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These reasons should be read in conjunction with those in Siminton (No 7) . 2 Gray J's order restrained Mr Siminton from dealing with, withdrawing or disposing of moneys held in various accounts. The contempts were committed when Mr Siminton either caused the funds to be transferred from such accounts into an account held by a Mr & Mrs Holzheimer in the Bank of Adelaide or he withdrew transferred funds from the Holzheimer's account. Mrs Holzheimer had obtained a Visa card which she provided to Mr Siminton. The card enabled Mr Siminton to draw on the account at automatic teller machines and, by presenting the card, to undertake credit card transactions with merchants. He used the card for these purposes. 3 Charges 1.1 to 1.5 related to transfers into the Holzheimer's account from a Mobile EFT Pty Ltd account controlled by Mr Siminton. • Charge 1.2: 3 May 2006 - $3,125.88. • Charge 1.3: 4 May 2006 - $228.84. • Charge 1.4: 8 May 2006 - $781.28. • Charge 1.5: 16 May 2006 - $4,608.50. Between 2 May and 16 August 2006 over $33,000 was withdrawn from the Holzheimer's account by Mr Siminton and applied by him for various purposes including the payment of legal fees. 5 Charge 1.9 related to a direction by Mr Siminton, to the Anglo-Irish Bank in Austria, to transfer $25,000 (less bank charges) to the Holzheimer's account. The transfer occurred on 16 August 2006. 6 Charge 1.11 was concerned with a series of transactions, undertaken by Mr Siminton between 16 August 2006 and 28 September 2006, in which he either withdrew money or undertook credit transactions totalling $21,377.93 from the funds which he had caused to be deposited into the Holzheimer's account. 7 On 30 March 2006 Mr Siminton had been found guilty of various contempts. On 10 April 2006 Merkel J sentenced him to imprisonment for a period of 10 weeks for transferring over $600,000 from one account to another and attempting to withdraw $500,000 from the account into which the money had been transferred. This conduct constituted a breach of an order made by Sundberg J which was in substantially the same terms as the order of Gray J which Mr Siminton subsequently contravened. Mr Siminton was also fined $5,000 for failing to comply with orders made by Sundberg J that he post notices on two websites. 8 APRA contends, and I accept, that Mr Siminton's conduct, in each case, was "deliberate, calculated and disguised. " He was well aware of the orders made by Gray J and the constraints which those orders imposed on him. Nonetheless, he continued to draw on funds which he knew were the subject of his Honour's orders. On 11 April 2006, the day after Merkel J sentenced Mr Siminton for having breached orders made by Sundberg J, Mrs Holzheimer reported to the Adelaide Bank that her Visa credit card had been lost. A replacement card was issued to her on the same day. It was that card which Mr Siminton used to make the withdrawals or incur the expenses which are the subject of Charges 1.7 and 1.11. The arrangements with the Holzheimer's, pursuant to which Mr Siminton was able to obtain a card to operate their account and was able to transfer funds into it and withdraw funds from it, was designed to mask the fact that Mr Siminton was, as he well knew, acting in breach of Gray J's orders. 9 The only evidence called by Mr Siminton in mitigation of his conduct was provided by Mr Peter Dodson and his sister Miss Susan Dodson. They testified to what they regarded as his "honesty". Miss Dodson also described him as "trustworthy" and "decent". She was prepared to concede that an honest person would not deliberately flout an order of the Court. Mr Dodson was not prepared to make that concession. Neither witness had a clear appreciation of Mr Siminton's conduct. Neither had read my reasons for decision in Siminton (No. 7) . 10 One of the defences raised by Mr Siminton, when he was dealing with the charges, was that Gray J's order lacked clarity. I dealt with this aspect of his defence in Siminton (No. 7) at [43]-[51]. I noted that, on the authorities there cited, it would be a relevant factor, in sentencing Mr Siminton for any contempt which he might be found to have committed, that he had a bona fide misunderstanding of Gray J's order. Mr Siminton gave no evidence at the penalty hearing. He did not, therefore, make any attempt to suggest that, in fact, he laboured under any misunderstanding of Gray J's order when engaging in the impugned conduct. 11 Despite numerous opportunities to do so Mr Siminton has failed to provide evidence of his personal and financial circumstances. What is known is that, since 2001, he has been an undischarged bankrupt and that he has failed to provide a statement of affairs in accordance with the requirements of the Bankruptcy Act 1966 (Cth). Counsel for Mr Siminton advised the Court, on instructions, that his client is impecunious. He also advised that a friend of Mr Siminton's might be disposed to provide money to meet any fine imposed by the Court. No indication was given of the maximum amount which the friend might be minded to advance for this purpose. 12 It is also notable that Mr Siminton did not apologise, express regret or in any other way seek to purge his contempt. Having regard to the factors set out above [those noted at [15] of these reasons] and the matters put forward by counsel on behalf of Siminton, the appropriate term of imprisonment for the disposal contempt is 10 weeks. I would add that had there been any prior contempt convictions, the penalty would have been significantly greater. I am not prepared to accede to Siminton's submission that any sentence of imprisonment should be suspended. 14 I have concluded that Mr Siminton's conduct constituted wilful disobedience and contumacious disregard of Gray J's orders. His multiple contraventions are rendered all the more serious by reason of the fact that he had, by the time at which they were committed, been found guilty of a number of contempts constituted by breaches of orders which related to the same funds which are the subject of the present charges. Each of the contraventions constituted a criminal contempt. 16 It cannot be gainsaid that the contempts presently under consideration fall into the most serious category. Having given careful attention to the various considerations referred to in para [15] above, I have concluded that there is no alternative but to sentence Mr Siminton to a period of imprisonment. The eight contempts formed part of a scheme, devised and implemented by Mr Siminton, to contravene Gray J's orders in a way that, he no doubt hoped, would not be detected. Although it is appropriate that a particular penalty be attached to each contempt, those penalties should, therefore, be served concurrently. 17 I do not consider that a distinction should be drawn between the four charges that relate to events which occurred before 9 May 2006 and the other four which occurred after that date. The purpose of the endorsement provided for in Order 37 r 2 of the Federal Court Rules is to alert the person, to whom the orders are directed, that he or she stands in jeopardy of imprisonment if he or she fails to comply with the orders. Given that the liberty of the subject is at stake the Court will not lightly exercise its power under Order 37 r 2(6) and dispense with the requirement of service of a properly endorsed order. It will not do so unless "the evidence shows that the requirements of and the purpose of a particular rule have been fulfilled in a manner otherwise than in the form provided": see Clifford v Middleton [1974] VR 737 at 741, a passage which was quoted with approval by the Full Court in Siminton v Australian Prudential Regulation Authority [2006] FCAFC 118 ; (2006) 152 FCR 129 at 147. 18 The copy of the orders, made by Gray J on 10 January 2006, which was first served on Mr Siminton, did not contain the endorsement required by O 37 r 2 of the Federal Court Rules . Once this deficiency was recognised by APRA, an endorsed copy of orders was served on Mr Siminton. This occurred on 9 May 2006. In Siminton v Australian Prudential Regulation Authority [2006] FCAFC 118 ; (2006) 152 FCR 129 at 145-147 the Full Court held that, in the absence of an endorsement or a dispensation granted by the Court, the Court could not order the contemnor to be imprisoned. The Court held that a dispensation might be given, inter alia, where the contemnor had been in Court at the time at which the orders were pronounced or where there was evidence that the contemnor had knowledge of the need to obey the order: see at 147. 19 Mr Siminton was present in Court on 10 January 2006 when Gray J made his orders. On 29 December 2005, 4 January 2006 and 19 January 2006 APRA had filed notices of motion and statements of charge seeking orders that Mr Siminton be punished for contempt of the orders made by Sundberg J on 15 December 2005. The relevant part of Sundberg J's orders was in substantially the same terms as the relevant part of Gray J's orders. Those charges were heard before Merkel J on 29 and 30 March 2006. On 10 April 2006 Merkel J ordered that Mr Siminton be imprisoned for contempt of Sundberg J's orders. It may, therefore, readily be inferred that Mr Siminton was well aware, before 2 May 2006, of the need for him to obey Gray J's orders and of the potential consequences if he failed to do so. In my view this is an appropriate case in which to grant a dispensation under Order 37 r 2(6) and I do so. 20 Although the amounts of money involved in the various contempts varied between $228.84 and over $33,000, I treat them all as warranting the imposition of the same term of imprisonment. I do so because the larger sums involved in Charges 1.7 and 1.11 are, in each case, aggregations of the sums involved in numerous smaller transactions. The money which was transferred from Austria and is the subject of Charge 1.9 was used to facilitate many of the smaller transactions which were dealt with in Charge 1.11. 21 I have determined that the appropriate penalty for each offence is a sentence of imprisonment for 12 months, with each sentence to be served concurrently with each other sentence. 22 APRA seeks an order that Mr Siminton pay its costs on a solicitor-client basis. It does so because it has expended public funds in seeking to protect the interests of members of the public who have contributed to the funds which were subject to Gray J's order and in seeking to vindicate the authority of the Court. Such an order is, in my view, appropriate in the circumstances. APRA should not have to bear the costs incurred by it in prosecuting the contested contempt charges. 23 Counsel for Mr Siminton advised the Court that Mr Siminton proposes to file an appeal against my contempt findings and any penalties which I might impose. I will, therefore, hear the parties as to whether or not the warrant for the committal of Mr Siminton to prison should lie in the Registry of the Court until his proposed appeal has been heard and determined. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey. | penalty hearing where respondent guilty of multiple counts of contempt of court considerations relevant to penalty contempt found to be wilful and contumacious prison term imposed contempt |
Firstly, an injunction to restrain the respondents from publishing on a website described as www.consumerhealthwatch.net.au , or otherwise, a report entitled 'Does Tebonin (Ginkgo biloba) provide relief in Tinnitus? ' under the banner of 'AusPharm Consumer Health Watch' convened by the Third Respondent, Mr Mark Dunn, or, any document the content of which is substantially similar in its criticism of the product Tebonin to the contents of the above document, or publishing any other document in which the product Tebonin is the subject of criticism. 2 Secondly, an injunction is sought to restrain the respondents from 'otherwise engaging in criticism of the product Tebonin whether orally or in writing'. 3 The primary relief claimed in the action is for a declaration that the conduct of each respondent in threatening to publish the report on the website would contravene s 52 of the Trade Practices Act 1974 (Cth), a declaration that the second, third and fourth respondents are persons involved in a contravention of s 52 , pursuant to s 75B of the Trade Practices Act , injunctions in final form in terms of the relief sought on an interlocutory basis, damages for breach of s 82 of the Trade Practices Act and costs. 4 The application for interlocutory relief was heard throughout Friday, 16 June 2006. I indicated to the parties that I would be sitting in an extensive copyright trial commencing on Monday, 19 June and in order to consider the submissions of the parties and the authorities, I proposed to reserve the matter for further consideration. The respondents provided an undertaking that the report would not be further published without leave, in order to preserve the interim position pending the pronouncement of judgment in the matter. The first applicant carries on business in Australia as the sponsor of a product called Tebonin which is manufactured in Germany by DWSG. 6 The first applicant has responsibility for maintaining and protecting the intellectual property DWSG holds in relation to its Tebonin product and liaising with regulatory authorities in Australia concerning regulatory approvals for the product. The second applicant, Natural Health Products Pty Ltd ('Natural Health'), has been appointed by DWSG as its distributor of Tebonin product in Australia. 7 Tebonin is a therapeutic good for the purposes of the Therapeutic Goods Act 1989 (Cth) and is required to be listed in the Australian Register of Therapeutic Goods ('ARTG') maintained under that Act by the Therapeutic Goods Administration ('TGA') which is a unit of the Australian Government Department of Health and Ageing. On 27 January 2006, a 'Certificate of Medicine Listing' issued to the first applicant by the TGA. The Register contains details of the active ingredient for the product, details of the manufacturer and coded indications of various claims for the product. The 'Listing Record' extracted from the ARTG reveals a therapeutic claim that the product may be taken for 'the symptomatic relief of Tinnitus'. 8 Tinnitus, described as the perception of sound in the absence of external stimuli (commonly described as ringing in the ear), is a common problem which affects 6% to 14% of the general population. Approximately 1% to 2% of the population are severely disturbed by the condition. 9 Various extracts of the plant 'Ginkgo biloba' are thought by some to have therapeutic or medicinal qualities in the treatment of Tinnitus. Dr Willmar Schwabe, a German physician, is said to have identified the essential active compounds in the plant which led to the development of a proprietary concentrated and purified Ginkgo biloba leaf extract known as EGb761. The ginkgolic acids, which are toxic, are removed to below the detection thresholds in EGb761. Due to this specific process, EGb761 has a unique chemical composition and a product that is not produced in exactly the same way inevitably differs from it in respect of its chemical composition. That is a really important issue and the difference can be shown eg, by electroencephalography with different products ie that the product composition, the bioavailability and the efficacy will differ. Bioavailability means the active ingredients are available at the site at which they are intended to take effect and so is a prerequisite for efficacy. Even the inactive compounds in a phytopharmaceutical may be important for bioavailability and thus for the efficacy of the active compounds. That is why different extracts of Ginkgo biloba or any other plant extract can never be the same in terms of efficacy and cannot be compared. This is a general principle in phytopharmaceutical medicine. On 3 March 2006, Natural Health was appointed as the Australian distributor for the product. Natural Health applied for and obtained from the 'Complimentary Healthcare Council of Australia' ('CHC') approvals for four advertisements promoting the product. 12 AusPharm.Net.Au Pty Ltd was incorporated on 16 June 2004. The third and fourth respondents are the directors of the company. There are 35 'B' class shares all held by Mr Mark Dunn and his partner Ms Rosemary Fisk and 100 issued ordinary shares of which 50 are held by Mr Dunn and Ms Fisk and 50 by Mr Tony Wiss and his wife, Helen Wiss. The AusPharm, AusPharmacist and AusPharmlist websites incorporate direct links to each other's websites in a prominent area at the top of the screen. From the AusPharm website, there is a direct link to the AusPharmacist and AusPharmlist websites. From the AusPharmacist website there is a direct link to AusPharm and AusPharmlist in the tabs at the top of the screen. From the AusPharmlist website there is a direct link to AusPharm and AusPharmacist websites in the dark green panel at the top of the screen. The first respondent also operates a further website described as www.consumerhealthwatch.net.au. The home page for that site is endorsed with the banner and logo 'AusPharm Consumer Health Watch'. From the links page on that website, there is a blue hyperlink to AusPharmacist.Net.Au under the heading 'Resources for Health Professionals'. There are two links from the AusPharmacist website to the AusPharm Consumer Health Watch website. On the AusPharmacist website in the area immediately below the words 'website (c) Tony Wiss and AusPharm.Net.Au Pty Ltd 1997-2006', and in the area immediately above the words 'website hosted by Red Book Australia and Web Hosting', there is a hyperlink reference described as 'consumerhealthwatch Australia'. There is also a reference to the 'AusPharm Consumer Health Watch' website on the AusPharmlist website. The terms of the hyperlink are 'AusPharm Consumer Health Watch link on AusPharmacist page'. The website www.consumerhealthwatch.net.au has a link to the AusPharmacist website. That link takes the enquirer to the home page for AusPharmacist.Net.Au. That home page exhibits many of the advertisers and sponsors that have taken up advertising packages with the operator of the site, the first respondent. Exhibit 'JAS28' to the affidavit of Mr Sweep sworn 14 June 2006 contains a print out from the AusPharm website by which the first respondent describes the advertising arrangements for the three inter-connected websites, AusPharm, AusPharmacist and AusPharmlist (but not including www.consumerhealthwatch.net.au ). All pages and sub-pages have the same framework. Each site has the capacity to feature one banner at the top of the site. These banners must be approximately 400 by 70 pixels in size. The monthly fee to insert a banner is $500 for one site and $1,000 for all three. These buttons need to be approximately 100 x 100 pixels in size. There are two groups of buttons, the "main" group consisting of the top four or five buttons (depending on the site) and the "secondary" groups all of the rest. For the secondary group the rates are $200 and $400. The exact location of buttons within the groups on each site cycles (automatically) on a daily basis from the top to the bottom. Buttons may be gift, jpg or swf files. These ads must be less than 200 Kb in size and must be deemed appropriate for the target audience. For example, cigarette ads wouldn't be allowed. The fee for this service is $100. It consists of a suite of websites incorporating AusPharm, AusPharmlist and AusPharmacist websites'. Its primary aim is to help consumers make informed choices about these products'. The group is described as a 'working group' and is made up of the second, third and fourth respondents (Ken Harvey, Mark Dunn and Tony Wiss), Lesley Braun, Meeghan Clay, Kate Doughty, Claire Keith and Greg Kyle. The website describes the background for each member of the group in this way. Mark Dunn is the convenor of AusPharm Consumer Health Watch and a director of the first respondent. Tony Wiss has operated a pharmacy for approximately 20 years and has become involved in the information technology side of pharmacy. He now works as an IT consultant primarily in pharmacy. Tony Wiss is also a director of the first respondent. Lesley Braun is 'a pharmacist, a naturopath with an interest in the evidence based clinical practice of all Healthcare professions, complementary medicine, in particular, rational use and safety issues. She is completing a PhD at RMIT investigating Hospitals and Complementary Medicines with a focus on issues of safety and evidence based practice'. Meeghan Clay is 'a rural pharmacist who has primarily worked in the retail as a pharmacist and manager. She is a medication review consultant pharmacist and has conducted residential and home medication reviews for a number of Aged care facilities and Community pharmacies'. Kate Doughty is 'a newly registered pharmacist who works in community pharmacy. She is particularly interested in evidence base complementary medicines'. Greg Kyle is 'a pharmacist with an interest in professional pharmacy practice and quality use of medicines. He has seen firsthand the confusion that can be caused by marketing of products with a questionable evidence base while managing national consumer medicines information services. Greg is currently undertaking a PhD at the University of Queensland in the quality use of medicines arena'. Claire Keith is 'currently working as a clinical pharmacist at the Austin Hospital in Melbourne. She has a background in drug information, and spent time as an editor at the British National Formulary. As a new challenge in 2006, she has begun studying towards a Masters degree in Public Health'. Ken Harvey is 'a public health physician with a special interest in medicinal drug policy, medicinal drug use and pharmaceutical promotion. He was a member of the WHO team that formulated "Ethical Criteria for Medicinal Drug Promotion" (1988) and has also been a member of the Therapeutic Goods Advertising Code Council (Media Council of Australia). Ken is a member of Health Action International, the Doctor's Reform Society, the Australian Labour Party and the Australian Consumers Association. Apart from submitting complaints about pharmaceutical promotion to Medicines Australia, he has no other association with the pharmaceutical industry'. 21 Both Mark Dunn and Tony Wiss declare on the AusPharm Consumer Health Watch website potential conflicts of interest in being members of the group in that 'the AusPharm publications accept paid advertising from companies who provide goods and services to the pharmacy industry in Australia'. 22 The effect of this material is that a working group of individuals with the background experience reflected in the biographical profiles above have come together for the purpose of conducting critical reviews of non-prescription health related products. These reviews will be undertaken in accordance with a process which involves an assessment of the claims made for such products against the background of both the evidence in support of those claims and professional and analytical literature relevant to those claims. The process involves a central conception that a draft report will be prepared by the group emanating from the review process as described and that report will be provided to the product sponsor for comment. A final report will then be developed which will be published very extensively not only on the 'AusPharm Consumer Health Watch' website but also through dissemination to major media outlets both electronic and print and to consumer associations and the various regulators. 23 The applicants contend that in undertaking this review the first respondent engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act and the second, third and fourth respondents were knowingly concerned in the contravention. Further, the applicants contend that the conduct of the respondents involved the publication of injurious falsehoods concerning the applicants. 24 The applicants' evidence is this. 25 On 28 April 2006, Ms Deborah Reddy received a telephone call from Ken Harvey enquiring about the Tebonin product and its use in relation to Tinnitus. Ms Reddy is a registered nurse and customer representative employed by the distributor, Natural Health. Dr Harvey was told that there are over 60 controlled clinical trials of the product. Dr Harvey said he would be interested in seeing the studies as he is a doctor. Ms Reddy said she would contact Schwabe in Germany and see whether any studies could be sent to him. Ms Reddy asked Dr Harvey to provide an email address so the material could be sent directly to him. Dr Harvey gave Ms Reddy an email address at La Trobe University. Ms Reddy expressed surprise that Dr Harvey was at the University. Dr Harvey said he lectured there. Ms Reddy spoke to a director of the first applicant about the request from Dr Harvey. Ms Reddy requested Mr Sahlholt, of the first applicant to provide Dr Harvey with studies pertinent to Tinnitus. Ms Reddy sent Dr Harvey hard copies of two studies she had at hand and available to her. Dr Harvey thanks Ms Reddy for her assistance, that day. 26 On 2 May 2006, Ms Serene Chiang sent by email three papers to Dr Harvey and copied the email to Mr Sahlholt. The three papers were a paper by E Ernst & C Stevinson entitled 'Gingko biloba for Tinnitus: A Review', 22 January 1999; 'Gingko biloba special extract EGb 761 in the treatment of tinnitus aurium (Results of a randomised, double-blind, placebo-controlled study)' by Prof C Morgenstern and Dr E Biermann, 1997; and 'The efficacy of Gingko special extract EGb 761 in patients with tinnitus' (C Morgenstern and E Biermann), International Journal or Clinical Pharmacology and Therapeutics, Vol 40 --- No. 5/2002. 27 Although there is great contention about whether Dr Harvey received this email from Ms Chiang, for present interlocutory purposes I accept the evidence of the applicants that the email was sent and that the email log confirms the transmission of the three papers. [Plainly, the reference to Monday, March 15 is intended to be a reference to Monday, May 15]. We anticipate publishing the final report on the Consumers Health Watch website on May 18, 2005 [which should be a reference to May 18, 2006]. The TGA required the first applicant as sponsor of the product to provide certain information to the TGA. 30 On 10 May 2006, the first respondent listed the forthcoming review 'Will Tebonin relieve tinnitus? ' for publication on the website for 18 May 2006. 31 On 11 May 2006, Mr John Waitzer wrote to Dr Harvey in response to the submission by Dr Harvey to Ms Reddy of the draft report of the AusPharm Consumer Health Watch Group and the proposal to publish a report having provided the applicants with five working days to respond to the draft. Further, request for material was not conducted in what might be described as the usual manner. (b) The request put to the distributor's service representative, Ms Reddy, was for papers on Tinnitus because of an expressed interest in the product. At no time did Dr Harvey disclose either in the conversation with Ms Reddy or by way of any written communication that Dr Harvey was a member of a group convened to conduct an independent review based upon the evidence and the literature of claims made for the product, Tebonin , with a view to formulating an analytical report written for the purpose of distribution to regulators, consumers' associations, electronic and media outlets and publication on particular websites. (c) The papers sent to Dr Harvey were not sent for the purpose of verifying in the context of such a review, the efficacy of the product in the therapeutic treatment of Tinnitus. The papers were supplied in response to an academic interest not for the purpose of a formal structural review of product efficacy. (d) Criticisms were made of the views expressed by Dr Harvey in the draft report of the quality and authority of the reports/papers sent to Dr Harvey. Further criticisms were made of inaccurate references in the draft report to papers sent to Dr Harvey. Mr Waitzer was critical that the report made reference to studies which were not sent by Schwabe to Dr Harvey although the draft contended that the source of particular reports was Schwabe. (e) Mr Waitzer was critical of the draft report in not making proper reference to the three papers sent to Dr Harvey by Ms Chiang. (f) Mr Waitzer was critical of the process in that the applicants and DWSG had not been provided with a proper opportunity to respond to the draft report. Mr Waitzer drew attention to the proximity of the timing between the events in late April, the preparation and issuing of a draft report on 10 May 2006 and a letter received by the first applicant from the TGA on 8 May 2006 calling into question aspects of the claims made for the product in relation to Tinnitus. Mr Waitzer drew an inference that Dr Harvey or members of the working group must have been in communication with the TGA and provoked the letter from the TGA notwithstanding that the process contemplated an opportunity being afforded to the sponsor and presumably DWSG to deal with any critical opinion from the working group, before dissemination of that opinion. 33 On 12 May 2006, Dr Harvey responded and advised that Mr Waitzer's letter of 11 May 2006 had been circulated to the working group and the letter was under discussion and advice would be taken. Dr Harvey said that his draft reply on behalf of the group would be sent to Mr Waitzer shortly after 15 May 2006. Dr Harvey also said 'We will then send a copy of your correspondence and our response to Dr Peter Bird, Manager, Post Market Review Section, Office of Complementary Medicines, Therapeutic Goods Administration' . 34 Further, on 12 May 2006, Dr Harvey sent an email to Mr Waitzer contending that he had no record of receiving the three papers sent by email on 2 May 2006 by Ms Serene Chiang. Dr Harvey requested Mr Waitzer to resend those three papers and the papers would be taken into account in formulating the final report. On Monday, 15 May 2006, Serene Chiang resent the three papers and copied that email to Mr Sahlholt. On 15 May 2006, Dr Harvey acknowledged receipt of those three papers. 35 On 15 May 2006, Mr Waitzer wrote to Dr Harvey. Mr Waitzer again pressed what he perceived to be the anomaly that Dr Harvey had not received the three papers sent on 2 May 2006 and pressed the position that the three papers, in any event, had been sent in the context of an expressed interest but not for the purpose of a systemic independent review. On 16 May 2006, Dr Harvey responded advising that a consolidated response to the earlier correspondence would be given. Dr Harvey provided further references to papers by reviewers of the efficacy of Gingko biloba in relation to indicia of Tinnitus. 36 On 16 May 2006, Dr Harvey expressed comments in an email about the three papers the subject of the earlier issue. Also, on 16 May 2006, Mr Waitzer sent an email to Dr Harvey confirming that the applicants would be given a further seven working days from the date of the response of Dr Harvey to the letters of concern, to respond. On 17 May 2006, Dr Harvey extended the time for a response required by the working group to 5.00pm, 25 May 2006. Dr Harvey observed 'This should provide you with adequate time to produce additional evidence that may change our opinion about the efficacy of Tebonin, EGb 761 (Gingko biloba) for the relief of tinnitus' . That email attached a letter of response to the first applicant's letters of 11, 12 and 15 May 2006. 37 In that response, Dr Harvey dealt with the claim by Mr Waitzer that Dr Harvey had neither articulated to Ms Reddy nor set out in correspondence to the company, the precise role Dr Harvey played, the task he had in mind and the scope of the consequences of the working group formulating its view of the efficacy of the product arising out of its process of review. Dr Harvey said in his response, 'I believe that when a registered medical practitioner, academic, or other qualified health professional asks a product sponsor (or distributor) for information relating to claims made about that product, he or she is clearly proposing to undertake a "legitimate review" of that product' . 38 It seems to me, having regard to the stated purpose of such a review and the methodology the working group represented it would undertake in conducting a review, a failure to properly describe and identify the purpose for which the papers were sought and the task and scope of the role proposed to be undertaken, was misleading. It plainly led Ms Reddy into a false understanding of the purpose for which the reports were sought. An oral request simply on the basis that Dr Harvey was a doctor and an academic at an Australian university made to a customer service representative of the distributor of the kind made by Dr Harvey does not represent a transparent identification of a proposal to undertake what purports to be a comprehensive review, independently, of the efficacy of the product both by reference to the evidence and the literature. 39 Dr Harvey disputes the receipt of the three papers sent by Ms Chiang on 2 May 2006. 40 Dr Harvey contests the proposition that the review process was not undertaken consistent with the published representations of the methodology to be applied. This (and subsequent communication) with the TGA was undertaken to check TGA procedural matters which we refer to in our report. A copy was E-mailed to the TGA at 9.55am on the same day. The purpose of sending a copy of the TGA was to afford them the same courtesy we had afforded you; to comment on relevant sections of the draft report in order to ensure our final report is accurate. The review methodology plainly contemplated that the review conducted by the working group would result in the preparation of a draft report which would be provided to the sponsor (and presumably through the sponsor to DWSG); the sponsor would be provided with a reasonable opportunity to respond to the draft report; the response would be properly considered by the working group; a final report would be produced and that report would be the subject of the threatened or proposed publication or distribution. However, Dr Harvey published the draft report absent any response from the sponsor or DWSG, to the Unit of Administration of the Australian Government charged with the regulation of the Therapeutic Goods Act 1989 , namely, the TGA. The immediate distribution of the draft to the regulator failed to provide the sponsor or DWSG with any opportunity to put its position and influence the measured, balanced and proportional evaluation of the evidence and the literature leading to a final report. The failure to act consistently with the expressed methodology for the review raises a prima facie case of a contravention of s 52 of the Trade Practices Act . 42 Moreover, the draft report was not only distributed to the regulator but was also sent, without the benefit of a response from the sponsor or DWSG to the draft report, to Mr Craig Patterson, the Manager of the New Drugs Program ('NPS') and the Australian Consumers Association. 43 It seems to me that the distribution of the draft report without compliance with the opportunity for a response to the draft is misleading conduct which has given rise to a distributed report (in draft) containing opinions which may have been properly the subject of further evaluation had the first applicant and DWSG been provided with a proper opportunity to respond and a reasonable time to respond. The notion that the TGA regulations require sponsors of listed medicines to hold evidence in support of the claims made for a product is not an answer to a failure to properly disclose the scope of a proposed independent review of both the evidence and the literature relating to a product. The nature, scope and extent of material going to the evidence in support of claims for a product and the field of literature which might be provided to a group of experts or a working group of consumer health professionals for the purpose of a systemic review of both the evidence and the literature is very likely to be entirely different to the body of material immediately available to a sponsor in support of an enquiry concerning the therapeutic claims for a product. For example, it was precisely that enquiry which Dr Harvey made of Ms Reddy which produced two reports on 28 April 2006 and by 2 May 2006 three reports from Ms Chiang. 44 The distribution of a draft report before any opportunity was afforded to the sponsor to respond is consistent with the comment by Dr Harvey in the email at [33] in which Dr Harvey said he proposed to copy his letter of response of 17 May 2006 to Dr Bird. 45 On 17 May 2006, Dr Harvey sent further material to Mr Waitzer for confirmation of certain matters. 23) [which presumably is intended to mean May 2006, Issue No. 23] you run an article apparently authored by Christine Sands about the product Tebonin (Gingko biloba). [presumably the question is - or is this number a forgery? Dr Harvey took objection to the refusal to provide confirmation of whether an approval had been given. At the time Dr Harvey was pressing this matter with the CHC, sending emails to the publisher of Good Health News and copying emails to third parties, there was no basis for suggesting or inferring that the sponsor had fraudulently or unlawfully endorsed advertisements with numbers purporting to represent pre-clearance numbers. 51 On 21 May 2006, Dr Lewis wrote to the solicitors for the first applicant explaining the conversations with Dr Harvey. I told him that I would neither confirm nor deny that the CHC had approved the advertisement nor would I provide the other details he had requested. In response to a question from Ken I said that I did not know whether a number appearing on any particular advertisement was a correct number or not. I told Ken that while I did not have ready access to this information there was a system to record approvals. Ken indicated that he was already aware of the complaints process. I told him that the CRP was the body to rule on this and the organisations that breached the code were potentially subject to substantial financial penalties. He referred me to a draft report he had earlier forwarded to Trisha Campbell (CHC) which he said showed it did not work. I put to him the proposition that this was a matter of his believing [Dr Lewis's emphasis] the product did not work. At that point Ken abruptly terminated the conversation. This is not what I said. What I said was that I did not know whether the number you had given to me was a correct number for the advertisement you were referring to. I then said that it would be possible for an incorrect number to appear in an advertisement. In saying that, I did not refer to this specific advertisement nor did I use the term "forge". That is entirely your construct . Dr Harvey says that neither he nor Tony Lewis suggested that the applicants had in fact forged or used incorrect or unauthorised approval numbers in relation to particular advertisements. However, the evidence suggests a prima facie case of Dr Harvey engaging in communications with parties both at the level of the CHC and third parties on a footing that suggests that numbers endorsed by the sponsor on print advertisements may legitimately give rise to the notion that those numbers were forged and fraudulently applied to the advertisements to convey the impression that the advertisements were authorised when they were not. 54 Correspondence subsequently took place between the solicitors for the applicants and the solicitors for the respondents concerning aspects of the formulation of the draft report and the proposal to publish a final report. A final report was published by Mark Dunn on 9 June 2006 to Dr Peter Bird, Office of Complementary Medicines of the TGA, Mr Craig Davies, TGA Advertising and Export Section and Dr Tony Lewis, Complaints Resolution Committee, Complementary Healthcare Council. 55 The final report is the emanation of a document based upon the draft report and a consideration of the papers sent by Ms Chiang to Dr Harvey and a consideration of the propositions put to Dr Harvey by Mr Waitzer in relation to the draft report and particularly the inadequacies in the process and other matters. It seems to me that there is a serious question to be tried that the final report is affected by the misleading conduct of failing to provide the draft report to the sponsor and DWSG for comment and response before distribution to the parties who received it. In addition, the final report at pages 4 and 5 contains a description of the process of the investigation and it could not be fairly said that the description under the heading "Our Investigation" represents an accurate synopsis of the sequence of events. The language of that part of the report suggests that the sponsor was provided with a reasonable opportunity to respond, it provided no further information and engaged legal representatives to seek undertakings not to publish any criticism of the Tebonin product. The position, of course, is that the sponsor was putting the proposition that the draft report emerged in circumstances where there had been a failure in the central process of the investigation and in circumstances where the very nature of a review by reference to the evidence in support of the claims for the product and the literature relating to the product, had not been disclosed to the sponsor from the outset. 56 A further difficulty with the final report is that in discussing the product Tebonin , there is a conjunction of the term Tebonin and Gingko biloba. The report does not make entirely clear which studies relate to an analysis of the therapeutic affects of Gingko biloba and those which deal quite specifically with the constituent element of the applicants' product described as EGb 761. At page 6 of the final report, the working group says, 'We dispute that Tebonin (Schwabe extract EGb 761) is sufficiently different from other standardised extracts to invalidate the clinical trial evidence we have assessed' . The authors then say that they understand that Gingko biloba extracts must meet the requirements of the 1994 German Commission E Monograph which specifies what the extract must contain. The authors appear not to have taken into account any further the question of whether the processes described by Dr Robert Hoerr [10] provide a basis for a legitimate differentiation between the applicants' form of a product containing an active ingredient derived from Gingko biloba and other products derived from the plant. 57 The final report also talks in terms of the working group providing seven more working days to the product sponsor to provide additional scientific evidence that might 'change our opinion about the efficacy of the product'. These statements are consistent with the notion that the working group had already formed an opinion by the draft document and that that opinion had been circulated. The issue for the sponsor was not whether it could change the opinion of the working group but whether the working group remained in a process of evaluation and proportional consideration of all material until a final view was formed. Moreover, the report refers, as does the early material, to the provision of the draft to the sponsor 'as a courtesy' just as the draft report had been provided to regulatory authorities and consumer associations 'as a courtesy'. The report, of course, could not be provided as a matter of courtesy because the process expressly contemplated that a draft report would be provided for appraisal, comment and response before a final report or final view was formed. That part of the process was integral to a proper review process. Similarly, there could be no courtesy in extending determinative conclusions in draft form to regulatory bodies. 58 The applicants make a further challenge to the report on the basis that the process undertaken by the working group does not reflect a systemic peer reviewed process by reference to evidence and literature consistent with the orthodoxy of such review processes. Dr Hoerr in his statement of 25 May 2006 being Exhibit 'JAS17' of the affidavit of Mr Sweep sworn 1 June 2006 is critical of the methodology and says that it does not provide a foundation for a proper evidence based and literature based review of the efficacy of the product and further, the reviewers failed to recognise the features and processes of differentiation between EGb 761 and generic Gingko biloba extracts. 59 The applicants seek to rely upon a further affidavit from Mr Sweep sworn 16 June 2006 which exhibits ('JAS37') a further report from Dr Hoerr. The respondents object to the admissibility of the affidavit on the basis that counsel for the respondents was provided with the commentary on the morning of the hearing and was not in a position to respond to it. I propose to admit the affidavit although for the purposes of these proceedings I have not had regard to the further statement of Dr Hoerr as the respondents have not had an opportunity to respond to that document. 60 In order to arrest the possible publication of the final report on the AusPharm Consumer Health Watch website and publication otherwise, on the ground that such publication involved the contravention of s 52 of the Trade Practices Act , the solicitors for the applicants sought certain undertakings from the respondents and on 19 May 2006 the solicitor for the applicants wrote to the first respondent and to Dr Ken Harvey, Mr Mark Dunn and Mr Tony Wiss putting each of those parties on notice that the conduct of publishing the report would involve contraventions of s 52 of the Trade Practices Act . Any publication of the report subsequent to notice of the matters complained of, would involve the second, third and fourth respondents being knowingly concerned in a contravention of the Trade Practices Act . 61 In expressing these observations on the facts, I am, of course, not making findings or determinations of contested questions of fact. I acknowledge that the respondents contest the evidence of the applicants. However, an assessment of the evidence of the applicants, recognising that the factual matters are in issue, is made for the purpose of determining whether there is a serious question to be tried as to whether the formulation and publication of the report constitutes conduct in contravention of s 52 or the publication of an injurious falsehood concerning the applicants. 62 I am satisfied that there is a serious question to be tried at the very least and in my view there is a reasonably strong prima facie case of a failure to afford the represented procedural requirement identified by the working group in the conduct of the proposed review. I am further satisfied that the conduct in relation to the agitation of the question of whether the sponsor had potentially engaged in fraudulent conduct by endorsing print advertisements with numbers which may not have reflected approval numbers is also misleading conduct. 63 The questions of law are these. Have the applicants established the necessary burden on the facts of a serious question to be tried. I have expressed a view that the applicants have established a prima facie case of a contravention of s 52 as to that aspect of the case which involves whether the conduct is misleading. In forming that view I have had regard to the observations of his Honour Mason A-CJ in Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 at 153 in these terms, '(1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction' or, the applicant must 'be able to show sufficient colour of right to the final relief in aid of which interlocutory relief is sought'. See also Gleeson CJ, Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] 208 CLR 119 at 217. 64 I will return to aspects of propositions two and three of his Honour's remarks in Castlemaine Tooheys Ltd v South Australia (supra) shortly. 65 The respondents contend that the observations made by Dr Harvey and the working group are merely expressions of opinion that convey nothing more than that the working group honestly held the opinions reflected in the report. See James v Australia & New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372; Global Sportsman Pty Ltd v Mirror Newspapers (1984) 2 FCR 82 at 88; Tobacco Institute of Australia v Australian Federation of Consumer Organisations Inc. (1992) 38 FCR 1 at 25-26 and 45-48. The respondents contend that the expression of opinion may constitute misleading or deceptive conduct but cannot do so if the authors of the opinion genuinely hold the opinion in question and there is some proper foundation for it. See the authorities referred to by Weinberg J at [124], Orion Pet Products v RSPCA [2002] FCA 860 ; (2002) 120 FCR 191 at 213. Dr Harvey says he genuinely holds the opinion reflected in the final report. In this case, both the draft report and final report are affected by misleading conduct in relation to the process adopted for the conduct of the review and thus the basis or foundation for the expression of the opinion. Further, the conduct in relation to the notion that 'pre-clearance' approval numbers endorsed on print advertisements may not have been genuine, is misleading and deceptive. 66 A further aspect of the applicants' case is that the conduct of the first respondent and conduct in which the second, third and fourth respondents are knowingly engaged is not conduct which occurred 'in' trade or commerce. In some senses, it might be contended that the conduct occurred in connection with or in relation to conduct in trade or commerce but the conduct of convening a working group and conducting an examination of the therapeutic claims of a product in circumstances where the primary author of the report, Dr Harvey, was not paid for the report and the report is to be published upon a website which does not attract any subscription fee for access to a document or commercial sponsorship, fails to engage any aspect of commercial activity. Therefore, the conduct of the working group and the formulation and publication of the draft report and final report is simply a process of intellectual discourse by engaged citizens relevantly skilled in the art with a view to forming a professional opinion. The nature of the democracy is such that individuals are entitled to express an opinion and, particularly, people skilled in the relevant art are free to form views and express opinions about matters such as the veracity of claims for therapeutic benefits of complementary medicines. It may be that the opinion expressed by the working group or any particular individual is right or wrong. Other opinions may be based on greater experience, a greater depth of skill and expertise, a greater degree of focus on the particular expertise which needs to be called upon such as the efficacy of blind trials and other things. The issue is not whether the opinion is correct. It is simply an opinion. It carries no greater weight than the intellectual authority and experience of the author(s). Minds might legitimately differ about a range of matters affecting, for example, the opinions reflected in the report in this case. 67 The difficulties in this case are the ones I have already mentioned as to the question of whether the process was undertaken consistently with the representations made as to the process and other matters. In the absence of that process, the foundation for the opinion as an independent opinion derived from the process as represented, fails. On the question of whether that conduct occurred in trade or commerce, the respondents rely upon the well known passage of their Honours, Mason CJ, Deane, Dawson and Gaudron JJ in Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17 ; (1990) 169 CLR 594 at 602-604 to the effect that the conduct, the subject of enquiry, must have occurred in trade or commerce thus giving the operation of s 52 a restricted operation. The concept is narrow in the sense that the proscription applies only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. In other words, one does not simply identify the conduct in question, note that the relevant corporation is engaged in commercial activity of some kind and then look to a connection between the two. Because corporations are usually formed to engage in commercial activities, it will rarely be difficult to find such a connection. The correct approach is to determine whether or not the relevant conduct can, according to ordinary usage, be described as having occurred in the course of dealings "which, of their nature, bear a trading or commercial character". The commercial undertakings of the corporation in question may be relevant to the exercise. However, the more important question will be whether the conduct is of a kind which is usually of a commercial nature. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential customers, be they identified persons or merely an unidentifiable section of the public. In some areas, the dividing line between what is and what is not conduct "in trade or commerce" may be less clear and may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character. In the particular case in question, representations made by a film producer that young teenage Aboriginal girls would be the subject of a documentary film concerning their participation in a contest called the Miss Maid Contest but who were subjected to questioning concerning aspects of their sexual activity, was found to be conduct capable of bearing the description of conduct 'central to the trading or commercial activity of producing a film for profit' and thus conduct in trade or commerce. 70 The respondents say that the principle that the activity in question must bear the character of a trading or commercial activity divorced from other considerations of the activity of the particular corporation is a principle which has been applied in the Federal Court frequently. See Unilan Holdings Pty Ltd v Kerin (1992) 35 FCR 272 per Hill J; Fasold v Roberts (1997) 70 FCR 489; Plimer v Roberts (1997) 80 FCR 303; Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449 and Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc. (1992) 38 FCR 1. 71 Mr Mark Dunn has sworn an affidavit in the proceedings in which he describes the formation of the AusPharm Consumer Health Watch Group ('ACHW'). Mr Dunn says that in early 2006 as a result of concern for the manner in which information about some non-prescription pharmacy products was being presented to the public, a group of people including Mark Dunn, Tony Wiss and Dr Ken Harvey formed a non-profit organisation, ACHW, and set up a website to publish articles to the public. Initially there were 10 members of the ACHW Group. Now, seven members have resigned and the group is comprised of Mark Dunn, Dr Ken Harvey and Tony Wiss. Mark Dunn says that as a non-profit entity, ACHW's primary aim is to inform the public so that consumers can make informed decisions about products. The three remaining members are volunteers and receive no payment in any form for their work. The ACHW website does not carry advertising material and receives no income. Mark Dunn says the costs associated with setting up the website were paid by him and Tony Wiss. The ACHW website is a separate site from the first respondent's other sites. Mark Dunn says the article (report) was written following a consultative process among the group members. 72 The question to be determined on an interlocutory application is whether there is a serious question to be tried as to whether the conduct occurred 'in trade or commerce'. The first respondent operates four websites. The first three websites, AusPharm, AusPharmacist and AusPharmlist are interconnected websites which have the appearance of a single website. The AusPharm website contains a significant number of sponsorship and other commercial endorsements which are productive of revenue. Plainly, there is a trading or commercial activity undertaken by the first respondent in respect of those three websites. The fourth website, sponsored by the first respondent but dedicated to the AusPharm Consumer Health Watch objectives contains a link to the AusPharmacist site which takes the enquirer directly to the home page which displays the substantial field of sponsors and commercial parties. The third and fourth respondents are directors of the first respondent and are therefore directly involved in the sponsorship of the fourth website upon which the report would be published. Because the AusPharm Consumer Health Watch website contains a link to the home page for the primary apparent AusPharm 3-in-1 site [13] it seems to me that there is a sufficient relationship on an interlocutory basis to conclude that there is a serious question to be tried as to whether the conduct is in trade or commerce. 73 In addition, an examination of the materials in evidence from the AusPharm website and its inter-relationship with AusPharmacist and AusPharmlist demonstrates that the economic methodology for sustaining the services provided by the three inter-related sites is to secure revenues from commercial participants on any one of the bases identified in the advertising terms and conditions [15]. It seems open, on an interlocutory basis, to infer that the probability is that a similar sponsorship methodology will be applied to the fourth site operated or sponsored by the first respondent even though it may not be the case that there is any demonstrated discreet commercial arrangement between the operator of the site and a commercial party at present. 74 Further, the position in Fasold v Roberts (supra) and Plimer v Roberts (supra) is not directly applicable on the facts of the present case. In this case, two members of the working group, the third and fourth respondents who are authors of the report with Dr Harvey, are shareholders and directors of the company sponsoring the site. In the Full Court in Plimer v Roberts (supra), their Honours took the view that because Dr Roberts was simply an invited expert speaker and had no connection or engagement with the sponsoring body promoting the address, his conduct could not be regarded as conduct in trade or commerce. In this case, the third and fourth respondents are directly involved both as directors and equity holders in the sponsoring vehicle and Dr Harvey together with the third and fourth respondents are members, and core members, of the AusPharm Consumer Health Watch Group. It seems to me therefore there is a greater proximity of connection in the central activity and it bears a sufficient relationship with the other activities of the first respondent that the conduct in question 'of its nature, bears a trading or commercial character'. The question in issue is whether the applicants have established sufficient evidence to raise a serious question to be tried as to whether the conduct is in trade or commerce. I am satisfied that there is a serious question on that issue which ought to go to trial. 75 As to the second aspect of the observations of his Honour Mason A-CJ in Castlemaine Tooheys Ltd v South Australia (supra), I am satisfied that publication of the report in the manner contemplated by the website, that is, publication on the website and distribution of the document to all of those outlets discussed in these reasons [19], has the potential to cause injury to the applicants which will be both difficult to identify and difficult to compensate by way of damages. 76 As to the third element, I am satisfied that the balance of convenience favours the applicants. It seems to me that there is a significant public interest in allowing the process invoked by the respondents to take its course in the regulatory forums in which they have made their complaint. The Parliament of the Commonwealth has enacted the Therapeutic Goods Act 1989 which provides a regulatory mechanism for dealing with the listing of complementary medicines, prescriptions and offences concerning false representations and false claims of therapeutic benefit for a product and mechanisms which enable the TGA to test whether the sponsor or manufacturer has complied with the Act or engaged in any contravention of the legislation. The respondents elected to publish both the draft and final report to the bodies described at [54]. The Therapeutic Goods Act 1989 is important legislation of the Commonwealth. It seems to me that the public interest is served by enabling the respondents to articulate their criticisms before the relevant officers of the regulatory authorities which in turn will provide a balanced and proportional opportunity for the applicants to respond and put before a relevant decision-maker the body of data, evidence and material which either supports or fails to support the claims of efficacy for the product. That process should take its course. As an aspect of the balance of convenience , it seems to me that the complaints made by the respondents to the various bodies should take their course free of pre-judgment by the distribution by the respondents, in the manner suggested in the website material, of their own view of the material. Mark Dunn says in his affidavit that if an interlocutory injunction is granted, it will have the result of stifling public discussion and scientific debate about Tebonin . Debate within the scientific community can take place in circumstances where the matters debated involve a genuinely held opinion about which there is a proper foundation. Having regard to the Therapeutic Goods Act 1989 , its purposes and the processes invoked within the forums contemplated by that Act, an examination can occur concerning the claims made for and criticisms of Tebonin . 77 I have also had regard on the balance of convenience to the affidavits of Lauren Rignall sworn 29 May 2006 and 13 June 2006. I am satisfied that the scope of the financial risk which will be difficult to calculate is significant. 78 One further matter the applicants agitate is the assertion that the conduct on the part of the respondents constitutes an injurious falsehood. I am not satisfied that the evidence demonstrates that the conduct in relation to the report reveals a prima facie case of injurious falsehood in respect of any of the respondents or a serious question to be tried. In relation to the conduct on the part of Dr Harvey in agitating the question of whether the applicants may have endorsed numbers fraudulently upon print advertisements, the evidence seems to me to reveal a prima facie basis for concluding that such suggestions were made recklessly and not merely in a careless way. The current authorities suggest that although malice must be shown in establishing a cause of action based on injurious falsehood, an intent to injure 'without just cause or excuse' may be sufficient. I am satisfied that there is at least a serious question to be tried as to the factual matrix surrounding the question of the circumstances in which Dr Harvey elected to agitate the possibility with a number of parties that the sponsor applicant may have engaged in the suggested conduct. See the discussion in Fleming , The Law of Torts , 9 th Ed, 1998 and the discussion in Orion Pet Products v RSPCA (supra) at [195] to [225]. 79 The respondents further contend that there is no material which would suggest that any undertaking offered by the applicants is of substance. It seems to me that the affidavits of Lauren Rignall of 29 May 2006 and 13 June 2006 demonstrate substance on the part of the applicants in relation to the undertaking as to damages. 80 Accordingly, I propose to make an order in these terms. Upon the applicants by their counsel giving the usual undertaking as to damages, the respondents (and each of them by themselves, their servants or agents or otherwise howsoever) are restrained until the trial of the action or until further earlier order from publishing on a website described as www.consumerhealthwatch.net.au or otherwise a report described as 'Does Tebonin (Gingko biloba) provide relief in tinnitus? ' or any document which is substantially similar to the said report in purporting to critique as part of or emanating from a process of review of the product Tebonin applying the methodology as represented by the first respondent at a web page under the heading 'About Us' at a website described as www.consumerhealthwatch.net.au under the paragraphs bearing the headings 'Background' and 'The Review Process'. 2. Costs of the application are reserved. 3. The parties shall have liberty to apply on two clear days notice. | application for interlocutory injunction consideration of whether conduct concerning the formulation of a review report involved a contravention of s 52 consideration of whether the conduct occurred 'in' trade or commerce rather than in connection with or in relation to trade or commerce consideration of the public interest in the context of the therapeutic goods act 1989 (cth). practice and procedure |
