The work was done by him in person and the only question is whether in the special circumstances here existing he was entitled to the benefit of the rule of practice established by the authorities to which we have referred. (2) The taxing officer shall appoint a time for taxation on the application of the party claiming taxation. Order 71, r 19 of the High Court Rules considered in Guss limited a bill of costs and fees to those payable to a barrister or solicitor "entitled to practise in the Court". That expressly brought into play the question whether the name of the solicitor, whose costs were being claimed, appeared in the Register of Practitioners kept by the High Court. As it did not, on a proper reading of the judgments of the Court, the Court was not prepared to ignore the strict requirements of O 71, r 19 when read with s 55B. Rather, it applied a special rule that was considered still to exist in the State of Victoria, concerning the entitlement of a solicitor acting on his or her own behalf to recover, in the view of the majority, his professional costs or in the view of the minority, certain limited costs and disbursements including counsel's fee. In these circumstances, in my view, the decision in Guss is not consistent with the exception contended for by Sirtex, that costs paid by an innocent party to an uncertificated practitioner may still be recovered under the general indemnity principle, at least not in relation to such a costs regime as applied in that case. The Court made no reference to such an exception. Rather, the view taken was that unless a party could show that the costs claimed fell under O 71, r 19 they were irrecoverable. In this regard, the words in O 71, r 19(1)(a), costs and fees which "are payable" are not in my view intended to refer to charges and fees which remain unpaid at the time of taxation, but include all relevant charges and fees whether at the point of taxation they have been paid or not. In an older case, involving a review of taxation by the Principal Registrar of the High Court, Rich J in Kenna v Conolly [1943] ALR 151 at 151 --- 152, found that, as neither of two practitioners had complied with the requirements of the former s 49 of the Judiciary Act 1903 --- 1940 (Cth) requiring a person to enter their name on a Register of Practitioners kept in the principal registry as an entitlement to practise as a barrister or solicitor or both in any federal court, "they were not acting as such before this court, and were disqualified from appearing before the court, and consequently no fees are payable to them". Rich J in so finding relied upon Brown v Barber and Kent v Ward , both of which cases have been referred to above and were to the same effect as Fowler . In Guss at 60, Mason and Murphy JJ observed that the decision in Kenna v Conolly related only to items consisting of counsel's fees and did not relate to filing fees which constitute an outgoing and expense necessarily incurred by the appellant whether he acts for himself or not. To the extent to which the decision of Rich J denied the right to recover disbursements in respect of counsel's fees, their Honours did not think that the decision of Rich J should be followed in the case before them. As noted above, they referred to the rule of practice mentioned above and thought it was enough to say that although in Victoria there is a practice that counsel will not accept instructions from unqualified persons to act for them, there is no legal prohibition against an unqualified person instructing counsel to appear for him. Accordingly, the bill of costs of Mr Guss should be allowed to the extent indicated. Their Honours did not, however, appear to doubt that Kenna v Conolly was otherwise rightly decided. In Minister for Works v Australian Dredging and General Works Pty Ltd [1986] WAR 235 , the Full Court of the Supreme Court of Western Australia ultimately ruled that counsel and solicitors from the State of Victoria, who were engaged in an arbitration in Western Australia under the Arbitration Act 1895 (WA), were not persons in respect of whose costs a costs order could apply within the meaning of s 76 and s 77 of the Legal Practitioners Act 1893 (WA). Burt CJ, at 238, noted that "counsel fees" in Item 14 of the Fourth Schedule of the Rules of the Supreme Court was confined to fees paid to counsel who are certificated practitioners or who, although they are not certificated practitioners, have a right of audience before the Supreme Court as could be the case when the Court is exercising federal jurisdiction under s 55B(4) of the Judiciary Act . The Chief Justice also held that fees paid to solicitors for getting up the case for trial are confined to such fees paid to solicitors who are certificated practitioners. The Chief Justice considered this was the same position as reached in Fowler . In the instant case, as noted above, on 14 August 2008, French J ordered that the assessment of Sirtex's costs against UWA proceed by way of gross sum, in accordance with O 62, r 4 of the FCR. (ii) An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62: Beach Petroleum v Johnson (No 2) , at 120, 124, per von Doussa J; Harrison v Schipp , at 743 [22], per Giles JA. (iii) The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson (No 2) , at 123, per von Doussa J. (iv) Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the ' necessary or proper ' test) and those stated in Stanley v Phillips [1966] HCA 24 ; (1966) 115 CLR 470 , at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673 ; (1999) 93 FCR 1 , at 4-5 [12]-[15], per O'Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 , at [6]-[8], per Mansfield J. (v) Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Schedule 2 provide assistance in fixing an appropriate gross sum: Charlick Trading Pty Ltd v ANRC , at [10], per Mansfield J. FCR , O 62 r 4(2)(c) authorises the Court to order that, instead of taxed costs , the successful party should be entitled to a gross sum costs order. The subrule contains no express direction that the Court is to apply the detailed criteria that are laid down in O 62 and Schedule 2. On the contrary, the subrule apparently leaves the question of quantification at large. It would be extremely odd if the more expeditious procedure contemplated by r 4(2)(c) resulted in either a successful or an unsuccessful party being exposed to an assessment of costs which simply ignores or overrides the basic principles applicable to a taxation of costs. I accept Mr Sheahan's submission that it would be an error for a Court to use its power under r 4(2)(c) to assess a gross sum clearly higher than that which would be allowed on a taxation of costs. As the cases have stressed, the object of the procedure is to avoid the expense, delay and aggravation that would be involved in a taxation of costs, especially in a lengthy and complex case such as this. The procedure is intended to replace the potentially elaborate process contemplated by O 62 and Schedule 2, whereby a taxing officer meticulously analyses a specially prepared bill of costs by reference to individual items, some of which have distinctly Dickensian overtones. In this respect, as the parties agreed, Telstra bears the onus of establishing that its claim to a gross sum satisfies the applicable test. In practice, this may involve the parties adducing evidence from expert costs assessors addressing whether the costs claimed by the successful party were ' necessary or proper for the attainment of justice or for maintaining or defending the rights of a party ' (O 62 r 19) or, in more general terms, whether the amounts sought would have been recoverable on a taxation of costs. There is a danger, perhaps reflected to a limited extent in some of the evidence adduced on this application, that the parties will descend too far into the minutiae of the rules governing a taxation and will spend disproportionate time analysing the application of specific items in Schedule 2 to the costs claimed by the successful party. The process should direct attention primarily to issues of principle that explain the differences in the positions taken by each party in relation to the assessment of recoverable costs. For the most part, the reports and oral evidence of the experts in this matter concentrated on the more general issues. Both experts recognised this point in their evidence. Ms Harris, for example, readily agreed that it was difficult for her to assess whether and to what extent Telstra's solicitors performed work beyond that necessarily or properly required to defend the proceedings, because she had only limited material available to her concerning the issues in the proceedings and the nature of the legal work required to address them satisfactorily. Accordingly, her opinion was founded on her experience in assessing costs or preparing bills of costs in litigation which was not necessarily comparable to this case. In particular, neither has had experience with a case involving the great volume of documentation, in paper or electronic form, that this case has generated. Consequently, insofar as their opinions rest on the usual practice in taxations of costs, the force of those opinions may be affected by the fact that this case has extremely unusual, if not unique, characteristics. This comment is not a criticism of either Ms Ashe or Ms Harris. It merely reflects the necessary limitations of the expert evidence in providing guidance on the issues I must address. As Einstein J pointed out in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 , at [117], a court is entitled to form its own view as to where a case falls within the possible range of recoveries, given its own appreciation of the factors bearing on the assessment. The base hours have been multiplied by the appropriate Item 31 hourly rate to achieve a base figure for fees ('the base scale fees'). A second adjustment is then undertaken to accommodate the different scale rates applicable to different types of work ('the adjusted fees'). The parties do not contend otherwise. Item 31 distinguishes between "solicitors" and "managing clerks". Item 31 was expressed in the same terms in the form of the Scale that applied from 30 August 2004 to 20 December 2004 and from 23 December 2004 to 31 July 2006, though the rates in each of these periods was different. Item 31 makes no express reference to whether the names of such solicitors appear in the Register of Practitioners held by the High Court. However, Item 31 makes a significant distinction as to the monetary value in attendance by a "solicitor" compared with a "managing clerk". The time of a solicitor is treated as more than 4.5 times the value of the managing clerk. This undoubtedly reflects the expectation that a solicitor will have greater legal knowledge and experience and their work will be intrinsically worth more than that of a managing clerk. The question that remains for determination here, is whether the "solicitor" referred to in the Scale must be one