On 7 August 2006 the union and the corporation signed the Sydney Ferries Corporation Maritime Officers Enterprise Agreement 2006-2008 ('the Agreement'). The union, at all relevant times, was and is an organisation registered under the Workplace Relations Act 1996 (Cth) ('the Act'). The corporation, at all relevant times, was and is incorporated pursuant to s 35A of the Transport Administration Act 1988 (Cth) as amended. At all relevant times the corporation employed Maritime Officers for the purpose of operating ferry services on Sydney Harbour and the Parramatta River. The Agreement was lodged for approval pursuant to s 340 of the Act on 7 August 2006 and it came into operation on that day as provided by subclause 1.4.1 of the Agreement. The Agreement is a workplace agreement and a collective agreement as defined in s 4 of the Act and a union collective agreement as defined in s 4 and s 328 of the Act. By virtue of the Agreement and s 351 of the Act, the union, the corporation and the Maritime Officers employed by the corporation were bound by the Agreement. The Agreement has a nominal expiry date of 30 December 2008, as defined in s 352(1) of the Act, but pursuant to s 347(5) its provisions remain operative after such date until such time as they have been replaced with a new collective agreement. As stated, the corporation acknowledges that it has not fulfilled its obligations required by the clause. However, it submits that it is not required to do so since the obligation contained in the clause constitutes ' prohibited content ' as defined hereunder because the subject matter of the clause does not ' pertain to the employment relationship '. Note 1: The Workplace Authority Director can vary the workplace agreement to remove prohibited content (see section 363). Note 2: For civil remedy provisions relating to including prohibited content in a workplace agreement, see sections 357, 365 and 366. The union also acknowledges that the proposed insurance benefits would not operate until the happening of the disability or illness and that the insurance benefits can continue after the employment has ceased. The union submits however that the benefits payable pursuant to the clause constitute part of the relationship of the employer and employee since income protection relates to an incident of employment. The union further submits that the fact that the income protection benefit might become payable to employees arising from circumstances unrelated to the employment relationship does not lead to the conclusion that those payments cannot pertain to the relations of an employer with his employee and that it is of no significance that no immediate benefit is derived by the employee from payments made by the employer. The union relies on the decision of the High Court of Australia in The Queen v Portus and Another; Ex parte Australia and New Zealand Banking Group Limited and Others [1972] HCA 57 ; (1973) 127 CLR 353 and subsequent decisions of the High Court and Federal Court of Australia considered hereunder which concern the relationship of employer and employee in support of its submission that income insurance protection arises out of the relationship between employer and employee. The union also relies upon the decision of the Full Bench of the Australian Industrial Relations Commission in Re National Union of Workers; Re Agreement with Exel (Australia) Logistics Pty Ltd (2005) 146 IR 334. In that decision, the Full Bench upheld the validity of a clause pursuant to which an employer was to pay insurance premiums to an insurer nominated by the National Union of Workers for ' Safety Net insurance '. Such insurance was to protect future income. If an employee decided to terminate such insurance, an increment was to be added to the employee's wages. In the event of insurance premiums being increased, the employee was provided the right to terminate such insurance or to agree to a greater deduction from his or her wages. Further, the union submits that the payments made by the employer to the insurer for income protection insurance should simply be seen as a reward for services, in the same way that a salary is a reward for services. Reward by way of remuneration of course conforms most clearly to such a test; the payment of wages or salary is inherent in the relevant relationship. Should the Court not uphold its submissions, the union submits that s 358 of the Act (which provides that a term of a workplace agreement is void only to the extent that it contains prohibited content) would result in the clause being held void only to the extent that it required income protection insurance in circumstances which were unrelated to the contract of employment. The High Court in Portus found that the dispute arising out of such demand did not constitute an ' industrial matter ' as defined in s 4 since the payments for union dues were to be made by the employer only after income had been earned by the employee. Menzies J at 360 observed that the pivotal question was whether the imposition upon an employer of an obligation to make deductions for the purpose of making the subject payment ' affects the industrial relationship of employers and employees '. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association... In my opinion, the facts before the Court disclose a dispute which is not an industrial dispute. It is, in truth, a dispute between the association and the banks about whether or not the banks should perform for the association a dues-collecting service. In the Superannuation Case the High Court found that a demand that employers contribute to a superannuation scheme related to an ' industrial matter ' within the meaning of s 4 of the Conciliation and Arbitration Act. The answer was made that the employee will receive a vested interest in the money paid, albeit not in possession, when the contributions are made by the employer to the fund. Whether or not this be so, the fact that there is no immediate benefit to employees from the payments to be made by employers, at any rate in any tangible form, does not in our view mean that those payments cannot pertain to the relations of an employee with his employer... payments do not cease to be remuneration for service during the relationship merely because the benefit from them is deferred until after the service has been finally performed and the relationship has ended. The obligation of the employer to make payments ends with the relationship between him and his employee unlike the obligation of an employer to pay a pension, which necessarily extends beyond the period of employment. It is obvious that the relationship between an employer and the trustee of a superannuation fund is not that of employer and employee, but that is hardly to the point. As the decision in Reg. v. Portus; Ex parte A.N.Z. Banking Group Ltd . shows, the identity of the payee is ordinarily not of significance in determining whether payments made by an employer to a person other than his employee constitute an industrial matter. But the opposite is the case where the payments are to a superannuation fund, because the character of the payee and the capacity in which he receives the payments provides the very connexion with the relationship between the employer and employee which is necessary if those payments are to be an industrial matter. Because the payments are to a superannuation fund, they form, to use the words of Menzies J., an incident of the employment... There is no reason why those payments should be seen in any other way than as contributions by an employer to a fund for the benefit of an employee. No doubt the payments represent money earned in an industrial relationship, but they do not represent money to which an employee is himself presently entitled... [Footnotes omitted]. 1 ') the Court considered whether a claim that the employer contribute the equivalent of 1.5 per cent of an employee's weekly wage for a scheme to protect long service leave and other entitlements in an external trust deed pertained to the relationship of employer and employee. The claim is not to be construed as if it were a document creating legal rights and obligations: see Shell at 359. Finally, a claim can be properly characterised as pertaining to the relationship of an employer and its employees notwithstanding that parts of a claim that are machinery provisions giving effect to the claim (see Shell at 359), or ancillary aspects of it (see R v Portus; Ex parte Australia and New Zealand Banking Group Ltd [1972] HCA 57 ; (1972) 127 CLR 353 (" Portus ") at 372), may not pertain to that relationship. If a claim pertains to the requisite relationship in accordance with the above principles it is because it is in respect of a matter that pertains to that relationship. As the entitlements are not payable until some time in the future the claim for payment to be to a trustee seeks to ensure that the employee entitlements will be paid to the worker on the right to payment crystallising. The claim for payment on account of the entitlements, which protects and enables portability of the entitlements, is analogous to the claims of unions for employers to participate in a superannuation scheme by payment of superannuation contributions to a trustee of a particular superannuation trust fund pending the superannuation entitlement becoming payable to the employee, for example on retirement. The payments relate to particular aspects of the remuneration to be received by employees for service to their employer (that is, employee entitlements in respect of severance pay and leave) and belong to and are within the sphere of the relationship between Electrolux and its employees, as such. In so far as there may be some circumstances where amounts paid on account can accrue to the benefit of the trust fund, and interest earned on payments made by the employer is to be paid to the trustee for its services, such provisions are ancillary or incidental aspects of the matter to which the claim relates and do not alter the substantive characterisation of that matter. 2 ') confirmed that the principles discussed in the preceding paragraphs apply to the Act. [Footnote omitted]. The first is that the benefit of the income protection may never vest in the employee, that is, any benefit is contingent. The second issue is that the payee is a third party. The third issue is whether such benefit may be characterised as being connected with employment. As to the first facet, the fact that such benefit is contingent and has not yet crystallised or may not crystallise does not necessarily render such clause invalid. An entitlement to long service leave may never arise because an employee may not work for a sufficient period with an employer to enable such benefit to accrue. Nevertheless a scheme protecting long service leave entitlements was found to pertain to the relationship between employer and employee in Electrolux No. 1 . In relation to the second facet, the statement from the Superannuation Case extracted in paragraph [19] of this judgment suggests that the mere fact that the payee is a third party is usually irrelevant to any determination as to whether the particular scheme pertains to the employment relationship. However, the union submits that, in accordance with the reasoning of the Superannuation Case in the aforementioned passage, the identity of the payee provides the ' very connexion ' with the relationship between the employee and employer. Such claim will be dealt with below in relation to the third facet. Such disability may arise out of the employment in which the employee is engaged. However, it is not confined only to those circumstances. The clause imposes the obligation to provide insurance which covers injury or illness causing such disability in circumstances wholly unconnected with the employment. That is, any cause resulting in long term illness or injury would be sufficient to engage the payment of insurance benefits for the employee. Further, the insurance benefits under the clause would be payable whilst the employee remains in the employ of the corporation but also in circumstances where the employment has ceased. Although the employee may have resigned his or her employment or been terminated, entitlement to receive payments pursuant to the clause would continue indefinitely provided that the event which triggers the payments occurs while an employee is in the employ of the corporation. When considering whether the clause is connected with the relationship between an employer in its capacity as an employer and an employee in its capacity as an employee, the relationship had to be ' direct and not merely consequential ' in order to be the subject of an industrial dispute under the Conciliation and Arbitration Act: see the Superannuation Case at 353; see also Gleeson CJ's statement at [10] in Electrolux No. 2 . That is, the obligation imposed upon the corporation must arise inherently from the relationship of employer and employee. The union sought to equate the income protection insurance scheme with superannuation contributions as considered in the Superannuation Case . Superannuation contributions have been recognised as a form of payment in lieu of remuneration: see the Superannuation Case at 354; see also 355-356 wherein the Court referred to the fact that superannuation payments were commonly regarded as an aspect of the terms and conditions of employment. However, the benefit to be obtained under the clause and the circumstances in which it becomes payable are very different to a superannuation entitlement, for the reasons explained below. Firstly, the quantum of the benefit which accrues under superannuation entitlements is directly connected with the service performed by the employee. This is demonstrated by the fact that generally the greater the size of the employee's salary and the greater the length of time worked, the greater the superannuation benefit that accrues, even though receipt of such benefit is postponed until an event such as retirement occurs, and even though the exact dollar amount of the eventual benefit is unlikely to be the same as what was contributed by the employer. In contrast, the clause provides that insurance benefits are payable upon the happening of events which may be entirely unconnected with the employer and employee relationship. For example, if the employee sustained a disabling injury during a recreational activity, such as a weekend sporting engagement, or contracted a disabling illness whilst on an overseas holiday, benefits would be payable. Further, the benefits could continue long after the employment has been terminated. In these respects there is no equivalent direct connection with the employment relationship. The union has submitted that because the amount of the insurance benefit is stated as a fixed percentage of the actual income, namely 75 per cent, a closer connection to the employment relationship exists than with superannuation. Such submission has a superficial attraction. However, this submission overlooks an important factor. That factor is that while the benefit is certain in that the insurance benefit would constitute a fixed proportion of a known income, the duration of any insurance payments, and therefore the overall quantum of the benefit, is entirely unknown. The long-term injury or illness might last for a few years. It might equally last for much longer. Therefore the delimiting factor of the overall quantum of the benefit does not arise out of the relationship between the employer and employee. Rather, it arises out of the duration of the period of incapacity due to illness or disability. It follows that the claim that the clause has a closer connection to the employment relationship as compared to superannuation contributions fails. In The Queen v Hamilton Knight and Others; Ex parte Commonwealth Steamship Owners Association [1952] HCA 38 ; (1952) 86 CLR 283 the High Court recognised that a causal connection between the employment and the injury was a vital consideration in determining whether workers compensation benefits could be found to be directly connected with the relationship between the employer and employee: see Dixon CJ at 296; Kitto J at 329. In the present case there is no necessity that there be a causal connection between the employment and the injury which triggers income protection insurance benefits, since the event giving rise to the insurance benefit may be unconnected with the employment. In its judgment, the Full Bench in Exel quoted in full paragraph [22] of Merkel J's judgment in Electrolux No. Does such a payment relate to "an incident of the employment"? We have no doubt that a scheme for income protection insurance, in which the employer pays the premium, pertains. In this case, there is an income protection insurance scheme which allows that if premiums rise the employer and the employee are to pay a share of the premium. In those circumstances at least, a provision for the employee's share of the premium to be deducted by the employer from the employee's wages and remitted to the insurer also pertains. We think that such a payment relates to an incident of the employment in the sense in which Menzies J. used that expression in Portus . For that reason cl.19.4 is a matter that pertains to the relevant relationship. However, there are significant conceptual differences between such schemes. For example, the long service leave benefits under consideration in Electrolux No. 1 accrued during the long service of the employee and arose directly from the relationship of employer and employee in that the protection of the long service leave entitlement only arose if the employee became entitled to such benefit arising from their relationship with the employer. Such benefits are significantly different to a scheme as envisaged by the clause pursuant to which premiums are required to be paid to an insurer by an employer for possible future payments, the entitlement to which may arise out of a cause wholly unrelated to the employment. Further, the scheme in Electrolux No. 1 sought to protect employees against the loss of entitlements which accrued as a result of the relationship between employer and employee. An entitlement connotes a right to a benefit. An income protection scheme does not protect employees against the loss of future entitlements, since it can hardly be said that an employee has a right to an income from the company if, because of a disability unconnected with their employment, they are unable to continue to work for the company. The decision of the Full Bench in Exel may possibly be explained upon the basis that the employer paid the premium for income protection insurance in lieu of remuneration to the employee in accordance with the reasoning of the High Court in the Superannuation Case at 355. This was demonstrated by the fact that if the employee chose to opt out of the insurance his or her wage was to be increased by 1.15 per cent. Unfortunately, the details of the proposed income protection insurance considered in Exel are not apparent from the judgments of the Full Bench. For example, it is not known whether the insurance was payable in respect of disability resulting from work-related causes, or whether such causes were unrelated to employment. Without such information, it is not possible to accept the Full Bench's findings as stating a general principle that all employer sponsored schemes for income protection insurance necessarily arise out of the employment relationship. If the decision is intended to operate as a principle of universal application, this Court respectfully declines to follow it. The Court concludes that the income protection insurance scheme proposed by the clause cannot be said to be analogous to any of the schemes referred to by the authorities relied upon by the union. It is not sufficiently connected to the employment relationship and consequently cannot be said to pertain to the relationship between corporation in its capacity as an employer, and the Maritime Officers in their capacity as employees. The scope of the clause has the consequence that insurance benefits could be payable arising out of circumstances having no direct connection to the employee's relationship with the employer. For this reason, the clause cannot be justified even on the more abstract level that the preservation of a disabled employee's salary is a matter that pertains to employment. However, the union has also submitted that the proper characterisation of payment of premiums by the employer to an insurance company for income protection insurance is as a reward for services. The union's reliance on the High Court in the Superannuation Case at 356 where it said ' the obligation of the employer to make payments ends with the relationship between him and his employee ' is insufficient to establish that nexus. This particular passage was used in the context of distinguishing superannuation from pensions, which had been found in Hamilton Knight to not pertain to the relationship between employer and employee, rather than to provide a reason why superannuation could be considered to pertain to the relationship between employer and employee. As Steven J said in the passage cited above, the subject matter must still pertain to the relationship between the employer and employee. In the Superannuation Case payments were found to be in lieu of remuneration, thus providing a necessary link to the employer and employee relationship. This was also the case in Electrolux No. 1 and Exel . In the absence of similar evidence that the payments of insurance premiums by the employer were a reward for services and in view of the Court's finding that the benefits do not pertain to the relationship between employee and employer, the claim that such payments are merely a reward for services cannot be sustained. Can the clause be read down? The Court concludes that the clause is not one which relates to the employer and employee relationship. In the event of such finding the union submits that such clause is void only to the extent that it applies to disability insurance to be effected in respect of injury or illness arising out of the employment relationship. If the income protection clause were read down to exclude benefits arising from causes outside the employer and employee relationship, there could be a duplication of insurance for potentially the same or similar causes. Accordingly, the Court considers it unlikely that the parties, in formulating their Agreement, would have intended that the clause be able to be read down to lead to such result. The Court is not satisfied that the clause can be read down in such a way and it is therefore void in its entirety. Accordingly it is a prohibited clause within the meaning of s 358 of the Act in its entirety. The Court observes that as a consequence of such finding the corporation may be in breach of s 357(1) of the Act. However, such matter was not argued before the Court and consequently the Court makes no finding on this issue. It follows that the application must be dismissed. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. | workplace agreement validity of provision within agreement whether scheme for income protection insurance was 'prohibited content' meaning of 'pertains to the employment relationship' s 358 workplace relations act 1996 (cth) industrial law |
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of interlocutory orders consideration of issues going to discovery practice and procedure |
The Tribunal affirmed the decision of a delegate of the Minister for Immigration and Citizenship to refuse to grant a protection visa to the appellants. They obtained travel visas from the Australian High Commission in Colombo and claimed to be visiting Australia to stay with the brother-in-law of the female appellant who had gifted the trip to the appellants. On 21 May 2007 the appellants lodged an application for a protection visa with the Department of Immigration and Citizenship. A delegate of the Minister refused the application for a protection visa on 26 June 2007. On 11 July 2007 the appellants applied to the Tribunal for a review of that decision. Before the Tribunal, the appellants claimed to have a well-founded fear of persecution in Sri Lanka due to the fact that they belong to a social group predominantly made up of wealthy and middle class citizens or businessmen. Further, although the appellants are members of the majority Sinhalese population they allege that the work arrangement of the male appellant with Tamils, in his capacity an ice cream vendor, made him a target for the Sri Lankan paramilitary who suspected him of being an informant to the LTTE (Liberation Tigers of Tamil Eelam) and accordingly involved with Tamil terrorist activities. The appellants claimed that military intelligence, possibly the Karuna faction, had entered their home on 6 April 2007 and had threatened them and mistreated the male appellant. The paramilitary then allegedly abducted the male appellant, held him hostage and interrogated him with respect to ties with the LTTE. The appellants allege that the female appellant and her family paid a ransom of 40,000 rupees for his release. The appellants claimed that on 11 April 2007 the paramilitary returned to their home and asked the female appellant about the whereabouts of the male appellant. The appellants also claimed that the female appellant's mother has been questioned by paramilitaries about their plans to return to Sri Lanka and was told they suspected the male appellant of involvement with terrorist activities. The appellants claim that the Sri Lankan government's security forces act with total impunity and acted against Sinhalese civilians who are remotely suspected of providing succour to the LTTE, and further that the middle class were targeted because they were able to pay a hefty bribe to security forces for the release of loved ones. The Tribunal considered that the information concerning the appellants' activities prior to their departure from Sri Lanka is at odds with their claims as to the circumstances in which they left Sri Lanka, in particular that the male appellant continued to work after his alleged abduction between 13 April 2007 and 6 May 2007. The Tribunal noted that the appellants had made arrangements to travel to Australia by 7 March 2009 and considered that it appeared to have been a great coincidence that, having suffered no problems prior to having made these arrangements, the appellants then began to suffer difficulties on 6 April 2007. The Tribunal considered it unlikely that either of the appellants would suffer persecution, abduction or other serious harm at the hands of the Karuna group, paramilitaries, the military or any groups associated with the armed forces if they returned to Sri Lanka, for reason of being a member of the particular social group constituted by wealthy, middle class persons or wealthy middle class businessmen. Further, the Tribunal considered that the chance that the female appellant would suffer abduction or persecution on this basis was similarly remote. This finding was made despite the fact that the male appellant had association in the past with Tamil people and military officers as part of his job. Finally the Tribunal noted, relying on UNHCR information, that "Sinhalese fleeing generalised violence generally enjoy protection in government controlled areas". In relation to the second ground, the Federal Magistrate held (in summary): A fear is well-founded when there is a real substantial basis for it (at [35]). The Tribunal found that the appellants never had been subject to "serious harm" in the past. In its decision the Tribunal correctly addressed itself as to the relevant test (at [36]). The Tribunal discussed country information, and noted disappearances and abductions of businessmen and Sinhalese which supported the appellants' claims. The Tribunal concluded that there would be a remote chance that the male appellant could suffer abduction or other serious harm (at [37]). Contrary to the appellants' submissions the Tribunal's findings were not premised upon any equation by the Tribunal between a low percentage risk factor and remoteness. The Tribunal simply, as a matter of fact, determined the chance of harm as remote. That finding is open on the evidence (at [38]). His Honour erred in finding that the "Tribunal made a finding of fact open to it and then applied the legal test correctly" when considering whether the appellant's fear was well-founded in relation to the claimed social group. Before me however the appellants pressed only the first ground of appeal. In summary they submitted that: In response the respondent submitted in summary: The Tribunal did consider the claim of the appellants concerning their membership of a particular social group, namely wealthy middle class businessmen, but it was in the context of the primary submission of the appellants before the Tribunal which was that the male appellant was being persecuted due to his perceived association and support for various Tamil groups. The issue whether a particular social group needs to be considered if there has been no persecution was recently considered by Besanko J in SZJRU v Minister for Immigration and Citizenship [2009] FCA 315. The Tribunal found, as a finding of fact, a lack of credibility in the appellants' account of events which formed the basis for the claim of a well-founded fear of persecution. In short, the Tribunal did not accept that the appellants left Sri Lanka in the circumstances claimed, nor that they had been targeted by the Sri Lankan security forces, the army, the paramilitary, the Karuna nor anyone else. No jurisdictional error or error in the decision of the Federal Magistrate was apparent in this ground of appeal. Further, it is clear from s 91S of the Migration Act that the concept of persecution is to be considered alongside membership of a particular social group for the purposes of the legislation and determination of whether a person is a refugee. In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 the High Court considered the task of the Tribunal where an applicant claimed persecution on the basis of membership of a particular social group. The majority (Gummow, Hayne and Callinan JJ) said that the task of the Tribunal involved a number of steps, namely: In this case it appears that the Tribunal gave consideration to whether the appellants, in particular the male appellant, was a member of a particular social group. Looking to the reasonably foreseeable future, the Tribunal finds to be remote the chance that the applicant would suffer abduction or other serious harm for reason of being a member of the particular social group constituted by wealthy, middle class persons or wealthy middle class businessmen . The Tribunal finds this to be the case in spite of his past associations with Tamil people and military officers. For similar reasons, the Tribunal finds to be remote the chance that the applicant wife would suffer abduction or persecution for reason of membership of such a group . The Tribunal is willing to accept for the purposes of this decision that such people constitute a particular social group . Nevertheless, it finds to be remote the chance that the applicant would suffer abduction or any other harm for reason of the membership of such a group if he were to return to Sri Lanka. The appellants' submissions stressed the irrelevancy of the ethnicity of the appellants as a factor in the determination by the Tribunal as to whether the appellants had a well-founded fear of persecution for reasons of their membership of their particular social group, which was wealthy, middle class businessmen. For reasons set out above, the Tribunal does not accept that the applicant has in the past in any way suffered harm at the hands of the Karuna group or any other group accused of involvement in abductions. As the Tribunal has put to the applicants, the available independent country information indicates that it is primarily Tamils and other minority groups who have been the victims of abduction. Indeed, the reports submitted by the applicants refer largely to Tamils and also Muslims as victims of such harm. The Tribunal has been provided with articles indicating that Sinhalese account for 9.1% of those killed in Sri Lanka and for 3% of abductions (to the extent that the ethnicity of victims is known). However, the appellants' case is (and must be in order to satisfy the requirements of the Migration Act and the definition of "refugee" for the purposes of the Convention), that they had a well-founded fear of persecution by reason of their membership of a particular social group. As submitted by the Minister, in essence the Tribunal made a factual finding that the appellants did not have a well-founded fear of persecution for any reason, because the Tribunal did not accept that the appellants had previously been the subject of abduction, assault, harassment or other forms of serious harm which complaints formed the basis of the appellants' claims of their well-founded fear of persecution before the Tribunal. If the appellants did not have a well-founded fear of persecution as contemplated by s 91R(1) of the Migration Act , as the Tribunal found, the Tribunal was entitled to affirm the decision of the Minister not to grant the appellants Protection (Class XA) visas. The appellants submitted that this approach is contrary to Dranichnikov [2003] HCA 26 ; (2003) 197 ALR 389. He argued that the steps outlined in Dranichnikov must be followed even if the Tribunal is of the view that the Applicant's fear is unrelated to the membership of any such group. This is plainly incorrect. Courts will frequently skip over more difficult questions if the main issue can be determined from the answer to a simpler later question: in the law of negligence, there is no need to ask whether there is a duty of care if it is obvious that there has been no damage. In this case, moving to the last step in Dranichnikov was quite proper. Dranichnikov does not demand otherwise. In this case the Tribunal did not accept that the appellants had been harmed in any way or targeted in the past. The Tribunal also found to be remote the chance that the appellants would suffer abduction or other serious harm for reason of being a member of their particular social group. Accordingly, the Tribunal did not accept that the appellants would have a well-founded basis for any fear of persecution in the future. Once the Tribunal had made this finding, realistically it was unnecessary for the Tribunal to identify the particular social group of which the appellants claimed to be members. Indeed, I note that in the circumstances of this case the Tribunal found no serious harm had been suffered, nor was likely to be suffered by the appellants. In such circumstances, inevitably such a claim as the appellants must fail. However even if I am wrong in adopting this approach, I consider that the Tribunal did have reference in its decision to the appellants' particular social group. I do not accept the submission of the appellants that the consideration by the Tribunal as to whether the appellants had a well-founded fear of persecution was conducted against the background of the appellants' ethnicity (rather than their particular social group), notwithstanding there was also some discussion of the appellants' ethnicity. I am not persuaded that the Tribunal's reference to the appellants' ethnicity was a fatal distraction from the real issue for determination by the Tribunal. I also note that, while the appellants claim that the ethnic divide in Sri Lanka was irrelevant to determination of the issues before the Tribunal in this case, issues of ethnicity formed a significant part of the case put by the appellants to the Tribunal. However at the end of the day, as I have already observed, I am satisfied that the Tribunal did consider the appellants' case in the context of their particular social group. It follows that, in my view, the decision of the Tribunal was not affected by jurisdictional error. I can also identify no appellable error in the decision of the learned Federal Magistrate. The appeal should be dismissed with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | migration act 1958 (cth) s 91r(1) , s 91s application for protection visa claim that appellants have well-founded fear of being persecuted for membership of particular social group particular social group was wealthy middle class citizens of sri lanka appellants are sinhalese appellants claimed they were at risk of persecution and abduction by sinhalese military due to suspected ties with tamils and because of their particular social group delegate of minister refused application tribunal affirmed decision of delegate and rejected appellants' claims of persecution tribunal found appellants had not previously suffered serious harm and did not have well-founded fear of persecution decision of tribunal affirmed by federal magistrates court whether jurisdictional error by tribunal whether failure of tribunal to identify correct social group when considering if appellants had "well-founded fear" of persecution whether tribunal was distracted by appellants' ethnicity when making decision whether tribunal needed to identify particular social group once it rejected appellants' claims of persecution migration |
Three of the unions (together ' the Respondents ') have now filed motions seeking to restrain Sydney Ferries from proceeding with an application for certain orders in the Australian Industrial Relations Commission (' AIRC '), pending resolution of the proceedings in this Court (see [16] below). 2 By its application in this Court, Sydney Ferries seeks an interpretation of similar, but not identical, clauses in each of the Enterprise Agreements. However, as will be seen, that relief is now not to be pursued by Sydney Ferries. AIMPE is not a party to the motions that have been brought by the Respondents against Sydney Ferries. 8 Section 849 of the Workplace Relations Act deals with interpretation of certified agreements. On 2 May 2008, Sydney Ferries gave notice to its employees that it intended to introduce the new system. None of the four respondents to the proceedings in this Court has agreed to the new rostering arrangement. I suggested that the matter could be heard on a final basis as early as 13 June 2008. Mr Goot SC, who appeared with Mr Saunders for Sydney Ferries, stated in response that his instructions were to proceed with the application. 12 Argument on the interlocutory application continued until 4 pm. At that point, Mr Hatcher, who appeared for the MUA and SUA, concluded his submissions, in the course of which he had contended that the Court had no power to make orders against either of his clients. 13 After a short adjournment, Mr Goot announced that Sydney Ferries was withdrawing its application. No explanation was given for this decision. Mr Goot also informed the Court that Sydney Ferries proposed to press neither its claim for the imposition of penalties for alleged contraventions of s 494 of the Workplace Relations Act nor its application for an injunction restraining the respondents from engaging in or organising industrial action in relation to the proposed rostering arrangements. 14 Following discussion about the further progress of the matter, I indicated in response to an inquiry from Mr Goot that a final hearing could still take place on 13 June 2008 if the parties so desired. That offer was accepted, and further directions were made with a view to facilitating a final hearing on that date. No reference was made to any proposed proceedings in the AIRC. The application seeks an order to stop or prevent industrial action that is threatened, pending or probable, or is being organised by one or more of the Respondents. 17 The motions were heard on 30 May 2008. I was informed at the commencement of the hearing that the AIRC had adjourned the matter before it on 29 May 2008 until 3 pm on 30 May 2008 in order to enable the motions to be determined by this Court. 18 The hearing before me concluded at 12.10 pm. I took the view that I should deliver judgment prior to the scheduled reconvening of the AIRC at 3 pm. There was urgency about the matter, so far as the AIRC is concerned, because s 496(5) of the Workplace Relations Act requires the AIRC, as far as practicable, to hear and determine an application for an order under that provision within 48 hours after the application is made. My reasons are therefore truncated, although they have been edited and expanded somewhat for publication. Usually such an injunction is sought to restrain a party from instituting or pursuing proceedings in another court, whether within or outside the same jurisdiction. In this case, the injunction is sought to restrain Sydney Ferries from pursuing its claim for relief, not in another court, but in an ' arbitral body ' (as the parties describe the AIRC) which does not exercise the judicial power of the Commonwealth. Mr Goot accepted, nonetheless, that this Court has power to grant the relief sought by the Respondents, even though the order, if granted, would prevent them from pursuing relief in a body that does not exercise the judicial power of the Commonwealth. 20 The concession made by Mr Goot appears to me to be correct. In CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33 ; (1997) 189 CLR 345 , the joint judgment of six members of the High Court noted (at 391) that the power to stay proceedings on the ground of forum non conveniens is an aspect of the inherent or implied power which, in the absence of some statutory provisions to the same effect, every court must have to prevent its own processes being used to bring about injustice. And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions'. (Emphasis in original; citation omitted. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes'. (Citation omitted. Rather, it is a power the limits of which are to be determined by the dictates of ' equity and good conscience ' ( CSR, at 394). 23 Interlocutory relief was sought in this Court by Sydney Ferries under s 494(5) of the Workplace Relations Act . This enables the Court to grant an injunction in relation to a person who has contravened s 494(1) , if the Court considers that an injunction is necessary to stop the contravention or remedy its effects. Section 494(1) is contravened only if (relevantly) an organisation organises or engages in ' industrial action ', as defined in s 420(1). It follows that Sydney Ferries had to demonstrate in the interlocutory proceedings before me, inter alia, that there was at least a serious issue to be tried as to whether each of the respondents had organised or engaged in ' industrial action '. 24 The question of whether a refusal by Sydney Ferries' employees to undertake work in accordance with a proposed roster which has not yet been implemented could constitute ' industrial action ' was the subject of vigorous debate in the course of the interlocutory hearing. In the event, that issue did not have to be determined because Sydney Ferries withdrew its application for interlocutory relief. As I have noted, no reasons were given for that withdrawal. 25 The application to the AIRC has been made pursuant to s 496 of the Workplace Relations Act . That section provides that if it appears to the AIRC that industrial action by employees is happening, is threatened or impending or is being organised, the AIRC must make an order that the industrial action stop, not occur and not be organised. It seems to be common ground that if any action being organised or threatened could not, as a matter of law, constitute ' industrial action ', it would not be open to the AIRC to exercise the powers and duties conferred on it by s 496. In other words, the alleged or threatened conduct would have to be capable of constituting ' industrial action ' for the AIRC to form the necessary opinion that is a prerequisite to it exercising jurisdiction over the matter. 26 It follows that the AIRC, if it is to deal with Sydney Ferries' application, will need to address precisely the issue that was argued before this Court on Sydney Ferries' application for interlocutory relief. If the AIRC is unable to resolve the matter within the 48 hour period specified in s 496(5) (as seems very likely), it will have to address the question of statutory construction in the course of determining whether to make an interim order pursuant to s 496(6) of the Workplace Relations Act . It failed in its application for interlocutory relief in this Court. While Mr Goot has suggested that the reason may have been the submissions put by Mr Hatcher relating to the position of the MUA and SUA, no such explanation was given at the time. By withdrawing its application for interlocutory relief, Sydney Ferries also withdrew its contention, at least for the purposes of the interlocutory proceedings, that the respondents had organised or engaged in ' industrial action '. 28 By instituting proceedings in the AIRC the day after withdrawing its interlocutory application, Sydney Ferries seeks to achieve, in substance, the same result in the AIRC that it failed to achieve in this Court. It is true, as Mr Goot points out, that there are differences between s 494 and 496 of the Workplace Relations Act and that the differences are not confined to the nature of the decision-making body that exercises the relevant powers. (One example is that an order under s 494(5) of the Workplace Relations Act can be made only by the persons identified in s 494(2) , while an order made under s 496 must be complied with by any person to whom the order is expressed to apply, including a union registered solely under State law: s 496(10) ; Transport Workers' Union of New South Wales v Australian Industrial Relations Commission [2008] FCAFC 26 , at [25], [36], per Gray and North JJ. ) Nonetheless, in order to discharge its functions, the AIRC must address and make a determination on the proper construction of the statutory expression ' industrial action ' and its application to the circumstances of the present case. That is precisely one of the points that was argued before this Court on the application for injunctive relief that was withdrawn by Sydney Ferries. 29 I accept that, as Mr Goot contended, a determination by the AIRC on the question of statutory construction cannot bind this Court. Any such determination appears to be merely a step to the determination of future rights by the AIRC and does not bind the parties: Miller v University of New South Wales (2003) 127 IR 432, at 439, per Gray J; at 456, per Ryan and Gyles JJ. Nonetheless, having pursued a particular course in this Court and failed, Sydney Ferries now seeks relief in the AIRC that is in substance very similar if not identical to that sought in this Court on an interlocutory basis. It does so, moreover, on the basis of arguments that it has decided not to pursue in this Court on an interlocutory basis and which may remain to be resolved. In my opinion, to allow Sydney Ferries to proceed in this way would impair the integrity of the processes of this Court that Sydney Ferries itself chose to invoke. To put the matter another way, Sydney Ferries' initiation of proceedings in the AIRC is an attempt to seek relief of the kind that it has unsuccessfully sought in this Court, and requires the AIRC to address issues of construction that were and may still be before this Court. 30 It is difficult to see, so far as the present dispute between the parties is concerned, what point would be served by the proceedings in this Court seeking declaratory relief in relation to the construction of the Enterprise Agreements if Sydney Ferries were to succeed in its application before the AIRC, whether on an interim or permanent basis. Assuming Sydney Ferries succeeded before the AIRC, it would have obtained orders binding on the Respondents and their members, in the sense that any contravention of the orders could lead to the imposition of penalties. For the AIRC to make such orders, it would have to address the questions of construction presented by the application to this Court. This is so because if Sydney Ferries' actions are not authorised by the Enterprise Agreements, it is unlikely that the Respondents could be said to be organising or threatening ' industrial action '. Moreover, if the AIRC made the orders sought by Sydney Ferries, the onus would be on the Respondents to challenge the orders, whether by way of an appeal to a Full Bench of the AIRC (for which leave is necessary), or, more likely, by an application in this Court or the High Court by way of constitutional writs alleging jurisdictional error. There would be no need for Sydney Ferries to obtain any additional relief from this Court for the threatened or actual ' industrial action ' to be effectively restrained. 31 I should add that the effect of the anti-suit injunction sought by the Respondents will not be to deprive Sydney Ferries of recourse to the AIRC. The order proposed by the Respondents will apply only until the determination of the application for declaratory relief in this Court. Once that occurs, as Mr Birch SC (who appeared with Mr Gibian for the AMOU) accepted, it will be open to Sydney Ferries to seek orders under s 496 of the Workplace Relations Act from the AIRC. Any declaration made by the Court as to the effect of the Enterprise Agreements will be binding on the parties by virtue of s 849 of the Workplace Relations Act . Since an expedited hearing has been granted, there will be only a short delay before Sydney Ferries' application to this Court is resolved. Thereafter it will be free to pursue such remedies as may be available to it in the AIRC. 32 For these reasons, I think it appropriate to make the orders sought by the respondents. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | industrial dispute between sydney ferries corporation and unions over introduction of new ' crew-based ' roster system application by corporation for injunctive relief and penalties withdrawn without explanation corporation subsequently makes a similar application to the australian industrial relations commission respondents file motions for an anti-suit injunction whether such an injunction should be granted industrial relations |
At the relevant time the first applicants were the joint and several deed administrators of the second applicant which was subject to a Deed of Company Arrangement. The respondent was the registered proprietor of a property situate at Mitchell Street, Darwin. The second applicant was the assignee of a lease granted by the respondent to Lorlina Pty Ltd on 6 March 2003. Since the assignment (20 June 2005), the second applicant had conducted a business on licensed premises on the property at Mitchell Street, Darwin. On 24 April 2008, by resolution of the directors of the second applicant, the second applicant entered into voluntary administration which resulted in the appointment of the first applicants as the administrators. On 12 June 2008 the respondent wrote to the second applicant giving notice of intention to terminate the lease effective from the date of the service of the notice on the ground that an Insolvency Event had occurred by reason of the second applicant being placed into administration. The respondent was not able to take possession of the property, notwithstanding there had been a default: s 440C and s 440D of the Corporations Act . Eventually the second applicant executed a Deed of Company Arrangement which provided, inter alia, for the continuation of the second applicant's business on the premises owned by the respondent. The applicants sought the respondent's agreement to the continuation of the lease but that agreement was not forthcoming. The lease which was granted to Lorlina Pty Ltd was if both renewals were exercised for a period of 25 years and would not expire until 2027. Mr McKenzie, who was the General Manager of Property of the respondent's holding company said that the lease was entered into when the retail market in Darwin was depressed. He said the length of the lease was more than double any other lease he managed. The leasehold property forms part of the respondent's cinema complex in Darwin which has five auditoriums. The property is, Mr McKenzie said, of strategic importance to the respondent's long-term development plans regarding a range of potential retail users. The respondent made two offers to the applicants for a new lease. The first was for a term of two years with three renewals options of one year, subject to a redevelopment clause. The second was for a term of five years with no renewals options on terms consistent with the lease. The respondent said that the offers were made to avoid this litigation. Because no agreement could be reached with the respondent, the first applicants applied under s 444F of the Corporations Act for an order that the respondent not take possession or otherwise recover the Mitchell Street property. The applicants were successful on that application and the order mentioned above reflects that success. During the course of the proceedings the applicants contended that they would also be entitled to an order relieving the second applicant from forfeiture. However, I determined that that relief had not been pursued in the applicants' Points of Claim. The applicants sought to amend their Points of Claim to include that plea but that application was refused. Thus it was that the first applicants were successful on the claim for relief under s 444F of the Corporations Act but the applicants were unsuccessful in relation to a claim for relief from forfeiture. During the proceeding the respondent also sought to amend its pleadings. The respondent's counsel attempted to cross-examine Mr Strazdins in relation to the existence of a management agreement that was to be entered into between the administrators and a third party. The respondent had not pleaded that that management agreement also gave the respondent a right to terminate the lease. It sought leave to amend its Points of Defence to raise that issue but that application was also refused. I handed down my reasons with the direction that the applicants bring in Minutes of Order to reflect my reasons for judgment which should include the appropriate conditions to be made under s 446F(6) of the Corporations Act . I also indicated that I would hear the parties on the question of costs. The applicants brought in short Minutes of Order which, after some argument and some amendment, eventually became the orders of the Court. At the same time, the applicants sought an order that the respondent pays the applicants' costs of and incidental to the proceeding save and except the costs of and incidental to the applicants' application for leave to amend its Points of Claim. In that regard, the applicants submitted that it would be appropriate that the applicants pay the respondent's costs of that application. The applicants argued that the respondent should pay their costs because of they had been successful on the application under s 444F and costs should follow the event. They recognised however that they had been unsuccessful on their application for leave to amend their Points of Claim and, in those circumstances, they should not have their costs and that they should pay the respondent's costs of that application. That proposal recognised that the applicants had been successful in relation to their claim under s 444F and unsuccessful in relation to the application for leave to amend the Points of Claim. On the other hand, the respondent argued that the appropriate order for costs should be that the applicants pay the respondent's costs. The respondent contended that the applicants should pay its costs for four separate reasons. First, it contended that it had a contractual right to costs and in that regard relied on clause 4.7 of the lease. The respondent contended that clause 4.7(d) gave the respondent a right to costs and therefore an order should be made in the respondent's favour. I do not think that argument can be accepted. Clause 4.7(d)(iii) itself recognises that a court may make an order for costs other than in accordance with the provisions of clause 4.7. In my opinion, clause 4.7 does not constrain or otherwise detract from the general discretion reposing in a court to order costs in any proceeding before the court: s 43 of the Federal Court of Australia Act 1976 (Cth). The agreement between the parties however is a relevant factor to be taken into account in the exercise of the court's discretion. Next the respondent argued that, consistent with the decision of the Supreme Court of New South Wales in Fekala Pty Ltd v Cenbond Pty Ltd [2001] NSWSC 340 , an order for costs ought to be made in the respondent's favour. In that case, the Court was concerned with two interlocutory applications relating to an order under s 441D(2) of the Corporations Act . Section 441D operates to protect a company's property during an administration. Section 441D allows an administrator to apply to the Court for an order that a chargee or receiver or other person not perform specified functions or exercise specified powers during the course of the administration: s 441D of the Corporations Act . The section allows the Court to restrain a secured creditor from realising on the creditor's security. In Fekala Pty Ltd v Cenbond Pty Ltd [2001] NSWSC 340 , the Court was asked to make an order under s 441D where the administrators had had considerable time to put forward some firm proposal in relation to a payment due to the secured creditor and even at the time of the hearing could only put forward a speculative proposal. The administrators were not in a position to give any undertaking as to damages. The trial judge, Young J, made the order under s 441D only because he thought there was some chance that the secured creditors would benefit by the order being made. He made it a condition of the order, without saying why, that the administrators pay the costs of the application. It seems to me that that case is no authority for any general proposition that when a court makes an order under s 444F , the court should award the chargee or the owner or lessor of property its costs. Justice Young did not say that. He merely made it a condition of the order that the costs be paid. In my opinion, that case is not authority for the proposition advanced by the respondent. Next the respondent contended that, if the applicants had applied to the Court for relief under the Law of Property Act 2000 (NT), the Court could have made an order for costs in favour of the respondent. The applicants did initially include in their application a claim for relief under that Act but that was abandoned very early in the hearing. The matter did not proceed under that Act. It seems to me irrelevant what powers the Law of Property Act 2000 (NT) gives to the Court in relation to costs for applications under that Act. Next it was put that there is a presumption that where a party seeks an order for relief from forfeiture that the party seeking relief ought to pay the lessor's costs. In support of that contention the respondent relied on Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247. That was a case for relief from forfeiture under s 128 of the Conveyancing Act 1919 (NSW) in which the trial judge (Young J) was of the opinion that, in the exercise of the Court's discretion relief should be granted. His Honour addressed the question of costs and said "it is abundantly clear that as the price of getting relief against forfeiture the plaintiff must pay the lessor's reasonable costs": Hayes v Gunbola Pty Ltd 4 BPR 9247 at 9255. His Honour referred to Howard v Fanshawe [1895] 2 Ch D 581 at 592 where he said the ordinary order was that the plaintiff must bear the costs of the action except where those costs have been increased by the defendant resisting the claim and those costs must be borne by the defendant. If the court thinks the lessor ought not have opposed in toto the grant of relief from forfeiture, the court may make the lessor pay the costs so far as they have been increased by the lessor resisting the claim to relief on any terms ... But the court may make, and has in one case at any rate made, the lessee pay all the costs, notwithstanding the lessor contested his claim to relief at all: Quilter v Mapleson [1882] 9 QB 672. It is a question for the court's discretion in each case. On an application for relief from forfeiture the applicant is seeking an indulgence from the Court, namely to be excused from the consequence of the applicant's breach and to be allowed to remain in possession of the leased premises. In those circumstances it is understandable why the courts may from time to time impose as a condition of the grant of relief the payment by the applicant of the respondent's costs. There is no rule to that effect, nor could there be. Such a rule would interfere with the court's unfettered discretion in relation to costs. It would also be a licence to a landlord to unreasonably resist a claim for relief from forfeiture. On an application under s 444F the administrator is seeking to prevent the owner or lessor seeking to exercise its right to take possession or otherwise recovering property. It must be assumed in an application relying on s 444F that the owner or lessor has the right to possession or recovery of the property. Otherwise no such application would need to be made. In those circumstances it may be appropriate to make it a condition of the order that the applicant pay the respondent's costs or some part of those costs as the price of the order. But again there is no rule to that effect and again, for the reasons already mentioned, nor could there be. If there were a rule to that effect then an owner or lessor could behave unreasonably and put the administrators to the cost of proceedings unnecessarily or by their behaviour increase the costs of the proceeding. The purpose of an order for costs is to compensate the party in whose favour the costs order is made for the costs of the proceeding. The orders for costs are not an indemnity but are designed to compensate the party in whose favour the order for costs is made in part for the costs of the proceeding. The purpose of an order for costs is not to punish the party against whom the order for costs is made: Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 543, 563 and 567; Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72 at 96. But that said however, if a party does behave unreasonably in resisting an application or in the conduct of the proceeding generally, the Court may take that matter into account in determining where the burden of costs should lie because that kind of conduct may have increased the costs incurred by the other parties to the proceeding. In this case the respondent acted as it did, in my opinion, to further its commercial interests. The respondent wished to obtain possession of the property so that it could develop the property. The lease which was granted to Lorlina Pty Ltd was potentially, if both renewals were exercised, for a period of 25 years, which would have inhibited the respondent's ability to develop its property. The respondent was not so much concerned about the ability of the second applicant to pay rent in the future or comply with what were the terms of the terminated lease. It was more concerned with obtaining a commercial advantage. In those circumstances, its actions in resisting this application should be taken into account in assessing the appropriate order for costs. In my opinion, it is a relevant factor in determining any order for costs on a s 444F application that the administrators have sought an indulgence from the Court to restrain an owner or lessor from exercising a right that would otherwise be available to be exercised to take possession or otherwise recover property. The respondent contended that it ought to be paid the whole of its costs of the proceeding for the reasons mentioned. The applicants contended in reply that the orders which they had proposed reflected their winning on one issue and their failing on another. In my opinion, it would be appropriate to address the question of costs in the following manner. First, to acknowledge that the applicants in this case sought an indulgence of the kind to which I have referred. Secondly, to have regard to the contractual arrangements between the parties, which indicate that the parties intended that in any litigation in relation to the lease the burden of costs should fall upon the second applicant. Thirdly, to acknowledge that the respondent was entitled to resist the application if the respondent would suffer a real detriment by the granting of the order. Fourthly, to acknowledge that the respondent's failed application to amend its pleadings increased the costs of the litigation. Fifthly, to acknowledge that the applicants claim to be entitled to the relief from forfeiture and its application to amend to include such a claim also increased the costs of the litigation. Sixthly, that despite the respondent's opposition the first applicants were successful. In my opinion, it would be an appropriate exercise of discretion that there be no order as to costs and there will be an order accordingly. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | corporations act 2001 (cth) s 444f application to restrain an owner or lessor from exercising right to take possession or otherwise recover property court's discretion in the award of costs of the application no order for costs made. costs |
On 20 June 2008, Portman served a notice on Golden West pursuant to s 249D of the Corporations Act 2001 (Cth) (the Act) requesting Golden West to call and arrange to hold a general meeting of its shareholders. Portman wished to propose certain motions for the appointment of two persons nominated by Portman as directors of Golden West and to remove two current directors of Golden West. (Golden West was not initially named as a defendant so has styled itself as an intervenor). 2 By notice dated 21 July 2008, Golden West called the meeting of its shareholders. It was to be held on 29 August 2008 at 2.00 pm Western Standard Time (the Meeting). The Notice of Meeting set out the motions requested by Portman together with a number of other motions relating to other items of business which were proposed by Golden West. It also contained a proxy form in respect of voting. 3 By letter dated 13 August 2008, Portman then also wrote to all shareholders in Golden West setting out its recommended vote and reasons for the voting on all the motions proposed by the Notice of Meeting. It included a pre-completed proxy form which advised shareholders how to complete and lodge the Portman proxy form. 4 Portman requested that the shareholders return the completed proxy form to Portman's office by a certain date. That date was sufficiently early to enable Portman to collect the proxies and to deliver them to the company within a timeframe which would enable compliance with the requirements of s 250B of the Act. Portman received completed proxy forms from approximately 181 shareholders in Golden West representing about 12% of the voting shares. The proxy forms were then delivered to the registered office of Golden West in Perth. The forms were delivered prior to the deadline required for lodgement with Golden West. 5 At approximately 4.30 pm on the afternoon of Thursday, 28 August 2008, Portman's solicitor was telephoned by Mr Martin Bennett, solicitor. Mr Bennett explained that he would be chairing the Meeting and that he had provisionally formed the view that each of the completed Portman proxy forms was invalid. It followed that the votes reflected in those completed proxy forms would be disallowed. There were several exchanges by telephone and email debating the point but the position was unable to be resolved. About an hour before the Meeting was due to be held, Portman filed these proceedings in this Court seeking injunctive relief. 6 Portman sought declaratory relief and/or alternatively orders pursuant to s 23 (or, I have assumed s 21) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) or in the alternative, pursuant to s 1324 of the Act. Specifically, Portman sought orders that the company not act on any resolution to be put at the Meeting or, alternatively, that the company be restrained from holding the Meeting. In the event of any of the proxies referred to at paragraph 10 in David Roger Davies affidavit of 29 August, being ruled invalid at the meeting of the company of 29 August 2008, until further order, the Company not declare the result or act upon any motion to be put at that meeting. 2. The costs of today be reserved. 3. There be liberty to either party to apply on short notice. 4. Any further material on which the applicant is to rely be filed and served by 1.00 pm on 1 September 2008. 5. Any further material on which the Company intends to reply in response be filed and served by 11.00 am on 2 September 2008. 6. The hearing be adjourned to Tuesday 2 September 2008 at 2.15 pm. Prior to the hearing on 2 September 2008 Portman provided a minute of proposed orders seeking declarations that the Portman proxies were not invalid and that the Chairman of the Meeting erred in law in disallowing the Portman proxies. At the hearing on 2 September 2008, as I had doubts about two of Golden West's arguments, I extended the orders of 29 August 2008 until delivery of this judgment. For the following reasons (which do not rely upon those two arguments), the proceedings will be dismissed. (1A) The person appointed as the member's proxy may be an individual or a body corporate. Note: A body corporate may appoint a representative to exercise the powers that the body corporate may exercise as the member's proxy, see section 250D. (2) The appointment may specify the proportion or number of votes that the proxy may exercise. (3) Each member may appoint a proxy. If the member is entitled to cast 2 or more votes at the meeting, they may appoint 2 proxies. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half of the votes. (4) Disregard any fractions of votes resulting from the application of subsection (2) or (3). Note: Even if the proxy is not entitled to vote on a show of hands, they may make or join in the demand for a poll. However, if the constitution does not deal with this, a proxy's authority to speak and vote for a member at a meeting is suspended while the member is present at the meeting. Note: For strict liability , see section 6.1 of the Criminal Code . An appointment may be a standing one. (2) If a company has a constitution, the constitution may provide that an appointment is valid even if it contains only some of the information required by subsection (1). (3) An undated appointment is taken to have been dated on the day it is given to the company. (4) An appointment may specify the way the proxy is to vote on a particular resolution. Note: A company's constitution may provide that a proxy is not entitled to vote on a show of hands (see subsection 249Y(2)). Note: For strict liability , see section 6.1 of the Criminal Code . (6) An appointment does not have to be witnessed. (7) A later appointment revokes an earlier one if both appointments could not be validly exercised at the meeting. (3) This section applies despite anything in the company's constitution. For the purposes of the application, it was accepted by Portman that even if the Portman proxy forms had been treated as valid and included in the vote, that Portman would not have prevailed. That is to say, the majority of shareholders who voted had voted contrary to the wishes of Portman. In the light of that concession, I raised with counsel for Portman, Mr Holler the appropriateness of granting declaratory relief. It could make no difference to the substantive rights of the parties as even if the ruling by the Chairman were wrong, and the Portman proxies were included, the outcome of the voting at the Meeting would have been unaffected. 19 Mr Holler's argument was that it is quite likely that Portman will seek to call further meetings and that it wishes to know whether collecting completed proxies before forwarding them to the company is valid compliance with s 250B of the Act. Secondly, he submitted that for the purpose of those future hypothetical meetings, the shareholders as a whole would then appreciate that the vote was much closer than was declared at the Meeting. In those circumstances they might be persuaded to support Portman's position, he submitted. 20 In Industrial Equity Ltd v New Redhead Estate & Coal Co Ltd [1969] 1 NSWR 565, Street J as his Honour then was considered a similar situation. In that case the plaintiff had attempted to have three directors elected at the annual general meeting of the defendant. Many proxies were lodged for the meeting, some in favour of the plaintiff and some in favour of the defendant. The chairman disallowed some 160 proxies, mostly in favour of the plaintiff. His Honour said that the most significant aspect of the case from a practical point of view was that of the three persons proposed by supporters of the existing board, for election as directors, two of them, even if every challenge propounded by the plaintiff were accepted, would still have been elected. His Honour said at 570 'in accordance, then, with the well settled approach in this Court, no occasion arises for any grant of equitable relief in respect of the election of those two persons'. There must be a real question involved, and the declaratory relief must be directed to the determination of legal controversies: Re Judiciary and Navigation Acts [1921] HCA 20 ; (1921) 29 CLR 257. The answer to the question must produce some real consequences for the parties. The party seeking declaratory relief must have a real interest to raise it: Forster v Jododex Australia Pty Ltd [1972] HCA 61 ; (1972) 127 CLR 421 at 437 per Gibbs J and Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd at 448 per Lord Dunedin. Generally there must be a proper contradictor: Russian Commercial & Industrial Bank at 448; and Ainsworth at 596 per Brennan J. Their Honours made the point that "[i]t is now accepted that superior courts have inherent power to grant declaratory relief"; and "[i]t is a discretionary power which `[i]t is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise"' (a reference to a passage from the judgment of Gibbs J in Jododex at 437). See also Oil Basins Ltd v Commonwealth at 649 per Dawson. ... These are the rules that should in general be satisfied before the Court's discretion is exercised in favour of granting declaratory relief. This Court has undoubted power to grant declaratory relief whether or not any consequential relief is or could be claimed: s 21 of the Federal Court of Australia Act 1976 (Cth); and Ainsworth per Mason CJ, Dawson, Toohey and Gaudron JJ at 581-582. See also Commonwealth v Sterling Nicholas Duty Free Pty Ltd [1972] HCA 19 ; (1972) 126 CLR 297 at 305 per Barwick CJ; Telstra Corporation Ltd v Australian Telecommunications Authority (1995) 133 ALR 417 at 424-425 per Lockhart J; and Young on Declaratory Orders (2nd ed, 1984) p 74. 22 As observed by Le Miere J in MTQ Holdings Pty Ltd v RCR Tomlinson Ltd [2006] WASC 96 at [121] , declaratory relief is a discretionary equitable remedy. The power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances calling for their making. For the reasons I have earlier stated, the irregularity in denying the plaintiffs the opportunity to object to certain proxies did not cause any substantial injustice. That is, the declaration would not remedy any substantial injustice. 124. A declaration that (the director) breached his duty as a director will not lead to resolutions 1 and 2 being void or the issue of the shares consequential upon those resolutions being reversed. In that sense, the declaration would have no practical effect. His Honour also declined to make an order under s 1322(4) of the Act making declarations concerning the validity of resolutions passed at the general meeting under consideration. 24 For similar reasons I would also decline to grant the declaratory relief which has been sought as, in my view, granting the declaration will not achieve anything in terms of reversing the resolutions or invalidating the resolutions nor would it resolve any presently outstanding dispute between the parties in circumstances where even if the Portman votes were counted and included, Portman would not have achieved its objectives. I also take into account that even if I clearly held a view different from that expressed in Bisan Ltd v Cellante [2002] VSC 430 (and I do not), there would be little clarification of the law as contended by Portman. Rather there would simply be two different opinions. For reasons expressed below, the better course, whether or not it is compelled by the proper construction of s 250B of the Act is for completed proxies to be returned directly to the company holding the meeting at which the vote is to be exercised. Mr Bruce submitted that there was not. 26 The existence of a 'matter' within the meaning of Ch III of the Constitution and s 39B of the Judiciary Act 1903 (Cth) is a jurisdictional prerequisite to the grant of declaratory relief under s 21 of the FCA Act. 27 A 'matter' is the justiciable controversy or dispute or the subject matter for determination in a legal proceeding: Scott v Handley (1997) 79 FCR 236. Whilst each of these inquiries may be pursued separately, all are related aspects of the basal question, "is there a 'matter' in the sense required by Ch III of the Constitution ? His Honour also observed (at [40]) that whether or not there is a real controversy between the parties to litigation is a question of judgment. The resolution of that dispute depended upon the application of a statutory provision which required an assessment of the likely future consequences of an acquisition of shares. Any declaration made by the Court would have immediate legal and practical consequences . In the present case, by contrast, no facts material to a specific dispute between the Institute and the Commissioner are pleaded. No consequences would flow from the making of declarations, at least without a series of further factual findings and determinations on issues of law. The circumstances of the present case are therefore far removed from those of AGL v ACCC (No 2) . Accordingly, the court lacks jurisdiction to entertain the Institute's claim. In support of that argument, Golden West relied on Bisan Ltd [2002] VSC 430. Portman, on the other hand, contends Bisan was either wrongly decided or is distinguishable. Golden West contends that Bisan was correctly decided, for good reason and that it is directly applicable. I agree with Golden West on this issue. 31 In Bisan Ltd [2002] VSC 430 , Bisan Ltd and Eromanga Hydrocarbons NL were listed public companies. Each had a common board of directors. Bisan sought an order restraining the holding of a general meeting of each of the companies called by the defendants pursuant to s 249F of the Act. Dodds-Streeton J had made orders on 10 October 2002 in respect of a meeting scheduled for 15 October 2002 restraining the holding of the meeting. In her Honour's reasons published subsequently she observed (at [22]) that the right to appoint and vote by a proxy is an extremely significant statutory entitlement embodied in s 249X of the Act which is a mandatory section for public companies. Any provision in a public company's constitution inconsistent with the requirements or terms of s 249X would be ineffective. Similarly, the requirements of ss 249Y, 250A, 250B and 250BA of the Act would override any inconsistent provision contained in a corporate constitution. In that case, Bisan Ltd's constitution was partially inconsistent with s 249X(3) of the Act but her Honour pointed out that a 'more significant defect' relied upon by the plaintiffs was that the relevant notice stated that the proxies may be sent or delivered to Omnium. (Omnium was a representative of Cellante). 32 By s 250(4) of the Act, the company's constitution, or the notice of meeting may reduce the period of 48 hours. In this case, neither the constitutions nor the notices reduced the 48 hour period. Section 250BA must logically refer to notices sent by the company. 34 Mr Cameron, counsel for the defendants, referred to the defendants' readiness to provide an undertaking to deal with all proxies received by them in respect of the meetings in compliance with s 250B of the Act and lodge them with the relevant companies at least 48 hours before the meeting. He contended that such an undertaking would overcome the defect and that appointments of proxies should be construed benevolently. No doubt strict compliance would not be possible in respect of proxies received at the very point of expiry of the stipulated period. If the undertaking were otherwise a sufficient remedy, that circumstance would appear relatively insignificant. 36 Much more significant, in my opinion, is the fact that the relevant proxies would be received by each company only following initial receipt by a third party. While it is liberal in affording rights to 5 per cent of shareholders to call a general meeting, the Act in s 250B expressly stipulates receipt by the company within the minimum period. While the company's constitution may reduce the minimum period (see s 250B(5)) the constitution cannot modify the requirement for receipt by the company. In the present case, however, Portman contends that there is no such requirement contained in the section. Such a requirement would require, it is submitted, the insertion of the word 'directly' after the word 'received' or some other clear statutory imperative that proxies must only be provided to the company. Portman submits that Bisan Ltd [2002] VSC 430 should not be followed as it requires the imposing of a gloss over the plain language of the Statute. Additionally, it is argued that the purposive construction adopted by her Honour is not supported by any other aspect of the Act. In this regard, I note that the Explanatory Memorandum does not specify any intent on the part of the legislature that proxies should be returned directly to the company rather than via a third party. Very little is said on proxies in the Explanatory Memorandum. (Nothing relevant to proxies was said in the Second Reading Speech). 5.565 Under proposed new paragraph 250D(1)(d), a body corporate appointed as a proxy for a member will be able to nominate an individual to exercise its powers at meetings (Item 14). Electronic authentication of proxy appointments 5.566 Proposed new subsection 250A(1A) will permit regulations to prescribe authentication mechanisms for authentication of proxy appointments other than signature (Item 9). A consequential amendment to subsection 250A(1) will be made to recognise other authentication methods (Item 8). Electronic submission of proxy forms 5.567 It is proposed to replace subsections 250B(3), which deals with the receipt of proxy documents, with a revised subsection that will permit companies to offer a facility for electronic submission of proxy appointment forms and related appointment authorities (Item 11). An appointment authority is a document such as a power of attorney by which a member has authorised another person to appoint a proxy on the member's behalf. Consequential amendments to paragraph 250B(1)(b) will be made to recognise other authentication methods (Items 10 and 11). 5.568 Subsection 250BA(1), dealing with the requirements for listed companies to specify how proxy documents are to be submitted, is proposed to be replaced to recognise the availability of the new facility (Item 13). 34 For Portman it is argued that when the Act is so specific about the method of completion of proxies in the sections which precede s 250B, it would be curious not to see such an express requirement that proxies be returned only directly to the company. 35 Portman argues that as there are other provisions entitling relief in circumstances where there has been an interference with the proxy process that the legislative intention was to turn to those provisions in circumstances of actual interference with a proxy. In my view, the difficulty with this argument is that if the proxies are returned directly to the company, the need to investigate or prove tampering with proxies by third parties is eliminated. 36 The only occasion on which Bisan Ltd [2002] VSC 430 has been followed in Australia appears to be in Lion Selection Limited 02 [2008] ATP 16 , a decision in June 2008 of the Australian Takeovers Panel. In that case the Panel declined to conduct proceedings following receipt of similar undertakings as those proffered in Bisan . The Panel considered there was no reasonable prospect of it finding that there were unacceptable circumstances when those undertakings were given. The apparent, as well as the actual integrity of the corporate electoral process, is important. Lion was concerned that Indophil might not lodge with Lion any proxy form which did not support Indophil's position in relation to the Lion Plan resolutions. Lion submitted that in such circumstances Lion would not know that such proxy forms existed and the vote of shareholders would not be exercised as the shareholder intended. The Panel considered that Indophil's undertakings (see paragraph 18) adequately resolved this issue. Given the number of votes that were actually cast "For" and "Against" the resolutions, the Panel considered that the Indophil proxies did not affect the outcome of Lion's shareholder meeting. As has been mentioned, Golden West itself sent out proxy forms with the Notice of Meeting. These were received by all shareholders and in the covering letter Golden West made recommendations as to how the shareholders should vote. Those proxy forms required the shareholders to complete and return them to the company, Golden West. Subsequently when Portman dispatched its proxy forms to all shareholders (which were pre-completed in favour of the voting which Portman recommended), some shareholders also completed those proxies and returned them to Portman. The effect was that some shareholders by completing both sets of proxies, intentionally or not, purported to vote twice in relation to the matters which were to be considered at the Meeting. There was no evidence as to whether the votes were always consistent but the particular difficulty which counsel for Golden West emphasised was that by receiving within time, but only just within time, 12% of the possible votes, the company was left with a substantial task shortly prior to the Meeting to consider the large volume of proxies received and also to analyse whether or not shareholders giving those proxies had previously signed the Golden West proxy forms. It was said that this was another reason why the legislature did not intend that the forms should go other than to the company. Implicit in this argument was the suggestion that if shareholders returned proxies that were sent out by the company to the company they would be more likely in the natural course of affairs, to come back to the company in a more even flow rather than in a large portion at the last minute. This practical consideration was also said to support the construction adopted in Bisan Ltd [2002] VSC 430. It was argued for Golden West that while it is a matter of convenience and commercially reasonable that someone in the position of Portman would wish to know how many proxies were being recorded in its favour, it could always request that a duplicate of the proxy form be forwarded to Portman when the proxy was returned to the company. 38 Although there is no suggestion of tampering with the proxies in any sense, counsel for Golden West has also pointed to the fact that Portman has not given any evidence as to the procedures that were taken on receipt of the proxies, how they were treated whilst in the possession of Portman and whether all of the completed proxy forms were in fact forwarded to the company. This might be contrasted with the position taken in Lion [2008] ATP 16: see the undertaking at [18]. But, in any event, on Golden West's argument, any form of undertaking or evidence of that nature would not satisfy or overcome the difficulties arising from non-compliance with s 250B of the Act. 39 In conclusion, my view on this topic is that while the Act does not expressly spell out that proxy forms are to be returned only to the company or directly to the company, the reasoning articulated in Bisan Ltd [2002] VSC 430 at [44] , reflects, with respect, a good deal of common sense. Also for the additional practical reasons discussed, while I may have been less emphatic about the construction placed on s 250B of the Act, there is no good reason to depart from the construction adopted in Bisan Ltd and I would not do so. See Hicks v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 757 per French J at [76] . 40 Portman also advances the alternative argument that Bisan Ltd [2002] VSC 430 is distinguishable as Golden West shareholders were given a choice. They could complete the company's form and return the proxy to the company or they could complete the Portman proxy form and return the proxy to Portman. It is difficult to see how this validates the Portman proxies if they were otherwise invalid. There is no suggestion that proxies which were sent to the company were invalidated by the Chairman. I do not think the argument assists Portman. This was said to be on the basis that until the Chairman had ruled, there was no arguable breach. I am not persuaded by this argument. The proceedings were issued as close as possible to the Meeting after attempts had been made to confirm the position that Golden West would take in relation to the proxies. The relief sought was declaratory and supported by suitable injunctive orders. There are many instances when foreshadowed breaches call for a declaration and injunctive relief before the breach occurs. Where otherwise appropriate, a declaration can be made in relation to a future event --- but perhaps only when it is quite clear that the conduct will occur: see the discussion in IMF (Australia) Ltd v Sons of Gwalia Ltd (2004) 211 ALR 231 and then on review on appeal in IMF (Australia) Ltd v Sons of Gwalia Ltd [2005] FCAFC 75 ; (2005) 143 FCR 274 at [16] per Moore J. (b) the Chairman of any meeting is the sole judge of the validity of every vote tendered and the Chairman's determination is final. 44 In my view, this issue has been decided on numerous occasions against the submission for Golden West. In that case, North J held that in the absence of fraud, a resolution for voluntary winding up of the company could not be impeached on the ground that the votes had been received improperly. If he had made a mistake in counting, for instance, the article would not apply. All the rule says is that any objections to votes are to be taken at the meetings, 'and every vote not disallowed at any one of such meetings shall be deemed valid for all purposes whatsoever. Pollock MR held that the Chairman was acting, in effect, as if he was an arbitrator chosen by the parties concerned, whose decision was to bind those parties on the question whether votes were to be treated as valid or not. His Lordship went on to say that the Chairman had been entrusted with powers which required him to decide whether or not the vote should be disallowed. Warrington LJ was of the same opinion. Sargant LJ also agreed. Here, all that is done is to take away from a shareholder a right of appeal against the decision disallowing an objection by him against the votes of some other shareholder, and it seems to me quite reasonable that such a question should be allowed to be decided summarily and finally by the chairman, although there should not be the same summary and final effect given to a decision against the right of a shareholder to vote. But whether making a ruling under cl 12.16 or generally, a Chairman's decision will be amenable to review by the Court if he makes an error of law. This proposition is well settled. It is convenient to refer to Link Agricultural Pty Ltd v Shanahan, McCallum & Pivot Ltd [1999] 1 VR 466. There, at 511, Kenny JA, with whom Batt JA and Buchanan J agreed, accepted the submission that the powers exercisable by the Chairman of a general meeting of a company were not unfettered and that "(b)roadly speaking, these powers could not be exercised so as unlawfully to deprive members of their votes". 68 Kenny JA reviewed a number of authorities which support that proposition, including Byng v London Life Association Ltd [1990] 1 Ch 170. There the Court of Appeal held that in exercising powers as Chairman of a meeting of the members of a public corporation, a Chairman would err in law if he did not take a decision reasonably, with a view to facilitating the purpose for which the powers had been conferred. The same approach was taken by Street J in Industrial Equity Ltd [1969] 1 NSWR 565. Further, I am not persuaded that I should take a different view from that expressed in Bisan Ltd [2002] VSC 430 nor that the facts in Bisan were relevantly distinguishable from the facts arising in the present circumstances. The plaintiff's application of 29 August 2008 be dismissed. 2. The Court declares that the intervenor is at liberty to declare the result of and to act upon the motions put at the Extraordinary General Meeting of the intervenor's shareholders held on 29 August 2008. 3. The plaintiff to pay the costs, including the reserved costs, to be taxed if not agreed. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | general meeting voting proxy votes forwarding proxies via a third party consideration of the requirements of s 250b of the corporations act 2001 (cth) whether a right of review declaratory relief injunctive relief justiciable controversy whether a cause of action single judge decisions judicial comity decision of single judge of same or coordinate jurisdiction to be followed unless clearly wrong authority of and confidence in courts corporations practice and procedure judges and courts |
I note that a previously constituted Tribunal in a decision dated 6 February 2006 had earlier affirmed a decision of a delegate of the Minister refusing to grant a protection visa to the appellant, but that the Federal Court in a decision of 4 October 2006 allowed an appeal against that decision and remitted the matter to the Tribunal for reconsideration. The matter before this Court concerns a subsequent decision of the Tribunal dated 11 January 2007 concerning the same visa applicant for a protection visa, where the Tribunal has again affirmed the decision of a delegate of the Minister to refuse to grant a protection visa to the appellant. To set aside the judgment of Driver FM dated 20 August 2007. To remit the matter to the Tribunal to determine according to law. 3. An order that no action taken to remove the applicant from Australia while the decision is pending. 4. An order of cost. And any further order that this honourable court may deem appropriate. On 22 April 2005 the appellant lodged an application for a protection visa. A delegate of the first respondent refused the application for a protection visa on 20 June 2005. The appellant claimed that he had suffered persecution by the local Sunni majority on the basis of his Shi'a religion. He asserted that in 1994 he was part of a group that was attacked by local Sunni Muslims, and he was jailed and later that year there was another attack and one of the group members was killed. The appellant claimed that the attackers were sent to jail but threatened to kill the appellant from jail, saying he was not a "true Muslim" and that it was a "jihad" to kill him. After they were released, the appellant claimed that they continued threatening him whereby he left his village but the Sunnis followed him and continued threatening him. The appellant asserted that in 2005 the Sunnis abducted him, but that he managed to escape and continued hiding until he left Pakistan. The appellant feared he will be killed should he return to Pakistan. The Tribunal found that the incident in 2005 was simply the result of his car being robbed by criminals. Further, the Tribunal found he had lived in Lahore for five years before his departure without being harassed, and that the people making the threats had remained in the village. The Tribunal was satisfied that there was no real chance that the appellant would suffer harm amounting to persecution for the reason of his religion in the future. 6 The Federal Magistrate viewed the first ground as a procedural fairness ground bearing on s 425 of the Migration Act 1958 (Cth). His Honour found no breach of procedural fairness as the appellant had been allowed to present his arguments and answer questions in the video link. Further, the Federal Magistrate noted that the Tribunal had carefully considered whether to adjourn the matter having regard to the appellant's medical certificate. 7 In relation to the subsequent grounds, the Federal Magistrate found that the Tribunal had not made a finding that certain documents were forged, but rather simply noted that as it was concerned about document fraud in Pakistan it would not rely on those documents alone. Further, His Honour stated that the Tribunal's failure to expressly refer to documents did not constitute a failure to consider them. 8 His Honour therefore found no jurisdictional error and dismissed the application. Failure by a court of first instance to consider a claim clearly raised by a litigant can give rise to a miscarriage of justice. So, for example, in the High Court decision QBE Insurance Ltd v Switzerland Insurance Workers Compensation (NSW) Ltd (1996) 70 ALJR 281 on appeal from the Court of Appeal of New South Wales, Gaudron, McHugh and Gummow JJ held that, in circumstances where a ground of cross-appeal was plainly arguable, and the judgment of the court below gave no indication that it had considered that ground (and, if it did, the reasons given by the court could not be regarded as proper reasons for rejecting that ground), there had been a miscarriage of justice calling for the intervention of the High Court. In those circumstances the High Court ordered that that the matter be remitted for re-determination to the Court of Appeal. Accordingly this is not a case where either the Tribunal, or the Court on judicial review, is required to consider whether relocation within Pakistan is a feasible option for the appellant. 15 In this case, I consider that this error of the Federal Magistrate is not a reason to allow the appeal from his Honour's decision or to remit the case to the Federal Magistrate for re-hearing. I take this view because I accept the submission of Mr Foreman that the appellant had no prospect of success in relation to this ground of judicial review before his Honour. To use the terminology of the High Court decision in QBE 70 ALJR 281, this ground of review was not "plainly arguable" in light of the findings of the Tribunal with respect to relocation of the appellant elsewhere in Pakistan. 16 In Randhawa 52 FCR 437 the facts demonstrated that the appellant in that case, a Sikh from the Punjab region of India, would have had a well-founded fear of persecution were he required to return to his family's home in the Punjab. However the Full Court in Randhawa 52 FCR 437 held that the Convention definition of "refugee" does not support a claim to refugee status in circumstances where the appellant, although having a well-founded fear of persecution in one region of a country, could avail themselves of protection elsewhere within that country. This is only the case, however, if it is reasonable in the circumstances to expect a person with a well-founded fear of persecution in relation to that part of the country from which they have fled to relocate to another part of the country of nationality. If it is not reasonable, their fear of persecution in relation to the country as a whole is well-founded (per Black CJ at 440-441 and 443, Beaumont J at 451, Whitlam J at 453). 17 The principles articulated by the Full Court in Randhawa 52 FCR 437 were recently affirmed by the High Court in SZATV v Minister for Immigration and Citizenship (2007) 237 ALR 634. But the situation may fairly be said to be covered by the causative condition to which reference has been made: for if a person is outside the country of his nationality because he has chosen to leave that country and seek asylum in a foreign country, rather than move to a place of relocation within his own country where he would have no well-founded fear of persecution, where the protection of his country would be available to him and where he could reasonably be expected to relocate, it can properly be said that he is not outside the country of his nationality owing to a well-founded fear of being persecuted for a Convention reason (at [7]). The Tribunal found that, although the appellant had a well-founded fear of persecution in his home village in 1994, in 1994 he had relocated to a city twenty kilometres from his home village. The Tribunal noted that he appeared to live there unharmed for several years. The Tribunal also found that the appellant then relocated to Lahore where it appears that he lived undisturbed for a number of years. Although the appellant was subject to an incident in 2005 where he was abducted and his car stolen, the Tribunal was not satisfied that those responsible were anything more than ordinary criminals intent on stealing a vehicle. It appears from the evidence and the history of the appellant's movements in Pakistan that it was reasonable for the appellant to relocate within Pakistan. Accordingly, the Tribunal found that he did not have a well-founded fear of persecution in Pakistan. 19 No jurisdictional error is apparent from the findings of the Tribunal with respect to this issue. In my view, even if the matter were returned to the Federal Magistrate for rehearing there are no prospects of success of the appellant's claim before his Honour that the Tribunal erred in its finding that the appellant could safely relocate within Pakistan - and indeed, had safely relocated after 1994. 20 I turn now to the appellant's notice of appeal. The Federal Magistrate had failed to find error of law, jurisdictional error, procedural fairness and relief under s 39B of the Judiciary Act 1903 (Cth). 2. The Federal Magistrate had dismissed the case without considering the legal and factual errors in the Tribunal decision. 3. The Federal Magistrate made a legal, factual and jurisdictional error in not applying the principles laid down in Randhawa 52 FCR 437. 4. The Federal Magistrate failed to take into consideration that the Tribunal decision was unjust and made without taking into account the full gravity of the appellant's circumstances and consequences of the claim. 5. The Tribunal had ignored relevant material as to the appellant's Shi'a background which put his life at risk, relied in part on irrelevant material and made a finding which was erroneous or mistaken. 6. There had been a lack of procedural fairness in his case along the same line as Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601. In particular, the appellant claimed that his case was identical to Muin [2002] HCA 30 ; 190 ALR 601, where the Tribunal had misled the applicant before it in that case to believe that the Tribunal had read some material. 7. The Federal Magistrate did not consider the appellant's application dismissed on the date of hearing the application, and the appellant was not legally represented at the hearing before the Federal Magistrate. 8. The Tribunal was affected by jurisdictional error in that the Tribunal did not take into account certain relevant considerations or "integers" central to the appellant's claim. 9. Although as a general proposition the appellant must demonstrate that it is expedient and in the interests of justice that new grounds of appeal be raised - O'Brien v Komesaroff [1982] HCA 33 ; (1982) 150 CLR 310 at 319, Coulton v Holcombe [1986] HCA 33 ; (1986) 162 CLR 1 at 7 - I am prepared to consider them in this appeal. He did not file any written submissions. At the hearing, he made lengthy submissions concerning his dissatisfaction with his previous solicitor (the history of which was discussed by Driver FM in his Honour's judgment and which in my view is not relevant to this appeal). He also expressed concern that his claims were not believed and that his documents were not given any credit. He strongly reiterated that his life would be in danger if he were to return to Pakistan and that during the ten years of his relocation in Pakistan he had lived in difficult conditions of marginal safety. 24 The respondent filed written submissions and Mr Foreman relied on those submissions, subject to a concession that the learned Federal Magistrate had not dealt with the ground of review concerning relocation. I have already considered this issue earlier in the judgment. However, in the circumstances I am prepared to interpret this ground of appeal as referable to the other grounds of appeal and the orders sought by the appellant. Decisions of the Tribunal are privative clause decisions and as such are not open to review on the facts: S157/2002 v Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476. As is clear from such cases as Attorney-General (NSW) v Quinn [1990] HCA 21 ; (1990) 170 CLR 1 and NAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 76 errors of fact do not give rise to jurisdictional errors. With respect to legal errors, other than the failure of Driver FM to deal with one of the appellant's grounds before his Honour - with which I have already dealt in this judgment - no legal errors are demonstrated by the appellant. In my view, for reasons given earlier, it is not sustainable. In any event, the Court cannot engage in review of the merits of the appellant's claims: NAHI v MIMIA [2004] FCAFC 10 at [10] . 30 In the absence of further particularisation, this ground of appeal cannot be substantiated. 32 With respect to the appeal before me, it is not clear as to which material the appellant is referring in relying on principles articulated in Muin [2002] HCA 30 ; 190 ALR 601. In the circumstances, this ground of appeal is not sustainable. As I indicated earlier in this judgment, the Court cannot engage in review of the merits of the appellant's claims: NAHI v MIMIA [2004] FCAFC 10 at [10] . This includes a finding by the Tribunal that documentation upon which the claimant relies is fabricated (see Re Minister for Immigration and Multicultural Affairs: ex parte Durairajasingham [2000] HCA 1 ; (2000) 168 ALR 407 per McHugh J at 67). 37 The Full Court held in WACO v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 171 at [54] that where the finding of fact made does not turn upon the credibility of the appellant and where there is nothing on the face of the documents themselves to alert the decision maker that they are forgeries, it is inherently unfair that the decision-maker conclude that they are not genuine without affording the person affected by that conclusion the opportunity of addressing the issue of possible fabrication. In this case, however with respect to a document purporting to be a copy of a First Information Report, referring to a crime by the appellant allegedly occurring after he had left Pakistan, and which the Tribunal concluded was not a reliable source of evidence, it is clear from the Tribunal decision that the Tribunal had questioned the appellant in relation to the document and expressed doubt at the hearing as to its provenance. In my view, there has been no absence of procedural fairness provided to the appellant in relation to that document or any claims he may have with respect to that document. 38 In the circumstances the appropriate order is that the appeal should be dismissed. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | appeal from decision of federal magistrate reviewing decision of the refugee review tribunal where federal magistrate failed to make findings with respect to a ground of application, namely whether tribunal erred in finding that the appellant could safely relocate within pakistan whether miscarriage of justice whether appeal should be allowed prospects of success whether tribunal actually required to consider whether relocation an option whether ground of appeal "plainly arguable" migration |
Separate objection was taken to para 75 of the affidavit on the basis of hearsay. It is convenient first to deal with the latter objection. As to that, it is apparent that the content of para 75 is put forward as operative rather than assertive hearsay. I note further that it is not proposed to tender the contents of the first sentence and, really, it would seem to me that would go to other matters of engineering opinion in that paragraph, as proof of the contents. The paragraph, insofar as it does concern hearsay, does nothing more, in my opinion, than provide a foundation - an identified foundation - against which Dr Mallen-Cooper came to furnish particular advice. I, therefore, overrule that objection. Insofar as the other objection is concerned, Dr Mallen-Cooper was an adviser whose input was provided in respect of the design of the upstream and downstream fishways in the form in which they ultimately came to take. He has, in his affidavit, recited that particular input. That input was in the nature of expert opinion. That opinion was not provided for the purposes of this litigation. It is, therefore, not in any way governed by the practice direction. It is true that some parts of his affidavit also go by way of what one might term later elaboration and further reflection of, and in respect of, advice which he gave at an anterior, preconstruction of fishway stage. Strictly speaking, it is possible to regard that latter content as falling within the content of expert evidence that would be covered by the practice direction. That is so even though Dr Mallen-Cooper is not disinterested in the sense that he had an involvement in the design phase. At most, that particular transgression, if it be that, would go to matters of weight. Of substance, though, is that Dr Mallen-Cooper's statement was provided in early August, well prior to the time when Dr Kind and Mr Tait came to confer in accordance with the pre-trail direction. There does not seem, and there certainly has not been raised in evidence, to have been any disposition on the part of the Conservation Council to involve Dr Mallen-Cooper in the conference or any perception that he ought to have been involved. Again, though, at its highest, that lack of involvement would go to matters of weight. More particularly, it is as well to recall that the statement of claim was, to use a neutral term, an evolving document, and particular aspects of Dr Mallen-Coopers' evidence, insofar as it goes beyond reference to past input, are referrable to what one might term that evolution, in my opinion. Further, and also of substance, is the fact that it is apparent that Mr Tait was, prior to that expert conference, and certainly prior to his giving evidence, seized with, in full, Dr Mallen-Cooper's statement. There has been no evidence in reply, either by way of a supplementary report filed prior to the trial commencing, or, for that matter, the subject of an application for leave to lead further evidence at the commencement of the case. In other words, such procedural fairness aspects as might attend the reception of those parts of Dr Mallen-Cooper's affidavit that relate to more than just past events have, in my opinion, been observed. Finally, there is no objection taken in respect of the relevance of the opinions that Dr Mallen-Cooper addresses. For these reasons, then, it seems to me that the objection is without merit. I overrule it. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | expert evidence objections hearsay relevance to admissibility of compliance with court's practice directions with respect to expert witnesses held expert's opinion not provided for the purposes of litigation held hearsay operative not assertive held objections overruled practice and procedure |
Mr Nick Jim Combis was appointed liquidator of Seminars International (the liquidator). On 18 June this year, the liquidator sought an order against the Commissioner pursuant to s 588FF of the Corporations Act 2001 (Cth) (Corporations Act) for the payment of the sum of $125,471.40. The occasion for the liquidator seeking that relief was a claim that moneys paid by the company to the Commissioner pursuant to a repayment arrangement which had antedated liquidation was voidable as against him. The Commissioner does not contest that, in the events which transpired following those repayments, a voidable transaction or transactions have arisen. Thus, inclusive of interest of $5956.62 on the sum I have mentioned, it is conceded on the part of the Commissioner that the liquidator is entitled to an order as an against the Commissioner, pursuant to s 588FF for the payment of the amount of $131,428.02. In turn, the Commissioner seeks an order pursuant to s 588FGA(2) of the Corporations Act against a director of Seminars International, Mr Roger Jeffrey Davies (Mr Davies). Mr Davies has become the Second Defendant in the proceedings, pursuant to interlocutory process issued against him at the behest of the Commissioner. I note that such a practice was the subject of approval by Mackenzie J in Harris v Commissioner of Taxation [2006] QSC 108 at [25] . Earlier this year I made orders providing for substituted service in respect of Mr Davies. The material read this morning on behalf of the Commissioner satisfies me that he has been served in accordance with those orders. Mr Davies has not appeared today. The evidence before me establishes that, of the sum of $125,471.40 previously referred to, the sum of $68,544.94 was applied by the Commissioner to Pay As You Go (PAYG) withholding liabilities of the company to the Commonwealth under subdivision 16B of Pt 2 - 5 in Sch 1 to the Taxation Administration Act 1953 (Cth). The evidence further establishes that Mr Davies was a director of the company at the time when the payments were made. I have already referred to the amount of interest which is payable by the Commissioner to the liquidator in addition to the basic conceded amount of the preference. That interest is $5956. Proportionately, having regard to the PAYG withholding component of the preference, the interest liability in respect of which the Commissioner is entitled to indemnification is therefore $3255.50. The evidence further establishes that the Commissioner has incurred the following disbursements in relation to the application brought against Mr Davies, namely: a filing fee: $288; a fee for attempted personal service: $46; and a fee for the filing of the substituted service application: $288. The Commissioner has, therefore, established a basis upon which, in my opinion, he is entitled to indemnity as a sequel to the order which I shall make against him at the behest of the liquidator. The amount of indemnity to which the Commissioner is entitled is $68,544.94 plus $3255.50. He is entitled to such an order pursuant to s 588FGA(2) of the Corporations Act . The Commissioner is further entitled to an order in respect of the disbursements which I have mentioned. Because the Commissioner appeared by an officer authorised in that behalf pursuant to the Taxation Administration Act , rather than by either the Australian Government Solicitor or some other person entitled to the payment of professional costs, there can be no order in respect of professional costs. There will, therefore, be orders in terms of the drafts provided. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | winding up liquidator appointed voidable transaction moneys paid by company to commissioner of taxation antecedent to liquidation constituted a voidable transaction commissioner required to pay money to liquidator commissioner entitled to an indemnity pursuant to s 588fga(2) corporations act (cth) corporations |
2 Section 1292(2)(d)(ii) of the Corporations Act relevantly provides that the Board may, if it is satisfied that a person who is registered as a liquidator under the Corporations Act has failed to carry out or perform adequately and properly certain duties, by order, suspend for a specified period the registration of that person as a liquidator. On, or possibly before, 20 November 2006, the Board decided to exercise the powers in s 1292(2). On that day, it made orders that registration of the applicant as a liquidator be suspended for a period of three months, commencing 60 days after the order takes effect. The form of the order is somewhat curious. It may be that the Board was intending to exercise the power conferred by s 1297 of the Corporations Act . Under s 1297(1) , an order made by the Board suspending the registration of a person as a liquidator comes into effect at the end of the day on which there is given to the person a notice of the kind referred to in s 1296(1). However, under s 1297(2) , where the Board makes such an order, it may, in order to enable an application to be made to the Tribunal for review of the decision to make the order, determine that the order is not to come into effect until a specified time or until the happening of a specified event. It may be that the Board intended to make a determination that its order for suspension of the registration of the applicant as a liquidator not come into effect for the period of 60 days after the order was made. However, that is not what the Board did. In any event, that curiosity does not appear to be relevant to the issue presently before the Court. 4 Section s 1317B(1) of the Corporations Act provides that an application may be made to the Tribunal for review of a decision made under the Corporations Act by the Board. On 30 November 2006, the applicant filed an application to the Tribunal for review of the Board's decision to exercise its powers under s 1292(2). 5 On 4 December 2006, the Tribunal directed that the order made by the Board on 20 November 2006 ' be stayed and not come into effect until the hearing of this matter or until further order '. However, the Tribunal declined to make any further order under s 41 of the AAT Act, as sought by the applicant. 6 The applicant now seeks an order for review of the decision of the Tribunal to refuse to make further orders under s 41 of the AAT Act. The applicant seeks that review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act'). Alternatively, the applicant seeks orders under s 39B of the Judiciary Act 1903 (Cth). The ground of review under the ADJR Act is that the Tribunal erred or misdirected itself in finding that it did not have power to make the further orders under s 41 of the AAT Act sought by the applicant. 7 The question is whether the power to make an order ' staying or otherwise affecting the operation or implementation ' of the Board's decision extends to an order prohibiting compliance with s 1296(1) of the Corporations Act . The Tribunal concluded that it had no such power because of observations made by Heerey J in Allied Asia Holdings (Aust) Pty Ltd v Australian Securities & Investments Commission [2002] FCA 566. There, ASIC made a decision under s 21(2)(c) of the Insurance (Agents & Brokers) Act 1984 (Cth) ('the Insurance Brokers Act') to refuse to renew a company's registration as a general insurance broker. On the same day, ASIC notified that company that it intended to publish a press release recording that facts and the findings made in the course of making the decision. The company sought to restrain ASIC from publishing the press release until the decision to refuse renewal had been reviewed by the Tribunal. At that stage, there had been no application to the Tribunal for review. A fortiori, there had been no application to the Tribunal for exercise of the powers conferred by s 41. 8 Heerey J also observed, however, that there was a statutory obligation imposed on ASIC by s 21(5) of the Insurance Brokers Act, which provides that, if ASIC refuses to renew the registration of a company under that Act, ASIC must publish notice of the refusal in the Gazette . His Honour considered that it was pointless to issue an injunction if the same result would follow by the publication of notice of refusal in the Gazette . The power conferred by s 41(2) of the AAT Act is to stay or affect the operation or implementation of a decision. It is not, in its terms, a power to suspend or stay the decision itself. 10 ASIC submitted that the operation of a decision is the way in which the decision works and that the implementation of a decision is the carrying out or putting into effect of the decision. Thus, ASIC contended, the making of orders that the registration of a liquidator be suspended would be an implementation of the decision to suspend the registration as that liquidator. Under s 1286(1)(a)(v) of the Corporations Act , ASIC must cause to be entered in the Register of Liquidators, in relation to any person who is registered as a liquidator, particulars of any suspension of the registration of that person as a liquidator. ASIC pointed to such an entry as another example of an implementation of a decision to suspend. Compliance with s 1296(1) , it says, however, is not implementation of the decision; nor, said ACIC, is it the operation of the decision. 11 Clearly, the implementation of a decision is distinct from the decision itself; so is the operation of a decision. However, some meaning must be given to the word ' operation ' when it appears in s 41(2) that is different from the meaning to given to ' implementation '. As a matter of ordinary English, ' operation ' includes the exertion of force or influence, a working or activity, a manner of working, or the way in which a thing works (see Shorter Oxford English Dictionary , 5 th ed, Oxford University Press, Oxford, 2002). It also means the state of being operative, or the act, process or manner of operating (see Macquarie Dictionary , 4 th Ed., The Macquarie Library Pty Ltd, 2005). On the other hand, ' implementation ' involves completion or execution, fulfilment or putting into effect (see Shorter Oxford English Dictionary ). 12 If the decision of the Board to make orders had not been made, there would be no obligation arising under s 1296(1) to lodge notice of the decision with ASIC or to publish a notice in the Gazette setting out the decision. Further, if the decision were set aside, one consequence would be that, for many purposes, it would be as if the decision had not been made and did not have any effect. If that happened before compliance with s 1296 , there could be no obligation to lodge a copy of a notice with ASIC or to publish a notice. Such an obligation could exist only for so long as the decision continued to have effect. 13 Section 1296(1) is concerned with the consequences of the fact of making a decision. A period of 14 days is allowed for the Board to give a notice of the decision, lodge a copy of that notice with ASIC and publish notice of the decision. However, it is the fact that an effective decision to exercise powers has been that triggers those obligations. If no effective decision had been made, because a purported decision was invalid for one reason or another, there would be no obligation. 14 As I have said, s 1297(1) provides that an order suspending the registration of a person comes into effect at the end of the day on which notice under s 1296 is given to the person. However, that provision is expressed to be subject to s 41 of the AAT Act. No such qualification appears in s 1296. 15 Under s 216 of the Australian Securities and Investments Commission Act 2001 (Cth) ('the ASIC Act'), hearings by the Board are take place in private, unless a person who is entitled to be given an opportunity to appear at a hearing requests that the hearing take place in public. Thus, some protection is afforded to a registered liquidator against detriment that might follow from publication of the fact of an investigation by the Board. 16 More significantly, there is provision in the AAT Act for a hearing to take place in private, although the presumption is reversed. Section 35(1) of the AAT Act provides that, subject to the balance of that section, the hearing of a proceeding before the Tribunal is to be in public. However, s 35(2) provides that, where the Tribunal is satisfied that it is desirable to do so, the Tribunal may direct that a hearing shall take place in private. Indeed, the applicant applied for an order under s 35 of the AAT Act, although that application was dismissed on 4 December 2006, when the Tribunal declined to make the further orders under s 41. 17 The presence of s 35 in the AAT Act assists in the interpretation of the phrase ' operation or implementation ' in relation to a decision that is the subject of a proceeding in the Tribunal. Since the Tribunal is to have power to direct that a hearing take place in private, there would be a deficiency in the armoury of the Tribunal to ensure just dealing with an application for review, if the benefit intended to be conferred by an order under s 35(2) were to be frustrated because the Tribunal could not prevent adverse consequences from the publication of the fact of the making of the decision that was to be the subject of review by the Tribunal. 18 The original legislative predecessor of s 1296(1) appears to be s 30M(1) of the Companies Act 1981 , enacted by the Commonwealth Parliament for the Australian Capital Territory, which was the template for the cooperative scheme for the National Corporations Law. Section 30M was inserted in 1983. Section 1296(1) is consistent with a requirement for prompt public disclosure of certain matters in the interests of the public at large. It is easy to see the policy behind the requirement for prompt publication of a decision such as that under review. 19 Such a policy would explain, for example, the requirement under s 213 of the ASIC Act for the Board to disclose otherwise confidential information to certain classes of bodies to assist them in their functions. One of the possible qualifications for registration as a liquidator is membership of a professional body. As such, a liquidator will be subject to professional disciplinary arrangements of that body. Gazettal of decisions by the Board serves the purpose of bringing the Board's decisions to the attention of such body. 20 However, there is nothing in the legislative background to suggest that publication of the fact of a decision is in the public interest even if the decision is set aside. Deferring the obligation to comply with ss 1296(1)(b) and (c) until the question of the validity of the decision in question has been determined would not necessarily be inconsistent with the apparent object of those provisions. 21 I consider that the Tribunal has power to make an order affecting the operation of the Board's decision in a way that would obviate the obligation to comply with s 1296(1). For example, an order that the obligations referred to in ss 1296(1)(a)and (b) be taken not to have arisen in relation to a particular decision would be an order affecting the operation of that decision. Such an order would have the effect that the Board was not required to lodge with ASIC a copy of the notice of its decision, or to publish notice of its decision in the Gazette. 22 It follows that the applicant is entitled to relief under the ADJR Act in respect of the decision of the Tribunal to decline to make a further order under s 41 of the AAT Act. The applicant contended that the Court should direct the Tribunal to make the orders sought by the applicant. However, that is a matter for the Tribunal and the Court should not usurp the decision making functions of the Tribunal. For example, the Tribunal must consider whether any order, such as the applicant seeks, is appropriate for the purpose of securing the effectiveness of the hearing and a determination of the application for review. The Tribunal declined to make an order under s 35 that the hearing before the Tribunal be in private. It is by no means clear that, even if the Tribunal had concluded that it had power to make the orders sought by the applicant, it would have made them. It is therefore inappropriate for the Court to entertain any suggestion that it exercise the discretionary power conferred on the Tribunal. 23 In the circumstances, I propose to invite the parties to bring in short minutes of proposed orders to give effect to my conclusions. Unless the parties wish to submit to the contrary, ASIC should pay the applicant's costs of the proceeding. There should be no other order as to the costs of the proceeding. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | proper construction of s 41 of the administrative appeals tribunal act 1975 (cth) in a review by the tribunal of a decision of the companies auditors liquidators disciplinary board whether the tribunal has the power to order decision and reasons for decision not be published statutory interpretation |
John Krueger is its Managing Director. The First Respondent, Glen Cameron Storage & Distribution Pty Ltd ("GCSD") and the Fifth Respondent, Glen Cameron Nominees Pty Ltd ("GCN"), are both companies in the Glen Cameron Group (together "Camerons"). Camerons is a transport and logistics group involved in transporting goods throughout Australia. The Second Respondent, Mr Glen Cameron ("Mr Cameron"), is the sole director of GCSD and GCN. The Third Respondent, Mr Martyn Tindal ("Mr Tindal"), was the Sales Manager of the Glen Cameron Group from 20 May 2002 to 22 July 2005. The Fourth Respondent, Vawdrey Australia Pty Ltd ("Vawdrey"), manufactures and sells semi-trailers and truck bodies throughout Australia. It is a competitor of Krueger. 2 In these proceedings, Krueger alleges misuse of confidential information by the Cameron parties and copyright infringement and contravention of the Trade Practices Act 1974 (Cth) ("the TPA") by the Cameron parties and Vawdrey. (Emphasis added. It will be necessary to return to consider each element of the confidential information later in these reasons for decision. 4 The "load restraint system" was to deal with cartage of palletised cardboard boxes produced by Amcor Fibre Packaging ("Amcor"). The boxes were to be carried in double stacked pallets up to 2.7 metres high on a 48 foot ("ft") dropdeck curtain-sided trailer. A 48ft dropdeck curtain-sided trailer carries 12 pallets along each side of the truck. The nine pallets on the dropdeck are double stacked. The three pallets on the higher deck are not double stacked. Krueger asserts that it created the load restraint system to deal with the Amcor cargo and that after it disclosed the system to Camerons, Camerons disclosed it to Vawdrey and Vawdrey used it to win the contract with Camerons. These allegations are denied by Camerons and Vawdrey. 5 The "load restraint system" in issue and shown in the Krueger Drawings requires further explanation. Those drawings show at least seven posts along each side of the truck. Each post was a sliding post. Attached to or "hanging off" each post was a special light weight gate which, because of its size and shape, acted as a load restraint for two pallets. Each of the posts with the attached special gates could be slid along the side of the truck as a unit and when each was slid to the end of the truck, they formed a single stack. As will later appear, the feature of the load restraint system that is of most importance for present purposes is the gate attached to or hanging off each sliding side post. 6 Krueger submitted, on two bases, that Camerons owed Krueger an obligation of confidentiality in relation to the information specified in [3]. First, Krueger submitted there was a contractual obligation arising out of an express agreement to keep certain information confidential between Krueger and Camerons that was reached at a meeting on 2 December 2002 at Camerons' premises ("the Cameron / Krueger meeting"). Secondly, Krueger submitted there was an equitable obligation arising from the relationship of the parties, the nature of the information in issue and the circumstances in which Krueger disclosed the information to Camerons. 7 The Cameron / Krueger meeting was attended by John Krueger and his son, Grant, on behalf of Krueger and by Mr Cameron and Mr Tindal on behalf of Camerons. Krueger contends that during the course of the meeting, a verbal agreement was reached that Camerons would keep private and confidential any ideas or designs for the load restraint system proposed by Krueger. Krueger alleges that the confidential information was then disclosed to Camerons both during the Cameron / Krueger meeting and after that meeting. Mr Cameron denies that confidentiality was discussed at any point during the meeting and denies that there was any express agreement as to confidentiality. 8 Camerons did not dispute it was obliged to keep confidential any information of Krueger's that was not already publicly available, but submits that Krueger did not disclose to it any information that could be characterised as confidential in nature and, in any event, denies having disclosed what Krueger described as "confidential information" to Vawdrey. (Emphasis added. 10 Krueger's case was thus based on inferences, which it said should be drawn from established facts. The principles to be applied in such a case are well established. They were described by Dixon CJ in Holloway v McFeeters [1956] HCA 25 ; (1956) 94 CLR 470 at 477, and by Williams, Webb and Taylor JJ at 480 and 481 (in the context of litigation arising from a vehicle collision) by comparing and contrasting the hypotheses that could be adopted to explain proved facts and the drawing of an inference from those facts. Hypotheses of this kind are not inferences. What is required is a basis for some positive inference involving negligence on the part of the driver as a cause of the deceased's death. The inference may be made only as the most probable deduction from the established facts, but it must at least be a deduction which may reasonably be drawn from them. It need not be an inference as to how precisely the accident occurred, but it must be a reasonable conclusion that the accident in one way or another occurred through the lack of due care on the part of the driver and not otherwise. In an action of negligence for death or personal injuries the plaintiff must fail unless he offers evidence supporting some positive inference implying negligence and it must be an inference which arises as an affirmative conclusion from the circumstances proved in evidence and one which they establish to the reasonable satisfaction of a judicial mind . It is true that "you need only circumstances raising a more probable inference in favour of what is alleged". But "they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is mere matter of conjecture. " These phrases are taken from an unreported judgment of this Court in Bradshaw v. McEwans Pty. Ltd . [(Unreported, delivered 27th April 1951)], which is referred to in Holloway v. McFeeters [1956] HCA 25 ; [(1956) 94 CLR 470] , by Williams, Webb and Taylor JJ. The passage continues: "All that is necessary is that according to the course of common experience the more probable inference from the circumstances that sufficiently appear by evidence or admission, left unexplained, should be that the injury arose from the defendant's negligence. By more probable is meant no more than that upon a balance of probabilities such an inference might reasonably be considered to have some greater degree of likelihood. " [1956] HCA 25 ; [(1956) 94 CLR 470 , at 480-481] But the law which this passage attempts to explain does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied . Amcor invited Camerons to respond to the Tender. The closing date for responses was 13 December 2002. 14 Camerons wished to respond to the Tender. If Camerons' response to the Tender was successful, Camerons would need to purchase at least 20 trailers to carry the Amcor cargo. On 4 October 2002, prior to receiving the Tender, Tindal obtained a quote from Vawdrey for the manufacture of one 14.6 Drop Deck 'Titeliner' (Curtainsided) trailer (the Vawdrey proprietary name for a 48ft dropdeck curtain-sided trailer). Cameron did not seek quotes from any other manufacturer at that time. Tindal's evidence was that he only sought one quote to avoid tipping off the industry that Camerons might be seeking a substantial number of trailers. I do not accept that explanation. It might be an explanation for why a quotation was sought for only one trailer but it does not explain why only one manufacturer was invited to quote for the manufacture of that trailer. 15 In any event, in late November 2002, Tindal sought further quotations from three manufacturers; a second quote from Vawdrey and a first quote from both Krueger and Barker Trailers Pty Ltd ("Barker") for the manufacture of 48ft drop-deck curtain-sided trailers. The quotes submitted by the manufacturers all included, as standard, a full set of gates, together with load binders for strapping the cargo. These gates were all approximately the same size --- either 1500mm or 5 feet high --- and were standard lift out gates. The First Krueger Quote (of $57,695 inc GST) was cheaper than either of the Vawdrey Quotes (of, respectively, $62,000 and $58,000 ) and the Barker Quote (of $60,320). No drawings were submitted with the quotes. 16 After receiving the quotes, Camerons decided to meet separately with each of Vawdrey, Krueger and Barker to discuss issues of load restraint and proposals for delivery of trailers and price. The fact that Cameron met with Vawdrey and then Krueger on 2 December 2002 and subsequently with Barker on 3 December 2002 is not in dispute. 17 What is in dispute is what transpired at the meetings at Camerons' premises between, first, Mr Cameron and Mr Tindal on behalf of Camerons and Paul Vawdrey on behalf of Vawdrey ("the Cameron / Vawdrey meeting"), and then at the Cameron / Krueger meeting. The Barker meeting may be put to one side for the moment. There was little or no evidence directed to that event. The evidence given by Mr Cameron, Mr Tindal and Paul Vawdrey of what transpired at that meeting was far from satisfactory and substantially inconsistent. The meeting was held at Camerons' premises and commenced at approximately 11.00am. It is not disputed that it preceded the Cameron / Krueger meeting. 19 Paul Vawdrey made handwritten notes on his copy of the Second Vawdrey Quote of what transpired at the meeting. Those notes record, in part, " 11 POSTS AS COVERAGE ON ". Paul Vawdrey's evidence was that the note recorded that a load restraint proposal was discussed by Vawdrey and Cameron that he (Paul Vawdrey) proposed. He said that he proposed to use a post per pallet space and that Mr Cameron and Mr Tindal liked the idea. Significantly, the notes do not describe anything "hanging off" or "extending from" each post, nor do they otherwise suggest that at this meeting there was any discussion of such a load restraint system. 20 Paul Vawdrey's evidence at trial was substantially different from and inconsistent with the account he had previously provided to the Patents Office of the same events on 15 March 2005 in the context of a patent application by Krueger for what became known as the "Slide-A-Gate" system. GCN were seeking to purchase 22 curtain sided semi-trailers for transporting double loaded pallets. I recall a discussion in the meeting about restraining the load and I recall the suggestion ( I do not recall by whom ) of using existing ("knee joint") sliding side posts at each pallet space to restrain the load. In other words the posts would be spaced along the sides of the trailer mid-way between the ends of each pair of double loaded pallets to prevent the pallets, and hence the goods on the pallets, from moving off the sides of the trailer. I further recall some concern being expressed at the meeting, as to whether a single post at each pallet space would be sufficient to restrain the load, or whether some additional restraint should be provided on each post . (Emphasis added. Further, there was no reference in the statutory declaration to anything "hanging off" or "extending" from each post. Taken at its highest, the account of events given in the statutory declaration spoke only of a concern being expressed that "some additional restraint should be provided on each post". Whether there would need to be additional restraint and, if so, what it might be, was not said to have been discussed. 21 What is not now in dispute is that during the Cameron / Vawdrey meeting Paul Vawdrey drew hand sketches of the load restraint proposals discussed during the meeting. The hand sketches are entitled, respectively, " CARGO NET INNER CURTAIN TRACK ", which has been crossed through (consistent with the rejection of that proposal by Mr Cameron during the meeting, see [24] below) and " 1 POST PER PALLET SPACING ". A copy of each of the sketches is in Annexure 2. The latter sketch was not crossed through. Mr Cameron recalls Paul Vawdrey drawing sketches during the meeting but does not recall what they looked like. Tindal recalls Paul Vawdrey drawing "1 Post Per Pallet Spacing". He also recalls that Paul Vawdrey "drew some other sketches" but does not recall what they looked like. Tindal was also in the habit of making handwritten notes about the proposals. 22 These contemporaneous documents thus record that during the course of the Cameron / Vawdrey meeting the idea of a "post per pallet" was discussed. The contemporaneous documents do not suggest, however, that there was any discussion of anything "hanging off" or "extending from" each post. 23 Mr Cameron's affidavit evidence of what transpired at the meeting referred to Tindal's affidavit. ... I cannot specifically recall whether my exact words were " a device extending off each post " or " something hanging from each post ". I do not recall drawing the shape of a hoop in the sky using my hands as I said those words, but I may have. (Original emphasis. What then did Tindal's affidavit say? So far as is relevant, his evidence was that it was he (Martyn Tindal), not Paul Vawdrey, who raised the issue of a load restraint system that would "restrain double stacked pallets and prevent them from falling out when the curtains on the side of the trailer were opened. " Tindal recalled that Paul Vawdrey suggested using cargo nets but that was immediately dismissed because the nets would have caught on the pallets. That is consistent with Paul Vawdrey having drawn the sketch labelled "CARGO NET INNER CURTAIN TRACK" and then crossing it through (see [21] above). 25 According to Tindal, it was after the rejection of the cargo net idea that Mr Cameron asked Paul Vawdrey if they could use conventional sliding posts located at each pallet space along the side of the trailer with "something hanging off or extending from each post to act as a load restraint, which was smaller and lighter than most traditional gates... [but] big enough to restrain double stacked pallets and not allow them to slip through". 26 What then is said to have occurred, at least according to Tindal (and by him adopting it, Mr Cameron) is that Mr Cameron also said "it would not be practical to have one post per pallet space because it would be laborious to remove all the posts" (emphasis added). One post per pallet space would have required 12 posts on each side of a 48ft trailer. Paul Vawdrey is also said to have indicated that he would submit a drawing and a cost estimate. 27 That offer and the steps that followed are important. They are important because they are not consistent with either Mr Cameron or Paul Vawdrey having proposed posts with special gates hanging off or extending from each post at the meeting. I will return to consider the subsequent steps taken by Cameron and Vawdrey later in these reasons for decision (see [40]ff below). It started at approximately 12.45pm when John and Grant Krueger met with Mr Cameron and Mr Tindal at Camerons' premises. 29 Mr Cameron and Mr Tindal told John and Grant Krueger that the Tender required a solution to occupational health and safety problems associated with "lift out" gates in conventional curtain-sided trailers. There was discussion about possible solutions to those problems. Mr Cameron asked John Krueger whether it would be practical to use a sliding side post per pallet. Asking that question is consistent with the discussion of a load restraint proposal during the Cameron / Vawdrey meeting going no further than a discussion of sliding side posts without any additional element. John Krueger rejected the proposal of using only sliding side posts as inefficient, impractical and unsafe. After the nature of the Amcor cargo was revealed, John Krueger drew the Krueger Sketch, a copy of which forms part of Annexure 1. The Krueger Sketch is important. It is a concept drawing. A section of the Krueger Sketch shows the cross section of part of the pelmet or top rail on the side of the truck with two rollers. Hanging from that pelmet is a sliding post. The fact that the post is to slide is indicated by the roller either side of the post. Attached to the sliding post is a gate with cross members. The gate and the cross members appear to be fixed to each post ("the Krueger Concept"). 30 John Krueger's evidence was that he showed the Krueger Sketch to Mr Cameron and Mr Tindal and explained the Krueger Concept to them, including how it would be necessary to slide and stack the gates to ensure sufficient clear space for loading and unloading the trailer. John Krueger's evidence was that Mr Cameron and Mr Tindal were impressed with the Krueger Concept. 31 The evidence of Mr Cameron and Mr Tindal about the Cameron / Krueger meeting was inconsistent, both with each other and inconsistent with Mr Krueger's evidence. In his original affidavit evidence, Mr Tindal claimed that neither he nor Mr Cameron "referred to back strain suffered as a result of lifting gates" and that it was not "a condition of tender that any safety issue (or any other issue) be resolved". In his subsequent affidavit, however, Mr Tindal admitted that he may have referred to occupational health and safety issues in the meeting with Krueger as he was concerned about "preventing double stacked pallets from falling out when the curtains on the sides of the trailers were opened". Mr Cameron also presented conflicting evidence. In his affidavit, he claimed he did not see John Krueger make a sketch of his proposal, but in cross examination admitted that he knew John Krueger had drawn "something". The evidence of Mr Cameron and Mr Tindal was consistent in one respect --- that neither was particularly impressed with John Krueger's Concept. (Mr Tindal said he felt "[t]he mood of the meeting did not change as the meeting progressed". First, John Krueger telephoned Adel Gerges, a Krueger engineer. John Krueger told Gerges about the Krueger Concept and explained the way it was intended to work with side gates attached to the sliding side posts. John Krueger asked Gerges to evaluate whether the concept was workable. There was discussion about whether the roof would be strong enough to carry the gates when they were open and whether or not the gates could be stacked at either end of the trailer when loading and unloading the truck. The conversation lasted approximately 22 minutes. 33 Secondly, Grant Krueger met with Gerges and drew another hand sketch of the Krueger Concept. A copy of that sketch is at Annexure 3. In his presence, Gerges drew a further hand sketch of the Krueger Concept. A copy of that sketch is at Annexure 4. These events demonstrate that as early as the afternoon of 2 December 2002, Grant Krueger (who had no relevant engineering experience) was aware of and understood the Krueger Concept so that he was able to sketch the Krueger Concept and explain it to Gerges (the Krueger engineer). Armed with these two explanations, Gerges was able to prepare his own sketch and then direct the preparation of appropriate engineering layouts depicting the Krueger Concept. This series of events is significant as will become obvious later in these reasons for decision. 34 The next day, 3 December 2002, Gerges asked another Krueger employee, Stephen Hunt, to prepare engineering layouts depicting the Krueger Concept. On 4 December 2002, Gerges approved the engineering layouts prepared by Hunt and asked Hunt to convert them into sales drawings. 35 On 4 December 2002, Hunt prepared the sales drawings, depicting respectively, a 48ft dropdeck curtain-sided trailer with eight sliding side gates and a 53ft dropdeck curtain-sided trailer with nine sliding side gates, but without Krueger's standard copyright and confidentiality notice ("the Initial Krueger Drawings"). The drawings did, however, contain a prominent copyright symbol with the word "Copyright" immediately beneath it. Hunt provided them to Grant Krueger. The Initial Krueger Drawings are part of Annexure 1. The Initial Krueger Drawings bear the date 4 December 2002. Those drawings show at least eight posts along each side of the truck. Each post has attached to or "hanging off" from it a gate which, because of the gate's size and shape, acted as a load restraint for two pallets. 36 Despite Grant Krueger's evidence that he believes he faxed the Initial Krueger Drawings to Camerons on 4 December 2002 at around the same time that he faxed Krueger's second quote to Camerons at 1.38pm on 4 December 2002 (a quote over which confidentiality has not been claimed by Krueger), there is no independent objective evidence that the Initial Krueger Drawings were ever provided to Camerons, whether on 4 December 2002 or at some later time. However, the content of the Second Krueger Quote is itself important. 37 On 5 December 2002, in response to an instruction from Grant Krueger, Hunt prepared the "Interim Krueger Drawings" (a copy of which forms part of Annexure 1), being a 48ft dropdeck curtain-sided trailer with seven sliding side gates (as opposed to the eight in the Initial Krueger Drawings), and a 53ft dropdeck curtain-sided trailer with eight sliding side gates (rather than nine). Again, the Interim Krueger Drawings did not incorporate Krueger's standard copyright and confidentiality notice but did include the copyright logo described earlier. On the same day, Hunt prepared the "Subsequent Krueger Drawings" (a copy of which also forms part of Annexure 1), which are the same as the Interim Krueger Drawings but included Krueger's standard copyright and confidentiality notice. 38 The Interim Krueger Drawings were sent to Camerons at 12.46pm on 5 December 2002 and accompanied the Third Krueger Quote (see [3] above). The Interim Krueger Drawings were adapted from the Initial Krueger Drawings. 41 At 3.54pm on 2 December, Vawdrey forwarded its third quote to Camerons by facsimile. The Third Vawdrey Quote took as its starting point the Second Vawdrey Quote and amended it to take into account the matters discussed at the Cameron / Vawdrey meeting as recorded in Paul Vawdrey's handwritten notes on the Second Vawdrey Quote and the sketch " 1 POST PER PALLET SPACING ". This is inconsistent with what Mr Tindal was later to say in evidence that Paul Vawdrey knew he was supposed to draw up, namely "a trailer with a number of posts, some number less than 12, with something hanging off each post " (emphasis added). No drawing was included. That was not surprising. There was nothing new or unique in what Vawdrey was then proposing. 42 Paul Vawdrey's evidence was that after sending the Third Vawdrey Quote to Camerons at 3.54pm on 2 December 2002, he spoke to his father, Michael Vawdrey (who is also the person in charge at Vawdrey), and told him of the meeting earlier that day with Camerons, the Tender and the Third Vawdrey Quote. According to Paul Vawdrey, he told his father that the Third Vawdrey Quote incorporated sliding side posts at each pallet space and he then said words to the effect that "there is some concern that the posts won't fully restrain the load" and that further restraint was required. In response to this concern, Paul Vawdrey gave evidence (contrary to the evidence of the Cameron parties) that his father immediately suggested to him to put "hoops" on the posts as existed on the Gold Wingbars manufactured by Wingliner and used in Australia and Europe for many years prior to 2002. An image of the Gold Wingbars is at Annexure 5. Paul Vawdrey's affidavit went on to say that he and his father then attended Vawdrey's spare parts department where they inspected the Gold Wingbars and concluded that the hoops would be suitable for use in the Cameron Tender. 43 The version of events given by Paul Vawdrey raises more questions than it answers. It is not consistent with Camerons' version of what transpired at the Cameron / Vawdrey meeting and, in particular, it is not consistent with either Mr Cameron or Mr Tindal having already referred at that meeting to "hoops" or something hanging off the posts. Moreover, it is not consistent with Paul Vawdrey's statutory declaration to the Patents Office where he does not refer at all to the Gold Wingbars product but to a "pogo stick" which was said to have originated from the Ancra Company of Austria. An image of the pogo stick, known as "Cargo-Sta", is also at Annexure 5. 44 Mr Michael Vawdrey gave evidence that his son Paul told him about the Cameron quote in the afternoon of 2 December 2002. Michael Vawdrey's evidence was that Paul told him that he , Paul, had suggested to Camerons that they use a post per pallet but that Camerons were concerned that this might not be sufficient and upon hearing this, he (Michael) suggested the hoops idea. There is no independent objective evidence that the conversation took place on that date. It is more probable than not that the conversation actually took place in the afternoon of 4 December, given the lack of any corroborating oral or documentary evidence to suggest that Vawdrey started working on a hoop design on that date and the affirmative evidence that Vawdrey was still proposing a non-hoop design as late as the afternoon of 4 December: see [51]. However, even taking Vawdrey's evidence at face value (ie that it was Michael Vawdrey who first suggested using hoops and that the suggestion originated on 2 December), it still undermines the Camerons and Vawdrey evidence that Paul Vawdrey, Cameron or Tindal had already suggested the Krueger Concept or even that there should be anything "attached to or "hanging off" each post at the Cameron / Vawdrey meeting earlier that day. 45 On 3 December 2002 at 2.55pm, Mr Tindal sent to Mr Cameron a spreadsheet entitled "FLEETSPEC.xls". That document included a reference to Vawdrey's load restraint proposal of eleven posts comprising "Sliding Side Posts: 9 of $4500" in addition to the "Side Posts: 2 Per Side Sliding". (The spreadsheet did not include any details of the Second Krueger Quote because that second quote was not sent by Krueger to Camerons until it was included with the facsimile of 1.38pm on 4 December 2002. ) Again, contrary to the evidence of Mr Cameron and Mr Tindal that they had already discussed with Vawdrey that the side posts would have something hanging off them, the spreadsheet did not describe anything hanging off the side posts. 46 The events of 4 December 2002 are important. At about 11.55am, after speaking with his engineering group about the feasibility of the Krueger Concept, John Krueger telephoned Tindal on his mobile phone. The call lasted for approximately five minutes. Neither Tindal nor John Krueger was cross examined about the content of this conversation. According to John Krueger, he told Tindal that Krueger was confident that the concept would work and that a quotation and sales drawing would be sent to Camerons later that day. John Krueger's evidence was that he then asked Tindal whether any other manufacturer had provided Camerons with a concept that Camerons believed would work and Tindal told him that none had done so. Tindal did "not recall what was discussed during [this] telephone conversation with John Krueger". He did not deny the contents of the conversation as deposed to by John Krueger. 47 As I have said earlier, the next step in the chronology was that at 1.38pm on 4 December 2002, Krueger faxed Krueger's Second Quote to Camerons: see [36] above. By that time, an employee of Krueger had also prepared the Initial Krueger Drawings, but there was no objective evidence that the Initial Drawings were sent to Camerons: see [35]-[36]. 48 Next, at 2.13pm on 4 December 2002, there was a telephone call from the general Camerons office telephone number to a Vawdrey telephone number. The call lasted for three minutes and 24 seconds. This phone call occurred shortly after the Second Krueger Quote was received by facsimile by Camerons at 1.38pm on 4 December 2002. Krueger asserts that it was during this telephone call that someone from Camerons, probably Tindal, disclosed to someone at Vawdrey, probably Paul Vawdrey, Krueger's Concept. Tindal could not recall whether he made that telephone call. However, he did deny that he disclosed the Krueger Concept to Paul Vawdrey during that telephone call. 49 Paul Vawdrey accepted that he may have received a telephone call on 4 December from Camerons, but believed it was Mr Cameron, not Tindal, who he spoke to and that Mr Cameron was calling to ask him to send through Vawdrey's design drawings. Paul Vawdrey denied that during the conversation Cameron conveyed any confidential information to him. 50 Camerons submitted that the call could have been made by many people at Camerons about any number of business transactions going on between Camerons and Vawdrey at that time, including discussions about spare parts, VicRoads requirements for 53ft trailers and invoices. 51 The contemporaneous documents provide some assistance. Paul Vawdrey's copy of the Third Vawdrey Quote sent by him to Camerons on 3.54pm on 2 December was annotated by Paul Vawdrey after it was sent to Camerons. As noted above (see [41]), the Third Vawdrey Quote contained what were described as three "options". Paul Vawdrey annotated the quote by placing a "x" against each option. Paul Vawdrey could not recall when or explain why he placed the crosses on the page. However, there was another annotation on the facsimile cover letter enclosing the quote which supports the contention that the annotations were made during the conversation between Tindal and Paul Vawdrey at 2.13pm on 4 December. The annotation reads "Quote Xtra for 53.0ft". It was common ground that this was a reference to Camerons asking Vawdrey to quote for a 53ft and a 48ft dropdeck curtain-sided trailer. It was that issue that Tindal addressed the very next morning. 52 At 7.35am on 5 December 2002, Tindal sent by facsimile to Paul Vawdrey a document containing VicRoads 53ft trailer requirements that Tindal had received from VicRoads at 3.13pm on the afternoon of 4 December. Tindal addressed the facsimile to Paul Vawdrey and added the notation "As per discussion, Martyn". This evidence supports the inference that there was a temporally proximate earlier discussion between Tindal and Paul Vawdrey, namely, the telephone call at 2.13pm on 4 December 2002. The telephone call is important because Krueger would have the Court infer not only that a call was made from Tindal to Paul Vawdrey, but to take one further step --- to infer that the Design Concept was disclosed by Tindal to Paul Vawdrey during that telephone call. 53 Whether to draw this further inference depends upon whether Vawdrey adopting the design concept of sliding side posts and hoops could or did result otherwise than from it first having been told by Camerons of that solution (a solution Camerons knew because Krueger had told Camerons of it). What is the Krueger Concept? 2. Did Vawdrey design a proposal employing the same concept as the Krueger Concept on 5 December 2002? 3. If Vawdrey did employ the same concept, do the facts proved form a reasonable basis for affirmatively concluding that it is more probable than not that Vawdrey devised its solution based on disclosure of the Krueger Concept from Camerons rather than independently (ie without knowledge of the Krueger Concept)? 54 With respect to the first question, the Krueger Concept had several elements. Each had its part to play, but for present purposes, the critical element of the concept was the idea of having gates hanging off the sliding posts. As to the second question, there was no doubt that Vawdrey's solution incorporated that element. Camerons submitted that the First Vawdrey Drawing did not employ the same concept as the Krueger Concept because the "First Vawdrey drawing [did] not show gate but hoop, and not gate to coaming". I reject that submission. The critical element of the Krueger Concept was the idea of having gates hanging off the sliding posts. That the gate depicted on the First Vawdrey drawing did not contain cross members and did not go to the coaming (the floor of the trailer) did not result in the critical element of the concept not being present in the First Vawdrey drawing. 55 Thus, the crucial question is the third one: Is it probable that Vawdrey devised the solution it ultimately submitted (incorporating as it did the element of gates or hoops hanging off the sliding posts) based on disclosure to it of the Krueger Concept? 56 In answering this question, the fact to be borne in mind is that by the afternoon of 4 December 2002, no member of the Vawdrey staff had commenced, or had even been asked to commence, preparation of the Vawdrey drawing even though Paul Vawdrey had said that Vawdrey would provide Camerons with a drawing by Friday 5 December 2002 (and even though Michael Vawdrey had supposedly proposed the idea of hoops on the afternoon of 2 December: see [43]-[45]). 57 How then did the Vawdrey drawing come to be? Jason Underwood, an engineer and former Vawdrey employee, was called to give evidence on behalf of Vawdrey on this point. On 4 December 2002, Underwood was working from home when he received a telephone call from Michael Vawdrey asking him to attend Vawdrey's premises that day to prepare a drawing. He does not recall the time of the telephone call. Michael Vawdrey insisted that Underwood attend the premises that afternoon because the drawing had to be submitted to Camerons the next morning. Underwood travelled to Melbourne. The trip took between three and three and a half hours. 58 Underwood arrived at Vawdrey's premises late in the afternoon of 4 December 2002. He spoke to Michael Vawdrey who instructed him to prepare a drawing. To the extent that Michael Vawdrey's evidence was inconsistent, I reject it. It was apparent that throughout the course of evidence that Michael Vawdrey is a man who wields enormous control over operations at Vawdrey, who instils fear in many who work with him (including his son) and who embellished, whether intentionally or otherwise, the various events in issue. 