who is entitled to practise in a federal court, not just any solicitor who happens to be admitted to practise and holds a practising certificate under the law of a State or Territory. In my view, the answer to this question is to be derived from an understanding of the operation and effect of the Rules generally and in particular O 62, r 8 FCR which deals with the topic of taxation of costs in the ordinary way and is made relevant to the assessment of gross sum costs under the principles enunciated above. Rather r 8(1) deals with costs and fees which are payable to "legal practitioners in respect of business transacted by them in the Court or its registries". In other respects it may be seen that the two provisions are quite similar. That is to say, a person whose name appears on the Register of Practitioners kept by the High Court pursuant to s 55C of the Judiciary Act . Consistent with the decision of the High Court in Guss , this seems to me to be necessarily the case, "unless the Court or a Judge in a particular case otherwise orders" as provided for by O 62, r 8(1) and consistent with the broad discretion to award costs given by s 43(2) of the FCA. In this case, a gross sum costs order has been made, but in its operation it necessarily has regard for O 62, r 8. In these circumstances, it appears to me not to the point that a party, such as the second respondent, has apparently already paid fees in respect of the work of an uncertificated practitioner. Under O 62, r 8(1) of the FCR, the taxing officer can only allow and certify costs and fees which are in fact payable to legal practitioners of the defined type, that is, whose names appear in the Register of Practitioners kept by the High Court under the Judiciary Act . In determining whether or not such costs are "payable", it does not matter whether the successful party has already paid the costs or not. The question is whether the costs charged have been paid in fact or remain to be paid to a certificated solicitor. Therefore, notwithstanding the submission of the second respondent, Sirtex, that there is a special rule or exception in the case of the recovery of costs which have actually been paid to an uncertificated legal practitioner, I do not consider that recovery is permitted having regard to the terms of the gross sum costs order and the terms of O 62 of the FCR. In my view, cases such as Elders , and the older, pre- Fowler cases cited above, were decided in a materially different cost regime from that under consideration here. While the costs order in the instant case is for the assessment of costs on a gross sum basis under O 62, r 4, as noted above, I do not consider that costs can be finally assessed on this basis without regard being given to the primary entitlement a party has to recover costs and charges under the Second Schedule of the FCR. This necessarily brings into play the same issue concerning the charges of a person admitted as a practitioner in a State court not on the Register of Practitioners kept by the High Court. On behalf of Dr Gray it is suggested that, although it is somewhat unclear why it was thought necessary to amend the FCR to include this definition, it seems likely that the updating of the definitions were intended to ensure that the renamed "practitioners" in Victoria were captured and it is clear that the amendment proceeded on the underlying assumption that "solicitor" was used in the FCR to refer to persons practising as such in several States not having in mind any limitation only to those solicitors whose name appeared in the High Court Register of Practitioners. Dr Gray's submissions go on to suggest that if it had been thought necessary to do so, the rule makers could have replaced all references in 2004, when the FCR were amended, to replace all references to solicitor to the new definition of "legal practitioner", however, they did not do so. As a consequence, Dr Gray submits O 62, r 8(1)(a) is intended to connote the concept of the solicitor on the record (who is obviously required to be entitled to practise) and is not directed to allowances of costs for individual practitioners contained on that solicitor's bill of costs. On the face of it, however, the difficulty with that submission is that the expression "legal practitioner" used in O 62, r 8(1) is clearly defined to include a solicitor who is entitled to practise in the Federal Court. Further, O 62, r 8(1)(a) deals with "costs and fees which ... are payable to legal practitioners in respect of business transacted by them in the Court or its registries". There is nothing in this particular form of wording to suggest that a particular species of solicitor --- a "solicitor on the record" --- is the only person who must be entitled to practise in the Federal Court and that other State certificated solicitors working under that person's supervision or control do not need to be certificated for their costs to be the subject of a properly taxed and certified bill of costs and fees for the purposes of O 62, r 8. Nothing in Guss suggests this distinction. Nor do the FCR or the FCA provide for such a person or approach. The submissions filed on behalf of Dr Gray also draw attention to the fact that O 62, r 12 continues to refer to a "solicitor" and suggests that this must be intentional and intended to enable the costs and fees of a person who is a solicitor but not on the Register of Practitioners kept in the High Court. In my view, while plainly r 12, which deals with the scale of costs, refers to solicitors in r 12(1), this must, in light of the definition of "legal practitioner" in O 1, r 4, mean a solicitor whose name appears on the Register of Practitioners kept by the High Court. In a related submission, on behalf of Dr Gray, it is suggested that a taxing officer would err in the exercise of his or her discretion if they only allowed costs in respect of a qualified "solicitor" at the rate applicable to a person without any qualification at all. It is said that the Court has a supervening discretion as to costs particularly manifested on a gross sum application, such as that currently before the Court, and would also exercise its discretion in favour of allowing costs at the rate of a solicitor when a party has required a solicitor's work to defend their case and has engaged a solicitor to do it. In my view, this submission must fail ultimately due to the express requirements of O 62, r 8. The taxing officer can only allow and certify costs and fees in a bill of costs that are payable to "legal practitioners" in respect of business transacted by them in the Court or its registries. A "solicitor" whose work is claimed, as I have just set out, must be a person entitled to practise in the Court. It is therefore not open, in my view, to the taxing officer simply to equate the work done by a person who is not entitled to practise in the Court as if they were entitled to practise in the Court. There is no "solicitor on the record" as such to whom the client pays the costs and who is able to justify the engagement of solicitors who are not on the Register of Practitioners and charge them out as if they were. In this regard, Dr Gray in his submissions says that it has long been accepted that the taxing officer's duty as set out in provisions equivalent to O 62, r 19, includes the discretion to allow costs at a higher amount than in the scale: for example see Re Ermen (1903) 2 Ch 156 ; or McIver & Co Ltd v Tate Steamers Ltd [1902] 2 KB 184 ; Fat-Sel Pty Ltd v Brambles Holdings Ltd (1985) 6 FCR 440. Dr Gray submits that this is because O 62, r 12 is subject to the FCR and O 62, r 19 is expressed affirmatively requiring a taxing officer to allow costs reasonably and properly incurred. The fact there exists a clear discretion to allow costs above the scale, tells against the view that a taxing officer is required to treat qualified persons as unqualified, just because they are not on the Register of Practitioners. If the work that an uncertificated person performed was work which involved the exercise of their skill and qualifications, then as long as that work was necessarily performed, its cost is likely to be necessarily or properly incurred and the taxing officer ought to allow the cost at the scale applicable to solicitors. It is further submitted that in the case of the qualified solicitors whose names have not been entered on the High Court Register of Practitioners, that a taxing officer would clearly be within power in adopting the rate applicable to "solicitors" in order to give effect to the underlying rationale of compensating a successful litigant for all costs reasonably and properly incurred. If a person is not a legal practitioner as defined, then it seems to me that it is not open to the taxing officer, in effect, to proceed as if they were. This approach must be adopted whether costs are assessed in the ordinary way or by way of gross sum under O 62, r 4 FCR in the manner ordered by French J in this case. To act in the way advocated on behalf of Dr Gray would, in my view, ignore the guidance provided by Mason and Murphy JJ in Guss at 59 that the requirements of the Judiciary Act in respect of the entitlement of a person to practise and to have a right of audience in a federal court is merely formal in character and has no intrinsic or historic importance. While on the one hand, one can appreciate an argument that the complementary nature of Pt VIIIA of the Judiciary Act provisions and the State and Territory laws regulating the legal profession suggest that, so long as a legal practitioner is properly certificated in a relevant State or Territory, a party should be able to recover the costs of their involvement in a Federal Court proceedings, the above analysis of the requirements of the Judiciary Act and the Rules of the Federal Court suggest otherwise. Accordingly, in my opinion, the answer to question 1 is "No". The result of so finding, in my view, would seem to be this. While ordinarily on the taxation of a bill of costs under O 62, r 8 close regard would be had to the costs as prescribed by the FCR Second Schedule, as applicable in respect of particular work done, including by legal practitioners as defined in the FCR, and similar regard would be given to the Second Schedule costs for the purposes of the assessment of a gross sum, it is not open to equate the work done by a person who is a solicitor but not one whose name appears on the Register of Practitioners maintained under s 55C of the Judiciary Act as if they were such a solicitor. The same approach must necessarily spill over into the assessment of gross costs in this case under the particular gross sum costs order made by French J for the reasons given above. That is not, to say, however, in my opinion, that the work actually done by an uncertificated practitioner is without value and cannot be the subject of assessment. That work would, in my view, be claimable as work done by a managing clerk or clerk or the like. It would be open to