60 The circumstances in which Underwood received his instructions late that afternoon are just one example of Michael Vawdrey embellishing his version of events. Michael Vawdrey's evidence was that Underwood arrived at approximately 4.45pm and that he fixed that time because the engineers had finished work and Underwood was drinking beer with them. I reject that evidence. Underwood's evidence was that he could not recall whether or not the engineers were finishing up but that he knew that they were not sitting around having a beer. Underwood's evidence was that "wasn't what they did at Vawdrey" and that he had "never had a beer at Vawdrey in [his] life". I accept that evidence. Underwood had no reason to deny it. 61 It was not seriously disputed that Underwood commenced the drawing at approximately 6.30am on 5 December 2002 and completed the drawing at some point between 7.30am and 3.00pm. Although the Underwood drawing did not display all the features of Krueger's Concept, it was a drawing featuring the critical element of sliding side posts with hoops attached. 62 At approximately 8.58am on 5 December 2002, Underwood telephoned Paul Vawdrey to obtain Camerons' facsimile number. He obtained what he presumed was Camerons' facsimile number. It was, in fact, Camerons' telephone number. None of the telephone and facsimile records produced into evidence record a transmission or even an attempted transmission to Camerons in the morning of 5 December 2002. Moreover, none of the facsimile records produced into evidence record a successful transmission of the Underwood drawing on 5, 6, 7 or 8 December 2002. The log of transmissions from the Vawdrey facsimile number record several unsuccessful transmissions to the Cameron telephone number at approximately 3.15pm on 5 December 2002. 63 A great deal of evidence was given about a number of subsequent events. For present purposes, however, it is necessary to deal with only some of those events. 64 It was not until 11.15am on 9 December 2002 that the First Vawdrey drawing was sent by facsimile to Camerons (a copy of which is at Annexure 6). For the first time, and on at least one version of the Vawdrey evidence, without any warning or explanation, a drawing was sent to Camerons which not only featured a new restraint system described simply as "special load restraining side posts" but showed side posts with gates attached. On any view, the appearance of a new restraint system without explanation is unlikely. At the very least, in the absence of an earlier explanation or discussion one would have expected some form of contemporaneous communication from Vawdrey to explain the concept. That it did not occur supports the inference that Paul Vawdrey and Tindal had discussed the concept during the afternoon of 4 December 2002. 65 What then followed on 9 December, in quick succession, was a telephone call from Camerons to Vawdrey at 11.57am. The call was short (11 seconds). Nothing happened for a couple of days and then on 11 December at 3.33pm, Camerons again telephoned Paul Vawdrey. Again the call was short (11 seconds). At that time, Camerons were chasing Vawdrey to provide a quote for what was now to be found in the First Vawdrey drawing. On any view, the Third Vawdrey Quote forwarded at 3.54pm on 2 December by Vawdrey to Camerons was no longer relevant. It was a quote for a different load restraint system and one which had been abandoned. 66 At 1.49pm on 12 December 2002, a facsimile was sent by Paul Vawdrey to Tindal at Camerons ("the Fourth Vawdrey Quote"). The Fourth Vawdrey Quote comprised a cover sheet and two drawings --- one for a 48ft trailer and the other for a 53ft trailer. The drawings were dated 12 December 2002. To supply special sliding side post's (sic) including the removal of the two set's (sic) of standard side post's (sic) the extra cost would be $985.00 per set of load restraining side post's (sic). ... (Emphasis added. However, no less significant was the language used by Paul Vawdrey to describe the load restraint system. The sliding side posts were described as special , not standard. The standard sliding side posts were to be removed. The special sliding side posts cost an extra $985.00 per set of load restraining side posts. The set was the post with the gate attached. The drawings attached to the cover sheet confirmed that fact. Again the drawings not only described them as "special load restraining side posts" but also showed sliding side posts with a gate attached. As Krueger submitted, it was a different load restraint proposal at a different price and it required the removal of the standard sliding side posts and the addition of special sliding side posts. 68 As noted earlier, the closing date for responses to the Tender was 13 December 2002. Before Camerons submitted its response to Amcor, Tindal telephoned Grant Krueger and asked his permission for Camerons to include the Subsequent Krueger Drawing in its response. Grant Krueger told Tindal that Camerons were permitted to use the Subsequent Krueger Drawing in that way. It was not submitted that the authorised disclosure of the Subsequent Krueger Drawing by Camerons to Amcor robbed the information of its confidential character or released Camerons from their otherwise general obligation to maintain it in confidence. That is not surprising. The Tender expressly provided that any response to the Tender would serve as a basis for any agreements and would represent a firm offer by the supplier to contract with Amcor on the terms and conditions described in the response (cl 1.1.2). The Tender went on to provide that Amcor assumed suppliers would meet all the terms of the attached Supply Agreement unless otherwise stated (cl 3.6). Camerons did not identify any relevant exclusions. 16.2.2 Not disclose such information, data, records and material (or permit its employees or agents to do so) except as may be necessary for the purpose of this Agreement. 16.2.3 On termination of this Agreement, whether by effluxion of time or otherwise, return to the other party (or destroy) all such information, data records and material. It included a copy of the Krueger Subsequent Drawing. With respect to the load restraint system, the proposal stated: "Our load restraint proposal will satisfy OH&S issues[. Our proposal centres around the experience of the past that the pallets need to be retained other than by the curtain to ensure that the load is stable when the curtains are pulled back at the customer delivery point. The design provides for the retaining system to remain in the vehicle at all times. The advantage is that it can be moved on a track to allow pallets to be loaded/unloaded. The drawing below shows the system. [A Subsequent Krueger Drawing was appended here. ] A key feature of the system is that the load restraint is fitted to the side sliding poles. (Emphasis added. 70 On 11 February 2003, Camerons' response to the Tender was formally accepted by Amcor. The next day, 12 February 2003, Vawdrey provided its Fifth Quotation and Third Drawing to Camerons. The quotation (dated 11 February 2003 but with a facsimile header of 12 February 2003) referred to a "telephone conversation" between Paul Vawdrey and Tindal on 11 February 2003. The enclosed specifications referred to "Six (6) special sliding posts for restraint per side". The Third Vawdrey Drawing depicted a 48ft trailer with what were still described as "special load restraining side posts" but which were now substantially larger. 71 As was properly conceded by Paul Vawdrey, the larger gates did not appear in any Vawdrey drawing until the day after Camerons were awarded the Amcor Tender in February 2003. The evidence of Paul Vawdrey and Underwood was that they could not recall why the size of the gates was increased. Both assumed that, consistent with usual practice, any increase resulted from a request of the customer and, in particular, a request from Tindal. Tindal denied making such a request. In support of his denial, he referred to the fact that Camerons did not employ any engineers and that it was incumbent on Vawdrey to ensure that the pallets were restrained adequately. I reject Tindal's evidence. Krueger submitted, and I accept, that it is open to infer that the increase in the size of the gates resulted from Camerons' obligation to provide to Amcor a load restraint system substantially identical to that detailed in its successful Tender proposal. That is to say, Camerons requested the amendment to the Vawdrey drawing more than two months after Vawdrey's original submission and on the day of (or one day after) winning the Tender so that the Vawdrey drawing would more closely match the successful Subsequent Krueger Drawing. Camerons' submission was that this inference was not open to be drawn because although Camerons were awarded the Amcor contract on the basis of the Subsequent Krueger Drawing, Camerons were not obliged to precisely follow that drawing because of the margin afforded to them in cl 14.2.5 of the Tender. That provision provided that it was up to Camerons to advise Amcor if any changes were required to the restraint mechanism to ensure the stability of the load. That submission is rejected because no changes were required to be made to the load restraint system shown in the Subsequent Krueger Drawing. Rather, the changes that were made were changes to the restraint system shown in the Vawdrey drawing to make it conform to the Subsequent Krueger Drawing. Clause 14.2.5 of the Tender, which gave Camerons the discretion (and indeed the obligation) to modify the successful (Krueger) system if it proved to be necessary for safety reasons (that is to say, it could have explained a decision by Camerons to drop the system shown in the Krueger drawing and adopt the system shown in the Vawdrey drawing on the basis that Vawdrey's design was more stable), does not and cannot have anything to say about why the Vawdrey drawing was amended to be more like the Krueger drawing. 72 The next morning, 13 February 2003, Paul Vawdrey and Tindal met to discuss the Fifth Vawdrey Quote. What transpired at that meeting was not the subject of oral evidence, but the contemporaneous documents assist. 73 At 1.30pm on 14 February 2003, Vawdrey submitted amended pricing and specifications for the trailer ("the Sixth Vawdrey Quote"). The price was now reduced to $57,500. There are three documents in Vawdrey's possession relevant to this issue. First, Vawdrey's copy of the Fifth Vawdrey Quote which was crossed through (consistent with the rejection of that proposal by Camerons) and, secondly, a copy of the Third Vawdrey Quote with Tindal's handwriting which had not been faxed by Camerons to Vawdrey. The handwritten notes on the copy of the Third Vawdrey Quote read "46645.45 + $3480 for sliding side gates = 50125". "$3480 for sliding side gates" was the price provided by Krueger to Camerons in the Third Krueger Quote. Vawdrey did not explain when or how it came to be in possession of the document. On any view, that document must have been provided by someone at Camerons to Vawdrey. 74 The third document was a copy of the Fifth Vawdrey Quote which contained handwritten annotations by Michael Vawdrey. There was no dispute that document contained Michael Vawdrey's handwritten annotations. Paul Vawdrey's evidence was that he may have discussed the document with his father. The notes are dated 14 March 2003. Krueger submitted that they were in fact made much earlier and should be dated 14 February 2003. The document on its face supports the inference that at least some of the document was prepared before 14 March 2003. The quote used was the Fifth Vawdrey quote. If the calculation was done in March 2003, one would have expected Michael Vawdrey to have used the later quote that Vawdrey issued. No less significant is the fact that the notes record the conclusion reached by Michael Vawdrey --- "WE WILL DO FOR $57,500 INC GST". $57,500 was the amount specified in the Sixth Vawdrey quote dated 14 February 2003. 75 Two other annotations are significant. First, the number of special sliding posts for load restraint per side had increased from six to seven. As the notes recorded, Vawdrey's price for seven posts was $57,500.00 (being the amount included in the Sixth Vawdrey quote for six posts). 76 Secondly, the notes recorded that the "price [Vawdrey] must do it for" was $56,653, being the price quoted by Camerons to Amcor of $51,503 plus GST. The GST exclusive price was made up of $46,645.45 (trailer price ex-GST from the Third Vawdrey Quote) plus $3,480 (price for sliding side post with gate from the Third Krueger Quote) and $1,378 (stamp duty as recorded in Camerons' response to Tender). There were, in fact, two references in the notes to $56,663.00. It was this amount that was included in the next Vawdrey quote. That quote was submitted by Vawdrey at 1.11pm on 17 February 2003, dated 16 February 2003 ("the Seventh Vawdrey Quote"). The price specified was now $56,653 ($51,503 plus GST), being the price quoted by Camerons to Amcor. 77 The Seventh Vawdrey Quote still referred to six special sliding side posts for load restraint per side. However, handwritten annotations on Paul Vawdrey's copy show a "(7)" noted next to the item "Six (6) special sliding posts for load restraint per side. " Although it is not clear when this annotation was added, the contemporaneous documents establish that the increase in the number of gates from six to seven was resolved during February because by 27 February 2003, Camerons and Vawdrey had a signed sales specification and order acknowledgement for 22 trailers with "seven (7) special sliding side posts for load restraint per side" at a total unit cost of $56,653.00. Michael Vawdrey's evidence was that the number of gates increased because Mr Worboys, one of his engineers, told him to do so. That evidence is rejected. Mr Worboys gave evidence, which I accept, that he had no involvement in the relevant drawings until March 2003, when he became involved in the process leading to the final Vawdrey drawings, being the Vawdrey Engineering Drawings (a copy of which is at Annexure 7). Furthermore, Alastair Lang, another Vawdrey engineer, accepted in cross-examination that the change occurred on or before 27 February 2003 and was not made pursuant to a direction from the Vawdrey engineering department. 78 In the absence of any other plausible explanation of when, and the circumstances in which, the number of gates was increased from six to seven, the evidence above provides more than a reasonable basis to definitively conclude that Camerons requested the increase to seven posts and that change occurred before 27 February 2003. 79 Just a few months later, on 14 April 2003, Paul Vawdrey sent a letter to Mr Cameron in which he referred to the Cameron / Vawdrey meeting again without referring to anything "hanging off" the posts. In this letter, Paul Vawdrey said " I [Paul Vawdrey] suggested using one side post per pallet spacing which would form a part of load restraint for the top and bottom pallet" (emphasis added). Mr Cameron took no action to correct that statement. 80 Lang, the engineer who had responsibility for drawings prepared by other engineers at Vawdrey, gave evidence that in March or April 2005, Vawdrey's solicitors requested the engineering department to provide electronic copies of the drawings that had previously been provided to them in hard copy. Lang's evidence was that although Michael Vawdrey was on leave, he had left instructions with Lang that Michael Vawdrey "knew that a certain sales proposal drawing had been drawn and sent to Cameron[s] on 5 December 2002 and that [Lang] should ensure that every sales proposal drawing [Vawdrey] send[s] to Vawdrey's solicitors is dated 5 December 2002". Lang's recollection, at the time, was that the original Cameron Job Package which contained the original hard copy documents had already been sent to Vawdrey's solicitors. Lang reviewed the electronic copies of every drawing relating to the Cameron Job Package. The electronic copy of Vawdrey drawing 25-1056-1 was dated 5 December 2002. The electronic copy of Vawdrey drawing 25-1056-2 was dated 12 December 2002. After checking all the information available to him (including the Cameron Job Package), Lang could find no record of anything having been sent to Camerons on 12 December 2002. Lang then went to Paul Vawdrey or Russell Baker. (The evidence discloses that it was Paul Vawdrey that he spoke to. Baker, a former director of Vawdrey, denied that Lang ever raised with him the issue of backdating the electronic drawings. Paul Vawdrey recalled the conversation. ) Lang told Paul Vawdrey that Michael Vawdrey had said words to the effect that everything had been sent on 5 December 2002. Paul Vawdrey's response was to the effect that "well we've go[t] to do what Mick told us to do". And that is what Lang did --- he backdated the date on the electronic copy of Vawdrey drawing 25-1056-2 from 12 December 2002 to 5 December 2002. I consider that it is more probable than not that the idea was not present to the mind of any of Cameron, Tindal or Vawdrey before Krueger revealed, at the Cameron / Krueger meeting, that this was his solution. I further consider that the idea was not present to the mind of anyone associated with Vawdrey until immediately before instructions were given to Underwood. There is nothing in the contemporaneous documents that would support the oral evidence of Cameron, Tindal or Vawdrey that the idea of using gates or hoops was devised independently by Cameron, Tindal or Vawdrey. Each separately claimed to be the source of the idea. In my view, none of them was. Michael Vawdrey's instructions to Underwood would not have incorporated the Krueger Concept had he not known of Krueger's solution via the prior disclosure from Tindal to Paul Vawdrey, and then from Paul Vawdrey to Michael Vawdrey. 82 The sequence and temporal proximity of events provides more than a reasonable basis to definitively conclude that there was a disclosure of the confidential information (in particular, the Krueger Concept) by Camerons to Vawdrey. The inference is further supported by the lack of explanation accompanying the appearance of the Krueger Concept in the First Vawdrey Drawing: see [64]. 83 Against those factual findings, it is necessary to turn to consider each of the legal claims. First, Krueger submitted there was a contractual obligation arising out of an express agreement to keep certain information confidential between Krueger and Camerons at the Cameron / Krueger meeting. Secondly, Krueger submitted there was an equitable obligation arising from the relationship of the parties, the nature of the information in issue and the circumstances in which Krueger disclosed it to Camerons. 85 Mr Cameron denies that confidentiality was discussed at any point during the Cameron / Krueger meeting, and that there was any express agreement as to confidentiality. Mr Cameron did not dispute that he, and his companies and their employees, were obliged to keep confidential any information of Krueger's that was not already publicly available. He does submit, however, that Krueger did not disclose any information that could be characterised as confidential in nature and, in any event, denies having disclosed Krueger's confidential information to Vawdrey. No breach of confidence claim was alleged against Vawdrey. 86 Given that Camerons denies that there was an express agreement, it is convenient to proceed on the assumption that there was no contractual obligation of confidentiality and deal first with Krueger's claim that Camerons breached an equitable obligation. Using that framework for analysis, three elements are necessary for a successful action in breach of an equitable obligation of confidence. First, Krueger must establish that the information it claims was disseminated has the necessary quality of confidence. Secondly, Krueger must establish that the information has been imparted in circumstances importing an obligation of confidence. Thirdly, Krueger must prove an unauthorised use of that information to the detriment of the party communicating it. 88 The information submitted by Krueger to be confidential is described above (see [3]). I will deal with each element of the test in Coco in turn. However, the standard that must be met to establish the necessary quality of confidence is low. For example, confidentiality can attach to information that is not entirely novel or original, provided the information was not commonly or publicly known at the time of the alleged breach. Confidentiality can also attach to a design that draws on already known information to create a new solution to a problem. In British Celanese Ltd v Courtaulds Ltd (1935) 52 RPC 171 at 193, Lord Tomlin observed that there may well be inventive merit in combining in one combination, integers which are themselves old or the subject of common knowledge. In fact, that which is required to transform common knowledge into a matter of commercial confidence may involve little more than "work done by the maker upon materials which may be available for the use of anybody, so as to achieve a result which can only be achieved by somebody who goes through the same process": Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 49 per Gowans J. 90 Camerons submitted that the information was not confidential for two reasons. Its primary submission was that because the design is so simple and "routine" it cannot attract an equitable obligation. Camerons also submitted that the information was already in the public domain and there was no original or novel information that could be the subject of an obligation of confidence. (In support of this contention, Camerons led evidence about load restraint systems already in use or in the public domain that relied on similar concepts and characteristics including carpet posts and the Vawdrey-type lock. ) Secondly, Camerons submitted that the fact that the Krueger Concept was novel cannot be discerned from the documents it claimed convey the confidential information. 91 This section of the judgment addresses these submissions by identifying particular "characteristics" of the "confidential information" by asking whether the characteristic was in fact conveyed by the confidential information and, if so, whether it was unique or novel. It is sufficient to deal with two characteristics --- the ability to overlap the gates and the rigidity of the gate attached to each post. 92 Before proceeding, however, I pause here to note that care must be taken in using such loaded terms as "novel" in this context. The parties proceeded in this case as if it were a patent matter, presenting expert testimony regarding prior art, common general knowledge, and so forth. That is to say, they implicitly proceeded as if the Krueger design had to be patentable in order to be confidential. No doubt this approach was influenced at least in part by the ongoing patent application by Krueger in respect of the design at issue and the fact that the same experts were retained by the parties in both proceedings; Camerons' expert gave candid evidence that he was unaware of any distinction between patent, copyright, and breach of confidence litigation, and that he and Krueger's expert approached this case as if it were a patent dispute. Unfortunately, this is a fundamentally wrong approach in breach of confidence litigation. As Megarry J said in Coco (at 48), one should not get caught up by particular adjectives such as novel; "whether it is described as originality or novelty or ingenuity or otherwise, I think there must be some product of the human brain which suffices to confer a confidential nature upon the information". To put it more plainly, information need not be patentable, copyrightable, or otherwise protected by the intellectual property laws in order to be confidential. Common examples of commercial information that may be considered confidential even if not novel in the patent law sense include customer lists, price lists, business proposals, and marketing strategies. Public information can also be considered as confidential. This depends on the way a business uses the information. A customer list, for example, can be protected as having the necessary legal confidentiality where it has been developed and treated as confidential, even though it is drawn from information which is publicly known (ie. telephone records, trade journals, public registers etc). Legal confidentiality can be distinguished from the requirements for patent or design registration. The latter require that the concept be inventive and novel (or in the case of a design, an advance on the 'prior art' base). Legal confidentiality can protect uninventive information as long as it is not in the public domain. (Emphasis added. Accordingly, I will approach the issue of confidentiality as it was argued - that for the Krueger Concept to be protected it must not have been routine or otherwise a minor variation of common general knowledge. In that respect, Krueger submitted that there were at least two bases on which its design could be seen as novel as compared to existing load restraint systems. I turn to consider those bases now. Camerons submitted, however, that the ability of the gates to overlap or stack was, in fact, not conveyed by the confidential information. 95 Dr Hart, a consulting engineer, was called to give evidence by Krueger. He gave evidence that the confidential information did not, on its face, show that the gates overlapped. However, Dr Hart's evidence was that because the Krueger Sketch was a concept drawing, it implied overlapping even if it did not show it and, further, that he believed someone in the industry would understand the phrases or concepts in the Third Krueger Quote to imply that the gates overlapped, even if this character was not explicitly stated. 96 I accept Dr Hart's evidence. The confidential information did convey that the gates were able to be overlapped or stacked. That was sufficient for the Krueger Concept not to be routine or already publicly known. Insofar as the respondents sought to rely upon the prior existence of "carpet posts" as evidence that the Krueger Concept was routine and already publicly known, I reject that contention. Carpet posts do not overlap. Rather, when slid to either end of the trailer, they abut or stand next to one another. The confidential information showed gates rigidly attached to the post or, more correctly, did not disclose a method of detachment. 98 Dr Hart's evidence was that the degree of rigidity required was high and that this would likely be achieved by a permanent attachment although he did concede there were other methods of making a temporary attachment sufficiently rigid, for example, by using clipping or pinning. 99 It was in this context that the Vawdrey-type lock was raised by the respondents as demonstrating that the rigidity of the gate to the post was not new or unique. Documents illustrating the Vawdrey-type lock are in Annexure 8. Camerons submitted that the Vawdrey-type lock was a pre-existing load restraint that operated to make rigid the attachment of the gates to the post in such a manner that it performed the same function as the Krueger design of the gates rigidly attached to the post. The experts called by Krueger on the one hand (Dr Hart) and the respondents on the other hand (Dr Enkelman) did not agree. 100 Dr Hart's evidence was that the Vawdrey-type lock could not be made sufficiently rigid. Dr Enkelman was of the view that the Vawdrey-type lock could be made sufficiently rigid to act as a load restraint subject to what I consider to be significant modifications to strengthen the restraint. The modifications, he conceded, were required to strengthen the restraint included increasing the width of the lock, increasing the diameter of the pins and replacing the spanning plate with structural members to provide stiffness and strength. In addition, Dr Enkelman was careful to make it clear that the Vawdrey-type lock would only be effective when used with a low mass payload and small gates. These qualifications or clarifications to his evidence were not surprising. There had been a significant shift in Dr Enkelman's opinion on this matter between the time he prepared the Joint Report and his giving evidence in the Court. Dr Enkelman's opinion, at the time of preparation of the Joint Report with Dr Hart, was that the Vawdrey-type lock was not an inherently rigid gate freight restraint and that it was technically irrelevant to a consideration of the Slide-a-Gate concept. 101 The confidential information, in my view, did convey that the gates were to be attached to the post in a permanently rigid state. That was sufficient for the Krueger Concept not to be routine or already publicly known. Insofar as the respondents sought to rely upon the prior existence of the "Vawdrey-type lock" as evidence that the Krueger Concept was routine and already publicly known, I reject that contention. I reject it on a number of grounds: first, the Vawdrey-type lock did not convey the Krueger Concept and, in particular, did not provide for a gate to be attached to each post in a permanently rigid state. Secondly, and no less significantly, I entertain considerable doubt that a job sheet showing a hand drawing of the Vawdrey-type lock adduced in evidence by Vawdrey was created on or about the date it bears of 1995. The original of the document was not produced when called for by Krueger. Its non-production is significant because the document contains a reference to "Vawdrey Type Lock" which, on the face of the copy document, appears to be in different ink to the balance of the document. In the circumstances, I conclude that the references to "Vawdrey Type Lock" were added much later and only in response to this litigation. His view was that such a combination of features had existed prior to December 2002 (although he could not name any manufacturer or point to any documentary evidence of it), however differently dimensioned and differently spaced for different purposes. Given the view I have formed that the two characteristics identified above are sufficiently novel to attract the quality of confidence, it is unnecessary to address the view expressed by Dr Enkelman. It is sufficient to say that his view is rejected. That was to be expected. As Mr Cameron said in evidence, "[i]n my mind, there didn't need to be [a contractual obligation], because, as a matter of course, in business I would always hold everything confidential". 104 The concession of Mr Cameron does not end the inquiry, however, because not everything that is confidential in business is necessarily deemed confidential in law. What is important for information to attract a legal obligation of confidence is that "the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff": Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73 ; (1984) 156 CLR 414 at 438. In Moorgate , the High Court found that information relating to a new cigarette brand was not confidential in part because it comprised merely standard marketing materials that would be shown to any prospective licensees, not just the defendant. Here, on the other hand, it is clear that Krueger created the information and communicated it to Camerons so that Krueger, and only Krueger, would win the business with Camerons. It is thus objectively reasonable in the circumstances of this case that the preservation of the information's confidentiality and secrecy (specifically, its non-disclosure to competitors such as Vawdrey) was of substantial concern to Krueger. Accordingly, I conclude that the information in [3] attracted an obligation of confidentiality under the 'reasonable man' test propounded by Megarry J in Coco at 48. 105 But the inquiry is still not quite over. The careful reader will have noted that Krueger (for reasons that are not readily apparent) did not submit that the Second Krueger Quote was part of the confidential information described in [3] above. As noted earlier (see [36]), however, the Second Krueger Quote partially referred to the Krueger Concept; indeed the text of the Second Krueger Quote sent on 4 December 2002 (and in particular the portion referring to "sliding side gates fitted to side post") is virtually identical to the text of the Third Krueger Quote sent on 5 December. A question might thus be seen to arise as to whether that should affect the confidentiality analysis (ie the design concept should be considered to have entered into the public domain). No party made any submissions in this regard, however, and in the absence of any evidence that an outside party could have, without further knowledge, independently recreated the Krueger load restraint system based only on the Second Krueger Quote, I see no basis for revising my conclusion that the preservation of secrecy of the information in [3] was of substantial concern to Krueger. The strict approach, which Megarry J suggested should be applied in commercial cases such as this, requires some detriment suffered by the provider of the confidential information for equity to intervene. In contrast, under the broad approach, unauthorised use does not necessarily need to be accompanied by detriment. In the years since Coco , however, the cases have cast considerable doubt on whether detriment should be considered part of the cause of action even in commercial cases: see L Tsaknis, " The Jurisdictional Basis, Elements and Remedies in the Action for Breach of Confidence --- Uncertainty Abounds " (1993) 5 Bond University Review 18, 21-23 (collecting the cases and stating, "It is not clear whether the confider must suffer any detriment as a result of the unauthorised disclosure, though the balance of the authority suggests that the better view is that detriment is not required"). I do not consider the point further, however, because Krueger did not raise it, relying instead principally on Coco . In any event, nothing much turns on detriment in the present case because detriment is not an issue --- if Krueger is successful in establishing the other elements, detriment was clearly suffered by Krueger in that it lost the contract with Camerons in respect of the Amcor Tender. 107 Krueger provided its information to Camerons for the limited purpose of winning a contract with Camerons for the manufacture of approximately 20 truck trailers. In order to advance this purpose, it allowed Camerons to include part of that information (the Subsequent Krueger Drawings) in the tender Camerons submitted to Amcor. As noted earlier, it was not submitted that the authorised disclosure of the Subsequent Krueger Drawing to Amcor robbed that drawing of its confidential character or released Camerons from its otherwise general obligation to maintain it in confidence. Camerons had asked for permission to disclose it to Amcor. It had not asked for permission to disclose it more generally. 108 That leaves the issue of unauthorised use of the confidential information. If it is shown that Camerons provided Krueger's information (or part of it) to Vawdrey, allowing Vawdrey to eventually win the work with Camerons, Krueger suffered detriment from that unauthorised use. As noted earlier in these reasons (see [81] to [83]), I concluded that Camerons, knowing the Krueger Concept to contain information confidential to Krueger, made unauthorised use of it by disclosing it to Vawdrey without the consent of Krueger. 109 That Krueger suffered detriment from this unauthorised disclosure can be tested by posing a series of hypothetical questions. Would the inclusion by Camerons of the Subsequent Krueger Drawing in the Tender (with Krueger's consent) have authorised Camerons to get another manufacturer to build trailers in accordance with the Krueger Concept, not otherwise publicly available? No. In other words, in order to perform the contract with Amcor, Camerons would have had to either give the trailer manufacturing subcontract to Krueger or seek Krueger's permission to disclose the Krueger Concept (and the drawing in the Tender) more broadly, which presumably would have required Camerons to pay Krueger a licensing fee. If Camerons did not want to be committed to using Krueger by relying on the Krueger Subsequent Drawing in its Tender proposal, it should have sought prior permission to disclose the drawing more broadly. 2. Would Vawdrey have been able to produce a quote and a drawing for the load restraint system that ultimately allowed Vawdrey to win the trailer manufacturing contract with Camerons? No. 111 Where parties enter into written or verbal confidentiality agreements prior to commercial negotiations, the terms of the agreement usually govern the rights and obligations of the parties to that agreement. This is so even in relation to information that may not truly be confidential (for example because it has lost its confidentiality by reason of being in the public domain): Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 ; (2002) 210 CLR 181. Nonetheless, the High Court found that the agreement in question in Maggbury was an unreasonable restraint of trade because the information the agreement sought to protect was in the public domain and had been put there by Maggbury itself. 112 Krueger submitted there was a contractual obligation arising out of an express agreement to keep certain information confidential between Krueger and Camerons at the Cameron / Krueger meeting. The evidence of John Krueger and Grant Krueger was that at the beginning of the meeting with Camerons, John Krueger specifically requested that all information discussed in the meeting be kept private and confidential. Mr Cameron denies that confidentiality was discussed at any point during the meeting and denies that there was any express agreement as to confidentiality. He said that if the issue had been raised, he would have been offended. Initially, Tindal denied that confidentiality was discussed but later accepted he could not recall whether confidentiality was discussed at the meeting. 113 Both Grant and John Krueger asserted that Krueger had good reason to demand a confidentiality agreement from Camerons on the basis that Camerons rarely bought trucks from Krueger and he had the impression that Camerons was not seriously considering contracting with Krueger, but instead trying to keep Vawdrey competitive. It is true Camerons had not purchased many new Krueger trucks directly from Krueger for some years, though they did own a number of Krueger trucks they had purchased on the second hand market. 114 The issue which arises is whether the confidentiality was discussed, whether an agreement was reached on that point, and if so, whether the term was a reasonable restraint of trade? 115 In this respect, as in others, I prefer the evidence of the Krueger witnesses to that of Camerons' witnesses. That is, I find that there was an oral agreement between Krueger and Camerons that "any quotation, drawings and technical and pricing information provided by Krueger, including the Krueger Concept, would be kept confidential. (The consideration for that agreement was an exchange of promises - a promise of confidentiality in consideration for a promise to proceed with the negotiations and submit a design proposal. ) Moreover, that agreement was a reasonable restraint of trade because, unlike in Maggbury , the Krueger Concept was not already in the public domain. Finally, for the reasons given earlier (see [81]-[83]), Camerons breached that agreement. Specifically, it argued that Vawdrey won the contract for reasons of delivery time, price, difficulties with hire trailers, and reliability of supply. 117 Having carefully reviewed those submissions, I find that the evidence does not support them. In that regard, I need not rely on the principle that I should more readily infer that the wrongdoer achieved its desired objective: eg omnia praesumuntur contra spoliatorem . Instead, I find as a matter of fact that, but for the disclosure of Krueger's confidential information by Camerons to Vawdrey, Krueger would have won the contract with Camerons. Further, I find that it was reasonably foreseeable to Camerons at the time it disclosed the confidential information that Vawdrey would use the information to improve its design solution and win the contract to the detriment of Krueger. Delivery time : Tindal gave evidence that Vawdrey could deliver by 8 May 2003 while Krueger proposed to deliver in the week of 5-11 May 2003. As such, there was no reasonable basis for distinguishing between Krueger and Vawdrey on that ground. 2. Price : Camerons conceded in its submissions that Vawdrey's final price of $56,653 (or $51,503 ex GST) was only slightly lower than Krueger's. However, Krueger contended, and I accept, that the slight difference in price actually favours Krueger. Therefore, the lowest price quoted by Krueger for each trailer ($50,627.27 exclusive of GST) was $875.73 (exclusive of GST) less than the price ultimately agreed with Vawdrey for each trailer ($51,503 exclusive of GST), on the assumption that the amount of $3,480 [for the sliding side gates] was exclusive of GST. That is, there was a price difference for the 22 trailers of $19,266.06 (exclusive of GST). The prices quoted by Vawdrey and Krueger for the purchase of trailers, in my judgment were not significantly different and did not ultimately have any significant impact on my view as to whether to select Vawdrey rather than Krueger as the trailer supplier [. 3. Hire Trailers : It is true that Vawdrey offered to provide Camerons as many hire trailers as necessary while Krueger offered only six. However, it is also true that Camerons never asked Krueger whether it could provide more than six. More to the point, I accept Krueger's submission that the hire trailers issue was not a material factor in Camerons' decision to award the contract to Vawdrey over Krueger. Indeed, Tindal testified that "at that stage we [had] already ... formed the opinion that Vawdrey would be the preferred supplier". 4. Reliability of supply : Camerons also contended that the contract was awarded to Vawdrey due to Camerons' greater confidence in Vawdrey's abilities to deliver as promised. Krueger disputed this contention by pointing to evidence that it was in fact Vawdrey that made an error in its original proposed delivery schedule and that it was Vawdrey whom Tindal had to "chase" for a quote. While there is some merit to Krueger's counterarguments, I accept that the evidence showed that Camerons had awarded numerous previous contracts to Vawdrey while only infrequently dealing with Krueger. I also accept that a reasonable business person in choosing between two competing proposals would, all other things being equal, probably choose the party with whom he or she had the more extensive course of successful prior dealings. 5. Conclusion: The problem for Camerons here is that all other things were not equal (or would not have been, but for the wrongful disclosure of confidential information). I am satisfied on the balance of the probabilities that had Vawdrey not had the benefit of the confidential information in producing its design solution, the advantage of Krueger's solution would have outweighed any considerations in favour of Vawdrey owing only to greater confidence from successful past dealings. I am also satisfied that there were no other material differences (ie differences in price, delivery time, provision of hire trailers) between the proposals in favour of Vawdrey. Accordingly, I conclude that Camerons' disclosure of Krueger's confidential information to Vawdrey caused the detriment to Krueger of it losing the contract. 119 Finally, I should note here Camerons' claim that, even if liability is to be found against it, it should be assessed as against the fifth respondent GCN only, and not against GCSD, because only GCN "ordered and purchased the trailers from Vawdrey". This argument is misplaced for several reasons. First, Cameron and Tindal were at all relevant times agents (and Cameron was a principal) of both GCN and GCSD, acting for both without distinction. (There is no evidence that Cameron and Tindal held themselves out as receiving or making communications only on behalf of a particular Camerons' entity. ) Accordingly, when Krueger disclosed the confidential information to Cameron and Tindal at the Cameron / Krueger meeting, I find that the information was also effectively communicated to GCN and GCSD and that both those entities were parties to the equitable and contractual obligation of confidence. Secondly, the breach itself (whether of the equitable or contractual obligation) was complete upon wrongful disclosure by Cameron and Tindal to Vawdrey of the confidential information. Damages (detriment) as a result of that wrongful disclosure crystallized as and when Camerons awarded the contract to a party other than Krueger; the fact that it was one Camerons entity rather than another that actually ordered and purchased trailers from Vawdrey is not relevant to the accrual of the cause of action. Thirdly, even assuming that the identity of the actual Camerons corporate purchaser of trailers was relevant, to hold one Camerons entity liable but not the other on these facts (ie where the same agents were acting for both entities without distinguishing between their roles) would encourage future wrongdoers to avoid liability by disclosing information purportedly in one capacity then completing the breach purportedly on behalf of another entity (which entity of course would be maintained with limited or no assets so as to be effectively judgment-proof if sued). In view of these considerations, it is neither necessary nor appropriate, even if it were possible, to make an artificial determination as to which corporate entity Cameron or Tindal was acting on behalf of when he received or disclosed the confidential information. Instead, I conclude on these facts that GCN and GCSD are jointly and severally liable. Krueger does not claim copyright in the Third Krueger Quote. 121 The Krueger Sketch, referred to as the 'confidential sketch', was drawn by John Krueger in the manner earlier described at [29]. The Krueger Drawings, referred to as the 'confidential drawings', were produced on or about 4 and 5 December 2002 by Stephen Hunt, the Senior Design Draftsman for Krueger. Krueger claims copyright over all versions of the Krueger Drawings. Krueger's claim fails at the third hurdle in relation to the Krueger Sketch but not the Krueger Drawings. Copyright does not cover ideas or concepts: Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1996) 36 IPR 529 , 531 and Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112 ; (2002) 119 FCR 491 , 547-574. This is the basis upon which copyright is built, and distinguishes copyright protection from patent registration under the Patents Act 1990 (Cth). Each of the Krueger Sketch and the Krueger Drawings falls within the inclusive definition of a drawing, as each "is a two-dimensional work in which shapes and images are depicted by lines, often without colouring" ( Woodtree Pty Ltd v Zheng (2008) 74 IPR 484 , at [25]), performing a visual rather than "semiotic" function: Anacon Corporation Ltd v Environmental Research Technology Ltd [1994] FSR 659 at 662. The Krueger Sketch and the Krueger Drawings are, therefore, artistic works. Originality requires no notion of novelty or invention. If the form of expression represents independent application of knowledge, judgment, skill or labour, that will be sufficient: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465. 126 The Krueger Sketch was created by John Krueger during the Cameron / Krueger meeting in the manner outlined earlier. The Krueger Sketch was an independent application by John Krueger of his judgment, skill and labour including his extensive knowledge of load restraint devices and the cartage of cargo. The Krueger Sketch is original. 127 The Krueger Drawings were produced by Stephen Hunt from the Krueger Sketch and further oral explanations of the load restraint issue from Adel Gerges (see above at [33]-[35] and [37]). The Krueger Drawings are similar. However, that does not mean they are less likely to be original; the redrawing of a technical drawing may still involve considerable skill, time and effort on the part of the draftsperson: Interlego AG v Croner Trading Pty Ltd [1992] FCA 624 ; (1992) 39 FCR 348 , 378-379 per Gummow J; New England Country Homes Pty Ltd v Moore (199) 82 FCR 500 , 502-503 per Burchett J. 128 Vawdrey submitted that the Krueger Drawings were not sufficiently original because of the alleged pre-existence of the Vawdrey-type lock. Vawdrey's evidence of the existence of the "Vawdrey-type lock" included two engineering drawings and the job sheet referred to earlier: see [101]. When the lock came into existence is in dispute. However, it is unnecessary to resolve that dispute. Even if the two engineering drawings relied upon by Vawdrey were created in 1995, the Krueger Drawings are still original. As I have said earlier, it is the originality of the form of expression rather than originality of the concept of sliding side posts with fixed gates attached that is required for copyright protection. Even assuming the concept were not novel in itself, novelty is not a requirement for copyright protection. What is relevant is that the Krueger Drawings represent an independent application by Hunt of his judgment, skill and labour and portray an original, distinctive expression of the concept to that of the Vawdrey drawings of the Vawdrey-type lock (which in any event do not even convey the same concept, as noted in [101] above): see LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 35 IPR 215. The Krueger Drawings are original. Whether assessed by visual comparison or otherwise, substantial reproduction "depends much more on the quality than on the quantity" of what is alleged to have been copied: Ladbroke at 469 per Reid LJ; LED Builders . Whilst the Krueger Sketch and the Vawdrey drawings both depict one or more sliding side posts with "things hanging off them", the form in which they are both expressed differs significantly. They do not look similar; one is a hand drawn sketch of very few lines showing a concept whereas the other is a detailed technical drawing expressing that concept in a practical form. Krueger's claim of copyright infringement amounts more to a claim for the appropriation of the concept of Slide-A-Gate. Again, however, there is no copyright protection for concepts, and thus no breach of copyright subsisting in the Krueger Sketch. To put it another way, because the Krueger Sketch expresses little more than the concept (which is unprotected), very little of the sketch is protected. For infringement of copyright, there must be a degree of objective similarity and there must also be some causal connection between the work in which the copyright subsists and the allegedly infringing work: Nine Network Australia Pty Limited v IceTV Pty Limited [2008] FCAFC 71 at [124] ; Francis, Day & Hunter at 614; SW Hart at 472 per Gibbs CJ. Although inferences from facts can be drawn to substantiate a causal connection (see eg Tamawood Ltd v Henley Arch Pty Ltd (2004) 61 IPR 378 , 387; LED Builders at 225), there must still be established facts from which to infer that the allegedly infringing party had access to the copyright material. 132 Here, the facts established by the objective evidence provide a basis for inferring that Vawdrey had indirect access to the substance of the Krueger Drawings as a result of disclosure by Camerons: see [70] --- [78] above. Particularly relevant is my conclusion that shortly after winning the Tender, Camerons requested that Vawdrey increase the size of the gates in its design and change the number of posts from six to seven in order to conform to the design shown in the Krueger Subsequent Drawing included in the Tender proposal. Those facts put this case on all fours with LED Builders , where the court found (at 225) indirect copying based on the giving of oral instructions by an intermediary to bring the infringing design plans into line with the copyright holder's. I am satisfied that the same thing occurred here. 133 The next question is to determine whether Vawdrey copied a substantial part of the Krueger Drawings? 134 When one compares the Vawdrey Engineering Drawings (being the drawings from which the trailers were constructed) with the Subsequent Krueger Drawings, that question must be answered "yes". However, in answering that question, it is necessary to exclude from that analysis those elements that are unprotected by copyright. There was nothing in the unprotected concept that dictated the number of posts or the size of the gates. Here both the Vawdrey Engineering Drawings and the Subsequent Krueger Drawings featured seven posts with gates attached of nearly identical size and shape. Vawdrey submitted that these similarities were an inevitable result of the fixed parameters of a 48ft trailer. I reject that submission. The content of the First Vawdrey Drawing (see Annexure 6) demonstrates the error in that submission. In that drawing, the same concept was expressed using only six sliding posts with gates that were smaller and in the shape of a hoop. In addition, Krueger's expert, Dr Hart, gave evidence that the Krueger Concept could be expressed in numerous ways. In light of this evidence, I am satisfied that there were multiple ways in which the same concept was capable of expression but the Vawdrey Engineering Drawings used substantially the same form of expression as the Subsequent Krueger Drawings. 135 In those circumstances, an infringing act (the production of the Vawdrey Engineering Drawings) was done in relation to a substantial part of the Subsequent Krueger Drawings (ss 14(1)(a) and (b) of the Act), and the infringing item (the Vawdrey Engineering Drawings) was objectively similar to that original work. Accordingly, Vawdrey has infringed Krueger's copyright in the Subsequent Krueger Drawings. 136 Moreover, because Camerons authorised Vawdrey to do the acts that constituted an infringement of Krueger's copyright in the Subsequent Krueger Drawings, Camerons is also liable for that infringement: see s 36 of the Copyright Act and Barrett Property v Metricon Homes (2008) 74 IPR 52 at 99. It is unnecessary therefore to say anything further about these claims. In any event, it was not suggested that if Krueger were to succeed in its claims under the TPA that it would be entitled to any different relief. 139 Before the hearing in relation to quantum can proceed, it will be necessary for Krueger under s 115(2) of the Copyright Act to elect between damages and an account of profits and to identify whether they are seeking additional damages under s 115(4). 140 Vawdrey submitted that prior to any hearing on quantum, the Court should determine the preliminary issues of whether damages should be limited to the "value of the gates attached to the sliding side posts or, alternatively, the value of the sliding side posts and attached gates". Whatever the merits of that submission, Krueger correctly submitted that it was more appropriate for the issue to be determined as part of the hearing on quantum. 141 Accordingly, I will set the matter down for further hearing on the limited issue of the quantum of the respondents' liability to the applicant. To the extent that Vawdrey made any argument in support of its cross-claim, the whole of that argument was that if Krueger should fail in its infringement claim, then by definition its cross-claim should succeed. Given my conclusion that Krueger's infringement claim has in fact succeeded, the cross-claim must be dismissed. 143 In any event, there is no support for the proposition that even if Krueger failed in its infringement claim, then by definition Vawdrey's cross-claim would have succeeded. Even assuming that the threats contained in the letters were in fact unjustified, Vawdrey would not be entitled as of right to a declaration to that effect: JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at 107-108; see also Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd [2008] FCA 447 at [39] - [42] ; Avel Pty Ltd v Intercontinental Grain Exports Pty Ltd (1996) 65 FCR 154. 144 The cross-claim is dismissed with costs. The balance of Krueger's written submission was no more than a reference to the decision of Gilmour J in Barrett . As against Tindal and Cameron, the only relief sought in the Application was a declaration that they were "involved in the ... contraventions by" Camerons and Vawdrey. 146 None of the oral submissions addressed this issue except to make a passing reference to "an interesting debate in the court at the moment about the test for personal liability of someone who is said to direct or procure tort[i]ous conduct of a corporation". 147 No party submitted that even if Tindal and / or Cameron were personally liable, Krueger would have sought or obtained different monetary relief. Moreover, I can see no other potential utility in granting the declaration sought by Krueger (and none was suggested). In these circumstances, it is neither necessary nor appropriate to consider this issue further. The Fourth Respondent's cross-claim be dismissed. 2. The matter be set down for hearing on a date to be fixed on the limited issue of the quantum of the Respondents' liability to the Applicant. 3. The Fourth Respondent pay the Applicant's costs of and incidental to the cross-claim. 4. All other costs be reserved. 5. The proceedings be adjourned to 9.30am on 6 June 2008 for directions about the further conduct of the matter. I certify that the preceding one hundred and forty eight (148) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | [2008] fca 803 |
The Magistrate made an order dismissing an application under s 476 of the Migration Act 1958 (Cth) ('the Act'). 2 The application to the Federal Magistrates Court under s 476 of the Act was supported by an affidavit as required by r 44.05 of the Federal Magistrates Court Rules 2001 and it came before the Magistrate on a first court date on 30 January 2006. At that time, it was not clear to the Magistrate that the application disclosed an arguable case and, accordingly, he listed the matter for a hearing under r 44.12 so that he could determine whether the application raised an arguable case. He gave the applicant the opportunity to amend her application and to file further affidavits. No further affidavits were filed. Two amended applications were filed, but it is unnecessary for me to set out the details of those applications. The Magistrate concluded that the application failed to disclose an arguable case within r 44.12(1)(a) and, accordingly, he dismissed it. 4 On 23 March 2006 the applicant filed a notice of appeal from the decision in this Court. Rule 44.12(2) of the Federal Magistrates Court Rules 2001 makes it clear that an order for dismissal under paragraph (1)(a) is an interlocutory order. The Minister for Immigration and Multicultural Affairs filed a notice of objection to competency of the appeal and submits that the appeal is not competent in the absence of a grant of leave to appeal. In my opinion, that submission is correct. The order made by the Magistrate is interlocutory, and under s 24(1A) of the Federal Court of Australia Act 1976 (Cth), leave to appeal is required. The Minister does not object to me treating the purported notice of appeal as an application for leave to appeal, and I think that that is the appropriate course. The test for granting leave to appeal is well known and I will not repeat it: Decor Corporation v Dart Industries Inc (1991) 33 FCR 397 at 399-400. 5 The applicant is a citizen of the People's Republic of China, and she arrived in Australia on 15 March 2005. On 26 April 2005, she lodged an application for a protection (Class XA) visa with the Department of Immigration and Multicultural and Indigenous Affairs under the Act. On 5 August 2005, a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs refused to grant a protection visa. On 6 September 2005, the applicant applied to the Refugee Review Tribunal for a review of that decision. 6 The applicant was born on 6 March 1957 and she claims that she is one of the leaders of Falon Gong in Shanghai, China. She claims that the Chinese authorities regard Falon Gong as an illegal organisation. She claims that she helped to organise a number of activities related to Falon Gong. She claims that she was warned about her involvement in Falon Gong by the local police and local government. She claims that in April 2001, she was put into detention for one month. She claims that in October 2002, she was ordered to attend a 're-education' centre for two months. She claims that in May 2003, she was imprisoned for one week because an unidentified person told the police that she practised Falon Gong every day. 7 On 28 September 2005, the Tribunal wrote to the applicant and advised her that it had considered the material before it in relation to the application, but was unable to make a decision in her favour on that information alone. The applicant was invited to attend a hearing of the Tribunal to give oral evidence and present arguments in support of her claims. She was told that if she did not attend the hearing and if the Tribunal did not postpone the hearing, then the Tribunal could make a decision on her case without further notice. She was advised that the proposed hearing would take place on 28 October 2005. 8 The applicant did not attend the proposed hearing of the Tribunal. On 31 October 2005, she was advised that the Tribunal had made a decision, and that it would hand down its decision on 22 November 2005. The Tribunal decided to affirm the decision of the delegate of the Minister. The applicant has been put on notice by the Tribunal that it is unable to make a favourable decision on the information before it but has not provided any further information in support of her claims despite ample opportunity to do so. Nor has she given the Tribunal the opportunity to explore aspects of her claims with her. A number of relevant questions are therefore left unanswered. I have been unable to do that. As to her claims to have been detained at various times, I would have wanted to hear more details about the circumstances to satisfy myself that that really occurred. I have been unable to do that. Finally, I would have wanted to know why she did not leave China for nearly two years after her last detention. First, she asserted that the Tribunal did not comply with its obligation under s 425 of the Act to invite the applicant to appear before the Tribunal to give evidence and present arguments. Secondly, she asserted that the Tribunal did not comply with its obligation under s 424A of the Act, in that it did not give her particulars of relevant information. The specific information she asserted that the Tribunal was obliged to disclose was the fact that it would draw an adverse inference against her by reason of the fact that she did not leave China for nearly two years after her last detention. In essence, the applicant submitted that he erred in doing so. 12 As to the first ground, the Magistrate made findings of fact which establish that the Tribunal met its obligation under s 425 of the Act to invite the applicant to a hearing and that the Tribunal was entitled to proceed in the absence of the applicant when she failed to appear at the time and place fixed for the hearing. The applicant did not identify any error in relation to those findings. 13 As to the second ground, the Magistrate rejected the challenge of the Tribunal's approach for a number of reasons. First, he concluded that all the Tribunal member was saying was that that was an issue that he would like to have explored with the applicant and that that was not an error. Secondly, the comment was based on information provided by the applicant, and, accordingly, did not need to be disclosed by reason of the provisions of s 424A(3)(b) of the Act. Thirdly, the Magistrate said that the information did not need to be disclosed because it was the insufficiency of the information that was determinative and not any particular information contained in the visa application. The Magistrate referred to the decision in SZBCS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1457. I agree with each of the reasons identified by the Magistrate. His conclusions are supported by authority, including VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471 per Finn and Stone JJ at 476-477, at [24] and SZCIA v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 238. 14 Neither ground of challenge is arguable and, in those circumstances, the application for leave to appeal must be dismissed with costs. I will hear the parties as to whether I should order costs in a fixed amount pursuant to O 62 r 4(2)(c) of the Federal Court Rules . | purported appeal from orders made by federal magistrate dismissing applicant's application for review by refugee review tribunal of decision of minister's delegate refusing applicant protection visa decision of minister's delegate affirmed by refugee review tribunal obligations of tribunal under ss 424a and 425 of the migration act 1958 (cth) whether decision of magistrate interlocutory in nature effect of federal magistrates court rules 2001 (cth) r 44.12 whether leave to appeal required under federal court of australia act 1976 (cth) s 24(1a). migration procedure |
On 13 July 2009 judgment was given for the applicant against the first respondent in the sum of $36,341,461.73, for the applicant against the second respondent in the sum of $3,552,577.81 and for the applicant against the third respondent in the sum of $3,664,366.20. The judgment against the third respondent was made by consent but without admissions and without prejudice to the rights of the third respondent under Part IVC of the Taxation Administration Act 1953 (Cth) ('the Administration Act'). The judgments against the first and second respondents were made following a finding by the Court that neither the first respondent nor the second respondent had any reasonable prospect of successfully defending those parts of the proceeding which recorded the claims of the applicant upon them as found in paragraphs 3 and 4 of the Notice of Motion filed 24 June 2009 or the updated claims which took into account interest up to 8 July 2009 (see Commissioner of Taxation v Grimaldi (No. 5) [2009] FCA 765 ('Grimaldi (No. 5)'). Upon the motion coming on for hearing on 13 July 2009, senior counsel for the applicant informed the Court that summary judgment was not presently sought against the fourth respondent. He further indicated that consent orders were in contemplation as between the applicant and the third respondent. In the circumstances the hearing of the Notice of Motion proceeded on the basis that relief was sought against the first respondent generally in accordance with paragraph 3 of the Notice of Motion, against the second respondent generally in accordance with paragraph 4 and against the third respondent generally in accordance with paragraph 5. ... Following the conclusion of the hearing of the motion, but before the delivery of these reasons, that part of the proceeding as between the applicant and the third respondent was settled with appropriate orders being made in accordance with Short Minutes of Order signed by the solicitors for the respective parties. That prayer for relief in the Amended Notice of Motion came before the Court on 25 November 2009. An Acting Director in the Australian Public Service employed in the Debt section of the Australian Taxation Office at Melbourne in the State of Victoria, Mr Aris Zafiriou swore an affidavit on 24 November 2009 in which he deposed to the fourth respondent's outstanding liabilities totalling $25,909,612.54 at close of business on 22 November 2009. It is in respect of the applicant's claim against the fourth respondent for that amount that summary judgment is presently sought. The only issue tendered for consideration on the present application is whether the applicant is entitled to judgment for the said amount in circumstances where he already has judgment against the first respondent for $36,341,461.73. Whilst the very right or cause of action claimed or put in suit in the claim against the first respondent may have passed into judgment, so that it is merged and no longer has an independent existence, the right or cause of action claimed or put in suit in the applicant's claim against the fourth respondent is a different right or cause of action. Its independent existence has not been destroyed (cf Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21 ; (1988) 164 CLR 502 at 510-511). The applicant's right or cause of action against the fourth respondent has not passed into judgment. It retains its independent existence. Whilst there will inevitably be cases in which it would be oppressive for the Commissioner to seek to enforce payment of the full amount due under a number of notices of assessment issued by the Commissioner on an alternative basis to different taxpayers in respect of the same income, such a possibility does not preclude the Commissioner from securing judgments against different taxpayers in respect of the same income. What would be oppressive would be for the Commissioner to seek to execute such judgments so as to enforce payment of the full amount due under the several judgment debts. Double recovery by the Commissioner would be oppressive (see The Deputy Commissioner of Taxation of the Commonwealth of Australia v Moorebank Proprietary Limited [1988] HCA 29 ; (1988) 165 CLR 55 ('Moorebank') at 67). A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies (per Dixon J, as his Honour then was, in Blair v Curran [1939] HCA 23 ; (1939) 62 CLR 464 at 531). Res judicata estoppels operate for, or against, not only the parties, but those who are privy to them in blood, title or interest. 'Privy' includes any person who succeeds to the rights or liabilities of the party upon death or insolvency, or who is otherwise identified in estate or interest (see Handley, Honourable Mr Justice KR, Spencer Bower, Turner and Handley: The Doctrine of Res Judicata (3rd Ed, Butterworths, 1996) ('Spencer Bower, Turner and Handley') at para 231). In In re Waring. Westminster Bank v Burton-Butler [1948] Ch 221 ('In re Waring') the Court had been called upon to decide the entitlement of one of two annuitants named in the will of the late John Arkle Waring. A summons had been issued to determine whether, in setting up the relevant annuity fund, provision should be made for the tax-free annuities for which the will provided at their face value or on an after tax basis. Only one of the two tax-free annuitants was a party to the application. A representative order was sought but refused in circumstances where the other tax-free annuitant was abroad in an enemy occupied country. The effect of the decision of the Court of Appeal was that the annuity fund should be established on the basis that the entitlements were to be determined subject to the imposition of taxation by virtue of s 25 of the Finance Act 1941 (UK). In a later case, Berkeley v Berkeley [1946] A.C. 555 ('Berkeley v Berkeley'), the House of Lords overruled the decision of the Court of Appeal in the proceedings to which Mr Burton-Butler had been a party. In In re Waring the trustees of the will of the late Mr Waring proceeded to ask whether the tax-free annuities for which the will provided ought to be paid in full or be subject to the deduction provided by s 20 of the Finance (No. 2) Act 1945 (UK), which had amended s 25 of the 1941 Act. However, his Honour found that Mrs Burton-Butler, who had not been a party to the earlier proceeding, was in a different position. His Honour held that the decision of the Court of Appeal could not affect her rights in any way and she was entitled to claim retrospectively the full amount of her annuity calculated in accordance with the law as decided by the House of Lords in Berkeley v Berkeley . In Ramsay v Pigram [1968] HCA 34 ; (1968) 118 CLR 271 the High Court held that the nominal defendant, representing the government of New South Wales when sued by Mr Pigram for damages for negligence alleged against a New South Wales police officer whose vehicle collided with that of Mr Pigram who suffered personal injury, could not rely upon estoppels said to arise from findings in proceedings brought by the police officer for negligence against Mr Pigram in which the issues had been negligence on the part of Mr Pigram and contributory negligence on the part of the police officer. The jury in that case had found a general verdict for the police officer. The High Court held that there was no privative interest between the nominal defendant and the police officer which entitled the nominal defendant to rely upon the findings in the police officer's action. In my opinion there was no privative interest between the first and fourth respondents in this case. The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding (per Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Proprietary Limited [1981] HCA 45 ; (1981) 147 CLR 589 ('Anshun') at 597). For res judicata to operate the later proceeding must raise the same cause of action, except where the prior judgment was in rem, and the parties to the two proceedings must be the same or privies of the same parties (per Lindgren J in Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 722 at [43]). His Honour's orders in two of those matters were the subject of an appeal to a Full Court. One such appeal was dismissed and the other was allowed. However, there was no suggestion that his Honour had erred in stating the relevant principles in relation to res judicata as noted above. It would be an abuse of process to allow parties to litigate repeatedly matters that have been finally determined by the Court. Also, quite apart from any psychological detriment that might flow from an individual having to undertake litigation of the same issue a second time, the State has an interest in ensuring that, once an issue has been determined according to law and all rights of appeal have been exhausted, that should be an end of the matter. The resources of the community ought not to be expended in the litigation, more than once, of the same issue. The foundation of the rule, whether it be termed res judicata, or cause of action estoppel or judgment recovered, is the merging of the cause of action in the judgment. He may pursue his remedies concurrently in the same action, but he is put to his election before judgment as to which remedy he shall have. And when judgment is entered, all of the rights which he might have claimed in that litigation are merged in the judgment. Though he may elect between inconsistent remedies pursued in the one action, or between the actions to be pursued in order to recover a judgment giving the remedy he chooses, the merger in the judgment first recovered of a right to another remedy takes effect by operation of law. When those rights (or causes of action) are extinguished, no further litigation may be pursued to recover a second judgment upon them. They arise out of different notices of assessment and the statutory implications arising from the service thereof on the different respondents. Whilst the situation may be somewhat anomalous, decisions on income tax, land tax and rating assessments constitute an established exception to the general rules as to res judicata (see Spencer Bower, Turner and Handley at paragraphs 297 et seq). I think that the Deputy Commissioner is not entitled to judgment on alternative assessments at the one time but that he is entitled to proceed to judgment on his assessment of the defendant without releasing the other person assessed; however he cannot proceed to judgment on the other assessment unless he repays any tax recovered under the judgment in this case. The matter before A.C. King J in the Victorian Supreme Court was an appeal from an order of a master giving leave to sign final judgment in an action asking for judgment for a debt due to the Commonwealth of Australia and payable to and recoverable by the Deputy Commissioner under the 1936 Act. His Honour dismissed the appeal and refused to order a stay of its execution. There was an appeal in respect of the refusal by his Honour of a stay, which was dismissed (see Held v Deputy Commissioner of Taxation (Vic) (1988) 19 ATR 1213). In Held it had been contended by senior counsel for the defendant that the Deputy Commissioner had issued inconsistent assessments in respect of the same tax in respect of the 1981 tax year and that he was not entitled to proceed to judgment on one assessment without withdrawing the other. The submission was entirely inconsistent with more recent High Court authority. An 'adjusted assessment' had been issued to Cornix Anna Nominees Pty Limited as trustee for the Held No. 2 Trust. A.C. King J rejected the taxpayer's submission, finding that the Deputy Commissioner could proceed to judgment on his assessment of the defendant, without releasing Cornix Anna Nominees Pty Limited as trustee of the Held No. 2 Trust. 2 Trust. Had it been necessary for me to do so, I would, respectfully have held that A.C. King J's observation that the Deputy Commissioner was not entitled to judgment on alternative assessments at the one time was plainly wrong. For his Honour to reach such a conclusion it would have been necessary for him to have considered in detail the principles that have been referred to above in relation to res judicata, which he did not do. ... The solution may be in preventing double recovery as an abuse of power. The appeal was allowed and the stay relevantly set aside. It had not been argued by the Deputy Commissioner that s 201 of the 1936 Act deprived the Court of an appropriate discretion to grant a stay of proceedings or of execution. While hardship to the taxpayer and the merits of the appeal are relevant matters, other considerations are involved, including the Commissioner's right to have the tax assessed paid. It is not possible to work out in advance all possible bases for the exercise of such a discretion and it would not be proper even to attempt to do so. It is an open-ended discretion. First the comparatively rare case where the Commissioner abuses his position, for example by assessing and endeavouring to collect tax in defiance of a decision of the High Court or other Superior court precisely in point. Second, in cases of extreme personal hardship to a taxpayer called upon to pay. The obligation to pay which has been cast upon him by law is not a hardship of itself and the mitigation of the effect of inflation and the burden of interest is a matter for the legislature, not for the Court. If the metaphor is to be retained, the needle stands in the Commissioner's favour close to one hundred and it requires a weighty case to be presented by the taxpayer in order to depress it below the halfway mark. The Commissioner formed the view that assessments should issue for rental income from the property identified as 62 Darling Street, Balmain which had been purchased in the name of Mr Ward on 17 December 1982 and for additional tax for non-disclosure of income. The transfer to Mr Ward was dated 22 February 1983 but was not lodged for registration until early 1988. One set of assessments assessed Mr Ward to tax on the rental income on the footing that it was derived by him during the years of income. The other assessments assessed the Trustee for the Balmain Trust under s 99A of the [1936 Act] . Alternative assessments may be issued where the Commissioner is uncertain as to which taxpayer is liable. The obligation then is on each taxpayer who has been assessed to satisfy the onus of proof cast upon a taxpayer by s 14ZZK of the Administration Act [where in that case there had been an application for review of the Commissioner's decision by the Administrative Appeals Tribunal] to show that the assessment was excessive. It would be wrong, of course, for the Commissioner to recover two amounts of tax. The Commissioner should ensure that there is no double recovery of tax. As Brennan J said, that is an obligation which the courts would enforce, although I assume that they would never need to do so. As Davies J observed one might expect the courts to intervene to ensure that alternative assessments and judgments based thereon would not lead to double recovery by the Commissioner. By s 5(1) of the Income Tax Act 1986 (Cth) income tax was imposed in accordance with the Income Tax Act 1986 and at the relevant rates declared by the Income Tax Rates Act 1986 (Cth) . That schedule has been amended to record the prevailing rates from time to time. At all material times s 166 of the 1936 Act has made provision for the Commissioner to make assessments of the amount of the taxable income of a taxpayer and of the tax payable thereon and s 174 has made provision for the Commissioner to serve notices of assessment in writing upon persons liable to pay the tax the subject of the assessments. In s 255-1 of Schedule 1 to the Administration Act a 'tax-related liability' was defined as 'a pecuniary liability to the Commonwealth arising directly under a taxation law (including a liability the amount of which is not yet due and payable'). The Commissioner may vary that time under Subdivision 255-B. Other provisions were made in respect of the due time for payment of penalties and the general interest charge in the 1936 Act and in the Taxation Administration Act . The present proceedings are not proceedings under Part IVC of the Administration Act. Section 175A of the 1936 Act provided for taxpayers who were dissatisfied with assessments made in relation to them to object against the relevant assessment 'in the manner set out in Part IVC of the Administration Act'. As at May/September 2009, the period within which the relevant Notices of Assessment in this case were issued, Part IVC of the Administration Act commenced with s 14ZL and concluded with s 14ZZS. The qualification is that upon proceedings on appeal against the assessment, the production of the assessment does not constitute conclusive evidence that the amount and all the particulars of the assessment are correct. It will be seen that the sub-section contains two limbs and that the second limb applies only in proceedings which are not appeals of the character specified. In all other proceedings both limbs apply. But although doubts may exist as to what is comprised in each limb, the existence of these doubts in no way requires a modification of the view previously expressed. Bloemen Proprietary Limited v The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 27 ; (1981) 147 CLR 360 at 375, Mason and Wilson JJ cited with approval the observations of Taylor J in McAndrew . The former case is not greatly different from the present. In that case Mr Clyne, who had received a notice of assessment showing a credit for provisional tax, sought to argue that the giving of that credit constituted an admission by the Commissioner that payment had been made for that amount or that a claim was no longer made in respect of that amount, or alternatively that the provisions of s 177 rendered there conclusive evidence that the amount was no longer claimed by the Commissioner. This somewhat audacious argument was rejected by Hunt J who regarded the particulars of assessment referred to in s 177 of the Act as constituting merely the two ingredients taxable income and the tax assessed with respect to that taxable income. The other material on the notice, including the credit, were, his Honour thought, particulars of the notice but not particulars of the assessment. The decision of Hunt J was followed by Enderby J in Opiel in holding that details of a refund stated in the assessment to be due to a taxpayer did not attract the conclusive evidentiary protection of s 177. In Richard Walter , Mason CJ took the view that the relevant provisions of the 1936 Act did no more than require the making of an assessment, due compliance with the statutory provisions not being essential to the validity of the assessment (at 187). The reference to "due making" of the assessment in s 177(1) reflects the content of s 175. It will be appreciated that Part IVC of the Administration Act gives the taxpayer the option to seek review of reviewable objection decisions, as defined in s 14ZQ, in the Administrative Appeals Tribunal, or to appeal to the Federal Court against an appealable objection decision, as defined in that section (see s 14ZZ of the Administration Act). On this view, s 177(1) is consistent with the Hickman principle. If any of these issues be resolved in favour of the taxpayer, an amendment of the assessment so as to reduce the taxable income or the tax liability of the taxpayer must follow. The width of that jurisdiction and the evident purpose of the Act to channel all issues as to the true tax liability of the taxpayer into the objection, review and appeal procedures found the clearest implication that exceptions to the broadest literal application of s 175 must be narrowly confined and a corresponding operation must be attributed to s 177(1). Corresponding provision is made elsewhere in the Act for the recovery of other amounts. The action for recovery is facilitated by the "conclusive evidence" provision in s 177(1). That sub-section, as the Commissioner correctly submitted, is not a privative clause in the ordinary use of that term. It does not purport to oust the (necessarily federal) jurisdiction conferred upon any other court in matters arising under the Act. To the contrary, it recognises that there may be Pt IVC proceedings and in those proceedings the "conclusive evidence" provision does not apply. But, given the presence of Pt IVC, s 177(1) does not operate to impose an incontestable tax or otherwise fall foul of the principles which were considered in Nicholas v The Queen and which respect usurpation of the federal judicial power by deeming to exist an ultimate fact. If uncertainty as to the taxpayer liable were to sterilise the Commissioner's power to make an assessment or if the power could be exercised only when the Commissioner is satisfied on the balance of probabilities that one taxpayer, rather than another, is liable, the uncertainties which are the inevitable companions of complex commercial transactions would substantially erode the Commissioner's ability to recover tax and would, contrary to the intent of s 177(1) of the 1936 Act, open the way to litigating liability to tax outside the objection, review and appeal procedures (per Brennan J in Richard Walter at 201) . The fact that a tax liability remains outstanding against two taxpayers pending the ascertainment of the taxpayer truly liable is no bar to the exercise of the power to assess both to tax in respect of the same income. As Dixon J, as his Honour then was, observed in Richardson v Federal Commissioner of Taxation [1932] HCA 67 ; (1932) 48 CLR 192 at 207 when upholding the validity of an assessment to tax against a second person while the first person's assessment remained on foot and unamended 'it was not unnatural that [the Commissioner] should delay relieving one of two persons whom he considered culpable until the liability of the other was established'. The co-existence of tax liabilities in two or more taxpayers in respect of the same income is, as Dixon J observed at 207, attended with difficulty. Sometimes the difficulty will be removed by the objection, review and appeal procedures where the taxpayer will establish the facts in order to establish that the assessment is excessive (per Brennan J in Richard Walter at 201). The raising of concurrent assessments of two or more taxpayers to tax in respect of the same item of income has not hitherto been regarded as beyond the powers of the Commissioner. The appropriateness of alternative assessment to tax of two taxpayers in respect of the same item of income was recognised in a dictum of the High Court in Moorebank at 67. The courts, if not the Commissioner, can diminish the difficulty of concurrent assessments by ensuring that there is no double recovery of tax (per Brennan J in Richard Walter at 201-202). The co-existence of tax liabilities arising from concurrent assessments is entirely consistent with the operation of s 177(1). If the Commissioner employs s 177(1) in a proceeding to recover tax from taxpayer A, the liability of that taxpayer cannot be avoided by pointing to an outstanding assessment against taxpayer B. Section 177(1) operates as between the Commissioner and the taxpayer served with the notice of assessment in a proceeding between them and the notice of assessment issued to another taxpayer does not qualify or affect the operation of s 177(1) (per Brennan J in Richard Walter at 202). 'B', 'C', 'D', 'E', 'F', 'G' and 'H' to the affidavit of Aris Zafiriou sworn 6 October 2009. On 5 October 2009 a Deputy Commissioner of Taxation of the Commonwealth of Australia issued a certificate under s 255-45 of Schedule 1 to the Administration Act certifying that notice of the several assessments were or were taken to have been served on the fourth respondent as trustee for Webtel Management Super Fund under a taxation law and that as at 5 October 2009 the sum of $25,561,078.93 was a debt due and payable to the Commonwealth by the fourth respondent as trustee for Webtel Management Super Fund in relation to the tax related liability referred to in the certificate. A further certificate under s 255-45 of Schedule 1 to the Administration Act was issued by a Deputy Commissioner of Taxation of the Commonwealth of Australia on 24 November 2009 certifying that notice of the several assessments were or were taken to have been served on the fourth respondent as trustee for Webtel Management Super Fund under a taxation law and that as at 22 November 2009, the sum of $25,909,612.54 was a debt due and payable to the Commonwealth by the fourth respondent as trustee for Webtel Management Super Fund in relation to the tax related liability referred to in the certificate. Exhibits NM1 and NM2 on the hearing of the applicant's Amended Notice of Motion filed 6 October 2009 were a letter to the first respondent headed 'Audit of your tax affairs' dated 24 April 2009 and a letter to the fourth respondent dated 11 May 2009 headed 'Audit of MGG Capital Pty Ltd as trustee for Webtel Management Super Fund' respectively. When considered with 'APPENDIX C --- SUMMARY OF NET TRUST INCOME' to the letter to the first respondent and 'APPENDIX A --- SUMMARY OF TAXABLE INCOME OF THE WEBTEL MANAGEMENT SUPER FUND' to the letter to the fourth respondent, it became apparent that in each case the same figures appeared under the heading 'IRON INVESTMENTS LTD/IFTC BROKING SERVICE FOR PHILLIP GRIMALDI (Share Trader)' and 'IRON INVESTMENTS LTD/IFTC BROKING SERVICE FOR IRON INVESTMENTS (Share Trader)'. The final line in the Appendix C and the final comparable line in the Appendix A indicated that the Commissioner asserted that 'NET INCOME OF TRUST' was, in respect of the year ended 30 June 2006, $1,419,705.73, in respect of the year ended 30 June 2007, $8,565,126.08 and in respect of the year ended 30 June 2008, $32,001,831.97 (shown as $32,001,831.53 in the Appendix A). In respect of Appendix A to the letter to the fourth respondent as trustee for Webtel Management Super Fund there were additional entries under the headings 'MGG CAPITAL PTY LTD atf WMSF, MGG CAPITAL PTY LTd atf WMSF---through Ord Minnett---2008' and 'OTHER INCOME'. The resultant total taxable income for the Webtel Management Super Fund was $1,603,791.21 in respect of the year ended 30 June 2006, $9,348,105.10 in respect of the year ended 30 June 2007 and $36,444,383.00 in respect of the year ended 30 June 2008. It will be apparent from a comparison of Appendix C to the letter to the first respondent (Exhibit NM1) that the figures therein were repeated in full in Appendix A to the letter to the fourth respondent (Exhibit NM2) with a minor difference of 44 cents and with other income being added in the case of the fourth respondent. The bona fides of the Commissioner in proceeding as he has in relation to the first and fourth defendants are not in issue. It would appear that on 27 April 2009 the Deputy Commissioner served a garnishee notice on Westpac Banking Corporation under s 260-5 of Schedule 1 to the Administration Act requiring the payment of money owed by the Bank to the first respondent, to the Commissioner of Taxation. There is no evidence as to any monies that may have been paid to the Commissioner pursuant to that notice. In my opinion the right of the Commissioner to recover the tax the subject of the notices of assessment or notices of amended assessment referred to in the certificates directed to the fourth respondent are not founded upon the same right or cause of action that entitled the applicant to obtain judgment against the first respondent. The existence of the judgment for the applicant against the first respondent does not estop the applicant from securing a judgment against the fourth respondent. In my opinion the fourth respondent has no reasonable prospect of successfully defending that part of the proceeding which records the claim of the applicant upon the fourth respondent as found in paragraph 6 of the Amended Notice of Motion filed 6 October 2009 or, indeed, the updated claim which takes into account interest up to 22 November 2009. Whilst it has been necessary to give detailed consideration to the legal issue which has been tendered by the fourth respondent on the hearing of this application under s 31A of the Federal Court Act, that issue has been fully argued and decided against the fourth respondent. Accordingly, the Court should give judgment for the applicant against the fourth respondent as sought. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | whether judgments may be obtained against more than one party where concurrent or alternative notices of assessment have been issued to two parties taxation |
The sixteenth respondent is Optus Vision Pty Limited ('Optus') and the twenty second respondent is Singtel Optus Pty Limited ('Singtel'). 2 The issues to which the waiver was found by his Honour to relate were identified by reference to the summary in par 5 of his Honour's judgment. I have been taken to sections of the current statement of claim between paragraphs 600 and 657, which set out some of the material facts the subject of the summary in par 5 of Sackville J's judgment that material supplemented, inter alia, the issues identified by his Honour by identifying a claim in deceit to which his Honour had not expressly referred. 3 The letter of 18 February 2002 was written in the context that, as I understand it, two earlier variation agreements had been entered into between the applicants on the one part and Optus on the other to take account of the fact that there was some uncertainty as to when Optus would be able to, if it wished, terminate its agreements for taking a sports channel programming feed from the applicants in consequence of the applicants' loss of the AFL rights. One agreement was negotiated on about 27 September 2001 and another extension of that agreement on 18 December 2001. 4 The unredacted parts of the letter of 18 February indicate that cl 8A was assumed to have been breached by Optus at that time through its then negotiations with the Foxtel parties to the proceedings. On 20 February 2002 there was a public announcement of the conclusion of an agreement between the Foxtel parties and Optus. Mr Bannon SC and Mr Hewitt appeared for Optus and Singtel. They argued that the redacted portions of the letter referred to issues discrete from those the subject of the waiver applying the tests set out in Sackville J's judgment. Optus and Singtel argued that the introductory words of paragraph 6 might disclose what was in 5, which was a discrete issue, and it was for that reason they ought be redacted. One of the issues pleaded, in particular in par 656 and par 657 as well as in par 625 to par 628 inclusive, is that Singtel knew at all relevant times of the relevant contractual arrangements between Optus and the applicants, and that it induced Optus to act in breach of the two exclusivity clauses which, as I understand it, are cl 8A. 6 The contravention of cl 8A alleged is not a singular contravention. Rather it is a contravention that involves taking into account the fact that negotiations were conducted over a period in which cl 8A said they ought not to be conducted between Foxtel and Optus which culminated in the ultimate breach alleged, being the entry into the arrangement or agreements announced on 20 February 2002. Optus and Singtel argue that the 'Alchemy Paper' does not describe any consideration of a breach of s 52 of the Trade Practices Act 1974 (Cth), and that therefore that is a discrete issue. I do not think that that argument has any substance. The 'Alchemy Paper' is seeking to address Optus' likely commercial position, and focuses on the facts dealing with the negotiation of or the conclusion of the exclusivity arrangements. 9 But the reference to their legal advice enabled the authors of the paper to put it forward to Optus' board and, as I understand it, for Optus' board to put that forward to Singtel's board, as encapsulating the likely legal outcome in relation to a risk as to damages if the negotiations with Foxtel were to be pursued and concluded in breach of cl 8A. 10 In my view, the contents of par 5 of the letter of 18 February indicate a view as to the legal position that is relevant to the expression of the opinion that the risk of damages is low because it deals with a subject matter that can have a direct bearing on Optus' and Singtel's knowledge of the applicant's legal rights and the consequence of their being breached such as might be relevant to an issue of exemplary damages pleaded in par 656 and par 657 of the current statement of claim. 11 In my opinion, par 5, although it does deal with advice about matters that in one sense are different from those summarised in par 5 of Sackville J's judgment, are really so interconnected with consideration of Optus' and Singtel's understanding of the legal rights of the applicants that it would not give a complete picture of the basis on which Optus assessed its risk of damages being low and in which Optus proceeded to act in the way it did. And likewise this applies to Singtel, to the extent that it may have seen or relied on or be taken to have knowledge of this material, acted. 12 In my opinion, the matters go at least to the issue of damages the subject of par 656 and par 657 of the current statement of claim. For those reasons, in my view, the legal professional privilege in par 5 has been waived in accordance with the ruling Sackville J gave, and I order it be disclosed. For the same reasons, the introductory words of par 6 must likewise be disclosed. 14 In par 6(c) there is an examination of the possible consequences were the applicants to learn of a potential breach of cl 8A. The entry into and announcement of the arrangements between Optus and Foxtel parties on 20 February 2002 is alleged to have been a breach of cl 8A and to have been induced by Singtel, causing Optus to breach cl 8A. 15 The 'Alchemy Paper' refers to the legal advice about the risk of damages being awarded against Optus being low in the context of considering the entry into the agreement of 20 February, or what became or might become an agreement on 20 February. One issue which is relevant in the assessment of exemplary damages is whether the tortfeasor may have made or be taken to have made a calculation that the result of a payment of damages or other legal consequence of his or her or its behaviour vis-a-vis the plaintiff would be that the amount payable by the tortfeasor would be less than the gain which the conduct of the tortfeasor impugned may realise to it. That consideration is pleaded in par 656 and par 657. 16 It seems to me that the subject matter in par 6(c) does relate to that question and has been the subject of a waiver in accordance with Sackville J's ruling. That paragraph deals with a discrete subject matter which is not the subject, as I understand it, of any pleaded allegation and does not seem to me to be relevant to any pleaded allegation. In my opinion, the redaction of that paragraph should remain. It is, in one sense, a summary of or an elaboration of what would follow from the preceding matters. I have upheld the claim for privilege in respect of par 6(d). I think that it is possible to produce a version of par (h) which, if there is something that it currently reveals as to the content of par 6(d), can be revealed with appropriate redactions. I am not sure that the whole of it cannot be revealed, but I would prefer to allow Optus and Singtel to consider how much of it could be revealed and I will, if agreement cannot be reached or if what is produced is not satisfactory to the applicants, rule on whatever is produced at a later time. I think that is the most convenient way of dealing with the difficulty that there are parts redacted and unredacted in what had preceded it. 20 In my opinion, par 7 is relevant to the issues pleaded by the applicants, particularly in relation to the issue of exemplary damages and the way in which Optus and, to the extent that it was relevantly dealing with the applicants, Singtel, were conducting themselves in those dealings up to the time of 20 February 2002. 21 In my opinion, there is an assessment as to the exposure for damages that is the subject of the 'Alchemy Paper' revelation, and I am of the opinion that the waiver found by Sackville J extends to the content of par 7. Optus and Singtel argue that indeed the issues were discrete. The subject matter of paragraph 8 deals with what Mr Bannon SC described as a mechanical consequence once the 28 February expiry date passed. In my opinion, that submission should be accepted and the claim for privilege should be upheld. 23 Paragraph 9 deals with an entirely different matter. It is not, as I understand it, relevant to any allegation which the applicants have made in the proceedings, and I am of the opinion that the claim for privilege for that paragraph should be upheld. 24 The orders that I make are that the claim for privilege in respect of paragraphs 5 and the introductory words to pars 6, 6(c) and par 7 have not been established. I will declare that. 25 I direct the Optus and Singtel parties to prepare a redacted form of par 6(h) if they wish to maintain any claim to privilege in respect of that paragraph consistent with my reasons. 26 I uphold the claim for privilege in respect of pars 6(d), 8 and par 9. I certify that the preceding twenty seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | legal professional privilege waiver where document recording conclusion stated in legal advice found to waive privilege in the advice whether legal advice dealt with discrete issues in which privilege is not waived privilege upheld in part evidence |
2 On 1 November 2006 the ACCC commenced proceedings against six of the parties to the agreement alleging, inter alia, contraventions of s 45 of the Trade Practices Act 1974 (Cth) (TP Act). The proceedings were WAD 312 of 2006. The corporate respondents named were Kokos International Pty Ltd, and IAE Edu Net Perth Pty Ltd. Individuals sued were Chul Woo Kim, Young Gil Pae, Sang-Hong Jung trading as Nanuri Education Centre and Rebekah Cabalt. The application was for pecuniary penalties, injunctions and others orders pursuant to ss 76, 80 and 86C of the TP Act and of the Competition Policy Reform (Western Australia) Act 1996 together with declaratory relief pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth). The ACCC says that Study Overseas Now was also a party to the conduct which is the subject of the proceedings. 3 On 7 December 2005 Patricia Yeo, in her capacity as a director of Study Overseas Now, lodged an application with the Australian Securities and Investments Commission (ASIC) under s 601AA of the Corporations Act 2001 (Cth) for voluntary deregistration of the company. The directors at the time of deregistration were Sachiko Suka, Yuriko Suka, Belinda Yeo, Pat Yeo and Noriko Suka. The ACCC wrote to Ms Belinda Yeo and Ms Pat Yeo on 10 April 2007 advising them that it intended to apply to the Court to have Study Overseas Now reinstated. In its letter the ACCC informed the two former directors that based upon evidence and information which it had obtained it was of the view that the entry by the company into an arrangement with other education recruitment agents in Western Australia contravened s 45 of the TP Act and/or the Competition Code of Western Australia. It also stated its belief that it was appropriate to join Study Overseas Now and Mr Bernard Yeo to the proceedings and to seek declaratory and injunctive relief as well as pecuniary penalties against both parties. 5 The ACCC has attempted to locate the other directors. It appears that Sachiko Suka, Yuriko Suka and Noriko Suka left Australia for Japan in 2005 in the case of Noriko Suka and 2006 in the case of the other two directors. The Japanese Fair Trade Commission was unable to provide assistance about their addresses. The ACCC has been unable to contact them. 6 At a directions hearing on 15 May 2007 the two former directors Belinda and Patricia Yeo were given leave to appear in the proceedings and to file and serve any affidavits in opposition to the application for reinstatement by 5 June 2007. No such affidavits have been filed. However the solicitors for Belinda and Patricia Yeo have joined with the ACCC and ASIC in agreeing to orders reinstating the registration of the company. 7 A company, or a director or member of the company, or a liquidator of the company may apply, under s 601AA(1) for its voluntary deregistration. A person may apply only if the circumstances which were set out in Ms Yeo's application for deregistration and referred to earlier exist (s 601AA(2)). The applicant must give ASIC any information that it requests about current and former officers of the company (s 601AA(3)). Where ASIC is not aware of any failure to comply with the requirements of s 601AA it must give notice of the proposed deregistration on its data base and in the gazette. And when two months have passed since the gazette notice ASIC may deregister the company (s 601AA(4)). (4) ASIC must give notice of a reinstatement in the Gazette . If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant. (5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim. The application of those statutory requirements was considered by Austin J in similar circumstances in Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688. In that case the ACCC submitted that it had a public duty to improve competition and efficiency in markets and to foster a fair and competitive operating environment for businesses. One of the strategies used to achieve that objective is litigation in cases of serious breaches of the TP Act. The ACCC considered, in that case, that the conduct which it alleged was a serious example of price fixing and market sharing and that it had a duty in the public interest to reinstate and sue the perpetrator of some of that conduct. The former officers of the company then before the Court accepted that the ACCC had standing to apply as did his Honour. 10 In relation to standing, the present case is relevantly indistinguishable from that before Austin J. I find that the ACCC has the necessary interest in proceeding against the company in the discharge of its statutory functions such that it is "a person aggrieved by the deregistration" for the purposes of s 601AH(2). 11 In the case before Austin J the company whose reinstatement was sought had been placed in liquidation by a members' voluntary winding up. In the present case the company was voluntarily deregistered. A director of the company made a declaration of solvency on 7 December 2005 under s 601AA(2). 13 In her affidavit in support of the application for reinstatement, Bianca Sumner, a Project Officer employed by the ACCC, exhibited the written agreement which is at the heart of the proceedings instituted by the ACCC. The agreement is proposed to prevent excessively discounted fees offered by the agencies mentioned above. The agencies pledges (sic) to offer fair dealings accordingly to the agreed conditions which are listed below that all International students (including Working Holiday Makers & Tourists) will not be offered discounts beyond the noted amount on the school's invoice. Unfortunately the problem has arisen to enormous proportions in Sydney and it sets a fine example. The agents there are competing with each other by offering 15-20% off their own commission to students. In result of this, students are taking this matter to their advantage and requesting for more concessions. It is believed that all persons it concern (sic) do not want this predicament to occur in this market in Perth. Therefore, The Council of Korean Agency wishes to monitor and control unfair commissions apart from official privileges offered by Education Institutes. It is also aimed to all Institutions to cooperate within the agreement for fair dealings in the Korean Market. The five agencies in Perth will organize a Net Work System and cooperate by working together and monitoring any illegal activities. 2. All other agencies should follow the system, which has been organized by the five agencies mentioned above, and carry it into an effect. 3. If any of the five agencies as well as others has performed unfair illegal activities will face a penalty fee ordered by the Council of Korean Agency. 4. All Education Institutions in Perth to cooperate by reporting to the Council of Korean Agency if any illegal activities are performed by any agencies. . No enrolment for school for 3 months. 14 There are obvious public interest considerations in favour of the litigation proceeding against all companies said to have been party to the arrangements of which the ACCC complains. Given that those proceedings are still pending it is neither necessary nor desirable to enter upon any further analysis of their merits. It is sufficient to say that on the materials before the Court it is just that the company be reinstated. 15 In this case the Court is making an order by consent of the parties. In so doing it must be satisfied that the order is within power and appropriate. Where a proposed consent order satisfies those conditions, the Court will ordinarily make an order to give effect to the agreement which the parties have reached. 16 I will make the order as proposed. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | deregistration application for reinstatement of deregistered company by the australian competition and consumer commission purpose of joining company as respondent to penalty proceedings in relation to price fixing and related contraventions of trade practices act 1974 (cth) proposed order for reinstatement by consent whether order within power and appropriate whether accc "person aggrieved" whether proposed reinstatement just order for reinstatement made corporations |
Mr Hill, the second respondent, was being cross-examined about one view of a method in which he was doing business in the past involving the question of whether he or one of the companies with which he was associated was a licensee for the purposes of s 154A of the Liquor Act 1982 (NSW). 2 Mr Aldridge SC, who appears with Mr Glasson for the respondents, objected that the matter raised in cross-examination was developing a new case that had not been foreshadowed. Mr Allen, who appears for the applicants, conceded that it was a new case, but said that it arose in circumstances where he had revisited, the night before, s 154A and had seen, in the morning of the hearing yesterday, the respondents' written submissions, which explained their perception of the operation of s 154A. 3 This necessitated a situation in which Mr Allen has now sought leave to amend the application by, inter alia, adding three new applicants, and to reassess the applicants' claim that Mr Hill had become a debtor to them by force of s 154A. 4 The parties have agreed a timetable for the preparation of further evidence, and I have asked them informally to exchange points of claim and points of defence so that the issues will clarify for the further hearing to be held in June. 5 The solicitor for the respondents, Mr Doble, has prepared an affidavit today setting out the basis upon which it is sought to have me make an assessment of costs thrown away by the adjournment of the hearing which has been necessitated by the circumstances I have just described. 6 There is no doubt that there is some injustice to the respondents by their having to pay costs such as the costs of today and costs associated with preparing once again for the hearing by covering some of the older ground that had been covered in preparing for the hearing yesterday and today. I have to balance that injustice against the possibility that the respondents may be unsuccessful at the end of the hearing. Then there will be issues as to costs for both sides. 7 I have expressed, in the course of argument, a diffidence about granting an order for costs in an amount I assess in circumstances where the further evidence that is to be filed is not at this stage known and the precise way or ways in which the respondents have been adversely affected in a pecuniary way cannot be quantified with, in my opinion, a sufficient amount of certainty that it would be just for me to order the immediate payment of the money to them. 8 The proceedings between the parties apart from the first respondent have been, the evidence reveals, hard fought, complex and lengthy. The matter currently before me bears the hallmarks of a continuation of that process in the sense that there is obviously a concern on each side to pursue vigorously what is perceived to be its or their legal rights. 9 The question of whether I should make an order for costs and in what way I should make it is obviously one which is discretionary. Mr Allen, on behalf of the applicants, cannot and does not object to the making of an order that the costs thrown away by reason of the adjournment, including the costs of today, should be paid by the applicants. The question is whether I should make some order that permits those costs to be quantified whether by assessment, taxation or by myself fixing a sum under O 62 r 3(2) as suggested by the respondents. 10 In all of the circumstances, I am of the opinion that it would not be in the interests of justice to fix a sum of costs at this stage. I do not believe that the issues are sufficiently clear that it would be fair for me to order one party to pay costs in any particular sum even though the applicants do bear some responsibility for the situation which has arisen. I think that there is some force in the applicants' response that it was only until very recently that they perceived the basis on which their claim under s 154A had been opposed. This may be a result of there not having been directions for the filing of points of claim and points of defence, and it may have been the result of the fact that the solicitors for the parties were unable to identify in any precise way what those issues would be in their correspondence exchanges. 11 I am of the opinion that the appropriate order to make is that the applicants pay the costs thrown away by the amendment that is sought to be made to their case and that, included in those costs, the applicant pay the respondents' costs of today in any event. 12 For the reasons I have given, I reject the respondents' application to fix a sum or to require the taxation of those costs at this stage. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | where leave to amend interim application granted prejudice to party whether costs should be quantified order sought for taxation or fixing of costs costs |
The period of operation of the freezing orders had been extended on 1 and 7 March 2007. They were due to expire at 5.00 pm on 26 March 2007, the date of the hearing. In his case the orders were expressed to operate until further order of the Court. Mr Parsons does not seek to have the orders against him discharged. 3 By his amended notice of motion, Mr Yii also seeks orders that Mr Hamilton be removed as liquidator of Newpage and that the Court appoint an official liquidator in his place. However, Mr Yii has not pressed for these orders at this stage. 4 For their part, the applicants, Newpage and Mr Hamilton, move for a further extension of the freezing orders against Mr Yii. It is their motion for an extension, and Mr Yii's for a discharge, of the freezing orders against Mr Yii that are the subject of these reasons for judgment. 5 The second plaintiff, Peter Alexis George ('Mr George'), is a director of Elderslie. Elderslie and Mr George, the plaintiffs, are creditors of Newpage. They successfully sought an order that Newpage be wound up and that Mr Hamilton, whom they had previously appointed as receiver and manager of Newpage under a security held by them, be appointed as liquidator of Newpage. 6 Mr Yii is the sole director and secretary of Newpage. The debt, on the basis of which the plaintiffs applied for the winding up of Newpage, arose out of a loan of $3 million to Newpage made in circumstances described below. Of that sum, Newpage paid two amounts of $610,000 and $1,527,000 (totalling $2,137,000) to the first respondent to the interlocutory process, Casino Busters International Pty Ltd ('CBI'), of which Mr Parsons is the sole director and shareholder. 7 On various bases Newpage and Mr Hamilton contend that Mr Yii is liable to reimburse Newpage in respect of those two amounts totalling $2,137,000. In particular, the versions of events given by both Mr Parsons and Mr Yii in their respective affidavits are quite unsatisfactory. Neither of them was cross-examined. Indeed, the affidavit of Mr Parsons was not read, but was tendered in evidence by the applicants. Senior counsel appeared for Mr Parsons on the hearing but was not in a position to lead evidence from him because he is not a party to the present dispute --- it will be recalled that he does not oppose a continuation of the freezing orders made against him. 9 Under a deed of loan dated 31 May 2006 between Elderslie as lender and Newpage as borrower, Elderslie lent Newpage $1 million. Newpage granted to Elderslie a charge over its assets as security, and Mr Yii guaranteed payment by Newpage. The advance of $1 million was deposited to the credit of Newpage's bank account No 24-2903 with Westpac Banking Corporation the next day, 1 June 2006. On that day, 1 June 2006, Newpage paid out of the sum of $1 million a sum of $610,000 to CBI, by a deposit on that date of cheque No 033126 drawn on Newpage's account in favour of CBI's bank account No 21-0011, also at Westpac (although at a different branch). It is not in dispute that the Newpage cheque was signed by Mr Yii. 10 The sum of $1 million lent was to be repaid by 1 September 2006. It was not repaid. Newpage, through Mr Yii, unsuccessfully applied to Lewis Securities Limited ('Lewis') for a loan of $3 million. However, later in September 2006, Newpage successfully applied to Lewis for such a loan. Under a Loan Facility Agreement dated 22 September 2006 between Lewis as lender and Newpage and Mr Yii jointly and severally as borrowers, Lewis advanced $3 million to Newpage and Mr Yii upon the terms of that agreement. The advance of $3 million was secured by a Fixed and Floating Charge dated 22 September 2006 executed by Newpage in favour of Lewis. Apparently the advance was also secured by a Mortgage of Shares executed by Mr Yii. 11 Out of the advance of $3 million, the sum of $1 million was paid to Elderslie in discharge of Newpage's liability to that company, $1,600,000 was deposited to Newpage's bank account on 22 September 2006, and Lewis retained the remaining $400,000. 12 Out of the sum of $1,600,000, Newpage paid $1,527,000 to CBI on 22 September 2006 by causing that sum to be withdrawn from Newpage's account and transferred to that of CBI. Again, it is not in dispute that it was Mr Yii who caused the sum to be transferred from Newpage's account to that of CBI. 13 By a deed of assignment dated 3 November 2006 between Lewis as assignor and Elderslie and Mr George as assignees, Lewis assigned all its right title and interest under the Loan Facility Agreement and the said securities to Elderslie and Mr George in consideration of payment by them of an 'Assignment Fee' of $2 million. Lewis gave Newpage and Mr Yii notice in writing of the assignment. 14 Newpage and Mr Yii defaulted under the Loan Facility Agreement, and on 29 December 2006, Elderslie and Mr George appointed Mr Hamilton as receiver and manager of the property of Newpage. 15 Mr Hamilton's investigations as receiver and manager suggested that Newpage's major asset was 30,788,751 shares in the capital of Intermoco Limited ('Intermoco'), a public company whose shares were listed on the Australian Stock Exchange. According to the 2006 Annual Report of Intermoco, Newpage's shareholding represented 3.82 percent of the issued capital of Intermoco. Mr Hamilton's evidence was that Newpage also appeared to hold 500 out of 850 issued shares (approximately 58.8 percent) in the capital of Australon Enterprises Pty Ltd ('Australon'), which held, as at 30 June 2006, 83,831,922 shares in Intermoco, amounting to 10.4 percent of the capital of Intermoco. However, Mr Hamilton's inquiries suggested that Australon may have divested itself of its shareholding in Intermoco at same time after 30 June 2006. 16 In his capacity as receiver and manager, Mr Hamilton had a telephone conversation on 29 December 2006 with Mr Yii, who had telephoned him. Mr Yii said that he was aware of Mr Hamilton's appointment as receiver and manager. This was a fee for a loan being organised by him from the US of $150,000 million, which will be available on 15 January 2007. I will be returning to Australia on 20 January 2007 to arrange settlement. It will be recalled that in fact, of the sum of $3 million, $2,137,000 ($610,000 + $1,527,000) had been paid by Newpage, not to Penthouse, but to CBI, a different company associated with Mr Parsons. 18 On 2 January 2007, the date on which this proceeding was commenced by Elderslie and Mr George as plaintiffs against 'Newpage Pty Ltd (ACN 087 645 216) (Receiver and Manager appointed)' as defendant, Warwick Isherwood, solicitor, contacted Mr Baird of Kemp Strang, the solicitors for the plaintiffs and for Mr Hamilton as receiver and manager of the property of Newpage. Mr Isherwood advised Mr Baird that he (Mr Isherwood) represented Mr Yii. He said that he accepted that if Mr Hamilton's appointment as receiver and manager was valid, he did not act for Newpage. 19 By the originating process the plaintiffs sought orders for the winding up of Newpage and the appointment of Mr Hamilton as liquidator. By an accompanying interlocutory process they sought an order that Mr Hamilton be appointed as liquidator provisionally. On 2 January 2007, Stone J made orders abridging the time for service and directing service upon Mr Isherwood. On 5 January 2007, her Honour appointed Mr Hamilton as provisional liquidator of Newpage (see Elderslie Finance Corporation Limited v Newpage Pty Ltd [2007] FCA 4). 20 On 24 January 2007, Elderslie and Mr George filed an interlocutory process against CBI as first respondent and Mr Parsons as second respondent seeking freezing orders against CBI up to a sum of $2,137,000. The interlocutory process also sought an order that Mr Parsons file and serve an affidavit disclosing the facts and circumstances under which the sums of $610,000 and $1,527,000 were received by CBI from Newpage on 1 June and 22 September 2006 respectively, and as to any disposition or use by CBI or Mr Parsons of those amounts, and their present whereabouts. In the event, on 25 January 2007 Stone J ordered that Newpage be wound up and that Mr Hamilton be appointed as liquidator (see Elderslie Finance Corporation Limited v Newpage Pty Ltd [2007] FCA 61). On the same day, on the application of Newpage (now in liquidation) and Mr Hamilton, (now its liquidator), her Honour made freezing orders against CBI and a 'disclosure order' against both CBI and Mr Parsons. The following is his account of the facts, as to which I make no findings. 22 CBI was registered on 22 March 2004 and its business is that of operating a tutorial gaming internet site open to the public at large. In broad terms, members of the public are invited to purchase over the internet individual modules of instructions concerning the card game known as 'blackjack'. 23 Mr Parsons first met Mr Yii in or about 2002 when Mr Yii discussed the possibility of his purchasing a share in CBI. This did not eventuate, but they developed a friendship and would share meals together and discuss Mr Parsons's expertise at blackjack. Eventually Mr Yii offered Mr Parsons funds for the purpose of gambling on the basis of his expertise at blackjack. Their purpose was to make a profit from winnings. 24 Mr Parsons is unable to remember the number of occasions Mr Yii made funds available to him for blackjack gaming but the last payment to him was of $1,527,000 made in September 2006. He estimates that during his association with Mr Yii, the total sum provided by Mr Yii to him for blackjack gaming exceeded $10 million. 25 Mr Parsons used the amounts at various casinos in Australia and abroad, namely, Crown Melbourne, Jupiters Queensland, and Belaggios, MGM Grand and Wynns Casinos, all in Las Vegas, USA. Mr Parsons has not had sufficient opportunity to determine whether they are all of the casinos where he gambled with money provided by Mr Yii. 26 Mr Parsons estimates that the total amount returned to Mr Yii until about mid November 2006 exceeded $12 million. I am also the sole director of Penthouse Concepts Pty Ltd (ACN 103 282 944). 29 In relation to the sum of $610,000 deposited into CBI's Westpac account on 1 June 2006, Mr Parsons says that as best he can remember Mr Yii told him that he had funds of around $600,000 and would deposit them into CBI's account. He did not tell Mr Parsons they were from Newpage, and the first time Mr Parsons saw the name of Newpage as being associated with CBI was when he received documents in connection with this proceeding. Neither he nor CBI has had any loan agreement with Newpage. 30 Mr Parsons has inspected the Westpac trading account of CBI between 1 June 2006 and 31 July 2006 and, as best he can recall and allowing for the lapse in time, he identifies certain withdrawals which he characterises as having been for the purpose of blackjack gaming at the Crown Melbourne and Jupiters Queensland Casinos. 31 In respect of the deposit of $1,527,000 on 22 September 2006, Mr Parsons states that, as best he can remember, Mr Yii told him in about mid September 2006 that he had funds coming from London which would go directly into the CBI account, and that when they arrived Mr Parsons should contact him to confirm their arrival. Mr Parsons states: 'These funds were for the purpose of blackjack gaming'. 32 Mr Parsons has inspected the CBI Westpac trading account for the period 22 September to 24 November 2006 and identifies five withdrawals totalling $1,592,333.00 which he states were used for blackjack gaming. The returns to Mr Yii were always in the form of cash and casino chips. In respect of the sum of $610,000.00AUD deposited into the trading account CBI Westpac on 1 June 2006 and the withdrawals identified in paragraph 13 of my Affidavit a) to d) inclusive as best I am able to remember, these withdrawals were executed by raising bank cheques in each case made out in favour of Crown Casing Melbourne and deposited in my name at Crown Casino. These funds were used for the purpose of blackjack gaming. However, in respect of the amount identified in paragraph 13 a), only the sum of $150,000.AUD was deposited at Crown Casino Melbourne. As best I remember $9,000.00AUD was withdrawn in cash. In respect of the sum of $610,000.AUD identified in paragraph 12 of my previous Affidavit, as best I am able to recall, I returned the entirety of this amount plus winnings to Mr Martin Yii. The returns to Mr Yii were in cash and casino chips. The casino chips would usually be in lots of chips to the value of $25,000.00AUD per chip and lots to the value of $5,000.00AUD per chip. In respect of the deposit in the CBI trading account dated 22 nd September 2006 in the sum of $1,527,000.00AUD identified in paragraph 14 of my previous Affidavit, as best I remember, I returned to Mr Yii's agent "Walter" the sum of $370,000.00USD and $270,000.00USD in cash and chips. I would describe "Walter" as Asian in appearance, black hair, approximately mid forties, 1.75cm in height. "Walter" spoke fluent English without an American accent. I understood that he resided in Los Angeles. On the first occasion I met "Walter" and before I handed over money and chips, I rang Mr Yii using my mobile in order to confirm "Walter's" Identity. These funds were returned to "Walter" in Las Vegas, USA in September and October, 2006 respectively. As best I remember, the cash and chips were handed to "Walter" at Belaggios and Wynns Casino in Las Vegas. Further in respect of the withdrawals identified in paragraph 15 a) to e) inclusive, as best I am able to remember the withdrawal from the CBI Westpac trading account in the sum of $155,010.00AUD was by Westpac bank cheque in favour of Crown Casino Melbourne in the sum of $150,000.00AUD, $5,000.00AUD was withdrawn in cash. In respect of the amount of $1,527,000.00 identified in paragraph 14 of my Affidavit, I estimate between 22.9.2006 and the first week of December 2006 I returned to Mr Yii approximately $1,900,000.00AUD. These funds were returned episodically at the locations identified at paragraph 5 above except for the sums which were returned to "Walter" in the United States. I am now unable to recall a break down of the specific amounts I returned to Mr Yii and the dates I returned these amounts at the locations identified at paragraph 5 above. Mr Hamilton's next move, therefore, was to seek a freezing order against Mr Yii. Accordingly, by an amended interlocutory process filed on 26 February 2007, the applicants sought leave to join Mr Yii as third respondent and sought freezing and disclosure orders against him. Upon the applicants and Elderslie giving to the Court appropriate undertakings, I made such orders on 26 February 2007 (see Elderslie Finance Corporation Limited v Newpage Pty Ltd (No 3) [2007] FCA 259) , and, as noted earlier, they were the subject of subsequent extensions. In substance, he states that the account given by Mr Parsons is a complete fabrication. The following is Mr Yii's account, as to which I make no findings. 37 In early 2002, Mr Yii received a telephone call from Mr Parsons who spoke about his company, CBI, and asked Mr Yii if he would be interested in investing in it. 38 Mr Yii disputes that from time to time he and Mr Parsons would share meals together and discuss Mr Parsons's expertise in blackjack. Rather, their discussions were about CBI's business, and Mr Parsons gave Mr Yii a promotional video CD on 'CBI's internet portal'. 39 Mr Yii is not interested in gambling at all and is certainly not interested in it as a business model. 41 In early 2006, Mr Parsons approached Mr Yii to assist him with 'arranging some bridging finance to assist him with concluding a funding arrangement with his business partners in the United States of America (USA)'. Mr Yii does not recall the actual amount, but it was expressed in USA dollars. He understood that the USA funds were to be paid to Penthouse Concepts Australia Pty Ltd ('Penthouse') 'for the purpose of developing yet to be identified projects'. I was also told by Mr Parsons and believe that Penthouse was interested in investing in various projects. The terms agreed between Mr Parsons and I were that any costs of arranging for the funds were to be borne by Penthouse and that the interest payable to Newpage was 17% per annum. Mr Parsons agreed that the costs of procuring the funds were to be borne by Penthouse and the interest charged would be high at 17% per annum. If I had known that the moneys were to be used for gambling, I would never have put Newpage at risk by lending money to Mr Parsons to support his gambling habit. I would never have provided funding to him for that purpose. As a result of a number of conversations with Mr Parsons, he promised me that a proportion of the USA funds would be made available for the purpose of investing in some major projects that were yet to be identified. It was agreed between Mr Parsons and I that the USA funds could only be used on projects approved by Mr Parsons. Keeping those prospective projects referred to in paragraph 3(e)(iii) above active and available to be utilised for the USA funds caused me serious reputation issues with my Asian interests. Mr Parsons had continued to promise that the USA moneys were almost ready to be sent to Australia but was always being delayed for some reason or other. I then had to explain that situation to my Asian interests and that was affecting my reputation. I did not lend money to Mr Parsons or companies associated with him for the purpose of gambling. Mr Parsons has repeatedly told me that all the procedures required by his business partners in the USA have been completed. I understand from my discussions with Mr Parsons that he and CBI are also the subject of some freezing orders obtained against them and he said to me that those freezing orders need to be removed before any moneys from the USA could be transferred to Australia. However, these documents give rise to as many questions as they answer. 45 Mr Yii firstly exhibits an undated Investment Agreement between Ingestre Pty Ltd ('Ingestre'), another company associated with Mr Yii, and Penthouse ('Exhibit MYHY 1'). The Investment Agreement is signed by Mr Yii on behalf of Ingestre, and by Mr Parsons on behalf of Penthouse. Exhibit MYHY 1 has 29 clauses. It bears the name 'Dibbs Abbott Stillman/Lawyers' and the word processor number 'Doc#326235---v1---Matter#61499---GB'. The significance of these details will appear below. 46 Exhibit MYHY 1 is a very odd document in that it is impossible to identify from it any project or amount of money to which it relates. It is undated. While submissions and further evidence may alter my view, my impression is that the document was intended to convey that Ingestre and Penthouse had agreed upon some kind of joint venture structure, whereas in fact, in the absence of any detail whatever, they had agreed on nothing of significance at all. 47 Mr Yii states (para 3 (e) (vii)) that as recently as on 23 February 2007 'and at Mr Parsons's insistence', he emailed a draft Investment Agreement to Mr Parsons for his consideration. He exhibits to his affidavit a copy of his email to Mr Parsons and of the form of Investment Agreement ('Exhibit MYHY 2'). Exhibit MYHY 2 names Ingestre as one party, Allemar Investments Limited ('Allemar') as 'trustee' as another party, and leaves blank the name of a third company which is to be a party to the agreement. This third party is simply called 'Company' and is indicated within Exhibit MYHY 2 as being associated with Mr Parsons. 48 Exhibit MYHY 2 contains more detail than does Exhibit MYHY 1. It relates to an investment of US$330 million, and to a project of 'Development of the Kerengga Coastal Industrial City ... at the District of Marang, Terrenganu Darul Imam, Malaysia. ' The document is not executed. 49 Mr Yii denies (para 3 (f)) that until mid November 2006 Mr Parsons returned to him an amount exceeding $12 million, and asserts that Mr Parsons has not repaid the 'bridging finance' or the 'Loan Amount' to Newpage, let alone any interest or costs'. The 'Loan Amount' is defined as the sum of $1,527,000. The amount of the 'bridging finance' is apparently the sum of $610,000 that was paid by Newpage on 1 June 2006 into the bank account of CBI. 50 In response to Mr Parsons's statement that he has never had a loan agreement with Mr Yii or with any corporate entity associated with him, Mr Yii states (para 3(g)(ii) that Mr Parsons first approached him in relation to the USA monies in 2005, saying that he had access to such monies and wanted Mr Yii's assistance in identifying projects in which they could be invested. 52 Lest it be thought that the vagueness of my account of Mr Yii's affidavit is due to the summary nature of the account, I should note that this is not so and that I am reflecting accurately the vagueness of the affidavit. 53 Mr Yii states (para 3(g)(iv)) that in or about June 2006 he instructed Dibbs Abbott Stillman to prepare an agreement to document 'the investments' and provide a draft to Mr Parsons for his review. While Mr Parsons told him in or about September 2006 that he would sign the document, he did not do so. Accordingly, the agreement prepared by Dibbs Abbott Stillman remains in draft form, and a copy of it is Exhibit MYHY 3 to Mr Yii's affidavit. Exhibit MYHY 3 appears to be almost identical to Exhibit MYHY 1. There is the change of name from Ingestre to Newpage and related change of ACN number, but it has the same table of contents indicating 29 clauses dealing with the same subjects, and the same word processor reference. 54 On or about 7 September 2006, Mr Parsons wrote to 'the Board of Directors Ingestre Pty Ltd' on the letterhead of Penthouse ('Exhibit MYHY 4'). The letter was headed 'Confirmation of USD 200 Million Dollars Investment Fund'. The letter implies that establishment fees and costs of $2.5 million either have been or are to be paid, and that if the $US200 million is not paid to Ingestre within 10 days, the $2.5 million is to be refunded. 56 On 3 August and 13 August 2006, Mr Yii emailed Mr Parsons ('Exhibit MYHY 5') (para 3(g)(vi)). In the absence of context, the meaning of the two emails is obscure. Mr Yii provided Mr Parsons with details of Ingestre's bank account in Hong Kong and enclosed a 'sample document' which was to be executed. This is the form of Investment Agreement expressed to be between Ingestre and Penthouse that is Exhibit MYHY 1. He asked Mr Parsons to 'fill in' as much as he could, then added 'I will further massage the document after receiving the copy back from you', saying that he wished the document 'to look as complete and good as possible for the bank manager'. I was informed from the bar table that Intermoco shares were re-listed on the ASX, and that based on the latest sales of them, the market value of Newpage's shareholdings is of the order of approximately $652,000. 59 Mr Hamilton forwarded to Dibbs Abbott Stillman Lawyers of Melbourne a copy of the unsigned 'Investment Agreement' between Newpage and Penthouse and asked the solicitors to provide certain information about the document, such as whether it was indeed prepared by that firm, and, if so, the approximate date range for the preparation of it, the date it was provided to Newpage or Mr Yii, whether it was the only copy, and if other copies (including drafts) were prepared, the dates on which they were delivered to Newpage or Mr Yii. On 27 February 2007, Dibbs Abbott Stillman replied to the effect that that firm did draft an Investment Agreement but that 'the Investment Agreement was not drafted for and on behalf of Newpage or Penthouse Concepts Aust Pty Ltd and relates to another matter'. The letter advised that the solicitors were unaware of 'the interplay' between Newpage and Penthouse and that neither of those companies was a client of the firm. 60 I will not digress to attempt to reconcile the solicitors' letter to Mr Hamilton with Exhibits MYHY 1, 2, 3 and 5, discussed earlier. The best that I can make of it is that Dibbs Abbott Stillman must have prepared the form of Investment Agreement as between Ingestre and Penthouse, or as a standard form document leaving the parties' names and other particulars to be inserted by Mr Yii. No doubt the true position will emerge on the final hearing. 61 The word processor references on Exhibits MYHY 1, MYHY 3 and MYHY 5 are identical. That on Exhibit MYHY 2, the Investment Agreement expressed to be between Ingestre and Allemar, is different, being: 'Investment Agreement Penthouse Foreign co 20 Feb 07v 2.1'. 62 The reference 'GB' in the three identical word processor references is apparently a reference to George Bartzis of Dibbs Abbott Stillman. Mr Bartzis was the signatory of the letter of 27 February 2007 to Mr Hamilton. 63 The last piece of evidence to which it is necessary to refer is an affidavit dated 13 March 2007 of Mr Yii. He states that on 29 January 2007 he had a telephone conversation with Mr Hamilton in which Mr Hamilton informed him that Mr Parsons was convicted of fraud in the early 1990s and served some time in jail. Mr Yii said that that was when he learned of Mr Parsons's conviction for dishonesty. Mr Yii relies upon this evidence as showing that when the applicants applied for the freezing order against him on 26 February 2007, they were aware of Mr Parsons's conviction and imprisonment for fraud and were under an obligation to disclose this information to the Court. 64 A copy of the report in The Queen v Roumald Charles Parsons , Supreme Court of Victoria Court of Appeal on 24 October 1997 (unreported, BC9705568 --- see now R v Parsons [1998] 2 VR 478) and a copy of the report of Roumald Charles Parsons v The Queen [1999] HCA 1 (see now Parsons v The Queen [1999] HCA 1 ; (1999) 195 CLR 619) were tendered in evidence before me. They show that Mr Parsons pleaded guilty to five counts of obtaining property by deception. Mr Parsons admitted 30 prior convictions from two previous court appearances, all relating to offences of dishonesty. On 24 June 1997, the Victorian County Court imposed sentences of 16 months' imprisonment on each count, directing that four months of the sentence imposed on four of the counts be served cumulatively upon each other and upon the sentencing imposed on the remaining count. The total effective sentence was thus two years and eight months. His Honour directed that Mr Parsons serve a minimum period of two years before becoming eligible for parole. Mr Parsons applied for leave to appeal against his conviction, notwithstanding his pleas of guilty, and for leave to appeal against the sentences imposed. His applications were dismissed by the Victorian Court of Appeal. His appeal to the High Court was dismissed. 65 Mr Yii states that he attended a meeting with Mr Hamilton on 30 January 2007 at which Nigel Elias, a director of Lewis was present. Mr Elias said that he was assisting Elderslie to collect the debt owed by Newpage and Mr Yii to Elderslie, through his (Mr Elias's) company, Print Mail Logistics. Mr Elias also said that he was responsible for the appointment of Mr Hamilton as receiver and manager of the property of Newpage, and that he was the person to whom any matter relating to the debt assigned by Lewis to Elderslie and Mr George should be raised. 66 At one time the applicants sought an order that Mr Yii surrender his passport. I refused to make that order and the applicants have not renewed their application for it. Accordingly, I need not address the evidence relating to Mr Yii's practice of travelling between Australia and Asia in the course of his business. 68 Mr Hamilton knew, when he applied for the freezing order against Mr Yii on 26 February 2007, that the evidence of Mr Parsons on which he was relying was the evidence of a man who had been convicted of obtaining property dishonestly and had been sentenced to imprisonment in consequence. 69 Was it incumbent on Mr Hamilton to disclose these facts? It is said for the applicants that it was not, because the conviction and sentence are not germane to the question whether Mr Parsons's affidavit evidence relating to the joint gambling enterprise should be believed. 70 The obligation on an applicant for an order on a hearing ex parte is usually expressed as an obligation to bring to the Court's attention all 'material' facts, that is to say, all facts material to the decision whether to grant the relief: cf Thomas A Edison Ltd v Bullock [1912] HCA 72 ; (1912) 15 CLR 679 at 681-2 per Isaccs J; and see Biscoe P, Mareva and Anton Piller Orders: Freezing and Search Orders (LexisNexis Butterworths, 2005) at [6.44] --- [6.56], and cases there cited. 71 The conviction and sentence were in respect of transactions that occurred between May and August of 1994. They concerned frauds perpetrated by Mr Parsons on five Victorian newsagents. Mr Parsons obtained from these five people cheques totalling over $160,000 by various false pretences. In substance, he procured the newsagents to make out cheques in favour of his company on the promise that the funds would be used to procure paper from a supplier in South East Asia, for the sale of which his company already had contracts in place with large and reputable buyers in the districts in which the newsagents were carrying on their businesses. In fact, no orders for paper were placed, no supplies of paper in commercial quantities were ever imported, and the funds were squandered. Mr Parsons told a variety of lies to explain the whereabouts of the promised paper. In each case, the deceived person's cheque was paid into a bank account of a company called Canyon Bay Pty Ltd, and shortly afterwards, Mr Parsons procured a withdrawal of the amount. 72 Although the matter may be arguable, and I would not wish to detract in any way from the duty of a party applying for an order ex parte to make full disclosure to the Court (see Hayden v Teplinsky (1997) 74 FCR 7 at 12), I do not think that it was incumbent on Mr Hamilton to disclose on the application he made on 26 February 2007, that the deponent on whom reliance was placed had engaged in that fraudulent conduct some 13 years earlier. It is easy with the benefit of hindsight, and, in particular, with the benefit of the evidence of the version of events that Mr Yii subsequently gave, to question whether Mr Parsons was telling the truth in his two affidavits. However, at the times when those affidavits were filed and read, there was no reason for the applicants to think that his account was not or might not be true. The factual circumstances of some 13 years earlier had, of course, no connection with the factual circumstances touching the dealings between Mr Parsons and Mr Yii in 2006: they go only to the credit of Mr Parsons. In any event, according to the evidence, all that Mr Hamilton knew was that Mr Parsons had been convicted of fraud of some kind in the early 1990s and had served some time in gaol. Mr Hamilton did not know the nature or degree of seriousness of the fraudulent conduct or the length of the period of imprisonment. 73 In relation to the second matter, likewise I do not think that the applicants for the freezing order were obliged to draw the Court's attention to cl 14(a). It was not relevant to the application for the freezing order that Newpage and Mr Yii had undertaken to a non-party, Lewis, not to dispose of assets. If so, have they shown that there is a risk of dissipation of Mr Yii's assets which would frustrate an order that he reimburse Newpage to that extent. 75 The first of these questions directs attention to the legal bases of the claim for final relief against Mr Yii on which the applicants rely. 77 The draft points of claim assert that no reasonable person would, in the circumstances, have entered into either of the two transactions, having regard to the absence of any benefit to Newpage, the detriment to Newpage, and the benefit to CBI or, alternatively, to Mr Parsons, of the transactions. 78 It is said that each of the two transactions was an unreasonable director-related transaction of Newpage, and, by reason of s 588 FE (6A) of the Act, is voidable. 79 According to the draft points of claim, by reason of s 1317H of the Act, Mr Yii is liable to compensate Newpage for the loss and damage suffered by it, and is liable to account for any profits made by Mr Yii resulting from his breaches of duty. 80 Finally, it is said that if Mr Parsons's account of his having received the sums of $610,000 and $1,527,000 from Mr Yii and repaid those amounts to Mr Yii in the form of cash and casino chips should be found to be correct, then, in addition, Mr Yii has breached his fiduciary duties to Newpage by not acting honestly and in good faith in the best interests of Newpage, by improperly using his position as a director of Newpage to gain an advantage for himself, and by preferring his own interests to those of Newpage. 81 I have two diametrically opposed accounts. All parties agree that I am not to make findings of fact. Senior counsel for Mr Yii submits, however, that I am at liberty to prefer, on a preliminary basis and for the purpose only of the present motions, one version to the other. Of course, he urges me to accept that Mr Yii's version is to be preferred. As I understand it, he accepts that if I were to prefer Mr Parsons's account, it would be appropriate to continue the freezing order against Mr Yii. 82 Senior counsel for the applicants submits that if the version (vicarious gambling) given by Mr Parsons were to be accepted, it would be clear that the applicants have a cause of action against Mr Yii, and that the same facts show a risk of dissipation of assets (through gambling). He submits that it is enough that Mr Parsons has given sworn evidence as to his version. In other words, his submission is that on the basis that Mr Parsons's sworn version exists, and notwithstanding the existence of the diametrically opposed sworn version given by Mr Yii, there is a serious question to be tried as to Mr Yii's liability to the extent of $2,137,000. 83 In the alternative, he submits that even on Mr Yii's version (investment), there was a disposal of $2,137,000 without documentation or security, resulting in a similar liability on the part of Mr Yii. 84 I do not accept that it is necessarily sufficient that one sworn version of the facts shows a serious question to be tried. One could imagine a situation in which irrefutable evidence demonstrates the falsity of that version. That, however, is not this case. While there are many unsatisfactory aspects of Mr Parsons's affidavits, there is also possibly some corroborative evidence in the form of references in the statement relating to CBI's bank account of withdrawals at Broadbeach and at Conrad Jupiters Casino Queensland following the crediting of the sums of $610,000 on 1 June 2006 and $1,527,000 on 22 September 2006. 85 I do not regard the affidavit evidence of Mr Yii as being of the irrefutable kind that entitles me to set at nought the evidence given by Mr Parsons. There are problems to which I referred earlier also with the evidence of Mr Yii. 86 In addition, I note that an affidavit sworn by Joseph Edward Crogan on 24 January 2007 gives yet a further version of the purpose of at least the loan of $1 million. Mr Crogan was, at the time, Managing Director of Elderslie. He states that Mr Yii said that the sum of $1 million was part of an 'arrangement fee' of $4.8 million required to be paid 'up front' to procure the release of US$30.5 million from an investor in the Republic of South Africa. The arrangement fee of $4.8 million was to be paid to obtain the approval of the Reserve Bank of South Africa to the repatriation of the money. 87 Mr Yii does not mention this version in his own affidavits. 88 On Mr Yii's own account, he caused $2,137,000 out of the advance of $3 million to Newpage to be paid to CBI on the most vague of assurances, unsecured and not documented. Even on his own version, there is serious question to be tried as to whether he is liable to Newpage for that sum in respect of his negligent performance of his duties as a director. I need not discuss the other causes of action mentioned earlier. 89 Mr Yii has shown by his disposals of the amounts of $610,000 and $1,527,000 belonging to Newpage without anything approaching a satisfactory explanation, and without documentation or security, that there is a risk of dissipation by him of his own assets. Directions should be made with a view to bringing that claim to an early final hearing. | freezing order sharply conflicting evidence as to underlying facts whether serious question to be tried as to whether person against whom freezing order sought would be held liable to applicants whether freezing order should be discharged because applicants had not made full disclosure on original ex parte application for the order. practice and procedure |