the taxing officer or the Court in a taxation or in assessing costs on a gross sum basis, to regard the nature of the work done. What is not appropriate, however, is for the discretion under O 62, r 19, to do justice in any case, to be exercised by simply equating work done by a practitioner who was at material times not on the Register of Practitioners with the work of a certificated practitioner. The Second Schedule costs scale plainly anticipates that a solicitor who is entitled to practise in the Federal Court can engage persons other than duly certificated legal practitioners, as defined by O 1, r 4 of the FCR, to assist in the preparation and conduct of a proceeding in the Federal Court. For example: It may also be arguable that O 62, r 19 has application in relation to the performance of some of this work. In that case, the work done by an uncertificated person, under the direction and supervision of a person or persons who are entitled to practise in the Federal Court, might be charged out at an appropriate clerk or managing clerk rate, depending on their degree of skill or legal knowledge, where skill or legal knowledge is required to some extent in the performance of that task. However, it would not be appropriate to make allowances that simply equate the value of the work done on the basis that the work was equivalent to that of a solicitor as provided for in the Second Schedule of the FCR. It goes without saying, of course, that the issue that has fallen to me for determination in question 1 would not have arisen if the solicitors engaged by the respondents had in all cases taken the step of applying, on admission in State jurisdictions, to have their names entered on the Register of Practitioners kept by the High Court. In respect of the second question, Dr Gray in written submissions filed on his behalf states that he does not understand the significance of question 2 and says that people who are not entitled to and did not have their name on the Register of Practitioners, can only refer to paralegal assistants or people not admitted in any State or Territory; that is, people with no legal or professional qualification at all. If not solicitors, such people are likely to be clerks, and specific provision is made in the Scale and the Second Schedule of the FCR for the costs recovery in respect of them. Therefore, it appears obvious that a respondent is entitled to recover costs in respect of the work done by those people. Just because they do work which a solicitor or barrister could have done, does not mean the costs are irrecoverable. To hold otherwise would be to penalise a party for having work done at a cheaper rate (by using paralegals) than it could have (if it used solicitors). In submissions in reply, UWA submit that contrary to Dr Gray's submissions, the practical significance of question 2 lies in the treatment by Dr Gray's expert of clerks who were admitted to practise in a State jurisdiction and/or in the Federal Court at any time during the proceeding as if they were a solicitor admitted to practise in the Federal Court throughout the entire proceeding. UWA submit that clerks who were not admitted to practise in the State in which they undertook work in relation to this case may also be prohibited by applicable State legislation from recovering costs as if they were a barrister or solicitor entitled to practise in federal courts, see for example, s 14(4) Legal Profession Act 2004 (NSW); s 12(6) Legal Profession Act 2008 (WA); s 123(1) and s 127 Legal Practice Act 2003 (WA). In light of my findings, I need not rule on this submission. However, I accept the submission made on behalf of UWA concerning the practical significance of question 2. As noted above, I do not consider that clerks can be treated as if they did work as barristers and solicitors. For the reasons also explained above in relation to question 1, I do not consider that O 62, r 19 can be used by the taxing officer effectively to avoid the strictures of O 62, r 8(1). That is not to say of course, that work done by clerks cannot be the subject of taxation of a bill of costs and fees under O 62, r 8 or under a gross sum costs order, and that appropriate consideration can be given by the taxing officer of the nature and complexity of the work so undertaken by that person. There is ample authority concerning this approach to assessment of costs. For example, in Cole and Allied Operations Pty Ltd v Trevor Clifton, unreported (No 1057/97) New South Wales Supreme Court, Law Division, 27 August 1997, cited in the written submission filed on behalf of Sirtex, Master Harrison apparently indicated that an unqualified clerk who has great experience in undertaking work which would normally be undertaken by a solicitor with minimal supervision in 1994 (11 --- 13 years before the relevant period in the present case), properly be charged out at between $100 and $120 per hour. In this particular instance, Sirtex makes the point that it does not seek to recover any fees in respect of clerks or managing clerks on the basis that they were, in fact, working as "solicitors". They only seek to recover fees on the basis that it is just and reasonable to assess these persons at a level more generous than "managing clerks" as identified in Item 31 and rely in that regard on the approach taken by Sackville J in Seven Network Ltd v News Ltd [2007] FCA 2059 at [51] --- [59]. While, in short, I do not think it is open to the taxing officer to treat as a "technicality" the fact that a person admitted to practise as a barrister or solicitor or barrister and solicitor in a State, but whose name does not appear on the Register of Practitioners kept by the High Court, can be charged out at the rate provided for "solicitors" under the FCR, that is not to deny that there may still be a discretion capable of being exercised under O 62, r 19, for the purposes of the assessment of gross costs in this case, to increase the sum payable for the work of persons who are not "solicitors" according to the nature of the work performed. That is an exercise that remains to be conducted upon the final assessment of gross costs. On this understanding, the answer to question 2 is "No". The answer to Question 2 is "No". The costs of the proceeding in respect of the determination of these costs is reserved. I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | gross sum assessment order 62, r 8 federal court rules register of practitioners maintained pursuant to s 55c(1) of the judiciary act 1903 (cth) whether party entitled to recover costs of solicitor as "solicitor" under schedule 2, federal court rules scale where solicitor is entitled to but did not have name entered on the register of practitioners maintained under s 55c of the judiciary act 1903 (cth) and so not entitled to practise in federal courts costs |
The orders are sought in reliance on O 7 r 9 of the Federal Court Rules ('FCR'). That provides that where for any reason it is 'impractical' to serve a document in the manner set out in the Rules, the Court may by motion 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. The orders are sought in respect of the service of the application and a statement of claim. Order 7 r 1 requires that originating process shall served personally on each respondent, save where a respondent has entered an appearance, filed a defence or appeared before the Court. Personal service is effected pursuant to FCR O 7 r 2 by leaving a copy of the document with the individual. The substituted service must be based on a reasonable probability that it will inform the person served as a result of the form of service identified: cf Ginnane v Diners Club Ltd (1993) 42 FCR 90 at 92 citing Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 at 261 per Gibbs J. In order to establish impracticality some attempt, at least, should be made to effect service in accordance with the Rules, or evidence should be led that it is so obviously futile as not to warrant an attempt at service: Rice Growers Co-Operative Ltd v ABC Container Line NV (1996) 138 ALR 480 at 482 per Tamberlin J. The applicant has provided the Court with a document entitled 'Summary of affidavit evidence in support of application for substituted service'. That is supported by the affidavits relied upon by the applicant from which the summary has been prepared. I have examined those materials and have reached the view that in accordance with the abovementioned principles it is appropriate for orders to issue in accordance with the motion save in the following respects now identified and subject to consideration of any response to that identification received from the ex parte applicant. The 3 rd Respondent --- Bruce James Allsopp The evidence in respect of Mr Allsopp shows that his brother advised that he would be returning to Perth on 5 August 2006. There is no evidence that any attempt has been made to serve him in Perth after that date. In the absence of such evidence, I cannot conclude that the condition of impracticability is established in his case. The 30 th Respondent --- James Patrick Doyle It would appear that the proposed order 14 duplicates proposed order 13. Additionally, both proposed orders 12 and 13 describe different addresses as the last known address of Mr Doyle. Perhaps these orders could be combined to refer to his last known addresses or to treat one as primary and the other as secondary. The 62 nd Respondent --- Anthony Peter Nichols The evidence relating to Mr Nichols refers to 23 Park Street, Subiaco and also to 124 Coogee Street, Mt Hawthorn. Proposed order 18 seeks service at the former address, whereas the evidence would appear to also support service at the latter address. The 97 th Respondent --- Mark Phillip Galli The evidence relating to Mr Galli refers not only to the address referred to in proposed order 25 (14 Fairburn Close, Baldivis) but also to 15 Gecko Road, Baldivis. It would appear appropriate that provision be made also for service at this latter address. The 102 nd Respondent --- Dean Michael McBride I am not satisfied that the evidence supports a conclusion that there is a reasonable probability that Mr McBride will be informed of the proceedings as a result of the form of service identified. I will therefore hold the motion open before me pending receipt of any further evidence or submissions on behalf of the applicant in respect of the identified respondents above in respect of which I am not presently prepared to make the orders the subject of the motion. | application for substituted service procedure |
Schutz seeks additional orders for the respondents ( VIP ) to supply detailed information about an extensive range and number of sales over a considerable period. For the reasons which follow that additional relief will be refused. On 13 October 2009 VIP filed an affidavit of Mr Andrew Robert Smith setting out the information required by the Norwich Pharmacal Order. Only five of VIP's customers' details were revealed by Mr Smith's affidavit. It now appears that is in error, that affidavit did not contain details of all customers who had purchased cross-bottled IBCs from VIP containing labelling indicating that the IBCs were certified for use in the transport and storage of dangerous goods. One customer was omitted. Schutz now seeks an additional Norwich Pharmacal Order in these terms: Within 7 days, the respondents by their proper officer file and serve an affidavit specifying the names, addresses, telephone numbers and email addresses of those of their customers to whom they have sold composite intermediate bulk containers manufactured by the first or second applicants, or their agents or licensees, which contain inner plastic containers manufactured by persons other than the first or second applicants. The applicants have leave to despatch a letter, in the form of Attachment 'A' to this notice of motion, to any of the respondents' customers identified in the affidavit filed and served pursuant to order 1 above. Costs be in the cause. Schutz complains that this is insufficient to alleviate any confusion and potential risk to public safety that may result from VIP's conduct. That, they say, is why they seek an additional order requiring disclosure by VIP of all customers to whom VIP sold CB1 type IBCs as previously defined. Although VIP has discovered delivery dockets, Schutz point out that it is not possible to discern from the dockets what kind of IBCs were sold in some instances or whether the IBCs were sold pursuant to a request for DG IBCs or non-DG IBCs. Schutz argues that although VIP gave evidence that it was invariably the case that VIP sales staff would confirm with a customer if an IBC was required for transport of dangerous goods, that may not be, it is said, enough to prevent VIP's customers reliance on the labelling of IBCs themselves after delivery at which time VIP have no control over or knowledge of the ultimate usage of the cross-bottled IBCs. VIP observes correctly that this possibility must have been obvious to all concerned when the original orders were made, that it was even alluded to in the course of evidence and argument initially advanced for Schutz. Notwithstanding this, the orders that were drafted were seen as being proportionate to the degree of risk in respect of which there was any evidence. The question is whether Schutz have advanced any evidence to show any new risk. In my view, Schutz has done no more than simply restate the same fears it has relied on in support of previous applications. It has advanced an argument as to perceived risk supported by hearsay (but admissible) evidence of the presence in the market place of a small number of cross bottled IBC's (4 or 5) which have been used for storage or transport of non-dangerous goods even though the Schutz outer cage bears a UN Certification for transport of dangerous goods. The fear expressed is that there is a risk such cages may be used for storage or transport of dangerous goods, although there is no evidence of this having occurred so far. VIP deny (as they have always done), that there is any realistic danger or risk associated with this possibility. Specifically what Schutz rely upon, apart from internal reports, is a conversation between Mr Gill for Schutz and Mr Baker of Orica Chemical Services ( Orica ) revealing that Orica has a policy of only purchasing IBCs that are certified for use in the transport and storage of dangerous goods. Despite this, it nevertheless has acquired CB1 type IBCs from VIP. This demonstrates, according to Schutz, that there is potential for uncertified Schutz cross-bottled IBCs which retain the original UN certification markings to cause confusion. Objection has been taken to a substantial amount of the evidence of Mr Gill primarily on the basis that it is hearsay. To the extent that there is a hearsay component which leads to Mr Gill holding a genuine belief, the hearsay elements are admissible for the purposes of the interlocutory application. However, the evidence goes beyond information and belief into the realm of speculation as a result of belief held. To that extent, I will treat the speculation as being part of the argument for Schutz only. The intention of providing for liberty to apply was to permit the opportunity to revisit the situation should there be clear evidence of an elevated level of danger or an elevated risk of product confusion. There is no evidence that since the giving of the undertaking, VIP has sold IBCs for use with dangerous goods and there is no evidence that it has failed to label in accordance with the undertaking offered. There was always the potential risk regardless of these proceedings that IBCs may be inappropriately used by consumers to store dangerous goods in non-dangerous IBCs once IBCs have been recirculated or simply reused. To the extent that VIP is able to prevent this practice, there is the evidence of its standard policy of inquiring with customers as to the proposed usage. The handful of customers to whom IBCs for transporting dangerous goods were sold have had the benefit of the communication from Schutz advising of potential risks. I have previously indicated that if more cogent evidence as to danger were available, then by general liberty to apply provisions, the current order could be revisited. I am far from convinced that any such additional evidence has been provided. Schutz have not presented any evidence of any elevated level of risk which was not present and taken into account in the formulation of the original orders in this matter and on the original dismissal of the Schutz application for extended relief of the nature now sought. There is no proper basis to revisit those orders. Nor was there a basis for the further request for the urgent listing of this further application. As against that, there is a real risk that if the orders which Schutz seeks are made, it will be given the significant advantage of opening its direct competitor's books and writing in unnecessarily alarming and implicitly critical terms directly to VIP's customers with the imprimatur of the Court. This is an advantage which would certainly not be lightly given. In light of the defective compliance by VIP with the Norwich Pharmacal Order (which followed an earlier error on affidavit in relation to Schutz 2), I would discount the costs order in its favour. Schutz should pay two-thirds of VIP's costs of the motion. I therefore order: The motion be dismissed. The applicants are to pay two-thirds of the respondents' costs of the motion, to be taxed if not agreed. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | norwich pharmacal order whether order should be extended to broader class of persons whether fresh evidence justifying extension of order practice and procedure |
This is such a case. It raises for determination whether certain members of the applicant, Australian Nursing Federation, have been incorrectly paid by their employers for work performed on Monday 27 December 2004, Tuesday 28 December 2004 and Monday 3 January 2005. 2 The second respondent, Ellfam Nominees Pty Ltd, is the operator of Aged Care Facilities at Bendigo and Ballarat. At all material times it employed Kevin Wright, Ellen Lea and Kaye Young as Registered Nurses Division 2 (State Enrolled Nurses). 4 Kevin Wright did not work on Monday 27 December 2004 and did not receive pay in respect of that day. He worked on Tuesday 28 December 2004 and Monday 3 January 2005, but did not receive public holiday rates. 5 Ellen Lea's circumstances in respect of the relevant three days were materially indistinguishable from those of Kevin Wright. Kaye Young worked on each relevant day but did not receive public holiday rates. 6 Kevin Wright did not work on Saturday 25 December 2004 or Sunday 26 December 2004 but was paid for those days at public holiday rates. He did work on Saturday 1 January 2005 and was paid for that day at the appropriate public holiday rate. Ellen Lea's circumstances were the same as that of Kevin Wright in the above regard. Kaye Young did not work on Saturday 25 December 2004, Sunday 26 December 2004 or Saturday 1 January 2005. She normally did not work on a Friday or a weekend day. Those three days were weekend days. Kaye Young did not receive any payment for those days. 7 ANF contends that Ellfam should have paid Kevin Wright, Ellen Lea and Kaye Young for work performed by them on Monday 27 December 2004, Tuesday 28 December 2004 and Monday 3 January 2005 at public holiday rates. So far as is material, the notice declared that 25 December 2004 was not a public holiday but that 27 December 2004, 28 December 2004 and 3 January 2005 were to be public holidays. 11 Clause 24 of the Award is headed "PUBLIC HOLIDAYS". Sub-clause 24.2 is headed accordingly. Prior to then, and at least from 10 January 1997, cl 22 of the Nurses (Victorian Health Services) Award 1992 dealt with public holidays. 16 Sub-clause 22(a) of the 1992 award was materially identical to the current sub-cl 24.1. Sub-clause 22(b) was in the same form as the body of the current sub-cl 24.2, without the specificity provided by the heading to sub-cl 24.2. There was no equivalent to the current sub-cl 24.3 in the 1992 award. 17 Sub-clause 24.4 of the current Award effectively mirrors sub-cl 22(c) of the 1992 award, other than referring to "24.1" and "24.2" instead of "(a)" and "(b)" respectively. 18 The combined effect of sub-cll 22(a), 22(b) and 22(c) of the 1992 award was that although Christmas Day, Boxing Day and New Year's Day would usually be recognised as public holidays, when those days fell on a weekend day these public holidays would be substituted by 27 December, 28 December and the first Monday after New Year's Day as appropriate. These substituted public holidays were "in lieu of" Christmas Day, Boxing Day and New Year's Day rather than being in addition to the actual days as these substituted days were "set out" sub-cl 22(b). Under the 1992 award, this situation applied to all employees. 19 As such, if the 1992 award applied, the nurses in question who worked on 27 December, 28 December and 3 January would have been entitled to be paid at public holiday rates for those days. However, nurses who worked on Christmas Day, Boxing Day and New Years Day would not have been so entitled. 20 The anomaly identified in the preceding paragraph led to the application by ANF to vary the public holiday provision. At 244, in Seymour , Northrop J had regard to the transcript before the Commission on the making of the relevant award, but derived no assistance from it. Keely J, at 255 to 256, had regard to the transcript in arriving at his interpretation of the award. 