Having taken steps to advise the appellant that his application for waiver of the fee normally required in conjunction with an application for review had been refused, the Tribunal proceeded to dismiss the application for review on the basis that it had no jurisdiction. It took the view that a reasonable time had elapsed after notification of the refusal to waive the fee. Subsequently, the appellant contacted the Tribunal to say that he had not received the notice of the refusal to waive the fee. The Tribunal then took the view that it had discharged its function by making the decision that it did not have jurisdiction, and that it could not reopen that decision. In essence, the question is whether the Tribunal was bound to reconsider the issue of the lapse of a reasonable time, in light of the appellant's claim that he had not received the notice. The appeal is from a judgment of the Federal Magistrates Court, delivered on 7 August 2008 and published as Patel v Minister for Immigration & Anor [2008] FMCA 1035. The learned federal magistrate dismissed an application by the appellant, seeking judicial review of the Tribunal's decision, which was signed on 7 November 2007 and forwarded to the appellant, with a statement of reasons and a letter dated 8 November 2007. The Tribunal expressed its decision in terms that "The Tribunal does not have jurisdiction to review this matter. " The matter concerned was an application by the appellant to review a decision of a delegate of the Minister for Immigration and Citizenship ("the Minister"), the first respondent to this appeal, cancelling the appellant's student visa. That decision was dated 20 August 2007. The delegate reached the conclusion that the appellant could not be excused from the requirements of the condition because his non-compliance was not due to exceptional circumstances beyond his control. In the absence of such exceptional circumstances, cancellation of the visa was required by the relevant provision of the Migration Regulations 1994 (Cth) ("the Migration Regulations "), as it then stood. The appellant wished to contest the issue of exceptional circumstances beyond his control. On 24 August 2007, he lodged with the Tribunal his application for review of the decision of the Minister's delegate. He also made an application for waiver of the fee required by reg 4.13(1) of the Migration Regulations . According to the Tribunal's reasons for decision, on 25 September 2007, an authorised officer of the Tribunal decided to refuse the request for fee waiver. On the same day, the Tribunal wrote to the appellant, advising him of this decision and asking that he pay the prescribed application fee within a reasonable period, specifically by 18 October 2007, or make other arrangements with the Tribunal about the payment of the fee. The appellant neither paid the fee nor responded otherwise to the Tribunal's letter. On 30 October 2007, the case was allocated to a member of the Tribunal, who decided that the Tribunal did not have jurisdiction to review the decision of the Minister's delegate. This letter was addressed to the appellant at his place of residence in Werribee South. The appellant informed me on the hearing of the appeal that he had received the letter dated 8 November 2007, with the Tribunal's decision. He said that he telephoned the Tribunal and informed the person to whom he spoke that he had not received any letter informing him of the outcome of his fee waiver application. According to the Tribunal's records, on 15 November 2007, an officer of the Tribunal made contact with the appellant. post number RP35137215. I confirmed that the Tribunal had met its legal obligation to notify him of the decision and the matter is now out of hands [sic] and we can do nothing further to assist him. I advised him of the Tribunals' complaint handling procedures and suggested that he may want to contact the post office to follow up on the registered post that was dispatched to him and provided him with the reg. post number. The evidence was in an affidavit of a District Registrar of the Tribunal, who produced the Tribunal's postal log for 25 September 2007, recording that an item was sent by registered post to the appellant at the Werribee South address on that day. Significantly, there was no evidence that Australia Post obtained any signature for the delivery of the registered mail article. Counsel for the Minister conceded that no such evidence was to be found in the records of the Tribunal. At [5] , his Honour concluded that the appellant was deemed to have received the letter of 25 September 2007, because of the cumulative effect of reg 4.10(1)(b) of the Migration Regulations and s 347 of the Migration Act 1958 (Cth) ("the Migration Act "). After reciting the facts, at [11], his Honour expressed the view that it was surprising that, of all the letters sent to the appellant at his nominated address, the only one he did not receive was that of 25 September 2007. At [12], his Honour pointed out that evidence that he had not received that letter was not before the Tribunal. His Honour said that it is not generally open to an applicant to seek to put new evidence before the Federal Magistrates Court, in order to challenge a finding of fact made by the Tribunal. After pointing out that the appellant had had every opportunity to put evidence before the Federal Magistrates Court, at [15], his Honour expressed the "opinion" that "it is more probable than otherwise that the [appellant] did receive the Tribunal's notification about paying his fee but simply failed, for whatever reason, to do so. " His Honour went on to say that, even if the appellant did fail to receive the letter, "it is plain that the Tribunal's decision was correct. " The reason his Honour gave for this was that, at the time of the Tribunal's decision, the appellant had not paid the required fee. At [16], his Honour expressed a concern that a person who did not actually receive notification from the Tribunal of the rejection of a fee waiver application may suffer hardship. Nonetheless, his Honour said, that was a matter for Parliament and his Honour was required to hold the application to be totally deficient in merit. It is therefore unnecessary to look in detail at the provisions of s 347(1)(b) of the Migration Act , or at reg 4.10(1)(b) of the Migration Regulations , to determine what the period was. It is also not disputed that the appellant did not give to the Tribunal the prescribed fee within the prescribed period, because he applied for a waiver of that fee. In the present case, there was no such decision. The provisions of the Migration Act relating to the giving and receiving of Tribunal documents are found in Div 8A of Pt 5. That gap occurs in a case in which a person gives to the Tribunal, within the prescribed time limit, an application in the approved form, but the application is not accompanied by the prescribed fee, because the applicant has applied for a decision under reg 4.13(4) of the Migration Regulations that the fee should not be paid, generally described as an application to waive the fee. If the application to waive the fee is unsuccessful, the applicant is required to pay the prescribed fee. The problem is that time has elapsed. Not only has the prescribed fee not accompanied the application, but it is very likely that the prescribed period has expired. If a literal view were to be taken of s 347(1), in every such case an applicant would be precluded from proceeding for review, because of non-compliance with s 347(1)(c). This would have the effect of depriving reg 4.13(4), and the words "(if any)" in s 347(1)(c), of any real meaning, except in a case in which the applicant paid the prescribed fee and also sought a decision that it should not be paid, leading to the remission of the fee if the application were successful. Such a construction would do injustice to an applicant who genuinely lacks the means to pay the fee and therefore seeks a decision under reg 4.13(4) to waive the fee. It is likely that there would be many such applicants. To make the provisions operate sensibly, the Full Court in Braganza held that, in such a case, the Tribunal was not deprived of jurisdiction to consider the application for review merely because the prescribed fee was not paid within the prescribed period, provided the fee was either eventually waived or paid within a reasonable time after the rejection of the request for a decision under reg 4.13(4). See especially [50]-[52] in the reasons for judgment of the Full Court. Consequent upon Braganza , the Tribunal appears to have adopted a practice of allowing 14 days from the deemed receipt by an applicant of a letter informing that applicant that a decision to waive the prescribed fee has not been made. This period is generally regarded as a reasonable time for the purposes of the application of the principle enunciated in Braganza . That practice appears to have been applied by the Tribunal in the present case, when it advised the appellant in the letter dated 25 September 2007 that he should pay the fee by 18 October 2007. This allowed for the seven working days after the posting of that letter, to give rise to the deemed receipt, with a further period of 14 days as a reasonable time in which to pay the fee. For the purposes of the application of the principle enunciated in Braganza , however, the Tribunal was required to consider whether a reasonable time after that date had been allowed for the payment of the prescribed fee. A reasonable time can never be a period determined arbitrarily. The reasonableness of the time allowed must be determined, in each case, according to the circumstances of that case. If, in a particular case, the person to whom the letter is addressed has not received it in fact, that is one of the circumstances that must be taken into account in determining whether a reasonable time has in fact elapsed. When the appellant contacted the Tribunal to advise that he had not received the letter informing him that a decision to waive the prescribed fee in his case had not been made, it was not open to the Tribunal to take the view that it had allowed a reasonable time and had completed the discharge of its function. The information provided by the appellant necessarily raised for the Tribunal the factual question whether the appellant had not received the letter of 25 September 2007. If this question had been determined in the appellant's favour, it would have raised for the Tribunal the question whether its decision that it had no jurisdiction to deal with the appellant's application for review was attended by jurisdictional error. If the Tribunal had proceeded to such a decision before the passage of a reasonable time, in the circumstances of the case, it would not have performed its statutory function of reviewing the decision of the Minister's delegate. It would have declined to exercise its jurisdiction in circumstances where the provisions of the Migration Act required it to exercise that jurisdiction. The making of a decision consequent upon jurisdictional error does not discharge the Tribunal's function. The Tribunal has the power, and the duty, to disregard its previous decision and to proceed to perform its statutory function. See Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11 (2002) 209 CLR 597. In that case, a Tribunal exercising powers under the Migration Act had proceeded to make a decision on the footing that the applicant for review had not attended at the appointed time for a hearing, unaware of the fact that the applicant had communicated a request for an adjournment of that hearing. Upon discovering the error, that Tribunal had proceeded to make a second decision, after affording the applicant procedural fairness. The High Court held it had power to do so. In the present case, the Tribunal had power to consider whether a reasonable time had in fact elapsed after the deemed receipt of the letter of 25 September 2007 and therefore whether its decision declining jurisdiction had been made properly. It was wrong for the Tribunal, by means of its officer, to communicate to the appellant that the Tribunal had met its legal obligation, that the matter was now out of its hands, and that it could do nothing further to assist the appellant. Instead, the Tribunal should have offered to the appellant the opportunity to be heard on the factual question, whether he had received the letter of 25 September 2007. It is possible that the appellant may have been able to persuade the Tribunal to make a finding of fact in his favour on that question. The fact that the Tribunal did not have evidence of actual delivery of the registered mail article (such as a recipient's signature) is significant. The appellant informed me on the hearing of the appeal that the house in which he lived was a household of some 12 students. It is not difficult to see that, when the agent of Australia Post arrived to effect delivery, if the appellant had been not at home, a card recording the attempted delivery might have been left with another occupant of the house who had neglected to hand it on to the appellant. It is not for me (and it was not for the federal magistrate) to make this factual determination. It was a matter entirely for the Tribunal. If the appellant had succeeded in obtaining a finding of fact that he had not received the letter of 25 September 2007, the Tribunal would have been required to consider whether, in the light of that circumstance, the appellant had been afforded a reasonable time in which to pay the application fee. The appellant informed me in the course of the hearing of the appeal that he had been ready and able to pay the fee, if his application for a decision that the fee should not be paid were to be unsuccessful. It is likely that, in those circumstances, the Tribunal would have determined that a reasonable time had not elapsed, would have accepted the fee from the appellant, and would have proceeded to deal with his application for review of the decision of the Minister's delegate. Having regard to the subsequent history, in which the appellant has had to litigate this issue, it would still be open to the Tribunal to determine that a reasonable time has not elapsed, if it were to find in the appellant's favour on the question of fact about actual receipt of the letter. If the Tribunal found that a reasonable time had not elapsed, it might also have considered that its earlier decision that it had no jurisdiction because the application fee had not been paid within a reasonable time was subject to jurisdictional error. It amounted to wrongfully declining to perform the Tribunal's statutory function of reviewing the decision of the Minister's delegate, and therefore wrongfully declining to exercise jurisdiction. If the Tribunal reached such a decision, it would be open to it, and necessary, for it to ignore the previous decision and deal with the review of the decision of the Minister's delegate. For these reasons, the Tribunal wrongfully declined to investigate the appellant's assertion that he had not received the letter of 25 September 2007. The federal magistrate was in error in dismissing the appellant's application for judicial review. His Honour should have found that the Tribunal had not completed the discharge of its function and should have ordered the Tribunal, by means of a writ of mandamus, to proceed to do so. The orders made by the federal magistrate on 7 August 2008 must be set aside. In place of those orders, an order should be made that a writ of mandamus issue, directed to the Tribunal, requiring it to hear and determine the appellant's application for review of the decision of the Minister's delegate according to law. It is unnecessary to order that a writ of certiorari issue, because it may be that the Tribunal, upon revisiting the matter, finds that its initial decision declining jurisdiction is the correct one, because it does not make the requisite finding of fact in favour of the appellant about the actual receipt of the letter dated 25 September 2007. In those circumstances, that decision will remain. If the Tribunal determines that a reasonable time has not passed, it will ignore the earlier decision and proceed to deal with the review, as long as the appellant pays the application fee. For the federal magistrate's order that the appellant pay the Minister's costs of the proceeding in the Federal Magistrates Court, there should be substituted an order that the Minister pay the appellant's costs of that proceeding. In addition, there should be an order that the Minister pay the appellant's costs of the appeal. I certify that the preceding twenty one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | jurisdiction of migration review tribunal whether tribunal wrongfully declined jurisdiction prescribed fee payable on application for review application for fee waiver fee waiver refused whether tribunal should have considered whether appellant actually received letter informing him of refusal of fee waiver whether tribunal should have considered whether reasonable time had been allowed for payment of fee in light of any finding that he did not receive letter whether tribunal had discharged its function to review migration |
On 17 November 2006, Ms Li arrived at Melbourne airport as the holder of a subclass 676 (Tourist (Short Stay)) visa. Shortly after her arrival, an officer of the respondent Minister's Department interviewed her. As a result of that interview, the officer cancelled Ms Li's visa. Ms Li issued a proceeding in the Federal Magistrates Court, claiming that the officer's decision was affected by jurisdictional error, including a denial of natural justice. 2 Federal Magistrate Burchardt dismissed Ms Li's application. She now appeals to this Court. Her interview with the officer appears to have commenced at about 10.45 am. The interview proceeded without an interpreter, despite Ms Li not speaking English fluently. As a result of discussions during which an interpreter was not present, the officer formed the view that Ms Li had told him that she had come to Australia to talk with her customers about a shipment of clothing which she had arranged to be sent to Australia. While this early part of the interview with Ms Li was not recorded, it is evident from comments the officer made later in the interview (shortly after 12.14pm when a Bahasa Indonesian interpreter was present and when recording of the interview had commenced) that he had formed this view during the part of the interview when an interpreter was not present. After the Bahasa interpreter left the interview and before a Mandarin interpreter became available by telephone, the officer continued the interview without an interpreter. We need to make sure why you come to Australia. Ms Li is recorded as saying that she was in Australia for 10 days last time and that she saw customers for two days. The officer appears to later confuse that evidence with her intentions on her current visit. The discussion continued by reference to a container of clothes which was on its way to Australia and would be picked up by her 'customer', Mr Patterson, in the week after her arrival. I bring money, go back. During the course of reading that notice, a Mandarin interpreter became available and the officer re-read the notice, which the interpreter translated to Ms Li. The reasons are you have made admissions that you have come to Australia for the purpose of conducting business. Therefore, you have ceased to have an intention only to visit or remain in Australia as a visitor temporarily for the purpose of visiting an Australian citizen. 11 It appears that by this stage the officer had formed a preliminary view based on comments made by Ms Li, without the assistance of an interpreter, that Ms Li had come to Australia, in part, to conduct business. 12 At 1.40 pm, while a Mandarin interpreter was present, the officer asked Ms Li to provide reasons why the grounds for cancellation do not exist. Ms Li replied to the effect that she came to Australia for a holiday and to collect money for clothes that she had previously sold. She later said that she intended to do some sightseeing and collect money. However, counsel submitted that the lack of appropriate interpretation earlier in the interview 'irretrievably poisoned the well' and affected the officer's view of Ms Li's credibility. Counsel contended that the officer denied Ms Li a fair opportunity to put her case during the period prior to when he had formed the view that there may be grounds for cancelling her visa. Counsel submitted that the officer denied Ms Li procedural fairness in the manner in which he conducted the interview. However, the officer had the benefit of an interpreter when he informed Ms Li that there may be grounds for cancelling her visa. He afforded her an opportunity, with the assistance of an appropriate interpreter, to inform him why her visa should not be cancelled. During that part of the interview, Ms Li told the officer that she intended to collect money from customers during her stay, for the clothes she had previously sold. In effect, Ms Li said that she intended to conduct some business by collecting money from customers and to also have a holiday. She thereby exhibited a mixed purpose. In the circumstances, no practical injustice arose (see Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 195 ALR 502 at [37] ). 19 Although the officer inappropriately obtained some information from Ms Li without proper interpreting facilities, he afforded her an opportunity to disabuse him from any prima facie views he had formed as a result of those discussions. The oral notice issued under s 119 of the Act was interpreted properly. The answers given to it were interpreted. In those answers, Ms Li stated that she came to Australia for a holiday and the purpose of collecting money from customers. No practical injustice arose as a consequence of the failure of the officer to afford adequate interpretation prior to the reading of the notification under s 119 of the Act. Ms Li stated, with the assistance of interpretation, that she came for a mixed purpose. On the basis of these statements, the officer was entitled to cancel her visa. Even if this evidence had have been admitted it would not have demonstrated any injustice which was not remedied by proper interpretation of the notification under s 119 of the Act and proper interpretation of the subsequent interview which commenced at 1.40 pm. Assuming, without deciding, that this evidence should have been admitted, its tender would not have affected the conclusion that, overall, there was no practical injustice visited upon Ms Li. In her affidavit, Ms Li seeks to contradict what her counsel agreed was an accurate interpretation of what she said in the interview when assisted by a Mandarin interpreter. This shows that little weight would have been given to the affidavit if it had been admitted. The appellant sought the costs of an application for interlocutory relief preventing her removal pending the appeal. I see no reason why this circumstance should mean any extraordinary situation thereby arose such that costs should not follow the event. | tourist visa short stay cancellation where no interpreter present during part of interview where inappropriate interpreter provided for part of interview review application to federal magistrates court dismissed appeal whether jurisdictional error whether denial of procedural fairness where refusal to admit evidence no practical injustice appeal dismissed migration |
At that time and at all material times thereafter, the ordinary shares in the capital of Westpac were listed on the stock exchange conducted by Australian Stock Exchange Limited. Shortly thereafter, Custodian acquired a further 3 million fully paid ordinary shares in the capital of Westpac funded through Westpac's dividend reinvestment plan. By mid to late 1995, discussion was underway at Lend Lease executive and board levels to the effect that Custodian might 'exit from that shareholding' over an extended period of time, the same having by then increased in value, though having remained in Custodian's ownership as a 'passive' investment. The Lend Lease board decided by November 1995 to consider proposals for a staged realisation of Custodian's Westpac shareholding in order to protect the unrealised gain in value which by then was evident from the stock market price for Westpac shares, and to redeploy the capital profit anticipated to result from any such realisation. Accordingly Lend Lease developed by April 1996, at managerial and ultimately at board level, a scheme for the implementation of a staged profitable realisation of its Westpac shareholding, in the first place by the mechanism of a warrant granted over 100 million shares, out of that total holding of 172.6 million shares, in favour of County NatWest Securities Australia Limited ('County Natwest'), a major Australian merchant bank. That scheme of realisation to be undertaken comprised what was described by Lend Lease executives, for instance in a memorandum to the directors of 17 May 1996, as 'a public bookbuild selling process', being '... a method of selling securities through a well-publicised competitive tender...', whereby '... we would invite separate bids for shares and warrants'. It is apparent that such process of competitive bidding of investors, by way of individual participation in that so-called 'public bookbuild', was conducted at arm's length between Lend Lease and County Natwest. County Natwest subsequently changed its name to Salomon Smith Barney Australia Securities Pty Limited, but the convenient course is to continue to use the abbreviation County Natwest. There is no tax expense relating to this profit. in subsequent years, supported by Westpac's current low payout ratio. We expect all dividends to be fully franked. They could also disallow rebates on future dividends from Westpac. Greenwoods & Freehills advice is that the ATO would have no justification in law to do this and this will be confirmed with counsel. If Westpac does not meet our dividend expectations we will lose value. We will also lose value (not quantified in our calculations) if Westpac reduces its franking. It will be seen that Lend Lease acknowledged thereby that any immediate realisation of 100 million out of Custodian's total holding of 172.6 million Westpac shares meant that there was an apparency of market risk in relation to the price, which it might derive from the realisation of the remaining 72.6 million Westpac shares to be retained by Custodian during the ensuing five year period. Lend Lease has secured the major part of the gain from the restructuring of Westpac and now believes it is appropriate to lock in that value. The arrangements with County have allowed Lend Lease to take back its original capital of $625 million plus an abnormal gain of $75 million. This capital will be invested to generate further shareholder value. Lend Lease has already taken significant initiatives in this regard such as its property investments in Asia and Bluewater where, because of the nature of these projects, profits will not start to flow for 3 to 5 years. At the same time Lend Lease would disclose the provisioning it proposes to make against property revaluations. The shareholders will participate in the major part of the increase in value of the Westpac shares through fully franked dividends over the following 5 years prior to the emergence of profits on investments currently being undertaken. In the event of a takeover of Westpac in the meantime, Lend Lease would receive the balance of the discounted value of the dividends less any tax payable. Accordingly, the Board's approval is sought at this stage to the arrangements in principle to authorise County together with Management to make the appropriate approaches to the Authorities and Westpac on a confidential basis. County's firm commitment to the arrangements will not be given prior to all approvals being obtained and the setting of the final pricing. to present value. 4 A report was subsequently provided to Lend Lease on 9 April 1996 by KPMG Chartered Accountants, which discussed and made recommendations concerning the accounting issues which arose in relation to the County Natwest 'forward sale' proposal, if it was to be implemented. This would recognise the profit on sale immediately and amortise into future years income the discount applied. The discount rate would need to reflect alternative risk free investments (or cost of LLC capital), an allowance for commercial risk, and an allowance for the credit risk that WBC does not pay dividends during the 5 years at or above the estimated dividend stream, estimated at the beginning of year 1. We would concur [with] this view. In the subsequent 5 years, the WBC dividends received will be recorded as income in the LLC profit and loss statement, as such dividends are received or are receivable. We recommend that LLC record such income as "proceeds from sale of share" income since we believe the nature of such income is in the form of part deferred sale proceeds from the sale of the WBC shares. Since LLC would not be recording as an asset any investment in WBC, we would regard the recording of such income as "dividend" income to be confusing and misleading, since the term dividend implies the receipt of income from an ongoing owned investment asset. The profit arising from the sale will be disclosed in the operating profits note to the LLC financial statements pursuant to clause 9(1)(a)(iii) of Schedule 5 of the Corporations Law. Lend Lease dispose of its interest in Westpac through a fully underwritten sale agreement with County Natwest', because that arrangement would 'accomplish the accounting and commercial objectives in exiting the investment which could not be achieved under the other available exit strategies'. Both these alternatives would be difficult and more expensive and therefore less favourable. It is therefore not a viable option. I will hereafter refer to each of Lend Lease Corporation Limited and Lend Lease Custodian Pty Limited interchangeably, and irrespective of the context, as 'Lend Lease', where as a practical matter so to do should not confuse the context. 7 At the meeting of the Lend Lease board of directors that took place on 7 June 1996, being nearly three years after Custodian's purchase of the subject Westpac shares, Lend Lease resolved to commit Custodian to an agreement for the sale of 100 million ordinary fully paid shares, out of the total parcel of 172.6 million held in Westpac, to County Natwest as purchaser. That agreement was described as a Forward Purchase Agreement ('FPA'), Custodian being recorded therein as vendor and County Natwest as purchaser. It was so described because the sale and purchase was not on the date of completion of the FPA, that is to say, on 30 April 2000, in the absence of an earlier date for completion being determined by Lend Lease, in which case there would be an adjustment made to the purchase price. Initial Instalment means $3.5225 multiplied by the number of Warrants issued, being the amount paid by the Purchaser on the Payment Date. 8 County Natwest acquired the subject Westpac shares to be funded by the invocation and co-ordination of bidders for participation in what was described in financial market terms as a public 'bookbuild' fundraising mechanism, whereby prospective investors competitively bid for participation in the acquisition of parcels of Custodian's 100 million Westpac shares by way of implementation of the so-called 'bookbuild' process. The sale price for the subject Westpac shares approximated $3.52 per share, payable (as already indicated) on 18 June 1996, which date was defined by the FPA as the 'Payment Date' ( ante ). However as already further indicated, Custodian was to continue to receive (and did continue to receive) Westpac dividends payable in respect of the Sale Shares from the time of entry into the FPA on 18 June 1996 until completion of the FPA, which was not scheduled by the FPA to occur until nearly four years later on 30 April 2000 ( ante ), subject however to any bringing forward of that date pursuant to the operation of clauses 5.1 or 5.2 ( ante ). As a leading Australian bank, Westpac had a dividend history of significance, and Lend Lease reasonably anticipated that the status quo of its substantial and profitable banking operations would continue for the foreseeable future. 9 The definition of 'Sale Shares' appearing in the FPA has been already set out. Important to the preservation of the status quo relevantly of the 'Sale Shares' during the period of time from entry into the FPA on 7 June 1996 until the 'Completion Date' nearly four years thenceforth on 30 April 2000 (though later, as above indicated, brought forward to 17 January 2000), were the provisions of clause 7 of the FPA, the headings to which I have recorded above. Additional protection of the status quo was made by the Clause 7.9 provisions as to 'Excessive Dividends' , the comprehensive definition whereof has been already reproduced. 10 I have already set out the definition of 'Warrants' appearing in the FPA. Those instruments came on offer by County Natwest at or about the time of execution of the FPA, as the definition thereof indicates. The successful bidders will be notified of final allocations of warrants and shares later today. 12 The internal Lend Lease reports demonstrate that Lend Lease (and its wholly owned subsidiary Custodian) viewed the subject transactions as productive and financially viable. Custodian would thereby remain the beneficial owner of the shares until completion of the FPA initially scheduled to occur nearly four years later on 30 April 2000, and would receive in the meantime for its own benefit the periodic dividends likely to be declared by Westpac in respect of the subject 100 million Westpac shares held by Custodian. Lend Lease emphasised that the likelihood of derivation of Westpac dividends during that period of time, given Westpac's status as a leading Australian bank, and the likely scale thereof, was inferentially taken into account in the structural formation of the scope of the FPA. It was entirely unsurprising, so Lend Lease emphasised, that the FPA contained provisions designed to protect both parties thereto against unforeseen but nevertheless possible events which might otherwise alter the original substratum of the FPA, being the events the subject of subject matters addressed. It was common ground in the present proceedings that the FPA and the ancillary documents reflected in effect a transaction negotiated and put in place at arm's length, though Lend Lease asserted that so much was not acknowledged by the Commissioner until the final hearing of the proceedings was underway. 13 Subsequently on 18 June 1996, being the 'Payment Date' defined in the FPA, Custodian executed a so-called Voting Deed Poll in favour of each of two nominees of County Natwest, and at the same time County Natwest paid to Custodian the amount of $352,297,356, representing the initial but dominant segment of the price for the sale by Custodian of the subject Westpac shares to County Natwest and an interest adjustment provided for in clause 4 of the FPA amounting to $72,356. Thus the so-called bookbuild selling process was commercially successful in implementation, so it may be reasonably inferred. 14 On or about 17 January 2000, the FPA was amended by deed made between County Natwest (by then called Salomon Smith Barney Australia Securities Pty Limited as I have earlier foreshadowed but to whom I will continue to refer to as County Natwest for convenience) and Custodian whereby the 'Completion Date' stipulated in clause 5.2(b) of the FPA was brought forward from 30 April 2000 to 17 January 2000, in consideration of the payment by County Natwest to Custodian of $250,000. That payment reflected the significance of the timely orientated structure of the transaction the subject of the FPA and the accompanying instruments. At the same time County Natwest paid to Custodian the so-called final instalment of $1,000,000 (being the only instalment of the purchase money apart from the initial instalment of $352,297,356) payable under the terms of the FPA, in addition to that sum of $250,000, and Custodian thereupon transferred the 'Sale Shares' to County Natwest, that taking place also on 17 January 2000. Incidentally, the expenses incurred by Custodian in relation to its disposal of the Sale Shares amounted to $1,041,401, comprising $479,646 for so-called 'legal and other', $529,838 for stamp duty and $31,917 for solicitors' fees and disbursements. The Commissioner further assessed Custodian to additional tax, being in the nature of a penalty, amounting to $9,958,103,91. It appears that previously by letter dated 3 September 2004, the Commissioner had assessed the above so-called '[a]dditional non-cash consideration' on disposal of $144,236,243 as a capital gain, and had imposed on Custodian a 'shortfall' penalty equal to 25% of the controversial capital gains tax as so assessed. The earlier exaction of a larger penalty upon the footing of tax avoidance was apparently later withdrawn by the Commissioner ( post ). 19 The Commissioner identified that so-called '[a]dditional non-cash consideration' of $144,236,243 as forming the basis for calculation of the controversial net taxable capital gain of $110,645,599 (both figures of course appearing in [16] above), being a gain said to have been constituted by the enforceable contractual right of Lend Lease as vendor conferred by the FPA, as against County Natwest as purchaser, to retain beneficial ownership of the 'Sale Shares' until the time stipulated for completion of the FPA by way of conveyance of legal title to the Sale Shares in Westpac. That time was of course 30 April 2000 (though subsequently brought forward to 17 January 2000 as I have also earlier recorded), which time did not crystallise of course until not long short of four years after the execution of the FPA on 7 June 1996, and that right encompassed in the meantime the entitlement to any dividends declared and paid by Westpac in respect of each half fiscal year appertaining to the 'Sale Shares', which of course Lend Lease was to continue to hold until completion of the FPA. That enforceable right and entitlement was said by the Commissioner to have become vested in Lend Lease, for capital gains tax purposes, at the time when it entered into the FPA on 7 June 1996, being a right or entitlement falling within the scope of operation of s 160ZD(1)(c) of the Tax Act and in the light of the s 160A(1) definition of 'any form of property' ( infra ). 20 The Commissioner contended further that Lend Lease's ongoing right to share to the foregoing extent in the Westpac dividends declared and paid in respect of the 'Sale Shares' between the formation of the FPA on 7 June 1996 and the 'Completion Date' the subject of the FPA (being as already mentioned brought forward to 17 January 2000), as to which see again the above extracted clauses 5.1 and/or 5.2, and constituting as that right allegedly did the so-called '[a]dditional non-cash consideration on disposal' appearing in [16] above, comprised 'property other than money' within the scope of operation of s 160ZD(1)(c). The Commissioner contended consequentially that Lend Lease acquired that so-called property under the auspices of the FPA, being property for capital gains tax purposes which the Commissioner valued in the sum of $144,236,243 as further appearing in [16] above. Assuming the correctness of the Commissioner's fiscal impost levied adversely to Lend Lease in respect of the consequential amount of $110,645,599 thereafter also appearing in [16] above (which of course Lend Lease disputed), there was no apparent dispute on Lend Lease's part as to the mathematical quantification of such impost. That sometimes designated 'right to share' in ongoing Westpac dividends up to the 'Completion Date', said by the Commissioner to be so conferred upon Lend Lease by the operation of the FPA, was identified by the Commissioner as created by clause 3.3(b) of the FPA in particular. I was referred by the Commissioner in that context moreover to the s 160A definition of 'Assets To Which Part [IIIA] Applies' , which commences with the broad description 'any form of property...' , and thereafter specifies 'a chose in action' and 'any other right' , 'whether legal or equitable and whether or not a form of property'. 22 The evolving course of the present fiscal dispute between Lend Lease and the Commissioner commenced with Lend Lease's objection to assessment lodged with the Commissioner on 23 January 2003, followed by the Commissioner's notice of decision thereon communicated to Lend Lease on 8 April 2004. That notice of decision was accompanied by the Commissioner's reasons for decision, which sought to make comprehensive explanations as to the operation of Part IIIA of the Tax Act adversely to Lend Lease, and in particular of s 160ZD(1)(c). As already mentioned, a further case was propounded by the Commissioner upon the basis of the income tax scheme benefit provisions of Part IVA of the Tax Act, in relation to which additional tax was imposed by the Commissioner referrable to ss 226G and 226K of Part VII of the Tax Act headed 'Penalty Tax' , but in the events which happened, the subject assessment process, to an original extent based upon Part IVA of the Tax Act, was not pursued by the Commissioner. 23 On 1 June 2004 Lend Lease filed in the Federal Court an application by way of appeal against the Commissioner's said objection decision of 8 April 2004. As foreshadowed, the issue arising for consideration is confined to the assessability or otherwise to capital gains tax of the foregoing amount $110,645,599, quantified by the Commissioner of course as a capital gain derived by Lend Lease. That former amount constitutes of course the value of the so-called '[a]dditional non-cash consideration' postulated by the Commissioner by reference to Lend Lease remaining entitled to retain the beneficial ownership of the subject 100 million Westpac shares from the time of entry into the FPA on 18 June 1996 until completion of the FPA on 30 April 2000. However the Commissioner did not appear to develop any such proposition independently of or additional to the controversial operation of s 160ZD(1)(c). 31 The Commissioner put in place an additional fiscal assessment pursuant to s 226G of the Tax Act ' by way of penalty ', upon the basis that Lend Lease failed 'to take reasonable care to comply with this [Tax] Act...' . Accordingly Lend Lease was made liable to pay additional tax equal to 25% of the alleged income tax shortfall, that liability amounting to $9,958,103.91. In the events which happened, the so-called protective or adjustment provisions of clause 7 of the FPA (summarised in [9] above) were not activated. Had that not been the case, as Lend Lease pointed out, the operation of s 160ZD in relation to Lend Lease, and of s 160ZH in relation to County Natwest, would have been different in the concluding transactional events which ultimately happened, being events in particular by way of ultimate completion of the FPA as an executory contract in January 2000. However as I have just observed, no such triggering or activation of those protective or adjustment provisions crystallised. What occurred in this transaction was that a public company sold in an arms length transaction shares that were trading on the market for about $5.39 for a purchase price as defined of $3.52 plus an extra cent per share in 4 years time. An inquiry into that is not part of the Commissioner's case and never has been. But what is clear beyond question is that the consideration which moved this disposal included an element other than the $3.53 in total approximately that has been described by my friend as the totality of the consideration. No public company in an arms length transaction would sell on that basis. Although this was a share sale transaction the sale was not to occur immediately nor even at a time in the near future to allow formalities to be completed as in a property settlement. It's not to the point that the applicant was already the beneficial owner of the shares. What it obtained under the forward purchase agreement was the right to remain as the beneficial owner for a period of 4 years of the shares that it was by that very agreement selling. Now your Honour, we don't put this as any form of economic equivalence or anything of that kind, we never have, but when the question is asked, what was the consideration in respect of the disposal the answer cannot be, the consideration was $3.52 for a share that was worth $5.40. And the rights are plainly identifiable in the agreement and I'll take your Honour to it. It was plainly a chose in action; it was assignable with consent... [i] t had all the characteristics of property... . Lend Lease submitted that any such so-called 'additional non-cash consideration' would need to have constituted 'property other than money' within the s 160ZD(1)(c) preceding expression (which additionally appears of course in s 160ZD(1)(b)), as well as in 160K(3) and 160ZH(4)), since such consideration did not consist of cash paid by County Natwest to Lend Lease, and moreover that the notion of beneficial ownership of property according to law implies nothing more significant in relation to an asset than ownership per se . 34 As I have earlier mentioned, the Commissioner described that so-called '[a]dditional non-cash consideration' as constituted by Lend Lease remaining entitled, under and by virtue of the FPA, which was entered into of course on 7 June 1996, 'to retain beneficial ownership of the [Westpac] shares until the 'Completion Date' and to receive any dividend owed by Westpac in or in respect of each half fiscal year of Westpac up to $0.70 per share until the 'Completion Date'. Also as I have already indicated, the expression 'Completion Date' was defined by FPA as 30 April 2000. That asserted entitlement to retain beneficial ownership was characterised or particularised by the Commissioner as a valuable enforceable contractual right to remain in possession of the Westpac shares and to enjoy the benefits of beneficial ownership of those shares until the completion date, being a right said to have been 'vested in [Lend Lease] when it entered into the [FPA]'. Since however those 'benefits of beneficial ownership until the Completion Date' included of course the receipt of any dividends paid by Westpac in respect of the Westpac shares, Lend Lease rejoined that any such outcome to the Commissioner's case 'would result effectively in double taxation of the same gain'. The rejoinder of Lend Lease was that there does not exist in law, or for that matter in commerce, any such notion of non-monetary property as the Commissioner sought to impute as comprising the 'consideration in respect of [the] disposal' , within the scope in particular of s 160ZD(1). That was said to be because the meaning of beneficial ownership according to the general law denotes no more than ownership, and because there is no separate beneficial ownership involved when the property of a legal owner is not subjected to a trust in favour of another person. 35 Lend Lease drew attention in that context to principles of law and equity concerning the nature and extent of proprietary interests created upon entry into contracts for the sale and purchase of both realty and personalty in the nature of shares in companies. The focus is here of course upon personalty by way of shares in Westpac. The subject Lend Lease shareholdings held in Westpac were of course listed on the Australian Stock Exchange, along with those held by other shareholders. It was emphasised by Lend Lease that the Commissioner's notion of 'additional non-cash consideration' (see again [16] above) must constitute 'property other than money' within the scope of operation of s 160ZD(1) if it is to fall within that subsection's reference to 'consideration in respect of a disposal of an asset' , and additionally must be property which Lend Lease 'has received or is entitled to receive' as further stipulated by that subsection, being requirements neither of which on Lend Lease's case were duly satisfied. 36 In drawing attention to the implications of beneficial ownership of property of the foregoing kinds, Lend Lease drew attention to the reasons for judgment of the High Court in DKLR Holding Co (No 2) Pty Limited v The Commissioner of Stamp Duties (New South Wales) [1982] HCA 14 ; (1982) 149 CLR 431, where there fell for consideration in the context of the Stamp Duties Act 1920 (NSW) the statutory notion of Declaration of Trust defined in the Second Schedule thereto, being '... any instrument declaring that any property vested or to be vested in the person executing the same is or shall be held in trust for the person or persons mentioned therein...'. That stamp duties legislation defined ' property ' as comprising both realty and personalty, and here of course the property involved, being the substantial shareholding of Lend Lease in Westpac, was in the nature of personalty. What was emphasised in the course of the majority judgments in DKLR was the precept that where property is beneficially held by an owner of the legal estate, there are no separate rights of ownership existing and divisible into legal and beneficial ownership. As explained by Gibbs CJ at 442-443, Aickin J at 463 and Brennan J at 473-474, a person cannot be a trustee for himself, and where for instance a person holds the legal estate beneficially, there are no separate legal and equitable estates thereby constituted or otherwise subsisting. What is constituted therefore in that circumstance is simply ownership in the sense of the entirety of an estate or interest. There is authority for the view that, after completion has actually taken place, some of the equitable rights of the purchaser, which (in their entirety) then constitute beneficial ownership, relate back to the date of the contract. But there is no relation back of beneficial ownership in the sense that the vendor is retrospectively deprived of his beneficial right, pending payment of the full purchase price, to the possession, use, rents and profits of the land. Regardless of whether his rights be viewed in the perspective of foresight (ie before completion) or hindsight (i.e. after completion), the ordinary unpaid vendor of land is not a trustee of the land for the purchaser'. The issue which arose in particular in Kern related primarily to the notion of insurable interest, and whether a purchaser could require the vendor's insurer to rebuild or reinstate; in the joint reasons of Wilson and Dawson JJ at 180, it was observed that ' ... a purchaser under an enforceable contract for the sale of land is bound to complete, irrespective of the destruction of the improvements on the land in the meantime and that from the time the contract is made the purchaser has an equitable estate in the land...'. That authority was said to serve as confirmation that proprietary rights crystallise normally in favour of a purchaser on entry into a contract to purchase personalty in the nature of proprietary interests, such as shares in corporations, as well as in the case of entry into a contract to purchase realty, but that the existence of an equitable interest in favour of a purchaser pursuant to an executory contract is not equivalent to beneficial ownership or ownership in equity. More recently in Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315 at 332-333, to which Lend Lease drew further attention for completeness, it was explained in the joint reasons for judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ at [53] that the interest of a purchaser under a contract for the purchase of realty is commensurate with the availability of the remedy of specific performance in favour of that purchaser, and may become '... the very question in issue where there has been a termination by the vendor for failure to complete as required by the essential stipulation'. Until that time, so the submission continued, Lend Lease remained the owner 'at law and for all purposes', and held the Westpac shares on its own account and for its own benefit, and moreover no trust relationship was created in respect of the shares, expressly or by implication, in favour of County Natwest at any time prior to completion of the FPA, consistently with the explicit operation of clause 3.3 of the FPA, the text whereof is later extracted in these reasons. Put another way, Lend Lease pointed out that there was 'no separate beneficial interest' otherwise subsisting in the Westpac shares arising out of the FPA and prior to completion thereof, the FPA having specifically excluded the existence of any 'beneficial interest in the Sale Shares' as thereby transferred to the purchaser in advance of the completion date of the FPA. County Natwest would have been entitled in principle to specific performance of the FPA, but so much had no bearing upon the operation of clause 3.3 in accordance with its terms. 39 Moving then to the Commissioner's postulation of the controversial notion of 'additional non-cash consideration' appearing in the table reproduced in [16] above, as reflective the right of Lend Lease, as against County Natwest, to remain in possession of the Westpac shares, and to enjoy the notion of 'beneficial interest in the Sale Shares' prior to completion of the FPA scheduled for 30 April 2000 (that is of course nearly four years after the FPA was entered into on 7 June 1996), Lend Lease submitted that such postulation of beneficial interest served inherently 'to reveal the fundamental fallacy in [the Commissioner's] argument'. Any such 'right as against County Natwest' did not exist, so the Lend Lease contentions continued, at any time from 18 June 1996, when the FPA was entered into and the sum of $352,297,356 was paid by County Natwest to Lend Lease by way of 'Initial Instalment', to January 2000, when the 'Final Instalment' of $1 million became payable and was paid, and thereafter until the 'Completion Date' of 30 April 2000, and was characterised by Lend Lease as an embellishment of the Commissioner's case attended with the misconceived adjectives of valuable and contractual. Lend Lease asserted moreover that the Commissioner's further notion of Lend Lease 'remaining in possession' of the subject Westpac shares was 'fundamentally mistaken' according to principles of the general law. I was referred in that latter context to Sydney Futures Exchange Limited v Australian Stock Exchange Limited and Another (1995) 56 FCR 236 at 256, where Lockhart J spoke of shares as constituting 'choses in action, not choses in possession' , in the context that '[t] he buyer of shares does not obtain legal title to the shares until the buyer's name is entered in the share register, but in the meantime the buyer may acquire equitable interests in shares, enforceable by specific performance...'. I was referred by Lend Lease to Associated Alloys Pty Ltd v ACN 001 452 106 Pty Limited (in liquidation) [2000] HCA 25 ; (2000) 202 CLR 588 at [36] - [37] , where recognition was afforded by the majority judgment of the High Court (Gaudron, McHugh, Gummow and Hayne JJ) to the principle that effect should be given to any expression of intention of the parties to a contract for the sale of goods (being there fabricated steel) concerning the retention of ownership in favour of the seller until the goods were fully paid for by the buyer. Put therefore in summary as to the operation relevantly of the subject contractual documentation, Lend Lease asserted that beneficial ownership of the subject Westpac shares was not acquired by County Natwest until the time of completion of the FPA on 30 April 2000, or on any subsequently varied 'Completion Date' put in place, nor was there constituted a right of any other proprietary kind in relation to its disposal of its Westpac shares in favour of County Natwest until completion of the FPA. Upon the footing therefore of what I have summarised to date, Lend Lease submitted that there was no value in the nature of so-called putative property of any kind which could have been rightly included until 30 April 2000 (or any subsequently varied contractual date) for the purpose of determination of any capital gain or loss made or sustained by Lend Lease pursuant to Part IIIA of the Tax Act. 41 Lend Lease submitted moreover that the construction of s 160ZD(1) of the Tax Act, by reference to the juridical basis upon which it framed its case, accorded also with 'business commonsense', and further that 'the consideration in respect of the disposal' of the Westpac shares, pursuant to the operation of subss 160ZD(1) and (2), constituted no more than the purchase price expressed to be payable by County Natwest as purchaser of those shares pursuant to the FPA. The legislation imposing it, mainly the Finance Act 1965, is necessarily complicated, and the detailed provisions, as they affect this or any other case, must of course be looked at with care. But a guiding principle must underlie any interpretation of the Act, namely that its purpose is to tax capital gains and to make allowance for capital losses, each of which ought to be arrived at upon normal business principles. No doubt anomalies may occur, but in straight-forward situations, such as this, the courts should hesitate before accepting results which are paradoxical and contrary to business sense. To paraphrase a famous cliché, the capital gains tax is a tax upon gains: It is not a tax upon arithmetical differences. The essence of that aspect of his Lordship's speech in Aberdeen Construction , incidentally, was cited with approval in Commissioner of Taxation v Orica Ltd [1998] HCA 33 ; (1998) 194 CLR 500 at 545 [118] (Gummow J). 42 Lend Lease's case was therefore that there never existed in law, or even in commerce for that matter, any ' property other than money ' constituting 'consideration in respect of the disposal of an asset' at any time prior to completion of the FPA and accordingly that the s 160ZD(1) notion of 'received... or entitled to receive...money... [or] property other than money' was not satisfied in the present circumstances. 43 It was pointed out by Lend Lease moreover that the notion of ' receive ' appearing in s 160ZD(1) should be accorded its ordinary meaning, for instance as contained in the Macquarie Dictionary (Revised Third Edition), that meaning being 'to take into one's hand or one's possession (something offered or delivered)' . A similar meaning was said to have been accorded in a social security context in Jazazievska v Secretary, Department of Family and Community Services (2002) 65 ALD 424 at 435 [39] (Cooper J), in the context of an attempted recovery of an overpayment of social security payments, where the statutory notion under scrutiny included the words 'received in good faith'. Lend Lease characterised the Commissioner's case as 'self defeating', in that 'it necessarily produces a concurrent capital loss in the same amount as the claimed capital gain'. In elaboration of that contention, Lend Lease explained that if, contrary to its submissions I have already summarised, the s 160ZD(1) notion of 'consideration' in respect of the disposal of the subject shares was to be taken to satisfy the further s 160ZD(1) notion of 'property other than money' within pars (b) and (c) thereof of that subsection, what is to be brought to account in calculating any capital gain would be an amount equal to 'the market value of that property at the time of the disposal' . Here of course the Commissioner has attributed to the so-called '[a]dditional non-cash consideration' a market value of $144,236,243 (see again [16] above). 49 Lend Lease submitted therefore that the fallacy in the Commissioner's approach lay in the notion that there must be something derived by Lend Lease additionally to the cash received from County Natwest, because of a supposed disparity between the value of the consideration given by County Natwest, which the Commissioner equated to the value of the Westpac shares, and the cash paid to and received by Lend Lease upon its sale of the Westpac shares to County Natwest. That approach was described by Lend Lease as fallacious because there was no such disparity, either as a matter of commerce or as a matter of law, or as a matter of accounting principle. Moreover the evident commercial reality was said by Lend Lease to have been that Lend Lease agreed to receive 'immediate cash in exchange for future transfer', to adopt the Lend Lease summary, and it was therefore said to be unsurprising that the so-called immediate cash was in a lesser amount than might have been received at a later date. As Lend Lease further pointed out, as a matter of principle evident from the operation of the Tax Act, income tax law is 'not concerned with the value of amounts which might be paid at different times', which I think to be correct in terms of principle. 50 In the foregoing context, Lend Lease cited dicta of a Full Federal Court in Burrill v Commissioner of Taxation (1996) 67 FCR 519 at 523 (Jenkinson, Olney and Sundberg JJ) that '[i] t is a fundamental principle of Australian income tax law that rights to receive money and obligations to pay money are taken into account in calculating income and outgoings, gains and losses, at their nominal value' . In the ordinary case, the debt is brought to account in the same amount as the money lent. The amount of the debt is not reduced because the lender is kept out of the use and enjoyment of the money lent for the period of the loan. The difficulty for the Commissioner remains however in seeking to establish that the par (c) expression 'an amount or amounts of money or property' accommodated the controversial notion of '[a] dditional non-cash consideration on disposal' appearing in [16] above. It was said by Lend Lease that the Commissioner's case would bring to tax both the amount of the dividends received and returned by Lend Lease and a like amount as the value of the right to receive those dividends, that being described as a case contrary to the structure and policy of the Tax Act. It was further said by Lend Lease in response that the subsection operates to reduce any capital gain which would otherwise arise 'in respect of the disposal of an asset' , where 'as a result of the disposal of the asset an amount or amounts... has or have been, or will be, included in the assessable income of the taxpayer in respect of any year of income under a provision of this Act other than this Part...' , those italicised expressions appearing of course in the text of s 160ZA(4). 52 The further response of Lend Lease to what was propounded by the Commissioner concerning the value of the 'right to share in Westpac dividends' was that the Commissioner thereby unjustifiably and impermissibly elevated 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration'. The Commissioner applied for leave to amend the grounds of appeal to raise this point... Leave to amend was refused. Present value discounting of outgoings, payable in the future, is currently under consideration, together with other methods for assessment and deduction, spread over the life of certain financial arrangements (her Honour thereby referring to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, exposure draft, December 2005) . However, the accounting basis used to date in Australian tax law for the purposes of assessment and deductions has been historical cost accounting, rather than economic equivalents. It does not follow, however, the form of financial accommodation agreed between the parties was by way of loan. To describe the transaction as being substantially one which involved a mortgage back to the vendor does not provide an answer to the critical questions in the case, and, as was submitted on behalf of the appellants, carries a risk of resolving the issue by reference to considerations of economic equivalence rather than by reference to an accurate characterisation of the instrument under consideration. Lend Lease contended nevertheless that the dividends, being a part or a so-called 'manifestation' of the 'non-cash consideration', were included in the assessable income of Lend Lease 'as a result of the disposal' of the Sale Shares under the FPA having occurred within the purview of par (b) of s 160ZA(4). Lend Lease emphasised in that context that by virtue of par (d) of s 160ZA(4), 'if the notional capital gain does not exceed the included amount or the sum of the included amounts --- no capital gain is deemed for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset' , and further that since the dividends included in the assessable income of Lend Lease totalled $162 million, that figure exceeding the amount of the capital gain assessed by the Commissioner, it followed that by virtue of par (d) of s 160ZA(4), no capital gain could or should be taken to have accrued to Lend Lease by operation of law. 55 It was further pointed out by Lend Lease that the operation of s 160ZA(4) was consistent with the principle as well as the policy of the general fiscal law that a taxpayer should not be taxed twice in respect of the same profit or gain. section 25) relate to the same profit or gain, sub-section 160ZA(4) operates to provide for the reduction of the capital gain. The capital gain is to be reduced by so much of the difference between the "notional" and "actual" amounts (referred to in paragraphs (4)(b) and (c)) as does not exceed the amount of the capital gain. The "notional amount" is the amount that would have been so included in the assessable income if the consideration received in respect of the disposal had been reduced by an amount equal to the capital gain. If the consideration in respect of the disposal were reduced by the amount of the capital gain (as required by paragraph (4)(c)), generally the amount that would be included in assessable income of the taxpayer under section 25 would also be reduced by the amount of the capital gain. Accordingly, the "notional amount" would be less than the "actual amount" by the amount of the capital gain, resulting in the capital gain being reduced to nil. Therefore, the same amount of profit is not taxed more than once. But there are cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute. An emphasis of the Commissioner's case was that the s 160ZD(1) notion of 'the consideration in respect of a disposal of an asset' , by reason of the inclusion of those words 'in respect of' , draws 'the widest possible connection between the terms of the disposal and the receipt of money or property'. Attention was drawn by the Commissioner in that regard to State Government Insurance Office (Qld) v Crittenden [1966] HCA 56 ; (1966) 117 CLR 412 at 416, where Taylor J referred to the expression 'in respect of' appearing in legislation, though being 'difficult of definition' , as having nevertheless and by virtue of longstanding judicial precedent 'the widest possible meaning of any expression intended to convey some connexion or relation between the two subject matters to which the words refer' . The legislative context there addressed in Crittenden was that of personal injury insurance. More recently in Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2 ; (2001) 202 CLR 351 at 380, Gummow J adopted that earlier dictum in Crittenden , the context in Moneywood also being other than that of revenue law. Moreover at 398 in Moneywood , Kirby J observed that '[t] he width of the words "in respect of" has been the subject of many juridical observations. There is no reason in the present context to cut down that width. ' The Commissioner's submissions thereafter focused with emphasis upon dicta of the majority judgment of Gummow, Kirby and Hayne JJ in Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ; (2005) 221 CLR 496, which involved a consideration of the meaning of 'dutiable value' in relation to ' dutiable property that is subject to a dutiable transaction' appearing in the stamp duty legislation of the State of New South Wales. Though the context in Dick Smith Electronics was that of revenue law, the issue there arose in a stamp duty and not an income tax context, involving the extent of stamp duty exigible upon agreements for the sale or transfer of shares the subject of issued capital in a company. The present circumstances relate of course to income tax assessable upon the monetary value of shares the subject of an agreement for sale or transfer of property, being of course shares in Westpac. 58 The circumstances in Dick Smith Electronics were that an agreement for the acquisition of the entire issued capital of a private company stipulated for a substantial purchase price for the shares less a so-called 'dividend amount' equal to the target company's retained earnings up to a certain maximum sum, and for the vendors (being the existing shareholders) to cause the target company to declare dividends equal to those retained earnings in favour of those existing shareholders. The takeover agreement further stipulated that on completion thereof, the purchaser would both pay the purchase price to the vendor shareholders and provide the finance, by way of additional consideration on the takeover, to enable the target company to discharge the debts owing to the existing vendor shareholders arising out of the dividends thus declared but remaining unpaid. Thus immediately prior to completion of the takeover agreement, the target company declared but did not distribute in cash those substantial dividends, and thereby created a debt equal to the amount thereof due by the target company to the existing shareholders, that is of course, the vendors of the shares in the target company. At the time of completion of the takeover agreement, the purchaser paid to the vendors accordingly the purchase price for their shares, less the amount of the dividend declared and distributed in their favour, but nevertheless simultaneously lent to the target company the residue of the purchase price, which equalled the dividend required to be so declared. Thereafter the company, being thus funded for the intended purpose, satisfied in cash the dividend declared in favour of the vendor shareholders. The takeover agreement was assessed to stamp duty what was identified as the consideration for the shares. 59 It may be seen that the present circumstances differ from those in Dick Smith Electronics . Whereas as indicated above, the purchaser there was obliged to in effect fund the target company so that it could pay the dividend to the vendors, the amount whereof would reduce the stipulated purchase price, and the vendor was not required to complete other than upon the footing of performance of that obligation, and so that the vendor would receive the dividend as well as the sale price for the shares stipulated in the agreement for sale which became the subject of transfer. The majority concluded that the vendor was entitled to receive, and the purchaser obliged to procure, that the vendors did receive on completion, as part of the total sale consideration required to be furnished by the purchaser, payment by the target company of the outstanding dividends already due to the vendors though in their capacity as shareholders of the target company. The majority held that the dutiable consideration comprised the several promises on the part of the purchaser recorded in the takeover agreement, in consequence whereof the vendors received an agreed monetary amount, whereof part was by way of dividend from the target company pursuant to the takeover agreement. Approached correctly, the case may be summed up as follows. The promises which the parties made and recorded in the Agreement can be sufficiently described as being: (1) the Vendors' promise to transfer the Shares to the Purchaser; (2) the Vendors' promise to procure the Company to declare as large a dividend as it could (up to a maximum of $27 million); (3) the Purchaser's promise to pay the Vendors $114,139,649 minus the Dividend Amount; and (4) the Purchaser's promise to "fund" the Company's payment of the dividend. However, what for the purposes of s 21(1) of the [Duties] Act moved the transfers by the Vendors was performance of all of the various stipulations in the Agreement, not merely the promises which the Purchaser made. To put the same point in other words: why identify the consideration "for" the transfers as only what the Purchaser gives up? The Vendors transferred the Shares in return for receiving some $114 million, of which part was received from the Company because the parties had agreed that this should be so. The valuable consideration which was said by the Commissioner to have 'moved' the disposal here of the subject parcel of Westpac shares from Lend Lease to County Natwest, as I have already foreshadowed, was 'the money' (ie the two monetary instalments of purchase price payable at different times and totalling $353,297,356), and additionally the value of the so-called 'contractual rights' to share in future dividends to be paid by Westpac in respect of that subject parcel, which the Commissioner characterised as '[a]dditional non-cash consideration' and asserted to have a value of $144,236,243 ( ante ). Those future dividends equalled what might be declared by Westpac during the period of time between entry into the FPA on 7 June 1996 and its completion. Thus it was the Commissioner's explanation that '[i]t is sufficient for the Commissioner's point that [Lend Lease's] contractual rights as a whole are assignable, subject to consent', in order for its Part IIIA case to qualify within the s 160ZD(1)(c) expression 'property other than money as a result or in respect of the disposal' . It was further said by the Commissioner that Lend Lease's contractual rights were capable in their nature of assumption by third parties and also of assignability, albeit that consent was required, and that prior to the FPA, Lease Lease 'did not have the contractual rights under it', but by entering into the FPA, it 'obtained or received those rights'. Lend Lease rejoined to the effect that the Commissioner's characterisation of Lend Lease's contractual rights as a whole was different to that characterisation elsewhere given by the Commissioner as rights 'to retain beneficial ownership', in either case '... until the Completion Date'. 