23 Mr Burrows tended a document, before Blair C, on which the Commission relied in making sub-cl 24. The document was headed "Intent of the Variation". In its first paragraph it referred to full time employees. This is exactly the same as currently exists. This group includes employees who work either rotating rosters or fixed days other than Monday-Friday. There is no evidence that the Commission intended to expand the number of public holidays provided for by the award in respect of the Christmas-New Year period, thereby giving a nurse an entitlement to a paid public holiday as well as an additional public holiday declared by the State, in recognition of the fact that 25 and 26 December and 1 January were weekend days. Those days include 27 December, 28 December and 3 January, which are "set out" in sub-cl 24.2. 26 Counsel for the ANF submits that the Court should not interpret sub-cl 24.4 literally because sub-cl 24.2 only applies to Monday to Friday nurses. However, under cl 22 of the 1992 award, nurses would not have been entitled to State declared public holidays which occurred on 27 December, 28 December and 3 January by virtue of the declaration only. Rather, this entitlement would have arisen under sub-cl 22(b) of the 1992 award. To treat 27 December, 28 December and 3 January as public holidays on account of a declaration by the State, when they had not been so treated in the past, would amount to a substantial change. Had it been the intent of the parties that the Commission approve this change they would have drawn a matter of such significance to the attention of the Commission. On the contrary, the stated aim of the parties, as approved by the award maker, was to correct an anomaly which arose from nurses being required to work on public holidays, when those days fell on weekends and not receive public holiday rates. That is all the variation was designed to achieve. 27 Consequently, the literal interpretation of sub-cl 24.4 should apply, notwithstanding that sub-cl 24.2 applies only to Monday to Friday nurses. The application of what I have described as the literal interpretation of sub-cl 24.4 reflects the status quo as at the time of the making of the provision, in circumstances where the award maker did not receive a request to alter the status quo, in that respect. 28 I reject the broader submission made by counsel for the second to seventh respondents that sub-cl 24.4 does not apply to employees covered by sub-cl 24.3, being all employees other than Monday to Friday nurses. Such a construction would deprive all other nurses of additional holidays prescribed by the State of Victoria which are not mentioned in sub-cll 24.1 or 24.2. In this regard, it would make such nurses worse off than was the position under the 1992 award, in that it would prevent access to further State declared public holidays on days other than those mentioned in the Award. 29 I acknowledge the force of ANF's submission that sub-cl 24.4 should not be read literally but distributively. However, anything but a literal meaning would give rise to an unintentional windfall for nurses who do not work on a Monday to Friday basis, in respect of Christmas Day, Boxing Day and New Years Day or holidays in lieu of these days for the reasons explained at [26] above. I also acknowledge the force of the employers' submission that sub-cl 24.4 does not deal with sub-cl 24.3, but such a construction would potentially provide a windfall for an employer in respect of non-Monday to Friday nurses who may wish to avail themselves of a State declared holiday in the future on a day other than the days mentioned in sub-cll 24.1 and 24.2. This may arise on a special day of future unforeseen celebration. 30 The correct interpretation, and the one which gives effect to the obvious intention of the award maker, is the literal interpretation of sub-cl 24.4. The proceeding against the first respondent was discontinued by a notice dated 11 January 2006. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | award interpretation obligation to pay public holiday rates for actual days and additional or substituted days when christmas day, boxing day and new year's day fall on weekend days intention of award maker admissibility of documents and transcript evidencing intent of award maker industrial law evidence |
The first appeal is brought by Mr Stephen Cooper (NSD 61 of 2006) and the second appeal is brought by E-Talk Communications Pty Ltd ("E-Talk") and Mr Leon Francis Bal (NSD 150 of 2006). 2 The first order sought by the record companies in relation to appeal NSD 61 of 2006 is that Mr Cooper provide security for the record companies' costs of the proposed appeal in such amount as the Court considers fit. The second order is sought against E-Talk and Mr Bal to provide securities in respect of their appeal NSD 150 of 2006. 3 The record companies submit that there is jurisdiction for a single Judge to make orders for security for costs of an appeal under s 56 of the Federal Court of Australia Act 1976 (Cth). This section provides that a Court or a Judge may order an appellant to give security for the payment of costs that may be awarded against them. Order 52 r 20 of the Federal Court Rules also illustrates that a Court or a Judge may make an order for security for costs of an appeal. 4 In this matter, I am satisfied that it is appropriate for me to consider the question of security and not refer the matter to a Full Court. The relevant principles were discussed by Hely J in Croker v Deputy Registrar of the High Court of Australia [2003] FCA 681 at [10] - [11] . In that case, his Honour did not consider it appropriate to convene and refer the application for security for costs to a Full Court. Nor did Spender J in Dranichnikov v Centrelink [2002] FCA 1622 , where his Honour took a similar course. 5 Both these decisions considered a contrary approach to that expressed by Beaumont J in Endormer Pty Ltd (in liquidation) v Australian Guarantee Corporation Ltd [2001] FCA 510 , in which his Honour held that the jurisdiction to order security for costs of an appeal should more properly be exercised by a Full Court. 6 In my view, a single Judge has jurisdiction to hear an application and, in the present case, it is appropriate to do so rather than convene a Full Court to hear the application for security for costs. Moreover, having heard the matter over several days, I am familiar with the background of the matter. 7 It was submitted by Mr Anthony Morris QC for Mr Cooper that, as I had previously expressed adverse views as to the credit of some witnesses in the matter, there may be a perception of apprehended bias and I should therefore consider disqualifying myself from hearing the application for security for costs. I have considered the principles set forth in the decision in Keating v Morris & Ors (Moynihan J, Supreme Court of Queensland, 1 September 2005 unreported) at [32] - [47]. It does not follow simply from my rejection of certain evidence and preference for other evidence that, without more, there is any basis for a perception by a reasonable informed observer that I may be perceived to be affected by apprehended bias on this application for security for costs. Therefore, I reject this submission. 8 The record companies have filed an affidavit by Mr Michael Williams, solicitor for the record companies, dated 22 March 2006. The file number on the copy of this affidavit on the Court file does not refer to the number assigned to the particular appeals, but to the number assigned to the matter at first instance. In my view, nothing turns on this, as the affidavit was accompanied by two notices of motion, one in NSD 61 of 2006 and the other in NSD 150 of 2006 in identical terms. I mention these matters because counsel for E-Talk and Mr Bal has contended that it is inappropriate, without a Court order, that evidence on one application for security for costs should be evidence on the other. I do not accept this submission and I make an order that, since the evidence relates to both applications, it may be used in each. 9 Counsel for E-Talk and Mr Bal also submits that evidence in the affidavit of Mr Williams which does not pertain to the circumstances of E-Talk and Mr Bal should be rejected as against them. I accept this submission, and I have read and used the affidavit only in relation to the particular appellants in question. The form of the affidavit makes it clear which paragraphs relate to each of the appeals and which relate to common matters. 10 Mr Williams sets out the factual background to the matter and quantifies the likely costs of the appeal. He gives a detailed breakdown of these costs. His conclusion is that the costs likely to be incurred by the record companies on the appeal would total $201,855.00. However, he states that, if the record companies were successful in defending the appeals, the party/party costs would amount to $100,000.00 after taxation. Mr Williams also sets out the investigations that he has conducted and the reasons why he considers that Mr Cooper, E-Talk and Mr Bal will not be able to meet any adverse costs order in the event that the record companies are successful in defending the appeal. 11 The Court has a wide discretion in relation to the grant of security for costs. There is no general rule because each case depends upon its own circumstances. In relation to an appeal, Courts have given weight to the injustice that might be caused to a successful litigant if the litigant is compelled to contest the matter for a second time without the probability of obtaining the costs if ultimately successful: Cowell v Taylor (1885) 31 Ch D 34 at 38. 13 Other relevant considerations affecting the discretion to award costs are also set out in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 per Beazley J; Paton v Campbell Ltd [1993] FCA 449 per Burchett J; Carey-Hazell v Getz Bros (Aust) Pty Ltd [2004] FCA 1334 per French J at [28]-[31]. Counsel for Mr Cooper says that the appeal raises important and novel questions relating to legal issues arising from the use of hyperlinks and the internet. Accordingly, it is argued that the application for security for costs should be refused. 15 I accept, for the purpose of this application, that some of the grounds of appeal raised are reasonably arguable. I also accept that, on the evidence, there is a real risk that a costs order on the appeal in favour of the record companies will not be satisfied by Mr Cooper. I am informed by counsel for Mr Cooper that any substantial order for security for costs will stifle the reasonably arguable grounds of appeal. No evidence has been presented to support this submission. 16 The record companies accept that Mr Cooper does not appear to have any means. However, Mr Cooper has led no evidence, as distinct from statements from the bar table, to support the submission that his appeal will be stifled. In the past, Mr Cooper obtained extensive legal assistance in relation to the trial, where he was represented by senior counsel and about five junior counsel assisting. There is no evidence that Mr Cooper cannot obtain funds or could not appear in person to prosecute his appeal. 17 There is also no suggestion that Mr Cooper's impecuniosity arises out of the conduct of the record companies or relates to the way in which the litigation was conducted. In these circumstances, while it is clear that the Court is reluctant to make an order for security for costs against an appellant who is a natural person, the considerations must be weighed in the balance. 18 Insofar as the Court's discretion is concerned, it is important to bear in mind that the record companies are faced with substantial legal costs which have not been paid and, having regard to the evidence of Mr Williams as to the apparent impecuniosity of Mr Cooper, may not be recoverable by the record companies. 19 It must also be kept in mind that Mr Cooper has already had an opportunity to ventilate his case, with the extensive representation referred to above. This appeal is designed to provide a further opportunity of redress for him. Moreover, there is precedent in this Court for making substantial orders for security for costs of an appeal, notwithstanding that the appellants are natural persons with no apparent means. 20 Having regard to the above considerations, I consider that an order for security for costs should be made against Mr Cooper. 21 In relation to E-Talk and Mr Bal, the affidavit of Mr Williams indicates that E-Talk and Mr Bal would not be able to meet the record companies' costs if they failed on their appeal. I note that E-Talk has an issued capital of only $100 and that its most recent balance sheets as at 30 June 2004 disclose a net deficit of $28,455 and an operating loss of $37,208 for that financial year. 22 No evidence has been led by E-Talk or Mr Bal as to their financial positions or ability to raise funds or obtain assistance. It was accepted at trial that Mr Bal is the controlling mind of E-Talk. Property searches indicate that Mr Bal does not own any real estate and there has been no response to requests on behalf of the record companies for clarification of his financial position. 23 Counsel for E-Talk and Mr Bal has submitted that there is no jurisdiction for a single Judge or that it is inappropriate for a single Judge to hear the security for costs application. For the reasons given at [3] --- [6] above, I reject this submission. 24 Counsel also submits that, as there has been no order that evidence in one appeal should be evidence in the other, the affidavit of Mr Williams should be disregarded. I can see no reason for taking this course as it is apparent from the affidavit which matters concern Cooper, which matters concern E-Talk and Mr Bal and which matters are common considerations to both applications for security for costs. There is a further submission that Mr Williams has misunderstood the expression of insolvency in expressing his views in the affidavit. It is also said that Mr Williams is relying on his inadmissible beliefs. I do not accept these submissions. 25 In my view, the facts and documents referred to by Mr Williams provide a basis for his expressed belief. In any event, the question of the adequacy of the evidence and the conclusions to be drawn from it are matters for the Court. 26 I make an order that the evidence of Mr Williams can be used in relation to both applications for security for costs as I do not consider that there will be any arguable prejudice to any of the appellants if this course is adopted. 27 I am satisfied that, on the evidence, E-Talk will not be able to meet any substantial costs order made against it on the appeal. In relation to Mr Bal, I am not persuaded that he will be unable to meet any substantial costs order made. Therefore, I do not propose to make an order for security for costs against Mr Bal, having regard to the inadequacy of the evidence on this aspect. 28 As to quantum, I am not persuaded that an order should be made for security for costs in the sum of $201,000.00. I similarly consider that the sum of $100,000.00, which is expressed to be the likely figure after taxation on a party/party basis, is not appropriate. In my view, security in the sum of $50,000.00 in total is an appropriate figure to be imposed, having regard to the length of time for preparation and hearing, which I consider is capable of being reduced. 29 As to the question of apportionment, I consider that it is appropriate that security for costs by Mr Cooper be in the amount $30,000.00 and, in respect of Mr Bal/E-Talk, in the amount of $20,000.00. The evidence in the affidavit of Mr Williams sworn on 22 March 2006 may be used in relation to the applications for security for costs in both NSD 61 of 2006 and NSD 150 of 2006. 2. The appellant provide security for the first to thirty fourth respondents' costs of the appeal in an amount of $30,000.00 and in such form as may be agreed between the parties or, failing such agreement, in a form acceptable to the Registrar of the Court. 3. The appeal be stayed until such security has been provided or until further order. 4. The appellant pay the first to thirty fourth respondents' costs of, and associated with, the application for security for costs against him. The evidence in the affidavit of Mr Williams sworn on 22 March 2006 may be used in relation to the applications for security for costs in both NSD 61 of 2006 and NSD 150 of 2006. 2. The first appellant (E-Talk) provide security for the first to thirty fourth respondents' costs of the appeal in an amount of $20,000.00 and in such form as may be agreed between the parties or, failing such agreement, in a form acceptable to the Registrar of the Court. 3. The appeal be stayed until such security has been provided or until further order. 4. The first appellant pay the first to thirty fourth respondents' costs of, and associated with, the application for security for costs. 5. The application for security for costs against the second appellant (Liam Francis Bal) be dismissed. 6. The first to thirty fourth respondents pay the second appellant's costs of, and associated with, the application for security for costs. | application for security for costs jurisdiction of single judge to make orders for security for costs of an appeal factors to be considered in deciding whether order for security for costs should be made whether evidence regarding one application for security for costs may be used as evidence in another related appeal costs |
It is proposed on the grant of the interlocutory relief that Mr Evans would be provided with liberty to apply, on three days notice to the plaintiff's solicitors, to dissolve or vary the injunction. 2 The plaintiff has applied to restrain Mr Evans from retaining Freehills on the grounds that Freehills has a personal interest in this action and are not sufficiently independent and objective to discharge the duties they owe to the Court as solicitors on the record and as counsel. The plaintiff relies on the evidence of Mr Mark Alan Richard Blundell in an affidavit sworn on 26 April 2006. Mr Evans relies upon an affidavit of Mr David Ronald Goodman sworn on 22 May 2006 in response to Mr Blundell's affidavit. 3 Freehills act on behalf of the examinees, Mr Evans and David Woolfe ('Mr Woolfe'). No restraint is sought in respect of them acting in respect of Mr Woolfe, who is no longer a member of Freehills. Each of them were served with summonses for examination under s 596A and s 596B of the Corporations Act 2001 (Cth) dated 10 March 2004. The circumstances of their examination have been set out in the reasons for judgment of the Full Court in Re New Tel Ltd (in liq); Evans v Wainter [2005] FCAFC 114 ; (2005) 145 FCR 176 at 183, at [34] per Lander J. There it was said that the plaintiff's purpose in applying for summonses was to assist in respect of a substantial contemplated claim against Freehills. "The Court is entitled to assume that solicitors and counsel appearing before it possess ... independence. Solicitors not only owe a duty to their clients to do the best for them but also owe an overriding duty to the Court. The same overriding duties are owed by counsel who have been granted a right of audience to appear in [the] Court. As part of their professional responsibility, therefore, solicitors and counsel must ensure that they do not appear in a matter in which they have an actual potential conflict of interest or where, by reason of their relationship with their client, their professional independence can be called in question": Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 at 590 per Thomas J, approved in Afkos Industries Pty Ltd v Pullinger Stewart (a firm) [2001] WASCA 372 at [29] per Murray J with whom Anderson and Steytler JJ agreed. "Legal practitioners who have a personal interest in the outcome of an action do not have that singular interest which as his Honour said, gives the fundamental utility and credence to the system": Clay v Karlson (1997) 17 WAR 493 at 495 per Templeman J. "Litigants, members of the public and the Court itself require the assurance that practitioners performing their important role in representing clients and as officers of the Court will not do so in circumstances where their conduct of litigation may be distorted by a personal interest in the outcome, which must have the effect of detracting from their independence": Afkos at [33]. The common law and statute law of Western Australia are applicable in this matter by reason of ss. 79 and 80 of the Judiciary Act 1903 . The Court has an inherent jurisdiction to "exercise authority over officers of the Court as to the propriety of their behaviour" and to "control and deal with members of the legal profession and to ensure that the administration of justice is not brought into disrepute by the conduct of those members": Newman v Phillips Fox (1999) 21 WAR 309 at 315 per Steytler J. Consequently, the Court can grant an injunction restraining solicitors acting for a party in circumstances where those solicitors lack the requisite qualities of independence and objectivity. "There can sensibly be no closed list of circumstances which would justify the exercise of what, on any view, must be regarded as an exceptional jurisdiction or power": Tottle Christensen v Westgold Resources NL [2003] WASCA 224 at [4] per Malcolm CJ, Murray and Anderson JJ. It is no answer that the solicitors' interests coincide with the client's interests: Clay v Karlson at 496. This Court has implied power to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure observance of their duties to the Court and the integrity of its procedures: De Pardo v Legal Practitioners Complaints Committee [2000] FCA 335 , 97 FCR 575 at 595 [53] per French J, with whom Whitlam J agreed at 598 [60]. This is a reference to a letter from Mr Goodman of 3 November 2005 in which it was stated that accurate reporting was 'of significance to us'. It is said that by this, Freehills took a position of protecting their own interests without any reference to the position of either of their clients. The reference 'of significance to us' appears in the course of a letter addressed from Mr Goodman to a Deputy District Registrar of the Court. It refers to three matters of concern to Freehills. Read in its context, I do not consider that the