62 In support of the Commissioner's case in any event, the Commissioner submitted that the majority of the High Court found in Dick Smith Electronics that what was received by the vendors by virtue of the takeover agreement there involved included the substantial dividend to be paid to the vendors prior to completion, and that the vendors had bargained with the purchaser to achieve that result (pursuant of course to the takeover agreement), the 'dividends' in that context having been declared and satisfied out of the fund comprising historically retained earnings of the target company. However as I have sought to point out, the circumstances relevantly involved in Dick Smith Electronics do not provide the extent of the analogy the commissioner sought to invoke. It was further emphasised by the Commissioner in any event that '[t]he amount of consideration which moved the sale was the receipt of the sum including the dividends and it did not matter that part was paid from the target company rather than the purchaser', and further therefore that '[t]he consideration for the transfers was not only what the purchaser gave up, but also what was agreed would be received by the vendors from the target' company. I have of course already made observations concerning what seem to me to have been features in Dick Smith Electronics distinguishable from the present case. 63 It was pointed out further by the Commissioner that '... even the minority judges in Dick Smith Electronics (Gleeson CJ and Callinan J) were prepared to accept that the promise to fund the dividend, as opposed to the performance of that promise, was a 'non-monetary consideration for the agreement to transfer on sale'. In that regard however Gleeson CJ and Callinan J observed (at 510) that while they were '... prepared to accept that the obligation accepted by [Dick Smith Electronics]', being the obligation of the purchaser to lend to that target company 'an amount sufficient to put it in funds to pay the dividend ', they decided nevertheless that '[w]e cannot accept that it is monetary consideration for the transfer on sale'. Be that as it may, the findings made by the High Court majority in Dick Smith Electronics were described by the Commissioner to be consistent with the approach taken in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428, where it was held that the payment of amounts equal to 90 per cent of all rents, as and when received by lessees of a city mixed development, constituted in reality outgoings of a capital nature, being part of the capital costs for the acquisition of an asset comprising that development, and were therefore not deductible. In other words the terminology adopted by contracting parties in their contract does not necessarily determine the character of a transaction the subject of that contract at least for revenue purposes, irrespective of the nature and extent of the divergence of views between the majority and minority of the High Court in Dick Smith Electronics . So much may be readily accepted but the issue remains as to whether the Commissioner thereby gains the assistance it seeks from Dick Smith Electronics . 64 It was said by the majority in Dick Smith Electronics in any event at 519 that '[i] t was only in return for that total sum (paid by the various steps and in the various forms required by the Agreement) that the Vendors were willing to transfer to the Purchaser the bundle of rights which their shareholding in the Company represented', and further that '... the amount of monetary consideration for the transactions of sale and transfer of the Shares... was to come as a dividend from the Company...'. It was further said by the majority at 519 '[t] hat which passed to the Vendors "for" the transfers of the Shares was "consideration" which was "monetary" rather than "non-monetary" within the meaning of s 21(1) of the [Stamp Duties] Act' , since '[t] he transaction was to be assessed to duty on the footing that it was performed... both sides addressed their arguments by reference to the implementation of the transaction [and] [t] he Commissioner correctly took the stance that the intended result of the transaction, seen as a whole, was the receipt by the Vendors of [that total sum]'. 65 It was contended by the Commissioner that in the present case, '[t]he relevant connection between the right to receive a portion of future dividends and the disposal of the Westpac shares was demonstrated by the FPA itself', the Commissioner thereby drawing attention to clauses 3.1, 3.2, 3.3, 5.1 and 5.2 of the FPA, which have been already reproduced in these reasons, and also to clause 7.1(b), which the Commissioner described as having 'provided for an automatic reduction in the Purchase Price of the shares in the circumstances specified in clause 7.9,' whereby Westpac might declare a so-called 'excessive dividend', as quantified by the Commissioner, '... in excess of 70c per share for any fiscal year'. Purportedly upon the basis of the entitlements thus postulated by the Commissioner to be conferred by the FPA, the Commissioner submitted that Lend Lease 'was entitled to dividend rights as a shareholder in Westpac until the Completion Date, subject to the limits imposed by the transaction documents', being limits described by the Commissioner as 'significant' and referable to what the Commissioner described as 'limited dividends', 'no rights to capital in the shares', 'sterilised voting', and 'restriction on dealing in the shares without consent'. There are I think at least conceptual difficulties with that analysis on the Commissioner's part, aside from the express terms of the FPA in any event. Be that as it may, the Commissioner categorised those rights to ongoing entitlement to dividends as 'property' within ss 160ZD(1) and 160K(3) of the Tax Act. The contention, accepted by the majority of the Full Court, that the right acquired by the taxpayer "was merely a personal right... which was incapable of being assumed by a third party" must be rejected. The conclusion that the taxpayer's right against MMBW was only a right to compel MMBW to specifically perform its obligations appears to have been founded in the proposition, adopted by the primary judge, that "no conceivable assignee would have any interest in enforcing MMBW's obligation which was to discharge [the taxpayer's] obligation to the debenture holders". It may be doubted that enquiring whether there is any person who would have a commercial interest in taking an assignment will determine whether something is an item of property capable of assignment. The question is whether the rights are capable of assignment, not whether anyone is interested in taking an assignment. 67 In relation to the Commissioner's invocation of Orica in any event, it is perhaps material for present purposes to record the background circumstances there involved. A publicly listed company undertook to repay loan funds the subject of issued debentures when the same fell due after certain terms of years, and subsequently liability for that repayment was assumed by a third party. It was held by a majority of the High Court that the assumption party's promise to perform was not income, and it was further held by a reduced majority, more relevantly for present purposes, that the company's rights against the assumption party constituted an asset for capital gains tax purposes, and that accordingly the company's rights were partly discharged or satisfied, and hence were partly disposed of, on each occasion that the assumption party effected a reduction of the principal sum the subject of the debentures. Moreover to the extent that the amount of each payment exceeded that part of the cost of the rights attributable to the repayment, it was further held that a capital gain should be accordingly imputed to the company. The rights which the applicants acquired as a consequence of the deeds were a chose in action and/or a right and hence an asset. The position referred to in TR 2001/9 and CGT Determination CGT 3 related only to a simple debt in which the taxpayer had no contractual right to a waiver upon achievement of the relevant contingent (sic) . The present position is therefore different because the taxpayer's rights gave them a CGT asset (s 105-5(1)). They arose as the consequence of a CGT event D1. The Commissioner's postulation of a so-called 'right to share in Westpac dividends' would impermissibly elevate a situation of 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration', as I have already pointed out in my citation of dicta in Citylink Melbourne . They cannot be assigned, charged or otherwise dealt with, and no party shall attempt or purport to do so, without the prior written consent of the other party. It may be further observed that the foregoing clause contained no qualification to the effect that such consent was not to be unreasonably withheld. 70 The Commissioner drew attention next to Lend Lease's contention that to the effect that nothing was 'received' by Lend Lease pursuant to the FPA, other than the two cash instalments of purchase money of $352,297,356 and $1,000,000 identified in [16] above and which were respectively payable on 18 June 1996 and about three months prior to ultimate completion of the FPA on 17 January 2000 (see again clauses 3.1 and 3.2 of the FPA extracted in [7] above), with the consequence asserted by the Commissioner that Lend Lease 'merely retained something it already had, namely its rights as a shareholder in Westpac --- limited by the arrangements it had made with County Natwest'. It may be observed incidentally that s 160ZD(1)(c) contains the expression 'has received or is entitled to receive', and in that context the Commissioner submitted that to describe Lend Lease as having merely retained a right to receive dividends 'was apt to mislead'. Whilst acknowledging that Lend Lease held what was described as 'a right' to receive dividends, both before and after entry into the FPA, as an ongoing shareholder of FPA until January 2000 subject always to the provisions of clause 7.9 as to 'Excessive Dividends' and the consequential reduction in 'Purchase Price' payable of course on the 'Completion Date', the Commissioner sought to raise the qualification that 'the FPA also provided for [Lend Lease] to be compensated for the sale of the Westpac shares by means which included an agreed period during which it was permitted to receive a defined share of dividends'. Nevertheless the FPA stipulated that the sale was not to be completed until the expiration of that mutually agreed contractual period of close to four years, being the 'Completion Date'. In the meantime it was Lend Lease's entitlement as beneficial owner to receive all dividends on the shares the subject of that agreement which remained in force and effect (see again clause 3.3 of the FPA). 71 It was next submitted by the Commissioner that '[i]t is not necessary that the value in the consideration for the shares should flow directly from County Natwest as purchaser for reasons discussed... in Dick Smith [Electronics]', and I was referred to what the majority in Dick Smith Electronics was said by the Commissioner to have held, being that '... the dividends received by the vendor from the target company moved the transaction and constituted part of the consideration for the transaction'. However a similar observation is not sufficiently apposite to the present circumstances. The subject dividends on the Westpac shares were to be and were in fact declared and paid by Westpac in the ordinary periodic course in relation to the entirety of its share capital listed for quotation on the Australian Stock Exchange, whereof only a relatively minor proportion were the subject of sale (ie from Lend Lease to County Natwest), and not for comparison as occurred in Dick Smith Electronics , by way of a single or isolated dividend distribution of accumulated retained earnings of the controlled subsidiary made in the context of and in order to facilitate the takeover, albeit also at arm's length, of the entirety of the issued capital of the offshore target company InterTAN Australia Ltd by way of takeover by Dick Smith Electronics Holdings Pty Ltd. The Commissioner contended nevertheless that s 160ZD(1) did not support 'a restrictive interpretation' which 'only picks up consideration which is received in a tangible or physical way', asserting in that regard that '[t]he words that govern the relationship between the consideration and the disposal are of the widest import', and were 'not to be read down by a reference to any notion of tangibility', whatever might be effectively conveyed, if at all, by that non-statutory notion of 'tangibility' so used by the Commissioner. 72 The Commissioner drew attention in any event to the way in which Lend Lease characterised the rights conferred in its favour by the FPA, and submitted that '[t]he dividends were commercially regarded as part of the consideration for the disposal of the shares', since '[t]he value of the dividend flow was clearly something which was in the mind of the Lend Lease Corporation Board in making its decision to authorise the transaction to proceed'. The Commissioner next referred, inter alia , to reports of 28 March 1996 made to the Lend Lease Board meeting held on 29 March 1996 (see [2]-[3] above), which summarised 'the effects of the proposal' submitted to the Lend Lease board by County Natwest in the context of the current market value of the Westpac shares, together with the realisable market value of the Lend Lease holding of Westpac shares if sold 'today' after allowing for 'market discount' (given the size of the subject parcel proposed to be acquired), and the implications of capital gains tax, and the value generally of the so-called 'County Deal'. That report suggested the provision of the following 'explanation to our shareholders and the market' to include the facts that 'Lend Lease has secured the major part of the gain from the restructuring of Westpac and now believes it is appropriate to lock in that value', pointing out thereby that '[t]he arrangements with County have allowed Lend Lease to take back its original capital of $625 million plus an abnormal gain of $75 million', and further that '[t]he shareholders will participate in the major part of the increase in value of the Westpac shares through fully franked dividends over the following 5 years prior to the emergence of profits on investments currently being undertaken. ' The inference is open to be drawn that the internal Lend Lease evaluations of the realisation proposal were commercially and not taxation driven, though understandably the Lend Lease decision-makers were concerned to receive expert advice as to any unfavourable taxation implications which might be involved. As I have elsewhere indicated, the Commissioner did not ultimately pursue any case based upon or referrable to the tax avoidance provisions of Part IVA of the Tax Act. ' However as I have earlier emphasised, Lend Lease remained entitled to receive the dividend income to be derived in the meantime on its ongoing holding of its Westpac portfolio. The Commissioner emphasised in that context that '[w]hen valuing a share, its value is the value in exchange and is ascertained by the reference to the sum obtainable upon sale', and that such '... sum represents the influence of two factors, namely, the amount of the accumulated funds or assets of the company and the expectation of future dividends annually or periodically distributed'. Its value is a value in exchange and is ascertained by reference to the sum obtainable upon sale. That sum represents the influence of two factors, namely, the amount of the accumulated funds or assets of the company and the expectation of future dividends annually or periodically distributed. The Commissioner observed that the financial accounts of Lend Lease showed that dividends were treated as being 'proceeds of sale of Westpac shares when they were declared', the Commissioner referring in that regard to the consolidated statements for the year ended 31 December 1996. However a right to receive future income to be derived over an ensuing period of time does not necessarily translate to crystallisation of the derivation for capital gains tax purposes of the present day value of that future income. Normally contracts entered into for the sale of realty envisage a period of time to elapse between entry by the vendor and purchaser into a contract of sale and completion of that contract of sale, although the structure of the subject transaction may probably not be described as normal, given the size and potentially strategic proportion of the Westpac capital the subject thereof. 75 As at 7 June 1996, Lend Lease would have no likely basis for predicting with any precision the quantification of the dividend income it would or might well derive from its Westpac shareholding from that time until 31 July 2000, or earlier on 30 April 2000 (see again clause 5.2 of the FPA, and the terms of the so-called subsequent Amending Deed to the Forward Purchase Agreement bearing date 17 January 2000). Each of Lend Lease and County Natwest having been involved in decision-making with the evident benefit of experienced and qualified professional assistance, would not have obtained any significantly larger lump sum consideration, up front as it were in the context which occurred, than was furnished by County Natwest at arm's length, once account be taken as to Lend Lease's entitlement to continue to receive and retain Westpac dividends until the fiscal year 2000. All that was said to be consistent with the decision in Commissioner of Taxation v Dulux Holdings Pty Ltd [2001] FCA 1344 ; (2001) 113 FCR 436, where a Full Federal Court (Beaumont, Lindgren and Kenny JJ) unanimously held that rights under an assumption agreement were discharged as each payment was made, leaving thereby no scope for s 160U(3) to operate. Contrary therefore to Lend Lease's submissions earlier recorded, so the Commissioner contended, 'the right was not disposed of for no consideration', since each dividend was received in respect of the disposal of part of the right and was therefore disposed of for consideration. As I have foreshadowed, there is evident difficulty with the Commissioner's notion as to payment by a company of a dividend involving the disposition of a right, within the scope of operation of Part IIIA of the Tax Act, attributable to the declaration and payment of that dividend to the company's shareholders. 77 Upon the basis in any event that the disposal did not occur when the FPA was entered into, but as and when dividends were paid in subsequent fiscal years, the Commissioner drew attention to s 160U(4), the text of which I have earlier reproduced. I am unable to accept, conceptually or otherwise, that payment of dividends by a company, in circumstances for instance as here prevailing in the case of County Natwest, constituted a situation whereby an '... asset [which] was... disposed of otherwise than under a contract' within that subsection, that being a provision designed to address the subject of 'Time Of Disposal And Acquisition' , as the heading to s 160U duly indicates. As I have earlier outlined, the Lend Lease case was to the effect that the FPA, though entered into on 7 June 1996, constituted a contract for the sale of the Westpac shares whereby until completion thereof on 30 April 2000, ownership of the Westpac shares would remain with Lend Lease, and would therefore not pass to County Natwest, such that Natwest would not acquire any beneficial interest in the Westpac shares prior to completion of the FPA. Consequently the Commissioner's submissions in derogation of the case propounded by Lend Lease as one based simply on the notion of a 'mere deferred delivery agreement' did not appear to advance the Commissioner's case relevantly or materially for present purposes. 80 The Commissioner emphasised in any event that it is the market value of the 'property other than money' received as 'the consideration in respect of a disposal of an asset' which falls to be addressed in order to calculate a capital gain, being a market value to be determined 'at the time of disposal' (see again ss 160ZD(1)), that time being that of entry into the FPA. The Commissioner referred in that context also to s 160U(3) of the Tax Act. 81 The Commissioner sought to explain that its case did not involve an 'attempt to bring the present value of future amounts into the tax net, but rather to give effect to the statutory provision, and bring the whole consideration on disposal into the capital gains calculation', and that it was sufficient for the Commissioner's case that Lend Lease's contractual rights 'as a whole' are assignable, subject to consent, and that those contractual rights comprise 'property other than money' within s 160ZD(1)(c). As to assignability of Lend Lease's contractual rights, the Commissioner pointed to clause 20 of the FPA headed 'Assignment', the text of which clause I have earlier reproduced. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing any transaction. I was also referred to the observations of Gummow J (as a member of a Full Federal Court) in Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1. 83 The Commissioner next drew attention to the circumstance that before entering into the FPA with County Natwest (as so-called 'Purchaser'), Lend Lease 'did not have the contractual rights under it', but '[b]y entering [into] the FPA it obtained or received those rights'. They merged in the transfer. They were spent. The applicant didn't have those rights following the transfer. They were consideration for the transfer, they were terms of the contract for the transfer. It's very easy when talking about consideration, to slide between consideration in the contractual sense, being the mutual exchange of promises, and consideration in the conveyancing sense. We are concerned with consideration which moves the contract and which one is left with, after the transfer. Not with the mutual promises which comprise contractual consideration. The consideration which the applicant was left with, after the transfer, what it got in exchange for what it gave, was the $3.53. It wasn't the additional promises that my friend relies upon. 84 The Commissioner therefore submitted that Lend Lease 'got something more than cash here', and that '[t]his was not a mere case of future delivery, it was a carefully constructed transaction, designed to secure to [Lend Lease], through its contractual rights, both immediate cash and a flow of income neither of which, if [Lend Lease] be correct, would lead to the payment of tax'. The Commissioner further submitted that the Westpac dividends were not 'really the additional consideration', but '[t]he contractual rights of [Lend Lease] were', and further that '[t]he dividends were an important by-product over which the parties bargained, and agreed a sharing formula and compensation mechanism'. As will have been appreciated from what I have discussed and recorded, I am of the opinion that the case of Lend Lease in denial of the viability of the assessment of the Commissioner to capital gains tax pursuant to Part IIIA of the Tax Act, and to s 160ZD(1)(c) in particular, and hence adversely to the Commissioner, should succeed and therefore be upheld in Lend Lease's favour. 86 In making and seeking to uphold the Commissioner's assessment decision under present review, the Commissioner adopted the position that property which the Commissioner described as '[a]dditional non-cash consideration on disposal', said to be in the sum of $144,236,243 in value and to result in a capital gain by Lend Lease of $110,645,599 derived in respect of the year of income ended 30 June 1996, was allegedly constituted by Lend Lease's derivation of what the Commissioner described as 'the right to retain the Sale Shares from the date of contract until the date of delivery', or 'the right under the agreement pursuant to which Lend Lease remained entitled to retain beneficial ownership of the shares until the completion date' (see again [16] above). So much was said by the Commissioner to involve in either case a right of retention of what the Commissioner further described as the 'beneficial ownership of the shares until the Completion date and [of the] dividends paid by Westpac in respect of the Sale Shares in or in respect of each half fiscal year of Westpac up to $0.70 per share until the Completion Date' . It will be recalled that the Completion Date was originally stipulated by the FPA to mean '30 April 2000, unless it is adjusted under clauses 5.1 and 5.2', such date having been subsequently brought forward to 17 January 2000 by the mutual agreement of Lend Lease and County Natwest. The Commissioner regards the right to retain as [being] a valuable asset as, during that period, the vendor, and not the purchaser will be entitled to continue to receive dividends paid by Westpac in respect of the Sale Shares. Rather as I have already indicated, the Commissioner propounded the controversial notion of a right, described by Lend Lease in submission to be 'a new right' constituted by that so-called '[a]dditional non-cash consideration on disposal', and to which the Commissioner attributed that value of $144,236,243. It was asserted by the Commissioner in that regard that Lend Lease stood to receive under the FPA a right to share in the subject Westpac dividends between the time Lend Lease committed to the FPA on 7 June 2000 and the contractual time for completion thereof, which latter time subsequently was brought forward from 30 April 2000 to 17 January 2000 in the circumstances outlined in [14] above. 88 In my opinion, reliance on that postulated right of Lend Lease to share in dividends, in support the Commissioner's assessment of capital gains tax presently contested, was misconceived by the Commissioner as satisfying the description of 'property other than money' within the scope of the capital gains tax provisions of s 160ZD(1)(c) of Part IIIA of the Tax Act. As Lend Lease rightly submitted, the Commissioner thereby elevated, without justification according to law, whether by a process involving economic equivalence or otherwise, the status of a contractual right which was misconceived as constituting ' property other than money '. The Commissioner's endeavour so to do impermissibly ran counter to the trend of authority which I have recorded earlier in these reasons . There was no right to share in Westpac dividends conferred upon Lend Lease, expressly or by implication, by the terms of the FPA or otherwise by the general law, such as to constitute an 'asset' of the nature identified by the Commissioner as a capital gain taxable under Part IIIA of the Tax Act. 89 As I have pointed out, the FPA was so structured that dividends on the Westpac shares the subject of sale would continue to be the entitlement of Lend Lease until the 'Completion Date' (which was brought forward to 17 January 2000 from 30 April 2000 as I have earlier recorded. In the events which happened, dividends continued to be regularly paid by Westpac to Lend Lease in the normal course until the 'Completion Date', as envisaged at the time of formation of the FPA and by the terms thereof, the same being within the range then reasonably as anticipated by Lend Lease, and those dividends thus attributable to Lend Lease's shareholding in Westpac were of course duly received for its own benefit. In that regard, none of those dividends crossed the 'excessive' threshold to which I have made reference in [9] above, and consequently no adjustment was required by the terms of the 'Excessive Dividends' provisions of the FPA. Such dividends as became payable in respect of the Westpac shares so held by Lend Lease until the 'Completion Date' (as varied) were thus wholly accrued in favour of Lend Lease as beneficial owner of those Westpac shares. 90 The case of Lend Lease was not adversely affected by the scope of operation of s 160ZA(4), which stipulates for reduction in the quantification of a capital gain where an amount has been received which is otherwise assessable as income. The fact that assessable income may well have been rebateable, such as would seemingly, or at least largely, have been the case in relation to the dividends declared and paid by Westpac to Lend Lease after the formation of the FPA and prior to completion thereof, did not alter the operation otherwise of that subsection, and the contrary was not suggested by the Commissioner. At the time of entry into the FPA by Lend Lease and County Natwest as the contracting parties thereto, it would have been readily apparent that future Westpac dividends would be ' included in the assessable income' of Lend Lease within the terms of s 160ZA(4), which outcome would not have been material to the scope of operation otherwise of s 160ZA(4) in any event. The fact that assessable income may be rebateable to a taxpayer does not alter its character as ' assessable income ' in the first place, and hence for the purpose inter alia of s 160ZA(4). 91 In reaching the foregoing conclusions in favour of Lend Lease, I am satisfied that operation should be accorded to the explicit provisions of the FPA, and clause 3.3 in particular, to the effect that 'the beneficial interest in the Sale Shares' was mutually intended by Lend Lease and County Natwest to remain vested in Lend Lease until completion of the FPA, and with it 'all rights attaching to the Shares' (to repeat the clause 3.3 expression). That circumstance tends to rationalise why the purchase price was set at a level significantly below the market price prevailing at the time the FPA was entered into on 7 June 1996. The fact is that what 'made the transaction work' was the expectation at that time of a predicable flow of Westpac dividends to be derived by Lend Lease over what would be thenceforth until completion in the order of nearly four ensuing years, together with the share acquisition price paid substantially in advance at a level commensurate with the market value of Westpac shares at the time of coming into effect of the FPA. Consistently with that pricing structure undertaken by Lend Lease in favour of County Natwest was the payment of $250,000 put in place in favour of Lend Lease in return for the 'Completion Date' being later brought forward from 30 April 2000 to 17 January 2000, as I recorded in [14] above. 92 Inconsistently therefore with that pricing structure put in place by Lend Lease and County Natwest was the Commissioner's purported postulation of the so-called '[a]dditional non-cash consideration', having a supposed valuation assessed by the Commissioner at $144,236,243 attributed adversely to Lend Lease. That is because the structure of the FPA evinced the mutual intention of the contracting parties that in the context of Lend Lease accepting an upfront sale price in cash of $352,297,356, together with the subsequent final payment price in cash of $1,000,000, County Natwest agreed that Lend Lease should be entitled in the meantime to receive all dividends which might become payable in respect of Westpac shares during the period of time exceeding three years between the so-called 'Payment Date' of and the 'Completion Date', which crystallised more than three years later in the year 2000. As appears in [15] above, dividends of $162 million were derived by Lend Lease on the subject Westpac shareholding in the events which happened, consistently with what the Lend Lease decision-makers anticipated, and being broadly in line with what County Natwest correspondingly anticipated as well. Moreover for the Commissioner to endeavour to attribute that quantification of supposed 'additional non-cash consideration', as being the subject of derivation on the part of Lend Lease, was in my opinion indefensible as a matter as well of commercial reality. Lend Lease demonstrated so much from the calculation exercises formulated and rationalised earlier in [45]-[48] of these reasons, in the context of the Lend Lease segment '[a] ny capital gain is offset by an equal capital loss '. 93 Of course, the dividends which continued to be received by Lend Lease, and which amounted to $162 million as detailed in [15] above, were wholly rebateable for income tax purposes, and it was that mutually conceived arrangement which commercially justified Lend Lease's entitlement in accepting in advance, commencing from the Payment Date of 18 June 1996, that extent of tax sheltered dividend income. I have earlier recorded that the Commissioner ultimately acknowledged an absence of any taxation avoidance scheme within the scope of operation of Part IVA of the Tax Act referrable to that rebateable dividend retention arrangement. 94 What the Commissioner sought nevertheless to rationalise as 'a simple point', by way of exposition of the thrust of the Commissioner's case as set out in [32] above, was misconceived for reasons I have outlined at the conclusion of that exposition. Those reasons may be broadly summarised upon the footing of the operation of clause 3.3 of the FPA that no beneficial interest in the 'Sale Shares' was to pass 'pending Completion', and the provisions as to 'Adjustment Of Completion Date' the subject of clause 7. In that regard, the evidence established that the negotiations for and the operation of the FPA occurred entirely at arm's length; so much was objectively apparent at least from the nature and scope of the deliberations of Lend Lease's executives extracted in temporal sequence from [2] to [6] above. What I have further set out at [40] and [72] above, concerning the operation of the transactions the subject of the FPA, serves to reinforce the commercial objectives of Lend Lease by way of implementation of the FPA according to its provisions. Those provisions reflect the respective advantages designed by the FPA to balance the respective interests of Lend Lease and County Natwest, in the latter case for the benefit of the so-called 'public bookbuild' process referred to at the commencement of these reasons. 95 It follows in my opinion that the Commissioner's principal case based purportedly upon the operation of s 160ZD(1), and in particular the statutory notion of 'property other than money ', should be rejected. 96 Nor in my opinion is there validity or substance in the Commissioner's case referrable to the operation of s 160ZA(4) which I have earlier summarised at [78] above. In short, Westpac's dividends relevantly derived and aggregated at [15] above were '... included in the assessable income of [Lend Lease] in the relevant years of income there particularised' , albeit that the same were rebateable pursuant to the further operation of the Tax Act. There is no substance in the Commissioner's endeavour to circumvent the implications of rebateable income under the Tax Act constituting income in any event, and to do so for instance by what Lend Lease characterised as constituting an elevation of 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration', as I have recorded in [52]-[56] above. 97 There remains for resolution the Commissioner's alternative case to the effect upon the basis that no capital loss arose from the partial discharge of the relevant rights. As I have foreshadowed in [76] above, I am unable to accept the proposition that the payment of a dividend may constitute the disposition of a right in the nature of property for capital gains tax purposes. 98 The application for review by way of appeal from the Commissioner's assessment decision the subject of the proceedings must therefore be upheld, with the usual consequences as to costs. The first question appearing in [18] above must be answered in the negative and the second question there appearing correspondingly in the affirmative. I certify that the preceding ninety-seven (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | purchase of parcel of shares of public banking company listed on australian stock exchange limited history of that public company's regular payment of dividends envisaged to continue at future material times purchase price payable on completion of contract of purchase nearly four years from time of entry into that contract of purchase at ultimate price significantly less than market value of shares of target company at time of that contract vendor contractually entitled to dividends on shares of target company until time for payment of purchase price became due negative operation of capital gains tax on sale of public company's shares referrable to that entitlement to dividends payable during that period of years between time of contract and time of completion no part iva issue arising income/capital gains tax |
Yesterday was also the first scheduled day of the hearing of this case. The application is opposed by the respondents. 4 On 15 February 2006 this matter was set down for trial for two weeks. Yesterday, both parties indicated that, in their view, the hearing would still require two weeks. Senior Counsel for the respondents informed the Court that he would be involved in a two month trial commencing immediately after the end of next week. Both parties submitted that if the trial were to be adjourned, it would be preferable to adjourn the hearing in its entirety, rather than hear half of the evidence next week. The applicants have asked that the hearing be initially adjourned to this Friday for directions. The applicants say that the respondents delivered to them a number of statements totalling 3785 pages over 10 days, including an extensive statement of 1685 pages delivered on 12 July 2006. Senior Counsel for the applicants tendered in court a document entitled 'Schedule of Respondents' Service of Statements', which he said summarised the documents received by the applicants up until last Wednesday evening and details of service. First, the approach of the applicants to the litigation, including the delays of the applicants, has meant that the applicants have caused the events which have resulted in their claim that they are not ready for trial. The respondents also referred to the position the applicants took in relation to security for costs, and point out that the matter was stayed until security was paid on 28 June 2006 pursuant to the order of the Full Court of the Federal Court. 2. Second, the respondents claim that their clients will be prejudiced by an adjournment, for reasons including: • serious allegations of fraud have hung over the first and second respondents for some time, and its important to deal with those allegations expeditiously • the respondents have spent considerable time and incurred considerable expense in preparing for trial (including witnesses travelling from interstate and overseas, and experts who have been retained) • they are not confident that the applicants will be in a position to satisfy a costs order in the event that the respondents were successful at trial. The claimed reasons for this include that: (i) the first applicant purchased the orchards on the basis of 100 per cent external funding (ii) the orchards have not been maintained (iii) they have no reason to believe that the second applicant has sufficient assets to satisfy a costs order (iv) the third applicant is currently in voluntary administration pursuant to Pt 5.3A Corporations Act 2001 (Cth). 3. Third, the respondents claim that the documents which have been delivered ought not to cause the applicants' difficulty. In particular, the respondents claim that most of the documents to which reference is made in the schedule were disclosed and the statements delivered during that time were made in response to the allegations of fraud made by the applicants. Senior Counsel for the applicants objected to the affidavit being filed, on the basis that the applicants had no knowledge of it. I stood the matter down for an hour yesterday morning to allow the applicants an opportunity to examine the affidavit. When the parties returned to court they agreed that the respondents would tender two documents. The first document was a copy of a letter of six pages (including cover sheet) sent by facsimile transmission by Lynch & Company, solicitors for the applicants, to McCullough Robertson, solicitors for the respondents on 14 July 2006. I understand that this is the letter that Senior Counsel for the applicants referred to in his submissions, to which the applicants claim they had received no reply. The letter also refers to 'Documents not disclosed by the respondents but which are in the applicants' possession', referable to the 'Strahley Affidavit'. It then goes on to state that the solicitors have 'isolated a number of classes of documents referred to in various paragraphs in Mr Strahley's statement which refers to classes of documents not disclosed or gives rise to inquiry into classes of documents as follows:...' It lists 29 classes of documents including Farm Management Reports, the SmartPak and TotalPak software data files 1998-2005, and diary notes of conversations between the second respondent and a third party. The second document tendered was a five page document, untitled, but containing a list of documents, and references to page numbers of various affidavits, with comments referable to discovery of the relevant document. I understand that this is the annexure to the affidavit that the respondents sought to file in court. I understand it was also prepared by legal representatives of the respondents. 10 The second document is clearly a partial response to the applicants' letter of 14 July 2006. The second document contains comments on behalf of the respondents referable to the contents of an affidavit of the second respondent and its annexures, and other affidavits (namely the 'Frick Affidavit', the 'Palfreeman Affidavit', the 'Burns Affidavit' and the 'Douglas Affidavit'). The second document does not however provide comments on documents not disclosed by the respondents but which are in the applicants' possession, or the classes of documents referred to in various paragraphs in Mr Strahley's statement. 11 Senior Counsel for the applicants said in court yesterday that the applicants did not necessarily accept some of the explanations in the second document as being accurate, and he had not had time to follow it through. When a case comes before the trial judge on the date fixed for trial, the parties are entitled to come to court with an assurance that the trial will commence and will proceed, so far as possible, without interruption, to its conclusion. The court, which is in this respect the protector of the public interest, is also entitled to that assurance. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim for a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. I note the claim of the respondents that most of the documents to which reference is made in the Schedule provided by the applicants to me in court yesterday were disclosed. The statements delivered during that time were made in response to the allegations of fraud made by the applicants. However, in view of the timing of delivery of this documentation and its considerable length (in particular the lengthy signed affidavit of the second applicant filed and served 12 July 2006 which in itself, including the annexures, totals 1685 pages) it appears --- at least from their submissions --- very difficult for the applicants to ascertain whether the documentation has been previously disclosed. I am not persuaded on the facts before me that the documents which have been delivered ought not to cause the applicants difficulty as urged by the respondents. 15 The position before me as of yesterday is that there appears to be a large volume of evidence which the applicant has either not had a proper opportunity to read and if necessary, respond to, or, possibly, evidence which is still not before the applicant. 16 During the course of yesterday morning there was considerable contention between the parties as to who had caused delay disclosing evidence. Both parties claim that each other had delayed. I make no finding as to this issue at this stage. 17 The respondents have also pointed to the fact that the application was stayed by the Full Court of the Federal Court pending payment of security for costs, and have submitted that they were entitled to stop preparing for hearing until they had been informed by the Court that proper security had been provided, which occurred on 28 June 2006. It is certainly the situation that the substantive application was stayed pending payment of security for costs. However whether this means that either party was entitled to temporarily abandon preparation for the hearing, in view of the possibility that the applicants did not pay security for costs is a different issue. The trial date had been set. Ceasing preparation pending payment would be, at best, a risky strategy. The applicants did pay security for costs, as ordered by the Court. I am not persuaded that there is particular merit in the respondents' claims that they were entitled to cease activity pending that payment, if the result is that preparation for and disclosure of evidence for the substantive trial, and the hearing of the trial itself, be jeopardised. 18 I note that the respondents appear to have incurred expense in relation to witnesses from interstate and overseas. However, I am not persuaded that the respondents are prejudiced in that the applicants would not be in a position to satisfy a costs order in the event that the respondents were successful at trial. Again, I note that the applicants have paid security for costs as directed by the Court. No evidence was produced yesterday which would indicate an inability of the applicants to pay further costs in the event of the success of the respondents at the hearing and a costs order being made against the applicants. 19 Finally, the respondents have submitted that serious allegations of fraud have hung over the first and second respondents for some time, and it is important to deal with these allegations expeditiously. This admission was strongly resisted by the applicants, on the basis that the claim is that the conduct of the respondents has breached the Act, and fraud is not pleaded. As Kirby J said in J & L Holdings at 170, there is a natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. However, the prejudice to the first and second respondents as described by Counsel in this case before me appears to be, with respect, unsubstantiated at this stage. 20 Adjourning the hearing of this matter is undesirable and will clearly result in inconvenience to both parties. Rescheduling a two-week trial at a date to suit the parties and the Court in the near future will prove a difficult challenge. I note that the timetable as contained in consent orders made by me on 3 April 2006 was not complied with after 30 May 2006. These directions included an order that the parties attend mediation by 7 July 2006. Failure to comply with this direction is perhaps itself, telling. It is unfortunate that the parties did not approach the Court to seek a variation of the timetable before this week. As it is, both parties have undoubtedly incurred considerable expense and inconvenience. 21 However, in my view on the facts presented to me yesterday, on balance it would be unjust to refuse the adjournment sought by the applicants. 22 In my view, the appropriate orders are as follows: 1. The trial is adjourned until Friday 21 July 2006 at 10.15 am for further directions. 2. Costs to be reserved. | application for adjournment of trial application brought on first day of trial whether considerable volume of material being put before a party in the days before trial (which might also have indicated that further relevant evidence had not been disclosed) gave rise to a need to adjourn the trial practice and procedure |
His Honour held that no reasonable cause of action was disclosed in that application and dismissed it. 2 The procedural history is that an application was filed on 20 January 2005 in which Ms Penhall-Jones claimed disability discrimination, as well as harassment and victimisation, as an employee with the New South Wales Department of Transport. Another application was later filed under s 46PO of the HREOC Act on 18 October 2005 in respect of the termination of another complaint of victimisation. 3 When the matter came before Federal Magistrate Driver on 6 December 2005, his Honour ordered consolidation of the two applications and made interlocutory orders with a view to hearing the matter on 17 January 2006. The hearing was later adjourned until 10 April 2006. 4 The State filed an application on 6 February 2006 seeking dismissal of the proceedings under r 13.10(a) of the Federal Magistrates Court Rules and this application was heard by his Honour on 20 February 2006. During that hearing, the applicant appeared in person. His Honour dismissed one application (SYG 185 of 2005) but declined to dismiss the later application (SYD 3013 of 2005). 5 The HREOC Act allows an affected person in relation to a complaint to make an application to the Federal Magistrates Court alleging unlawful discrimination by one or more of the respondents to the terminated complaint. It requires that the unlawful discrimination alleged in the application must be the same as the unlawful discrimination that was the subject of the terminated complaint, or must arise out of the same or substantially the same acts, omissions or practices that were the subject of the terminated complaint (ss 46 PO(1),(3)). 6 At the hearing of a complaint, the Court has a wide discretion to make such orders as it thinks fit if it is satisfied that there has been unlawful discrimination. These may include an order requiring the respondent to pay an applicant damages by way of compensation for loss suffered due to the conduct of the respondent (s 46 PO(4)). His Honour noted that the respondent asserted that it was not conceded that Ms Penhall-Jones ever had a "disability" at a relevant time and submitted there was no admissible evidence of such a disability. The State submitted that there was no causal link shown between the conduct complained of by Ms Penhall-Jones and any asserted disability because the applicant's main grievance appeared to be that the impugned conduct caused the disability, rather than that she was adversely treated because of it. The State also said that there was nothing before the Court that could support the claim of indirect disability discrimination, and that there was no relevant connection between the asserted harassment and any asserted disability except as an alleged cause of the disability. In relation to a victimisation claim it was submitted that the applicant could not establish a cause or connection between the conduct complained of and her complaint of disability discrimination. 8 Before his Honour, Ms Penhall-Jones submitted that the material filed by her supported her claims and that the only way to determine the claims was to have a hearing. She stated that she was content with the form of her application and the amended points of claim filed but would like to provide some more evidence including medical evidence supporting her claim to suffer from a disability. 9 The Tribunal reasons correctly point out that the Court's jurisdiction to summarily dismiss an application must be exercised with great caution: Rana v University of South Australia [2004] FCA 559 ; (2004) 136 FCR 344 at [72] . His Honour stated that the power to dismiss may be exercised if the applicant's case is unarguable and there is no reasonable prospect that an arguable case could be advanced. His Honour had the benefit of the amended points of claim in this case and had ruled that all affidavit evidence should have been filed by the time of the hearing. He proceeded on the basis that all relevant evidence was before him. His Honour said that he had examined all the material filed and had reached the view that the application was so irredeemably bad as to be hopeless and must be dismissed. 10 After referring to the evidence of Ms Penhall-Jones in an affidavit filed on 7 February 2006, his Honour reached the conclusion that the question of what if any disability Ms Penhall-Jones suffered from was an open question. However, he proceeded to further consider the matter on the assumption that he was satisfied that Ms Penhall-Jones suffered from a disability for the purposes of the Disability Discrimination Act . After examining the evidence, he concluded that there was nothing in the evidence to support the proposition that she was treated unfavourably because of any disability, or that she was subjected to a condition, requirement or practice that she could not meet due to it, or that she was harassed because of it. His Honour observed that the scope of the proceedings was limited to the scope of the complaint made to HREOC. His Honour considered at [12] that, at its highest, Ms Penhall's evidence pointed to a "dysfunctional workplace beset by bullying where individuals were punished as a result of pointing out management or policy failures or causing political embarrassment. " His Honour concluded that there was no evidence that Ms Penhall-Jones had been bullied because of her disability and there was no evidence that she had lost any position because of her disability. His Honour noted that the delegate of the President of HREOC had found this allegation lacking in substance and he also found this point unarguable. 11 The second and third claims were that the Department of Transport failed to accommodate Ms Penhall-Jones' disability. After referring to several authorities, his Honour concluded this argument was not open and could not succeed on a question of law. The fourth allegation made to HREOC was that Ms Penhall-Jones had been bullied at a job interview when she was asked questions she had difficulty answering. His Honour saw no substance in this ground. 12 In relation the fifth allegation that Ms Penhall-Jones was not provided with assistance to find a transfer to a new job, his Honour found that the evidence indicated that she had been offered assistance but declined to use it because she did not consider herself displaced. 13 The sixth allegation was that Ms Penhall-Jones was bullied and marginalised by her supervisor, Mr Mitchell. However, Federal Magistrate Driver considered that even if it were so, Ms Penhall-Jones was unable to link the alleged behaviour to a disability. 14 The final allegation made to HREOC was that another supervisor, Ms Lange, had made inappropriate comments in relation to disability when the issue of stress was raised as an explanation for Ms Penhall-Jones' work performance. His Honour considered there was persuasive evidence that the comments made by Ms Lange were in relation to perceived poor performance and were not in any way caused by Ms Penhall-Jones' disability. 15 His Honour therefore concluded that the application under s 46PO in matter number SYG 185 of 2005 was doomed to failure and accordingly the application was dismissed. His Honour ordered that costs should follow the event. His Honour refused to strike out the other proceeding. The first is that there was an error of law because the application for summary dismissal was heard under the relevant rule as amended and not under the unamended rule, and that therefore the applicant was deprived of an opportunity to address the matter on the form of the applicable rules. This ground cannot be made out, because at [1] of the reasons, his Honour records that the matter has proceeded on the basis that it should be dealt with pursuant to the Rules as they stood prior to 1 December 2005, since the substantive applications were filed well before the amendments were made to the Federal Magistrates Act and Rules on 1 December 2005. 17 The second ground of appeal is that not enough weight was given to the evidence of Ms Penhall-Jones which had been placed in the Court. The question of sufficiency of weight to be given to evidence is a matter for the Judge, and the weighing of considerations and the proportionate amount of importance attributed to each of them is not a matter of law but one of fact. 18 The third ground raised is that the conclusions drawn about the medical evidence do not follow from the evidence but demonstrate that the evidence needs to be explained to a Court. Again, this is a question of fact and of submission. The Magistrate left it as an "open question" whether the applicant had a disability or not. No adverse finding was made against the applicant in relation to whether she had a disability. The remaining reasons proceed on the assumption that she had a relevant disability. This ground lacks substance. 19 The fourth ground of appeal turns on the question of weight and alleges that too much weight was given to the results of the HREOC investigation. Ms Penhall-Jones contends that if the HREOC decision to terminate the complaint had been made in a Court, it would comprise a denial of natural justice. 20 The fifth ground on the draft Notice of Appeal simply states that "only in extreme cases should a case be summarily dismissed. " The applicant contends that her claim does not fall into this category of cases. Firstly, the Court must consider whether in all the circumstances, the decision in respect of which leave is sought is attended by sufficient doubt to warrant it being reconsidered. Secondly, the Court should examine whether substantial injustice would result if leave were refused. 22 In relation to the relevant principles concerning the exercise of jurisdiction by his Honour in this matter, the following observations are pertinent. The respondent relied upon the evidence contained in the solicitor's affidavit to establish that the appellant's claim lacked merit. The true inquiry is not whether the appellant's claim lacked merit, but whether the appellant's claim failed to disclose a reasonable cause of action. In so doing, his Honour acted contrary to the above principle. 24 While the respondent correctly notes that in the present case the applicant had filed points of claim, which contrasts with Rana, in which no pleadings or points of claim were filed, I do not consider that the relevance of his Honour's observations is diminished in this case when consideration is given to the way in which the decision below approaches the determination of the summary dismissal application. 25 It is essential that a Federal Magistrate should give sufficient reasons for reaching the conclusion that an application should be dismissed summarily. They do not have to be elaborate or excessively detailed, but the touchstone is that the reasons must indicate to the parties why the decision was made in order to allow them to exercise such rights as may be available in respect of that decision: Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386; SZDCJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1500 at [6] - [16] ; Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2006] FCA 661 at [15] - [20] . In relation to the medical evidence, for example, his Honour concludes that the medical opinions relied on by the applicant are "equivocal" and that none of the opinions appear "definitive". In relation to harassment, his Honour concludes that at its highest, the evidence of the applicant points to a dysfunctional workplace, beset by bullying. In dealing with "bullying", his Honour simply agrees with the conclusion of HREOC without giving any reasons. Concerning assistance to the applicant, there is reference to the "available evidence" only indicating an offer of assistance. The evidence is not specified. In respect of the conduct of her supervisor, there is reference to evidence of bullying but it is said Ms Penhall-Jones was unable to link that evidence to indirect disability discrimination. This clearly is a conclusion based on an evaluation and weighing of the evidence and an appraisal of evidence as opposed to a consideration of the claims themselves. Finally, in relation to the claim of inappropriate comments, there is a statement that there is "persuasive evidence" to the contrary. This reflects an evaluation of the evidence and amounts to an acknowledgment that there is a conflict that should only be determined on a hearing of the matter. This type of finding and examination is not appropriate on a summary dismissal application where the consequence is that the applicant is foreclosed from the benefit of cross-examination and detailed submissions at the close of evidence. Moreover, in several instances, no reasons are specified for his Honour's agreement with the conclusions of the HREOC delegate in this matter. In my view, the above observations disclose that the learned Magistrate adopted an erroneous approach by incorrectly undertaking the task of evaluating the evidence and forming a view on it. Furthermore, there has been failure to give reasons for agreeing with the conclusions of the delegate in relation to some findings and a failure to refer to the evidence by which that conclusion is reached. 27 Accordingly, in my view, the applicant has established that the decision below is attended by sufficient doubt to warrant the grant of leave to appeal, and that there would be an injustice if leave were not granted. I therefore grant leave. I am also satisfied that there are errors of law disclosed in the reasoning of his Honour which warrant the setting aside of the dismissal. 28 Therefore I allow the appeal. The decision of his Honour is set aside and the proceeding is to be remitted for determination in accordance with law. The respondent is to pay the costs of the applicant. | principles relevant to summary dismissal appeal from summary dismissal of unlawful discrimination claim by federal magistrate requirement that federal magistrate must give sufficient reasons for summary dismissal requirement that federal magistrate evaluate whether applicant's claim discloses a reasonable cause of action rather than whether an applicant's claim lacks merit appeal allowed. practice and procedure |
The Minister issued a surrender warrant under s 23 of the Act on 31 August 2006. The applicant has been detained in custody since that time. On 12 November 2002, the Minister received an extradition request from the United States for the applicant's extradition, in relation to one count of murder, contrary to s 187 of the Code. On 14 November 2002, the Minister issued a notice under s 16 of the Act, being a notice addressed to a magistrate stating that an extradition request had been received. 3 In December 2002, a magistrate determined that the applicant was eligible for surrender and committed him to prison to await surrender, pursuant to s 19(9) of the Act. The applicant unsuccessfully challenged the magistrate's decision, or his eligibility for surrender, in the Supreme Court of New South Wales, the Full Court of the Federal Court, and the High Court. What amounts to a 'speciality assurance', as referred to in s 22(3)(d), is dealt with in s 22(4) of the Act. In the case of the United States, the speciality assurance is incorporated in Article XIV of the Treaty. 8 On 13 December 2004, the Attorney General's Department wrote to the applicant inviting submissions concerning the decision to be made by the Minister under s 22. The submissions made by the applicant totalled over 1000 pages. Two affidavits of Mr Michael Fermin, Deputy District Attorney of the County of San Bernardino, California, were made in support of the extradition request. One affidavit was sworn in October 2002 ('the earlier affidavit'), and a supplementary affidavit sworn 14 November 2002 ('the supplementary affidavit'). Mr Fermin deposed in the earlier affidavit that the District Attorney's Office had filed a felony complaint on 28 May 2002 pursuant to s 187(a) of the Code, alleging that the applicant murdered Ms Kristina Garcia. While statutes in the same Chapter (Chapter 1 of Title 8) define degrees, malice requirements, punishment, and others, the main charging section is 187. Further, in California, the charging document need not limit the degrees of murder a prosecutor may seek. There are two degrees of murder in California. First and Second Degree Murder are defined in Penal Code Section 189. Penal Code Section 190 is the penalty section for murder. First Degree Murder, under the circumstances of this case, carries a sentence of twenty-five years to life in prison. The penalty to be applied shall be determined as provided in Sections 190.1, 190.2, 190.3, 190.4, and 190.5. These special circumstances include, for example, that the murder was committed while the defendant was engaged in the commission of an offence of kidnapping in violation of certain sections of the Code. The determination of the truth of any or all of the special circumstances shall be made by the trier of fact on the evidence presented at the trial or at the hearing held pursuant to Subdivision (b) of Section 190.1. Whenever a special circumstance requires proof of the commission or attempted commission of a crime, such crime shall be charged and proved pursuant to the general law applying to the trial and conviction of the crime. It provides that in those circumstances the trier of fact shall determine whether the defendant should receive the death penalty or life imprisonment without parole. Alternatively, a writ of habeus corpus , or the applicant be released on bail. 6. Costs. At the hearing, the applicant indicated that he no longer sought orders 5, 6, 7 and 8. 17 The application also contained claims for interlocutory relief, which included that the surrender warrant be stayed pending finalisation of these proceedings, the broadcast of the America's Most Wanted television program aired on 27 July 2002 be produced into evidence, that Detective Rob Aceivado appear at the hearing by video link, and that leave be granted to subpoena 26 named individuals (including Mr Acievado). 18 The applicant has filed four affidavits, at least in form. They represent the mechanism chosen by the applicant to put before the Court a mixture of submissions, facts and argumentative propositions. The first affidavit was filed on 6 September 2006 in support of the application. The second affidavit, sworn 13 September 2006, is entitled 'Additional evidence'. The third and fourth affidavits, both sworn 15 September 2006, are entitled 'Application Book' and 'Supplementary Book', and are over 200 pages and nearly 400 pages respectively. The supplementary book and the application book and supporting documents were provided by the applicant to the Minister in connection with the determination under s 22 of the Act. 19 The first affidavit identified eleven grounds 'relied upon to justify this review'. The Minister's powers under s 22 of the Act were unconstitutional. 20 On the first day of the hearing, counsel for the Minister provided the applicant for the first time with the Departmental submissions provided to the Minister in connection with the Minister's determination under s 22. The Departmental submissions were six pages in length including a cover sheet containing a recommendation that the Minister determine that the applicant be surrendered under s 22 and that he issue the warrant under s 23. Attached was a one page document of Departmental submissions entitled 'Concluded litigation initiated by Mr Rivera'. A further attachment was 34 pages of Departmental submissions entitled 'Grounds for refusal of surrender under the Extradition Act 1988 ' . The term 'Departmental submissions' will be used to refer to all these documents, collectively. Responses from the United States, and 'representations' received from the applicant, were also attached. 21 The applicant made extensive oral submissions over the two days of hearing. The written material on which he primarily relied was the 71 pages of submissions contained in his supplementary book and a document entitled 'Applicant's response to the Attorney General's Department submissions' which he provided on the second day of the hearing, after a three day adjournment. The latter document addressed the applicant's complaints concerning the Departmental submissions. The substance of those complaints was that the Departmental submissions had not accurately placed his representations before the Minister, by omitting or misrepresenting relevant submissions or facts. The applicant also made oral submissions on these issues. Counsel referred to the recent decision of the High Court in Vasiljkovic v Commonwealth [2006] HCA 40 ; (2006) 228 ALR 447 which considered the Minister's decision-making power under the section and which held, it was submitted, that in determining whether to surrender a person, the Minister does not undertake any sort of preliminary hearing of a criminal trial which in this case would be conducted in the United States by a Californian court. The Minister's task was not to determine any questions of guilt or to determine whether or not proceedings should be stayed on the basis of unfair publicity or other matters. 23 Counsel for the Minister submitted that to obtain relief under s 39B of the Judiciary Act , the applicant must show jurisdictional error on the part of the Minister. The grounds for review were even more limited in relation to declaratory relief: see Foster v Minister for Justice and Customs and Justice [2000] HCA 38 ; (2000) 200 CLR 442 at [7] to [8]. The Court did not have jurisdiction under s 39B to review findings of fact. Issues such as whether the applicant would be prejudiced at trial due to his race and religion, or whether he would be subjected to torture, were matters in the statute about which the Minister must be satisfied, and the grounds for judicial review by a Court of that state of satisfaction were limited: see Buck v Bavone [1976] HCA 24 ; (1976) 135 CLR 110 at 118 to 119 per Gibbs J. There had been ample probative evidence before the Minister to support the requisite state of satisfaction where such was required under s 22. He claimed that he was entitled to these documents and to an opportunity to respond to them as a matter of procedural fairness. As earlier noted, the Minister provided the applicant with a copy of the Departmental submissions for the first time at the hearing. Noting in those submissions a reference to the supplementary affidavit, the applicant initially complained that he could not recall having ever seen such a document. Counsel for the Minister later confirmed that the document had been provided to the applicant as part of the s 19 proceedings before the magistrate. On that basis, the applicant accepted that he had previously been provided with the document. It was not entirely clear whether the applicant pressed his complaint regarding not having been provided with the Departmental submissions prior to the s 22 decision. He did however, refer to the fact that he would have provided the Minister with a 'public reference' document concerning human rights violations in the United States had he known the Minister was going to rely on the grounds contained in the Departmental submissions to support his decision. It is clear, however, that the applicant's primary complaint concerning the Departmental submissions related to their contents. 25 Counsel for the Minister submitted that the Minister was not obliged to provide the applicant with a copy of the Departmental submissions as a matter of natural justice. Where the Department evaluated material, and that material had been made available to someone in the applicant's position as it had here to the applicant, it was not correct to say that natural justice also required the comments or submissions themselves to be provided: see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56 ; (2003) 216 CLR 212 at 219 to 220. In support of this argument he relied primary on the submissions contained in his supplementary book. He submitted that in appropriate circumstances, procedural fairness may require an oral hearing and that there was no basis for inferring that s 22 should be confined to a 'paper hearing'. He referred to the principles in cases such as Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550. He relied on the nature of his claims, the extent of conflicting material, and the seriousness of the consequences which might result from a decision adverse to him under s 22 , in support of the proposition that some element of an oral hearing was required to satisfy the need for procedural fairness in his case: see Chen v Minister for Immigration and Ethnic Affairs (1994) 48 FCR 591 at 599 to 602. He submitted that he was at least entitled to some form of oral hearing in relation to an audio tape recording he made of a conversation between himself and Mr Aceivado. According to the applicant, Mr Aceivado admitted that his fellow officers manufactured evidence in the case. The applicant had refused to provide the tape to the Department primarily on the basis that it could only properly be adduced in an impartial forum to ensure that it was properly tested. The applicant also submitted that there were no competing considerations sufficient to deprive him from putting his case before the Minister: see Murray v Legal Services Commission [1999] NSWCA 70 ; (1999) 46 NSWLR 224. 27 The Minister submitted that the Department had asked the applicant to provide the tape so that it could provide a copy to the United States. Having refused to provide the tape to the Department, the applicant could hardly complain that the Minister did not take it into account. The issue of whether the applicant was entitled to an oral enquiry was also raised in relation to his complaint regarding the witnesses offered, discussed below. That the potential racial prejudice in the venue where he was to be tried was very high. He also offered as a witness a chaplain who he said would give evidence of being told by a prison guard that the applicant had been assaulted. 29 Most of the witnesses offered by the applicant resided in the United States and were offered on the basis that they would appear by video. The applicant complained that the Minister had not taken up his offer and that the Departmental submissions had made no mention of the fact that he had offered witnesses. 30 The Minister submitted that it was not a rule of natural justice that the Minister must undertake in this case for himself some sort of roving, judicial style inquiry involving a vast array of witnesses who were alleged, but not shown, to be able to shed light on relevant issues. This had been the case particularly where the witnesses were offered in relation to what were in most instances issues remote to the question for consideration. Unless the Minister was actually provided with probative material, he had not been obliged to undertake an oral enquiry to obtain such material. The applicant submitted on the basis of these alleged inconsistencies the affidavit was intentionally constructed to misconceive and was wholly lacking in foundation, and that Mr Fermin had no honest belief in the truth of the statements made. 32 It was not clear from the applicant's submissions how this ground was said to support the orders sought. The Minister submitted that if the argument was that the Minister should have determined under s 23(3)(f) of the Act not to surrender the applicant because the request had been made in bad faith, then the ground had not been made out. As to the alleged discrepancies between the autopsy report and affidavit, the Minister submitted that the autopsy report had concluded that the circumstances were 'highly suspicious' for homicide and that the most likely cause of death was 'smothering or a similar form of asphyxiation'. The Minister submitted that there was no necessary inconsistency between these propositions, much less a basis for requiring the Minister to conclude that the request had been made in bad faith. As to the applicant's submissions that he was out of the country at the date of death identified in the autopsy report, the Minister submitted that the date of death attributed to the deceased was the date that the body was found, in line with standard practice, and that the body had been found in a state of advanced decomposition. He further submitted that such an undertaking was required in his case because the extradition offence could attract the death penalty. For those reasons, he contended that the Minister should not have determined to surrender him and should have exercised his discretion under s 22(3)(f) not to surrender him. The applicant submitted that he was not asking the Court to inquire whether the United States would in fact honour its undertaking not to seek or apply the death penalty: see McCrea v Minister for Justice and Customs [2005] FCAFC 180 ; (2005) 145 FCR 269. Rather his complaint was that the undertaking given did not comply with the requirements of s 22(3)(c) of the Act as established in McCrea . 