reference to 'we' or to 'us' is necessarily to be understood only as a reference to Freehills and not to their clients. The plaintiff seeks support for this in [4.1] of a facsimile from Mr Goodman to Mr Blundell dated 8 February 2006 in which he stated that '[A]t this stage, of the documents thus far reviewed, no privilege is claimed by Mr Evans or by Freehills'. The only reason this point, which remains outstanding, has not been argued, is that we recognise that if we succeed, your client will issue another summons to the correct people, so that little (other than expense) will be achieved by taking the point. This has been raised on many occasions. In [6.3] it was purported to be reiterated that all of the documents in Mr Evans' possession, custody and control (described as the director's documents) were produced to the Court on 9 December 2005. Further, at [6.4] it was stated that Freehills will produce 'the Freehills documents' subject to any claim of legal professional privilege which may be exercised by its clients. At [6.5] it was stated that Mr Evans has no authority to compel the production of the Freehills documents. These statements are reflective of issues which had arisen in the course of examination to the text of which it is not necessary to go, save to say Mr Evans, when asked whether the records of Freehills relating to New Tel were in his possession, custody or control answered only that this was putting a legal question to him which it was not proper for him to answer. That is, the allegedly undecided issue is whether Mr Evans, as a partner of Freehills, is a person who has in his possession, custody or control relevant documents for discovery (in the application described as the Freehills documents) being documents other than the director's documents. The plaintiff also relies on a letter from Mr Goodman dated 27 February 2006 in which it was stated that Mr Evans had produced all the documents required of him as a director and that Freehills was producing the other documents after reviewing files and extracting relevant documents, a time consuming and resource intensive process. That review of the 205 potentially relevant Matters comprising in excess of 171 files and 131 boxes is now substantially complete. Documents from the files of eight matters have been produced to the Court, including the CAT file which appears to be the Matter most relevant to Wainter's alleged claim. The remaining relevant documents are being compiled for the solicitors of the Liquidator to inspect for the purpose of determining whether to assert privilege, after which those documents will be prepared for production to the Court. It is anticipated that the last of the Freehills documents will be supplied to the liquidators' solicitors by 26 May 2006 so that they can consider whether they wish to assert claims for legal professional privilege. To date their advice has followed fairly quickly from the furnishing of the documents and privilege has not yet been claimed over any document. On 13 March 2006, Mr Goodman of Freehills sent a facsimile to the plaintiff's solicitors to the effect that Freehills had adopted the position that it would allow Mr Evans to produce the Freehills documents but did not concede that the summons required Mr Evans to be personally responsible for the production of those documents. The issue of the scope of the summons, that is, whether it extends to Mr Evans not only in his capacity as a former director of New Tel but also as a partner in Freehills, is not before the Court for decision. The relevance of the evidence just referred to is that the dispute between the parties on the issue is a factual circumstance from which the Court is asked to infer that Freehills have an interest in the proceeding. If it is the case that Freehills may ultimately be the subject of a proceeding brought by the plaintiff, the present approach of Freehills is not one that would lead to any inference that they were endeavouring to protect that interest. Rather, they have volunteered to make available all the documents subject to any claims of legal professional privilege. The residual issue, and that which concerns the plaintiff, is that Mr Evans as a witness is not able to speak to how the documents are assembled, what may have been omitted and generally to answer questions in cross-examination concerning the discovery. That, however, is not of itself a basis for inferring that Freehills have an interest which is causing them to take some inappropriate step. On the contrary, on the present evidence, they have opted for full disclosure subject to the laws of legal professional privilege. It is said that Freehills have asserted that Freehills, and not their client Mr Evans, have produced and are producing the Freehills documents to the Court, so that Freehills thereby contradicted an earlier assertion in December 2005 by Mr Evans that he was responsible for producing the Freehills documents. Certainly in the plaintiff's view there has been back tracking by Freehills from the position that Mr Evans would be responsible for the production to the position that Freehills would be responsible for the production of the Freehills documents. I am unable to see how this would found an inference that Freehills has a separate interest. It is a statement of fact as to what would be the position if the plaintiff, who formulated and cast the terms of the present order for examination, considered that it was necessary to issue summonses in that way. This is said to be a reference to a letter dated 10 March 2006 from Mr Goodman on behalf of Freehills to the associate to a Deputy District Registrar of the Court. It commenced by stating '[W]ithout prejudice to any of the rights or contentions of Freehills or Paul Dominic Evans', reference was then made to certain correspondence and box of documents enclosed. Reliance is also placed on a letter of 14 March 2006 from Mr Goodman to the same associate commencing in the same way and enclosing a further box of documents. If, however, the summons does not have that scope and Freehills are voluntarily providing the Court the reservation of rights, this is equally understandable. It does not, however, necessarily mean that Freehills has an interest of the type which would fall within the law earlier referred to. (6) Then it is contended that Freehills has asserted that Mr Evans is not producing documents to the Court in his own right; rather, he is acting as a vehicle or conduit for Freehills to produce the documents. That would not appear to support any inference of an identifiably separate interest. If that is the case, it does not seem to support a necessary inference that Freehills has an interest in the proceedings. More likely it discloses different comprehensions of the scope of the summons. That must be taken as a submission. There was a further submission from the bar table that on evidence which may subsequently be produced but which is not presently available, when discovery is complete it will be seen that Freehills has not made (subject to any claim of legal professional privilege) full and frank disclosure of documents. No evidence of that is presently before the Court. While not being a party to the action and not the recipient of the summons, they have, it is submitted, expressly asserted their rights in this action and have produced documents to the Court of their volition. Therefore, it should be concluded by the Court that Freehills are not acting for Mr Evans with the requisite degree of independence and objectivity. 7 To consider the implication of these submissions it is necessary to examine the factual situations which were in issue and some of the authorities relied upon by the plaintiff. 8 In Afkos Industries Pty Ltd v Pullinger Stewart (a firm) [2001] WASCA 372 , the Full Court of the Supreme Court of Western Australia (Murray, Anderson and Steytler JJ) dismissed an appeal from a decision of Miller J granting an interlocutory injunction restraining the appellant from retaining a law firm to act for it in the action as solicitors or counsel. The appellant had sued its former solicitors claiming breach of fiduciary duty and negligence in certain respects. The pleading by way of defence made the conduct of the appellant's solicitors on the issue of how costs had been compromised a matter in issue in the proceeding between the appellant and the respondent. Murray J, with whom Anderson and Steytler JJ agreed, said that while the pleading remained on foot it was sufficient that it be evaluated in its own terms. Those terms were capable of raising the issue of whether the appellant, by the conduct of its solicitors leading to the compromise in respect of costs, could be said to have failed to mitigate its loss arising from its assertion that due to the fault of the respondent it had been deprived of 30 per cent of its costs, although generally successful in the arbitration. 9 Murray J in the course of his reasons referred to the decision of Thomas J of the New Zealand High Court in Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 at 589---590, on which Miller J had relied. Thomas J had there stated that '[W]here the acts or omissions of the law firm, including situations where the actions of the client are based on advice given by the solicitors, are at the heart of the question in issue, the firm is, in a real sense, 'defending' its actions or advice'. He said, therefore, there were in such circumstances a danger that the client would not be represented with the objectivity and independence which the client is entitled to and which the Court demands. 10 In Clay v Karlson (1996) 17 WAR 493, a plaintiff applied to restrain a firm of solicitors from continuing to act for the second defendant in an action where it was apparent that it was likely that employees or partners or former employees and partners of the law firm would be called to give evidence at the trial in respect to issues concerning a will. Those actions emerged from a statement of claim and a defence. 11 In the present proceeding there are no pleadings delineating any interest of Freehills. In such circumstances it is therefore necessary to look to all the circumstances to consider what is the nature of the relationship of Freehills both to their client and to the other party. 12 The critical question therefore is, in the absence of a pleading delineating the interest affecting independence, what can that interest be said to be? 13 The first possibility is that in some unformulated and unspecified way there is an ultimate possibility asserted by the plaintiff that if the evidence gives foundation for it, it will bring an action against Freehills. That does not formulate any conflicting interest. It may never occur or be supportable. Furthermore, the action of Freehills in making full disclosure of the so called Freehills documents, subject to any claims for legal professional privilege, entirely mitigates against Freehills endeavouring to avoid disclosure of the true facts and hence to face the possibility of any claim against it being formulated in pleadings. 14 Likewise, references from the bar table to Freehills having in some way failed to make full disclosure of the Freehills documents in the manner which they assert they are doing is entirely without any evidentiary foundation appropriate to disclosing any genuine basis for establishing an interest in conflict. 15 The references by Freehills in correspondence to 'we' and 'us' are not in every circumstance to be read as a reference to the assertion by Freehills of any rights concerning its own position. However, even if that view is not accepted or where it is not applicable, it is appropriate that Freehills make such statements. This is because it has embarked on the provision of documents which it considers would normally be made available in response to a summons directed to each of the relevant partners of the firm. However to avoid the cost, time and expense of such a move, Freehills is making available the so called Freehills documents. 16 Mr Evans has himself declined to say on the basis that a legal issue is involved, whether he has in his possession, custody or control the Freehills documents in addition to his director's documents. Given that the issue of the proper construction of the summons is not before the Court, the Court has not heard argument on that issue. Reference was made to a number of authorities touching on the issue. One was Dorajay Pty Limited v Aristocrat Leisure Limited [2006] FCA 335. There Stone J dismissed a motion so far as it sought orders requiring PricewaterhouseCoopers to produce documents held by its affiliated practices, including overseas practices, where those documents fell within a subpoena and related to work undertaken by the affiliated practice on behalf of, or at the request of, PricewaterhouseCoopers. Stone J was not satisfied on the evidence that the documents held by PricewaterhouseCoopers' overseas affiliates were in the possession, power or control of PricewaterhouseCoopers or that PricewaterhouseCoopers could produce those documents. Her Honour referred to the authorities having made plain that the addressee of a subpoena must produce that which he or she has in his or her possession, power or control but that he or she is not obliged to take steps to bring documents that do not fall within those concepts into his or her power or control: Air Pacific Ltd v Transport Workers' Union of Australia (1993) 40 FCR 1 at 6---7, Pegasus Gold Australia Pty Ltd v Kilborn Engineering Pacific Pty Ltd (2000) 33 ACSR 752. Her Honour said that consistent with what the High Court had said in Rochfort v Trade Practices Commission [1982] HCA 66 ; (1982) 153 CLR 134, a practical solution was required in relation to the obligations of an addressee of a subpoena and that arid technical debate should be avoided. 17 Here, as has been said, the Court is not deciding the scope of the summons. It is sufficient to say, however, that the authorities canvassed by Stone J in Dorajay show that there is at least an arguable possibility in the law that, depending entirely upon the terms of the summons for examination, it may not extend to documents not in the power, control or possession of Mr Evans. The position may in fact be otherwise if the matter was fully argued and evidence brought as to his position as a partner. All that can be said here however is that there is an arguable possibility that Freehills has taken steps to deal in a practical way with an issue arising as a consequence of the way in which the summons has been formulated. In my view that does not create for them an interest in conflict, either with that of their client or with the litigation. 18 At the root of the plaintiff's case seems to lie the suspicion that Freehills in some way are directing Mr Evans to not take responsibility for the production so that there will be no party to the examination capable of answering for the production of the documents. Freehills' response to that is that they are endeavouring to assist the progress of the examination by making available the Freehills documents, subject to any claim for legal professional privilege. If it is the case that Mr Evans has changed his approach to the provision of documents in his possession, power or control (as to which I cast no opinion) there is no foundation for a proper inference that this in some way establishes an interest being asserted by Freehills. On the contrary, it arguably represents a statement based on a true understanding of the law subject to the interpretation of the scope of the summons. 19 There is a further aspect which goes to balance of convenience considerations. It seems to be implied that in the event that Freehills are injuncted in the way sought by the plaintiff, Mr Evans will then be able to assume in the witness box a different response to the question of responsibility for the provision of not only the director's documents but also the Freehills documents, in his capacity as a partner of Freehills. There is no foundation for such an assumption if it exists. 20 It follows that I do not consider that the plaintiff's case has made out a serious issue to be tried which the balance of convenience favours. The motion should therefore be dismissed. 21 That decision does not of course preclude the plaintiff, should it so wish, from properly seeking an interpretation of the scope of the subpoena. Alternatively, the plaintiff may consider the issue of summonses to the partners of Freehills to overcome the issue which seems to be at the core of the plaintiff's disturbance, namely, that there is no person available to take responsibility in the witness box for the Freehills documents. Alternatively again, it may rest with the present position. | interlocutory injunction serious issue to be tried whether law firm has interest affecting its independence not made out balance of convenience not favouring grant of injunctive relief examinations examinee a partner in law firm application for interlocutory injunction restraining examinee's solicitors from acting solicitors volunteering and making discovery of documents in their possession, custody or control possible future claim by plaintiff against solicitors as yet unformulated possible future claims by plaintiff of failure by solicitors to make full disclosure plaintiff's concern that examinee not answerable in respect of law firm's documents scope of subpoena in issue between the parties absence of pleadings delineating any interest of solicitors conflicting interest not established equity corporations |
The appeal was listed for directions at 9.15 am on 27 April 2006. At that stage, the applicant represented himself. The notice of appeal was obviously drafted by a lay person and was not in conventional form. The address for service was ' "Grannys Well", Wilkshire Road Via Delegate NSW 2633'. A notice of appearance was filed by solicitors on behalf of the respondent on 3 April 2006. On 20 April 2006 the respondent filed a notice of motion seeking the striking out of a number of grounds in the notice of appeal and an order that 'the applicant file and serve within 14 days of this order a statement which identifies with precision the grounds on which the respondent's application for registration is opposed'. The motion was supported by an affidavit of a solicitor sworn on 19 April 2006. On behalf of the Respondent, I request that the Court make orders sought by the Respondent in the Respondent's Notice of Motion dated 18 April 2006. On 26 April 2006 a notice of appointment of solicitor was filed on behalf of the applicant. The respondent indicate to the applicant whether it consents to the filing of the proposed amended notice of appeal on or before 25 May 2006. The proceeding, including the respondent's notice of motion filed on 20 April 2006, be stood over to 9.15 am 1 st June 2006. The matter has proceeded in the normal way since this time, the applicant having filed an amended notice of appeal in substantially different form from the original notice of appeal. The respondent's notice of motion became otiose. It was agreed that the costs of the motion be dealt with on the basis of written submissions. Those submissions have been provided. There are factual issues as to what occurred between the filing of the motion and 26 April 2006, including service or attempted service on the one hand, and what was done by the applicant by way of instructing a solicitor on the other. If it were necessary to resolve those issues, evidence would be required. In my opinion, it is not necessary to resolve those issues. On the one hand, it is clear enough that the applicant must bear and pay the costs occasioned by the filing of an inappropriately framed notice of appeal. On the other hand, it is clear enough that the filing of a motion was premature. The proceeding was listed for first directions within days of the filing of the motion. That is normally the occasion to raise procedural issues. Warning of such issues should normally be given by correspondence prior to that directions hearing. There may be circumstances where it would be appropriate to bring on a motion to stay or strike out proceedings returnable at the first directions hearing --- for example, if the proceeding was fundamentally misconceived. Even in that case, it would be unusual for such a motion to be heard and determined on the first directions hearing. This was not such a case. Further, the affidavit in support of the motion does not indicate that any prior notice of the defects alleged had been given to the applicant. Although it is not critical to this decision, it is to be noted that there is no evidence that service occurred sufficient to entitle the respondent to proceed with the motion on 27 April 2006. It follows, in my opinion, that the respondent is not entitled to its costs of the motion and the applicant should have his costs of the argument about costs. On the other hand, the applicant caused the initial difficulty by filing an inappropriate form of notice of appeal. The applicant is not entitled to costs connected with that and the respondent is entitled to its costs incurred by that circumstance. The respondent's costs would be limited because of the prompt acquiescence by the solicitor for the applicant in the necessity to replead. In my opinion, the entitlements to costs on either side effectively cancel each other out. The respondent should bear its own costs of and concerning the preparation of and filing of the motion filed on 20 April 2006 and the affidavit in support, any costs associated with service or attempted service thereof and of the argument as to costs of the motion. The applicant should bear his own costs up to and including 27 April 2006. Other costs of the parties to date will be costs in the proceeding. | costs relating to amendment of proceeding and premature motion to strike out practice and procedure |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.