34 The initial undertaking was provided by Mr Fermin, in his earlier affidavit. In his supplementary affidavit, Mr Fermin said that none of the special circumstances listed in s 190.2 of the Code applied to the extradition offence for which the applicant's extradition was sought and that no special circumstances had been alleged in the charging document. In the result, the death penalty was not an available punishment for the charge against the applicant. The Governor of California could give an assurance that the death penalty would not be imposed, or that if it is imposed, would not be carried out, since only the Governor had power to provide clemency, pardons or reprieves concerning the death penalty. 37 The undertaking which had been given was that it was not the intention of the District Attorney's Office to seek the death penalty. However, the applicant submitted that such intention was irrelevant since the District Attorney did not have the authority to impose the death penalty. Referring to Ring v Arizona (2002) 536 US 584, the applicant submitted that in the United States only the jury could impose the death penalty. 38 The applicant submitted that Mr Fermin's statements in his supplementary affidavit regarding 'special circumstances' had involved a misreading of the Californian legislation because in a formal sense the extradition offence did carry a maximum punishment of the death sentence. He further submitted that by requesting a death penalty undertaking, the Minister was clearly not relying on the assertion that special circumstances would not be sought. He referred to the decision of the United States Supreme Court in Apprendi v New Jersey (2000) 530 US 466 in which it was held that the jury was responsible for making all the findings necessary to expose the defendant to the death sentence. He submitted that any jury could find special circumstances for the imposition of the death penalty even without the express endorsement of the prosecutor or judge when the defendant was charged with first degree murder, as he had been. 39 Another matter raised by the applicant concerned the reference at one point in the Departmental submissions to Mr Fermin having advised that 'there are no aggravating circumstances to this case and that it does not attract the death penalty'. He submitted that 'aggravating circumstances' were not the same as 'special circumstances' under Californian law and that the Department had there been addressing some materially different matter, on which he had never been given the opportunity to comment. 40 Counsel for the Minister submitted that a death penalty undertaking was not required in this case, since no special circumstances had been charged in the charging document so that as a matter of Californian law, the extradition offence could not have carried the death penalty. The assurances had been provided only for abundant caution. Counsel for the Minister indicated that it was not clear whether the applicant had been shown a copy of the diplomatic undertaking, but that there was nothing that the applicant could have said which could possibly have made any difference in the circumstances: see Stead v State Government Insurance Commission [1986] HCA 54 ; (1986) 161 CLR 141 and Crown v Aston University Senate; Ex parte Roffey [1969] 2 QB 538. 41 The applicant had said in his written submissions to the Minister that he could face an additional charge of kidnapping which would be a special circumstance, rendering him liable to the death penalty. The Minister submitted that this was answered by the speciality assurance provided in the Treaty itself, which was part of the supreme law of the land in the United States, so that, as a matter of law, the applicant could not now be charged with special circumstances and thereby become liable to the death penalty. 42 Counsel for the Minister submitted that the reference to 'aggravating circumstances' in the Departmental submissions had been a singular, incorrect reference which should have referred to 'special circumstances'. The term 'aggravating circumstances' had only been used once, which was in the six page summary document, and the correct term 'special circumstances' had been used repeatedly in the lengthier Departmental submissions which were attached. The correct term was also used in the affidavit itself. Reference was also made to the High Court's remarks in Minister for Immigration and Ethnic Affairs v Wu Shang Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271 to 272 where the Court warned against construing reasons for administrative decisions with an eye finely attuned to error. He relied on three separate incidents. The first concerned a Departmental officer by the name of Ms Bickford, who was the case officer for the applicant's matter. The applicant claimed that on 23 March 2005, he had telephoned the Department and that Ms Bickford told him to 'Fuck off'. Ms Bickford was removed from her role soon after. The applicant submitted that the apprehension of bias on the part of the Minister arose because Ms Bickford was a preliminary link in the chain of decision making and had day to day care and control of the matter and the documents he sent as part of the s 22 process. He submitted that it was impossible for the Court to be satisfied that she did not have any bearing on the outcome, that is, the Minister's decision. Even if Ms Bickford was not responsible for the decision itself, her role in the process had been sufficient to raise an apprehension of bias. 44 The applicant also contended that the Departmental submissions had wrongly stated the words that Ms Bickford had said on the telephone as being 'Oh fuck, it's Rivera', and that this was a distorted impression of the incident. He said that if the respondent did not concede the actual words spoken were as he described, then he insisted on playing the tape in Court. When asked at the hearing whether he wished to adduce the tape as evidence, the applicant said that he did not have it on him but could arrange it. 45 The second incident involved Ms Nelson, also a Departmental officer. The applicant wished to provide the Minister with a copy of a broadcast of the America's Most Wanted program aired in the United States on 27 July 2002 as it related to him to support his contention that he could not receive a fair trial in the United States due to highly prejudicial media coverage. Under cover of letter dated 4 November 2005, Ms Nelson sent the applicant a DVD. The final paragraph of her letter was 'At your request, I also attach a copy of a broadcast of "America's Most Wanted", aired on 27 July 2002, along with a letter from Twentieth Television. ' The DVD received by the applicant contained approximately 30 seconds of footage. It was tendered jointly by the parties on the basis that it was what was sent to the applicant. The applicant's complaint was that it was not the version of the program which was broadcast, or at least not the full version, and that it had been digitally tampered with or edited. He indicated at the hearing that he did not know who was responsible for the alleged tampering, but that its purpose had been to suppress the graphic and prejudicial nature of the broadcast program. He said that he had written to the Department on a number of occasions complaining that he had not been sent the broadcasted version, but had received only vague replies. He claimed that any reasonable person, on viewing the footage, would infer that there was more about him in the actual broadcasted version than what was contained on the DVD. His written submissions set out a fuller explanation for that inference. He further contended that it should be inferred that Ms Nelson had willingly taken part in the charade of passing of the copy of the program that was sent to him as being the version that was broadcast. She had lied to him in her letter by stating that the DVD in fact contained the program that was broadcast. Further, because of these events, the Minister had not had the advantage of seeing the broadcast version of the program. The Departmental submissions had not mentioned anything at all about his complaints regarding Ms Nelson as they concerned the America's Most Wanted broadcast. He complained also that the Departmental submissions had stated falsely that Ms Nelson had been removed from the case for reasons other than his complaints. 46 The Minister submitted that all Ms Nelson had done was provide a copy of the program, having received it from the United States Department of Justice who received it from Mr Fermin. The Department had not vouched for the accuracy of the material, and it had always been open to the applicant to put probative material before the Minister to the effect that the program contained more material about him than was contained in the 30 seconds of footage contained on the DVD in evidence. There had been no evidence that the actual broadcast concerning the applicant was longer. It had been a mere assertion by the applicant. 47 The applicant had claimed that he had been told by Ms Walker of the Public Defender's Office in California, who had made enquiries on his behalf, that she had been informed by Twentieth Television that the 30 seconds was not the entire program broadcast on that date. However, the applicant had not claimed that Ms Walker had been told that it was not the entire program as it related to the applicant. Furthermore, a letter from the United States Department of Justice attaching the letter from Mr Fermin said that the videotape contained only the portion of the episode that involved Mr Rivera. It had been Mr Fermin who had received the tape from Twentieth Television and then provided it to the Department of Justice. 48 The third incident of which the applicant complained concerned Mr Cornall, the Secretary of the Attorney General's Department. The applicant claimed that in relation to an investigation by the Human Rights and Equal Opportunity Commission into human rights complaints he had made, Mr Cornall, in a submission made on behalf of the Commonwealth, had lied to the Commission by asserting that the applicant was in non-association protection in custody, in a letter to the Commission dated 5 December 2003. The Commission report of 5 May 2005 had relied, at least in part, on the fact of the applicant being in protective custody to support its conclusions. The applicant asserted that he was not in fact in protective custody and that this was known by Mr Cornall. He complained also that the Commonwealth had continued to rely on the existence of this fact, which was not true, even though it must have known it was false. He relied on correspondence from Mr Knox Sinclair of the Professional Standards Department dated 19 July 2004 to the applicant to support his claim about the state of knowledge. That letter arose from a complaint the applicant filed with that Department in relation to what he described as wrongful submissions put by the Commonwealth Director of Public Prosecutions ('DPP') to the Supreme Court in a bail hearing. Mr Sinclair's letter had confirmed that a copy of the complaint was served on the Commonwealth solicitor as was a copy of the applicant's prison file showing that he was not in non-association protection. The Commissioner's report had therefore been based on false evidence, which Mr Cornall must have known. He said that the false evidence about his level of custody had created the impression that he had fabricated the assaults of which he complained and that he had intentionally filed a false complaint. He complained also that the Departmental submissions had claimed that his submissions to the Minister had not specified the false information put to the Commission by Mr Cornall, whereas he said that the Department in fact had full knowledge and details of his complaint. 49 The Minister submitted that all that Mr Cornall had advised the Commission in his letter was that the Commonwealth DPP had prepared a document outlining the extent of the Commonwealth's knowledge of the matters the subject of the complaint by the applicant and the action that had been taken by the Commonwealth. He had attached that document prepared by the Commonwealth DPP, which stated that a DPP officer had been told by Detective Inspector Ruck that the applicant was in non-association protection. It was submitted that there was no doubt that Mr Ruck had in fact told DPP officer this and that even if it was not the correct situation that the applicant had been in non-association protection, it was an unwarranted leap to attribute Mr Cornall with any intention to mislead. He claimed that all his ongoing litigation in Australia related to his extradition case, and that both the nature of the litigation, and the fact that it was ongoing, should have been brought to the Minister's attention and taken into account. He said that he had commenced proceedings in the Supreme Court of New South Wales on 28 August 2006, just days before the Minister's decision under s 22 , and that the Departmental submissions did not contain any reference to these proceedings. 51 The Minister submitted that the Departmental submissions had only addressed the applicant's concluded litigation and that there was no error in not including ongoing matters. In relation to the recently commenced Supreme Court proceedings, it was submitted that the Minister was expressly made aware, through the Departmental submissions, of the applicant's prior litigation against the Australian Broadcasting Corporation which dealt with the same subject matter. The applicant referred in particular to the extradition objection in s 7(c), which concerns the person being prejudiced at his or her trial, punished, detained or restricted in his or her personal liberty, by reason of his or her race, religion or nationality. The applicant also submitted that he would not receive a fair trial in the United States. Although the relevance of this latter issue in terms of the statutory scheme was not entirely clear from the applicant's submissions, this argument could be relevant to both the Minister's general discretion under s 22(3)(f) and the extradition objections relating to race, religion or nationality (ss 7(b) and (c)). 53 The applicant said that he was a Hispanic-Muslim. His written submissions to the Minister identified a number of characteristics of the town where he would be tried, namely Barstow, California, and also of the alleged crime. He claimed that due to these factors, he would not receive a fair trial. 54 The applicant also alleged that the United States law enforcement authorities had intentionally released prejudicial pre-trial publicity which he said had led to widespread, adverse publicity about him. He submitted that in inciting this publicity, the United States authorities had acted inconsistently with the presumption of innocence and had not been impartial, creating an injustice which should preclude his extradition. He referred also to the America's Most Wanted program featuring his case which identified him as the deceased's killer, and to discussion about his case in on-line chat rooms created in California which he said demonstrated that the local population was strong hostile towards him. 55 The applicant also claimed that the adverse publicity had been obtained by prison guards in Australia and released to other prisoners. He claimed this had led to him being physically and sexually assaulted by prison guards and other prisoners whilst in prison in Australia. These alleged attacks were said to demonstrate the likelihood that he would be treated similarly in a United States prison, which he claimed would amount to torture under s 22(3)(b) of the Act. The applicant also provided detailed written submissions describing the conditions in Californian prisons, citing a number of sources. 56 The applicant submitted that even though some time had elapsed since the adverse publicity was first circulated, this did not lessen the possibility that he would receive an unfair trial or be subjected to torture. He submitted that the internet allowed information to be recirculated and available indefinitely. Further, Barstow was a small community which would retain in its public consciousness prejudices about the high profile case. 57 In response to submissions made on behalf of the United States as part of the s 22 process, the applicant submitted that it was extremely unlikely that there would be a change of venue for his trial or that jurors would be brought from other sections of the community. The applicant made detailed written submissions about the applicable jury selection system, which he submitted would lead to jurors being drawn only from a very narrow pool which would include Fort Irwin and the Army Base, and the Marine Base at Yermo. He submitted also that Hispanics were significantly underrepresented in juries in Barstow due to their low registration rate as voters, from which jurors were drawn. He submitted that the potential jury composition was relevant to the extradition objection under s 7(c) of the Act. 58 The applicant also stated in written submissions that any motion for jurors to be brought in from elsewhere or for a change of venue was extremely unlikely to succeed. The applicant referred to Californian case law and an opinion given by a Mr Padgett at the Public Defender's Office of Barstow in support of this proposition. He said that the jury selection process was unlikely to address the problems he complained about, and that it could in fact worsen the situation, since it would enable the prosecution to eliminate any eligible Hispanic, Muslim or non-Military jurors. 59 The applicant's written submissions also addressed the scope of the extradition objection contained in s 7(c). The applicant submitted that s 7(c) required the Court to take account of what might happen in the future and to consider the potential for discrimination upon the applicant's return to the United States. . He submitted that in the present case, the assessment under s 7(c) should not be made mechanically on the balance of probabilities: see Hempel v Attorney-General (Cth) (1987) 77 ALR 641. 60 The applicant also contended that the Departmental submissions had omitted various details about the submissions he had made to the Minister concerning the conditions of his detention and their effect on his ability to put his case fully to the Minister. The complaints about his prison conditions related to threats, obstruction and interference by prison guards, as well as the prison's policy of charging for photocopying. 61 The applicant also contended that the Departmental submissions had erroneously stated that if he were to suffer abuse while imprisoned in California, that such would not constitute torture under s 22(3)(b) because it was not condoned by the governments of California or the United States. He submitted that even though abuse by one prisoner of another may not constitute torture, if government authorities had engaged in threats and acts which caused that abuse, then that conduct can amount to institutionalised torture. 62 The applicant also submitted that the Departmental submissions had relied upon a United States-wide report concerning the rate of HIV infection, whereas in his submissions to the Minister, he had provided Californian-based statistics, which revealed a higher rate. The Departmental submissions had therefore understated the HIV risk which he would face when returned to the United States. The Departmental submissions had also claimed that it had been unable to locate any reliable reports of hepatitis C infection in the United States prison population or general population, whereas he had provided material in his submissions showing these statistics. His case was also that the risk of him contracting HIV or hepatitis C was very high due to the adverse publicity his case had received, rendering him more vulnerable to physical and sexual assaults. He complained that the Department had failed to accurately put his case on these issues to the Minister. 63 The Minister submitted that the matters alleged by the applicant concerning prison conditions could not amount to torture, relying on de Bruyn v Minister for Justice and Customs [2004] FCAFC 334 ; (2004) 143 FCR 162 at 163 per Kiefel J, with whom Spender J (expressly) and Emmett J (by necessary implication) agreed. 64 In relation to the applicant's complaints concerning the Departmental submission's use of HIV statistics, the Minister submitted that the Departmental submissions had relied on a clearly appropriate and probative source, which was the Centre for Disease Control. However, this ground was not touched upon at all in oral submissions. Further, the applicant stated on a number of occasions at the hearing that he relied upon pages 1 to 71 of his supplementary book, whereas his written submissions under the heading 'Constitutional challenge' commence at page 71. From this I infer that his constitutional challenge was not pressed. The Minister had an undertaking from the United States and information derived from affidavits concerning Californian law and the charge that had been laid. An evident object of s 22(3)(c) is to provide a safeguard against the carrying out of the death penalty upon a person extradited from Australia under the Act. Whilst the object of the provision can be variously stated, the seriousness of the subject matter suggests that it is very unlikely that nothing more than compliance with a verbal formula was intended. Consistently with the object of the provision, there is much to be said for the view that the expression "by virtue of an undertaking" requires that the decision-maker consider whether the undertaking is one that, in the context of the system of law and government of the country seeking surrender, has the character of an undertaking by virtue of which the penalty of death would not be carried out. It would seem unlikely that the object of the provision was intended to be achieved only by the favourable (to the person accused) exercise of the discretion conferred by s 22(3)(f). Perhaps my approach might be different if I held a strong view to the contrary, but I do not. Accordingly, in view of the submissions made by the applicant, it is necessary to ascertain whether the Minister, in the face of an undertaking that the death penalty would not be sought or imposed, considered whether it was an undertaking which, in the context of the system of law and government of the United States, had the character of an undertaking by virtue of which the penalty of death would not be carried out. 68 The essence of the case of the applicant was that the question of whether facts existed which fell within the concept of 'special circumstances' for the purposes of ss 190.1 and 190.2 of the Code was a matter to be determined by the jury and, at least impliedly, were not matters the determination of which was within the control of the prosecuting authorities or the trial judge. The authorities referred to by the applicant, namely the judgments of the Supreme Court of the United States in Ring and the earlier case of Apprendi , represent a line of authority that facts which establish legislative special circumstances, and which enable or require the imposition of the death penalty, must be found by the jury and not by a trial judge in the course of a sentencing hearing. However, having regard to the affidavits of Mr Fermin (the relevant parts of which were before the Minister in a summary way) who was the Deputy District Attorney responsible for prosecuting the applicant, a statutory condition precedent to 'special circumstances' being considered was that 'special circumstances' are charged. Mr Fermin deposed that they had not been charged. 69 In the result, there was material before the Minister which indicated that by reference to the applicable laws of the United States, the undertaking given by the United States , had the character of an undertaking by virtue of which the penalty of death would not be carried out, if indeed an undertaking was required. In the absence of evidence to the contrary, it can be assumed that the Minister read this material and considered the issues raised by it: see Chan v Minister for Justice and Customs [2001] FCA 718 at [29] . 70 I turn to consider other issues. It appears from the joint judgment of Gleeson CJ and Gummow and Heydon JJ in Ex parte Palme (at [16] to [26]) that, in a case such as the present, the applicant is not entitled to see and comment on the Departmental submissions and that the mere failure to make them available does not constitute a denial of procedural fairness without more. In certain circumstances a person affected by a decision may be entitled to see submissions made to a decision maker. But that could well depend on the contents of the submissions and the extent to which the person was otherwise aware of material that would be provided to the decision maker. However there is no requirement, as a matter of general principle that submissions be made available irrespective of their contents and the circumstances in which they come to be considered by the decision maker. None arose in this case. 71 There is no general entitlement to an oral inquiry and none arose in this case. Nor was the Minister obliged to pursue lines of inquiry proposed by the applicant by contacting and speaking to people. There is no substance, in my opinion, in the contention that the extradition request was made in bad faith. In addition, there is no substance, in my opinion, to the contention that the Minister was biased in any sense. As to the ongoing litigation of the applicant, it is not apparent to me that this was a matter the Minister had to take into account. Indeed it appears to me to be irrelevant. It is not for this Court to determine whether the applicant might be tortured (an issue not raised by a mere allegation of mistreatment or abuse in prison: see de Bruyn at [55]) or whether the applicant could mount a successful extradition objection based on his race or religion. They were matters to be considered by the Minister. They were. No reviewable error on the part of the Minister has been demonstrated. 72 The application should be dismissed with costs. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | application for judicial review of minister's determination under s 22(2) of the extradition act 1988 (cth) that applicant be surrendered to united states whether death penalty undertaking complied with s 22(3)(c) of the act whether applicant entitled to be provided with and to comment on departmental submissions provided to minister extradition |
Adept estimates the amount of its costs recoverable on a taxation to be about $25,000. Mrs Clark is the mother of three young children. At that time, the youngest was about three years of age. She described her occupation in the proposal for insurance, completed with Adept's assistance, as 'home duties'. Her husband was a coal miner. 4 In January 2003 Mrs Clark had taken out life and trauma insurance cover with Suncorp Metway Life & Superannuation Limited providing for a maximum benefit of about $260,000 should she be diagnosed with a 'critical condition', one of which was breast cancer. She renewed that policy in late December 2003 for a further year. During the course of 2004 Mrs Clark became aware of a lump in her right breast. She claimed to have consulted medical practitioners who advised her that the lump was a cyst and not malignant. 5 In early November 2004, Mr Budin, an employee of Adept, attended at the home of Mr and Mrs Clark. He assisted her in completing an application form for life and trauma insurance cover with ING Life Limited, the first respondent. ING issued a policy to Mrs Clark on about 30 November 2004 which provided for a cover of $250,000 in respect of a diagnosis of breast cancer. However, during the course of November 2004, Mrs Clark's breast condition needed further medical attention. She prepared an affidavit for the purpose of this costs application. There is a substantial issue discussed in it as to precisely what diagnosis she should have been aware of and what, if anything, may have been required to be disclosed by her to ING under her duty of disclosure pursuant to the Insurance Contracts Act 1984 (Cth). 6 Mrs Clark's statement of claim was filed on 26 July 2007. It joined only ING and Adept. It alleged that on or about 6 December 2004 Mrs Clark contracted, and was diagnosed with, breast cancer. In January 2005 she made a claim on the ING policy. That claim was declined by ING in April 2005. Also, at some stage during 2005, she lodged a claim on the Suncorp policy. It too was declined on two bases. First, Suncorp asserted that, at the time of the claim, Mrs Clark was not the subject of a policy issued by it which was then in force. Secondly, Suncorp declined on the basis that the diagnosis of a breast cancer tumour failed to meet what it asserted was the policy's requirement that it be of such severity as to require a full mastectomy. 7 In her original statement of claim, Mrs Clark alleged breaches of the Insurance Contracts Act against ING and breaches s 52 of the Trade Practices Act 1974 (Cth), against, relevantly, Adept. Earlier this year I gave directions in the matter with a view to bringing forward an early final hearing which I fixed to commence on 10 December 2007. 9 In October 2007, following the answer to subpoenas against, among others, Suncorp, ING's solicitors wrote to the solicitors for Mrs Clark informing them of a statement in a facsimile letter, dated 5 October 2005, which Suncorp had produced on subpoena. However, later in October 2007, perhaps inspired by the fact that Mrs Clark was now prepared to commence litigation and had sued ING and Adept already, Suncorp very quickly resolved the proposed proceedings without admissions. It paid Mrs Clark her $250,000 trauma cover and reinstated her policies. 11 Mrs Clark had provoked the settlement with Suncorp by foreshadowing a notice of motion in which she sought its joinder as an additional respondent together with amendments to her current pleadings against ING and Adept. One of her proposed claims was for, among other things, distress caused by the misleading or deceptive conduct, and or negligent misrepresentations, she alleged had been made by Adept's employee, Mr Budin, in November 2004. 12 In consequence of Suncorp's action, Mrs Clark was able to negotiate a settlement of these proceedings with ING. That permitted her to discontinue the proceedings against it with no order as to costs. She sought to negotiate a similar settlement with Adept, but it refused. It asserted that Mrs Clark was unreasonable because she had failed to commence litigation against Suncorp, following its refusal of 9 September 2005 to indemnify her. Adept pointed to the fact that, with hindsight or otherwise, once it became apparent to Suncorp that Mrs Clark was prepared to take legal proceedings, it immediately resolved them. There was also a suggestion put by Adept that it was not futile for Mrs Clark to continue the action against it because she had some residual claim that she may have been able to make, but now no longer wished to pursue. 14 On 6 November 2007, Adept's solicitors wrote to Mrs Clark's solicitors. They asserted that by force of O 22 r 3 the 'usual' order consequent upon discontinuance of proceedings is that the discontinuing applicant must pay the costs incurred by the relevant respondent up to the date of the notice of discontinuance. However, that order applies in circumstances where the leave of the Court has not been sought, as here, under O 22 r 2(1)(d). 15 Adept's solicitors also asserted that there was an underlying policy in the rules that a discontinuing party should be liable for the other party's costs, unless the Court otherwise ordered. They recognised that costs ultimately were a matter in the discretion of the Court, but said there were no special circumstances in these proceedings which would justify a departure from the 'usual' order. They then pointed out that the proceedings would never have been necessary, had Suncorp been sued or proper attention given to the operation of s 54 of the Insurance Contracts Act . They referred to an affidavit by the solicitor for Mrs Clark in support of the application to amend, which referred to the suggestion made by ING (which I have been informed was also orally communicated by the solicitors for Adept), that a claim could be made on Suncorp and s 54 of the Insurance Contracts Act relied on to support it. They said that Mrs Clark had, and always had, a valid claim on the Suncorp policy and that her sole allegation of loss in her current pleadings against Adept was her loss of opportunity to make good that claim because of the advice she received to cancel that policy once the ING policy had incepted. (The statement of claim pleads that one of the losses Mrs Clark suffered was her failure to recover the $250,000 in accordance with the ING policy or, alternatively, that sum under the Suncorp policy. I am of opinion that Mrs Clark's application for leave to discontinue is not an acknowledgement by her of likely defeat. Nor is there a basis on which it can be said that on any objective view of the case, she would have failed against Adept: see the discussion by Finn J in O'Neill v Mann [2000] FCA 1680 [11]-[13] and JH Lever & Co Pty Ltd v Maniotis (2005) 215 ALR 773 at 774-775 [3]-[4] per Mansfield J. A successful party may be ordered to bear the costs of the unsuccessful party. There may be prima facie rules that a successful party is entitled to costs or that a successful party should receive its costs unless good reason is shown to the contrary (at [35]) but that is subject to the "myriad circumstances" in the institution and conduct of litigation. 17 The question as to who should bear costs in an application under O 22 r 2(1) (d), falls to be determined under s 43(2) of the Federal Court of Australia Act 1976 (Cth). 19 Of course, the discretion must be exercised judicially. Parties should be encouraged to engage in sensible attempts to resolve disputes having regard to all the circumstances of the case at the time at which resolution is proposed. The purpose of an order for costs is not solely to compensate one party at the expense of the other: Oshlack 193 CLR at 89 [43]. Where there is no delinquency or misconduct on the part of the party seeking to discontinue in a situation such as the present, and there has been no determination of the proceedings on the merits, it is not usually appropriate for the Court to engage in predicting the outcome or assigning responsibility for the conduct of the proceedings in a way which attributes blameworthiness, unless there is a solid foundation for doing so. 20 In Smith v Airservices Australia [2005] FCA 997 ; (2005) 146 FCR 37 at 47-50 [36] - [49] Stone J examined a number of cases in which the principles had been explored. She noted that Finn J had said in O'Neill [2000] FCA 1680 at [13] that while there is an underlying policy that a party who discontinues proceedings is to be held liable for the costs of the other parties unless the Court otherwise orders, the reasons for, and circumstances of, discontinuance are so various that the policy cannot safely be said to have hardened into a usual rule. Finn J had observed that this was different to the usual rule which exists where there has been a determination of a claim on its merits. 21 So, in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 662 at 624-625, McHugh J commented on the difficulties inherent in a court seeking to allocate costs in circumstances such as the present. As he pointed out, when there has been no hearing on the merits, a court is necessarily deprived of the factor that usually determines whether or how it should make a costs order. 22 In the circumstances which I have briefly described it is also conceivable that Mrs Clark may have had claims under each policy, depending on the precise way in which the facts came out, particularly, what advice or other services may or may not have been given or performed by Adept in accordance with its professional obligations to her. On the pleadings and material before me, there was a sufficient basis for Mrs Clark to bring these proceedings and pursue them to judgment against both the respondents which she chose to sue, even if, properly advised, she may have been better advised to have sued Suncorp, either alone or with ING and Adept as additional respondents. 23 Mrs Clark suffered the trauma of breast cancer. That trauma was one risk in respect of which she had contracted to have the protection of insurance cover while bringing up a young family. It is not something that can be put to one side as an irrelevant consideration in determining the reasonableness of her course of action. If a person, in the position of Mrs Clark, has to deal with a life threatening illness or condition, such as cancer, she cannot be expected to take immediately every logical, rational or commercial decision which a large corporation with adequate resources and insurance might. Such a decision is particularly difficult for a person in her position, where as an individual, she would be required to take on the burden of litigation against well-resourced insurance companies and insurance brokers, who are entitled to resist the claims made against them. 24 I am of opinion that it is unreal for Adept to suggest that Mrs Clark was unreasonable in failing to sue a second insurance company, which had also declined her claim. After all, she had been given advice by Adept to take the insurance cover with ING. That advice was given in the knowledge that at that very time, something had occurred which required Mrs Clark to have medical attention for her breast condition, whatever it might have been. Whether that advice was right or wrong, as it turned out, it left her in a position where both ING and Suncorp had refused her claims. In a perfect world she may have had access earlier to the file note produced on subpoena by Suncorp, which indicated that its attitude to its refusal of Mrs Clark's claim, at least on the view of the officer who wrote the note, was not necessarily one that it was going to be able to sustain. 25 Courts have always encouraged parties to resolve proceedings without the need for engaging in full litigation of the dispute. There is a good public purpose for that encouragement. It saves the resources of the state from having to be engaged in the resolution of proceedings which the parties themselves are able to bring to an end consensually. And settlements enable parties to resolve differences consensually in ways that cannot necessarily be achieved by orders that courts have powers to make. Litigation is fraught with risk. It is even more risky than providing insurance cover, or as this case shows, taking out insurance policies sequentially with two insurers for the same risk. 26 Adding parties to litigation multiplies the risk for all concerned that one or more may lose or be subjected to costs, which might not be recoverable or fully recoverable from the party found to be responsible for their payment. In addition, claims for relatively small sums (although in the lives of Mr and Mrs Clark, the sum of $250,000 is no doubt of great significance) tend to become swallowed up in the legal costs required to be expended in the final resolution of those claims. It is not difficult to see that costs potentially involved in a case like the present, listed for a week's hearing with ING and Adept, could present a formidable burden to Mrs Clark by themselves --- the more so were she to add, as Adept said she should, a second insurer and a second broker. The costs at stake for Mrs Clark should be seen as an enormous hurdle for her in being able to continue or to bring further proceedings. 27 On top of that she still has the difficulty of dealing with the condition for which she sought, and paid, two insurers for trauma cover. Until recently she had been refused indemnity by both. 28 I am unable to see any substance in Adept's assertion that Mrs Clark has behaved unreasonably. In my opinion, there is no basis on which it could be said that she behaved unreasonably in the conduct of this litigation. It is true she may have been able to take a different, and, as it turned out, a better course earlier. That does not make the course she took unreasonable, even using the benefit of hindsight. Indeed, Adept has not demonstrated that she could not have recovered under the ING policy, as she claimed. If she had been properly advised by Adept she might have had cover under both ING's and Suncorp's policies. Moreover, on the evidence before me, Adept advised Mrs Clark that she no longer needed to maintain the Suncorp policy on foot in late 2004, so she cancelled it. 29 All these factors would be capable of bewildering ordinary citizens into thinking that litigation of any kind would be risky. Litigation is fraught with its own trauma and stress inevitably associated with committing one's own resources and family to a speculative endeavour. Anything can happen in litigation. Often the experience of the courts, and those who practise in them, is that the unlosable case can be lost and the unwinnable case can be won. Of course, life just does not have the crisp simplicity which hindsight can provide to assess one's past actions. Adept's argument is based on the certainty of hindsight and ignores the reality of actual experience. Suncorp declined and maintained its declinature despite the contents of its file note. As I have pointed out, in my opinion she did not act unreasonably. There is no basis for suggesting that she did so in bringing the litigation against Adept or in seeking to discontinue against it, in the circumstances, and at the time at which she has. 31 On the evidence before me, as soon as Mrs Clark became aware of the possibility that s 54 of the Insurance Contracts Act and the internal memorandum of Suncorp of 5 October 2005 might, in fact, be deployed forensically to persuade Suncorp to pay, she sought to do just that. In my opinion, no matter what mistakes or oversights Adept may imagine occurred within the minds of those advising Mrs Clark from time to time, these are not matters that warrant a finding that she had been unreasonable in failing to take proceedings against Suncorp earlier than she did or in bringing the proceedings against Adept. 32 If the residue of this litigation were to be resolved in a sensible and commercial way, the steps taken by ING of permitting discontinuance without an order as to costs seem eminently more attuned to achieving that end than the insistence by Adept that Mrs Clark pay its costs as the price of doing so. After all, Adept's advice was at the heart of the circumstances in which Mrs Clark came to face the litigious dilemma that she has. 33 In my opinion, the appropriate order to make is that sought by Mrs Clark. Adept should pay the costs of the application to discontinue. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | application for leave to discontinue proceedings with leave of the court pursuant to o 22 r 2(1)(d) of the federal court rules 2001 (cth) and s 43(2) of the federal court of australia act 1976 (cth) where leave sought is to discontinue with no order as to costs where there has been no hearing on the merits where respondent asserts discontinuing applicant failed to join a relevant party to the proceedings whether discontinuing applicant acted 'unreasonably' in all the circumstances costs factors governing the exercise of the court's discretion to award costs where application has been brought under o 22 r 2(1)(d) of the federal court rules where court finds there is no delinquency or misconduct on the part of the discontinuing applicant where there has been no determination of the proceedings on the merits practice and procedure practice and procedure |
He summarised Ms Budd's circumstances to the effect set out in the following paragraph. Ms Budd is handicapped. She suffers from social phobia and agoraphobia. She rarely leaves her home unit in Coogee. When she does she uses a wheelchair and cannot use public transport. She undertakes voluntary work for St Clare's Convent in Waverley and for other religious organisations and schools. Her work consists of writing poetry, interpreting scriptures and preparing other religious materials suitable for distribution to Christian organisations. She undertakes her work from home. On 17 October 2006 Ms Budd lodged an application for a mobility allowance with Centrelink. Finally it was affirmed by the AAT on 21 February 2008. The reason why Ms Budd's application for a mobility allowance was refused was because it was found that she was not required to, and did not, travel to and from her home for the purpose of undertaking her voluntary work. The SSAT recorded in its decision that at a hearing on 8 March 2007 Ms Budd said she had left her unit only four or five times in 2006 and not at all to that point in 2007. The AAT decision recorded that Ms Budd told it that "(s)he seldom goes out of the house and will only do so to get stationary [sic] supplies and post letters. That is the extent of her travelling". The AAT also observed that Ms Budd herself, in a letter written in November 2006, confirmed that she did not leave home to do voluntary work but did it at home. Ms Budd's statements in that letter seem quite definite on this point. I do this from home actively which counts as a Voluntary Works (but cannot be done outside only because my psychological disorder prevents me to leave home. It was also out of time. Nevertheless the primary judge treated it as an application for an extension of time in which to appeal. His Honour said that there was an acceptable explanation for the delay and that the respondent would not suffer undue prejudice if the Court were to grant leave to Ms Budd to file and serve a notice of appeal out of time. However, his Honour concluded that there was no foundation for an allegation, which Ms Budd wished to advance, that she was denied natural justice and he found there was no other question of law which arose in connection with the decision of the AAT. What Ms Budd sought to challenge, his Honour found, was a finding of fact and a conclusion about the merits of her application. Such a challenge is beyond the jurisdiction of the Court to entertain on an appeal from the AAT. Accordingly the primary judge denied Ms Budd an extension of time in which to appeal and dismissed her application with costs. Ms Budd has now sought to appeal against the judgment of the primary judge which was given on 17 October 2008. Again she is out of time. Her application for an extension of time was not filed until more than six weeks after the judgment was delivered, rather than within 7 days as required by O 52 r 10(2A)(b) of the Federal Court Rules . 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 under O 52 r 10(2A)(b) (see Deighton v Telstra Corporation 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). Ms Budd sent to the Registry a lengthy document containing, in a number of attachments, an extensive statement of the basis upon which she desired to challenge the judgment of the primary judge and the decision of the AAT. She also indicated the way in which her illness limits her capacity to comply with administrative requirements, including those related to completing the documents necessary to institute her present proceedings and providing them to the Court in a timely way. It is not necessary to determine the present application by reference to the time limits fixed by the Federal Court Rules . In the circumstances of this case it is better to move directly to a determination of Ms Budd's application for an extension of time on a broader basis by considering whether there would be any utility in permitting a challenge to the judgment of the primary judge or any further challenge to the decision of the AAT. The judgment which Ms Budd now wishes to challenge was an interlocutory judgment. Leave to appeal would therefore also be required, if an extension of time was granted, before a right to appeal would become available. 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). The central difficulty which confronts Ms Budd's desire to challenge the decision of the AAT in this Court, as the primary judge found, is that the role of this Court to review decisions of the AAT is subject to strict limits. (Emphasis added. Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 ; Comcare v Etheridge [2006] FCAFC 27 ("Etheridge") ; Purvis v Dairy Adjustment Authority (No 2) [2006] FCAFC 38 ; (2006) 150 FCR 48 ; Brown v Repatriation Commission [2006] FCA 914 ("Brown") and Colby Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10 ; (2008) 165 FCR 133 ( "Colby" )). In the written material Ms Budd provided to support her present application she argued vigorously that the AAT had committed errors of law, not only of fact. However, the suggested errors were those reflected by the conclusion of the AAT that Ms Budd did not satisfy the requirements of s 1035 of the Act. Notwithstanding her protestations to the contrary that conclusion turned entirely on questions of fact. Although Ms Budd also asserted that the AAT had failed to pay proper regard to letters from Sister Francis, at St Clare's Convent, and a report from Dr Hugo Rodriguez, it is clear from extracts from the AAT decision quoted by the primary judge that those matters were explicitly stated by the AAT, along with other material, to have been considered by it. At the hearing of Ms Budd's application she appeared by telephone, owing to her personal circumstances to which I have already referred. The respondent did not appear. The matter had been listed for some months and I decided to hear Ms Budd's oral submissions in the respondent's absence. Ms Budd insisted, as she had apparently before the primary judge, that in fact she left her home and travelled to St Clare's Convent by taxi to deliver work she had completed. She said she had done so for years. Her assertions contradicted the representations she made in her letters of November 2006 and 12 January 2007. Her factual assertions did not, of themselves, raise any question of law but an associated submission to the effect that the primary judge (and, I infer, the AAT) had no evidence to support a finding that she did not travel, or ignored evidence that she did in fact travel, is capable of raising a question of law about the decision-making process of the AAT, and the correctness of the decision of the primary judge, if the submission is sound. It therefore requires some further examination. I have already pointed out that there was direct evidence before both the SSAT and the AAT from Ms Budd herself that she did not leave her home, except on rare occasions. I have also pointed out that allegations that the AAT failed to pay any regard to material upon which Ms Budd relied are refuted by the terms of the AAT decision itself as the primary judge, with respect, correctly found. Nevertheless, I have also looked at the material referred to in her oral submissions for myself. The matters identified by Ms Budd in her oral submissions were: a letter from Sr Francis dated 2 September 2006; a report from Dr Rodriguez dated 19 June 2007; and reports from Ms Pamela Young. Ms Budd suggested that examination of this material would support her assertion that she often travelled by taxi for the purpose of the voluntary work she carried out. You certainly have a gift for them, (aided by your previous degrees). These you dispense to various places such as communities of Nuns, Priests, Brothers, Schools and others. Richard and Diana, who bring you Communion, are happy to receive your poetry. More specifically, to attend to expenses related to phone bills, faxes, courier fees, taxis, and hiring a wheel chair. These are Ms Budd's means for traveling [sic], as her medical condition prevents her from using normal transport. Ms Budd said that she can only stay away from home for short periods, not exceeding three hours, which she can only do if taken on a wheelchair. The report of 13 March 2007 was provided before the decision of the SSAT on 11 April 2007. Her condition manifests primarily with Agoraphobia (A morbid fear of having anxiety symptoms in public place) and Social Phobia (Extreme fear to face people or having to deal with people face to face). Her condition includes Situational Phobia (A phobic response to specific triggering stimuli such as clutter). At present, she is unable to have personal interviews other than with very familiar people or via the phone. Her symptoms are very debilitating and severely restrict her from attending to normal social and occupational matters. She is currently conducting volunteer work with St Claire Church, which comprises mostly of preparing modules for catechism books. Ms Budd manages to comply with this occupation working from home . She believes that this decision was reached due to the main factors for this request not being properly clarified, and she has asked me to state these issues more in depth. She is able to travel by car with only some familiar drivers. She relies mostly on her son, her full carer, to be conveyed to doctors' appointments and other commitments; she uses a wheelchair to commute --- Ms Budd reportedly qualifies for parking disability permit. And she relies on contacts made by telephone and faxes and by sending or collecting goods by courier or taxis . These are the only safe means for her to attend to her personal, social or occupational obligations. These are, in my view, Ms Budd's only likely forms of traveling [sic]. I understand that on these bases she complies with provision 1035 of the traveling [sic] section of the Social Security Act . I see this assistance as vital for the continuation of her work with the Church as well as for treatment of her symptoms. First, Dr Rodriguez's information came from Ms Budd. Apparently she contacted him again after the decision of the SSAT. Secondly, taken in context the reference to the use of taxis in the third passage I have emphasised does not seem to be a reference to Ms Budd travelling in them but, rather, using them as a method to transmit her work as an alternative, for example, to couriers. In any event, the assessment of the weight of this report, in light of the earlier information, was a matter for the AAT. It was clearly not ignored. No error of law arises from the way it was dealt with. Ms Young is a registered psychologist. She provided Ms Budd with a number of documents headed "To Whom it May Concern" in support of the claim for a mobility allowance. Many appear to be modifications of earlier versions of the same document. All the changes which appear relevant were made to one of the concluding paragraphs of the report. The representations they contained were obviously based on statements from Ms Budd to Ms Young. As they are dated in early 2008 they either shortly predated, or postdated, the decision of the AAT on 21 February 2008. They all postdated the AAT hearing which was conducted on 19 December 2007. The AAT did not commit any error of law by failing to deal with material which was not before it. In any event, I am satisfied they give no support to Ms Budd's position. She tells me she has been undertaking voluntary work for a Sister Frances of an Order of Catholic nuns for two years by fax, telephone and courier , and because of her agoraphobia and social phobia it is not possible to leave her premises or conduct face to face charitable work. Therefore she relies on her only means of communication --- that is electronic media combined with courier services . Had it been before the AAT it would have confirmed the other material to which the AAT referred when it concluded that Ms Budd was not entitled to a mobility allowance. Each of the other reports postdated the decision of the AAT. She is also seeking taxi vouchers to help with this work. Later versions of the report, evidently responsive to Ms Budd's representations to Ms Young after the decision of the AAT had been delivered, attempted to convey a different picture. There are two variations dated 21 April 2008. She is requesting taxi vouchers to assist with this endeavour. To my pleasant surprise Ms Budd tells me that for the past 18 months to two years she has been travelling by taxi three to four hours frequently to assist in this work, albeit not on a face to face basis. This implies that to a large extent Ms. Budd's agoraphobia has gone into spontaneous remission, leaving only the social phobia and anxiety symptoms to be dealt with. She tells me she has been undertaking voluntary work for a Sister Frances of an Order of Catholic nuns for 29 months by fax, telephone and courier, and also (although not face-to-face) by using taxis or with a trusted friend. She is requesting taxi vouchers to assist with this endeavour. The only versions upon which Ms Budd could hope to place any reliance post-dated the decision of the AAT and were contradicted by her own statements to the AAT. They were, in any event, of so little apparent reliability that they could carry no weight. They provide no foundation upon which to argue, in the present proceedings, that the AAT made an error of law or that the primary judge was incorrect to conclude that no question of law arose from its decision. None of the material, therefore, which was relied upon by Ms Budd in her oral submissions to me provides a foundation for a conclusion, or even a respectable argument, that the AAT committed an error of law. In the circumstances, I am satisfied that Ms Budd has no prospect of succeeding in any appeal against the judgment and orders of the primary judge and that it would be futile and a waste of public resources to grant her an extension of time in which to seek leave to do so. As the primary judge found, there is no power in this Court to interfere with, or set aside, the decision of the AAT. The application for an extension of time in which to appeal (or seek leave to appeal) will be dismissed. Although the respondent did not appear at the hearing of the appeal and filed no document other than a formal notice of appearance, that does not exclude the possibility that, nevertheless some costs may have been incurred by it in connection with the present proceedings. There is no reason in principle why those costs should not be recovered if the respondent wishes to seek them. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | leave to appeal from dismissal of an appeal from a decision of the administrative appeals tribunal need for an arguable case of error of law. application for an extension of time interlocutory judgment leave to appeal also required test to be applied. administrative law appeal |
He has great difficulty in hearing and considerable difficulty in fully understanding the events described in these reasons. Fifty-six years ago while in service with the Defence Forces he sustained a back injury. Relatively recently he claimed against Comcare for compensation in respect of that injury. Compensation was declined. He pursued appeals. They failed. Costs orders were made against him in favour of the Military Rehabilitation and Compensation Commission (the Commission) in lieu of Comcare. He failed to meet any of those costs orders. The Commission has now relied upon State legislation to compel Mr McGuire to make payment of its costs. The main function of these reasons is to collect the history of the matters and the grounds on which the Commission is entitled to rely in seeking relief. In that decision the Tribunal had affirmed the decision of Comcare. It affirmed, on 15 May 2001, a determination made on 31 March 2000 that Mr McGuire was not entitled to a lump sum payment for permanent impairment to his neck and cervical spine. 3 The Tribunal concluded that Mr McGuire had suffered an injury to his cervical spine in November 1951 which may have been aggravated in 1952 and which occurred in compensable circumstances. However the question was whether or not the injury resulted in permanent impairment of 10% or more and whether that impairment became permanent after 1 December 1988. On the evidence of Mr McGuire and the medical evidence the Tribunal was satisfied that the impairment caused by the 1951 injury was less than 10% under the Guide and became permanent well prior to 1 December 1988. The Tribunal held that further impairment had been a result of degeneration of the cervical spine resulting from congenital fusions exacerbated by degenerative osteoarthritis of the thoracic spine and rotator cuff tear. 4 The 'appeal' his Honour heard was pursuant to the provisions of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) and s 64 of the Safety, Rehabilitation and Compensation Act 1988 (Cth). By that decision his Honour dismissed the 'appeal' and ordered Mr McGuire to pay Comcare's costs of the application. His Honour observed that Comcare's case before the Tribunal had been that whatever impairment was suffered by Mr McGuire as a result of his injury in 1951 while he was enlisted with the Army, the impairment had stabilised long before 1 December 1988 and any impairment since 1 December 1988 was unrelated to the original injury. 5 His Honour found no error of law or, indeed any error in the determination of the Tribunal and dismissed the 'appeal' with costs. 6 This then led to an appeal to the Full Federal Court on 11 April 2005, ( McGuire v Military Rehabilitation and Compensation Commission [2005] FCAFC 52). After canvassing the history, the Full Court concluded that Mr McGuire's notice of appeal disclosed no identifiable legal issues and his submissions did not assist in elucidating the matter further. In addition, after considering the evidence and the legislative framework the Full Court concluded that for its part it could discern no legal error in the approach taken nor in the ultimate conclusion made by the primary judge. The Full Court also dismissed that appeal with costs. 7 The consequence of those two adverse determinations in this Court was that Mr McGuire was required to pay costs to each of the successful respondents. On 30 June 2006 (in WAD 141 of 2002) the Court issued a certificate of taxation certifying that Comcare's costs were assessed and allowed at $8,465. 9 On 4 July 2006, a letter of demand seeking payment of the amounts of $8,465 and $13,700 within 14 days was forwarded to Mr McGuire at his address for service in Forrestfield, Western Australia. Further demands were sent to Mr McGuire on 17 August 2006, 12 September 2006 and 8 January 2007 seeking payment of $8,465 and $13,700. There was no response to any of those letters. 10 There were obvious questions about Mr McGuire's capacity to meet costs orders. The Commission chose in both matters to adopt the practice available under the Civil Judgments Enforcement Act 2004 (WA) (the CJE Act) to ascertain the capacity of Mr McGuire, if any, to meet the costs orders. Section 27(1) provides that a judgment creditor may apply for a means inquiry to be held in respect of the judgment debtor. 14 On 15 June 2007 the matters were listed for a Means Inquiry hearing. The hearing proceeded but was subsequently adjourned to 29 June 2007. Mr McGuire completed a Form 38, being a Statement of Financial Affairs which appeared at that stage to demonstrate that he had a total of some $23,000 in various bank accounts and $13,000 in a burial fund. In addition, he had an income of some $13,000 per annum. As against that, as will be seen, the total owing in costs exceeds the amount of Mr McGuire's assets, with the exception of his burial fund. 15 On 28 September 2007 a Deputy District Registrar of the Court made the instalment order of $15 per week on the $8,465 payable in W141 of 2002 and ordered $1800 additional costs. A Default Summons was issued on 13 November 2007 for the $8,465 and $1800 in previous enforcement costs totalling $10,265. Also on 28 September 2007 an instalment order was made of $15 per week on the $13,700 payable in W172 of 2004 and $1800 additional costs also ordered. A Default Summons was issued on 13 November 2007 for the $13,700 and $1800 previous enforcement costs totalling $15,500. 16 Therefore a total of $30 per week was ordered to be paid in respect of both matters (totalling $22,165). An additional $3,600 costs was ordered against Mr McGuire with no instalment rate. The total debt owing is $25,765. 17 Although the Commission has pressed Mr McGuire for recovery of the costs no payments have been made. 18 The Commission has now filed Summonses to a Judgment Debtor under the CJE Act, Pt 4 Div 2 in both matters. The summonses confirm the history but do not seek specific orders. 21 Mr McGuire appeared before the Court on 6 December 2007 and the matter was adjourned to be heard on 6 February 2008 when he also appeared. The Court appointed pro bono counsel and on 7 December 2007, Mr David McKenna as pro bono counsel advised Mr McGuire. On the morning of 6 February 2008 Mr McKenna informed the Court that he had advised Mr McGuire in detail of the potential consequences of failure to comply with the Court's orders. Mr McKenna emphasised that Mr McGuire has great difficulty in understanding how it can be that he can sustain an injury while serving in the armed forces and that later in life does not receive the benefit of compensation in respect of that injury. His difficulty might well be understood. That issue, however, has now been ventilated on a number of occasions and after detailed analysis, it has been concluded that his current condition is not such as to qualify him for compensation for the reasons expressed in detail by the Tribunal, by Nicholson J and by the Full Court. 22 If Mr McGuire is surprised that he is not entitled to compensation, he might also be surprised that the Commission is apparently determined to pursue him for the costs incurred in defending his appeals. That, however, is a policy issue and something on which I express no view. We confirm that at this stage the Judgment Creditor is not actively seeking any orders pursuant to s98 of the Civil Judgment Enforcement Act 2004. An order that if the judgment debtor, Alexander Kyle McGuire, fails to comply with the Court Order dated 28 September 2007, then the matter is to be listed for a directions hearing so that the Court may consider whether the judgment debtor is in contempt of Court. An order that the judgment debtor, Alexander Kyle McGuire, is to pay the costs of the judgment creditor, Military Rehabilitation and Compensation Commission, fixed in the sum of $1,000.00. Although the Court was originally informed that there was no opposition to par 2 of the minute, the position has been clarified that the costs orders to the effect of 1,000 in each of the matters is opposed. 25 It is not appropriate for me to revisit any costs orders previously made nor am I asked to do so by either party. Further the weekly instalments, having regard to the financial circumstances of Mr McGuire, appear to be reasonable. There was no suggestion made by Mr McGuire or by counsel on his behalf that his financial circumstances have significantly changed since previous orders were made. 26 Given the totality of litigation which has ensued, the amount of costs involved is in modern terms not surprising, but the extensive number of appearances, judgments and rulings means that the full amount owing by Mr McGuire now exceeds the apparent current totality of his assets (his 'burial fund' excluded). 27 I urge the parties to reconsider whether there is some more flexible means of ensuring that the Commission is paid some contribution in due course to its costs. 28 In the circumstances, I will make the orders sought by the Commission, subject to an expansive liberty to apply period. These orders do no more than reinforce to Mr McGuire that the Commission is entitled to its costs which he must pay or risk being in contempt of Court. 29 As to costs, I do not consider that costs of $1,000 in each matter are warranted. My view is that a more modest allowance is appropriate. I have allowed a total of $800 rather than a total of $2000 but if that amount is not acceptable to the Commission it may apply within 14 days to have its costs taxed. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | enforcement of judgments and orders in respect of costs application of state act under the federal court of australia act 1976 (cth) and rules instalment order default means inquiry hearing costs |
In that decision the Tribunal affirmed the decision of the Refugee Review Tribunal (the "RRT") in which the RRT had concluded that certain documents were exempt from disclosure under ss 41 and 45 of the Freedom of Information Act 1982 (Cth) (the "FOI Act"). The issue before the AAT was whether two letters sent to the RRT by a third party and three file notes of discussions between an officer of the RRT and the third party concerning the possible release of the document were exempt under either or both ss 41 and 45 of the FOI Act. The Amended Notice of Appeal stated the following under parts 2 and 4 headed "Questions of Law" and "Grounds". THE QUESTIONS OF LAW RAISED ON THE APPEAL: Whether a document contains personal information about a person for the purposes of s41(1) of the Act where the only information about that person contained in the document is the person's identity as the author of the document. Whether (given the undoubted right of applicants to the RRT to be given access to documents relating to their application) a document provided to the RRT by a person, in relation to an application to the RRT by other persons, could have the quality of confidentiality necessary to be exempt under s 45 of the Act. Whether, in considering whether disclosure of the documents in question would involve the unreasonable disclosure of personal information, the Tribunal was required to have regard to the public interest in applicants to the RRT being enabled to test whether they had been accorded procedural fairness when not given an opportunity to deal with material presented to the RRT. Whether the concern of an applicant to the RRT to know what matters had been put against them in a document placed before the RRT is capable in law of constituting a threat that the information in the document would be used to the detriment of a third party. Whether the Tribunal erred in not determining whether the information in question was information about an individual whose identity was known to the Applicant. Whether the Tribunal erred in finding that section 41(1) of the Act was of application without a finding that the documents in question contained information about the third party, and not simply "personal" to that party. Whether the Tribunal erred in finding that disclosure of the exempt information constituted " unreasonable disclosure " which would cause " distress " to the third party, without considering the effect of such distress on the weighing of the public interests in disclosure. Whether the Tribunal erred in finding that disclosure of the exempt information constituted " unreasonable disclosure " which would cause "distress" to the third party, in circumstances in which the evidence upon which such a finding of distress was not even alluded to. Whether the Tribunal erred in finding there was no "good public purpose" to achieve in releasing the information when: The applicant clearly had an interest in, at the very least, confirming for themselves the ipse dixit of the Tribunal that the information was of no relevance to their proceedings; The applicants' interest was of such a nature that it was clearly more than to "excite or satisfy the curiosity of people about the person whose personal affairs were disclosed". Whether the Tribunal misdirected itself in finding that the fact that the author of the documents never intended their contents to enter into the public domain satisfied the criteria for establishing confidentiality for the purposes of section 45 of the Act, in circumstances in which: The intention of the author is not decisive: the full circumstances under which the disclosure was made needed to be considered, including the respondent's expressed undertakings, if any, to keep the information confidential; The Tribunal failed to allude to the evidence upon which it relied to come to the conclusion that the author had such an intention or that the respondent received the documents in confidence; The intention that the information not enter the public domain may not exclude an acceptance that the information may be disclosed to a limited group of people including the applicants; Whether the Tribunal misdirected itself in finding that there remained a threat that the information would be used to the detriment of the third party by failing to indicate the facts upon which it came to such a significant conclusion. The Tribunal erred in finding that documents provided by another person to the RRT in relation to the applicant's application to the RRT could have the quality of confidentiality necessary to be exempt under s 45 of the Act. In considering whether disclosure of the documents in question would involve the unreasonable disclosure of personal information, the Tribunal erred in failing to have regard to the public interest in applicants to the RRT being enabled to test whether they had been accorded procedural fairness when not given an opportunity to deal with material presented to the RRT. The Tribunal erred in finding that the concern of the applicant to know what matters had been put against her in a document placed before the RRT is capable in law of constituting a threat that the information in the document would be used to the detriment of a third party. The Tribunal erred in not determining whether the information in question was information about an individual whose identity was known to the Applicant. The Tribunal erred in finding that section 41(1) of the Act was of application without a finding that the documents in question contained information about the third party, and not simply "personal" to that party. The Tribunal erred in finding that disclosure of the exempt information constituted " unreasonable disclosure " which would cause " distress " to the third party, without considering the effect of such distress on the weighing of the public interests in disclosure. The Tribunal erred in finding that disclosure of the exempt information constituted " unreasonable disclosure " which would cause " distress " to the third party, in circumstances in which the evidence upon which such a finding of distress was not even alluded to. The Tribunal erred in finding there was no "good public purpose" to achieve in releasing the information when: The applicants clearly had an interest in, at the very least, confirming for themselves the ipse dixit of the Tribunal that the information was of no relevance to their proceedings; The applicants' interest was of such a nature that it was clearly more than to " excite or satisfy the curiosity of people about the person whose personal affairs were disclosed". The Tribunal misdirected itself in finding that the fact that the author of the documents never intended their contents to enter into the public domain satisfied the criteria for establishing confidentiality for the purposes of the section, in circumstances in which: The intention of the author is not decisive: the full circumstances under which the disclosure was made needed to be considered, including the respondent's expressed undertakings, if any, to keep the information confidential; The Tribunal failed to allude to the evidence upon which it relied to come to the conclusion that the author had such an intention or that the respondent received the documents in confidence; The intention that the information not enter the public domain may not exclude an acceptance that the information may be disclosed to a limited group of people including the applicants; the validity of such a contention cannot be tested without reference to the facts surrounding the disclosure, to which the Tribunal has made no reference; The Tribunal misdirected itself in finding that there remained a threat that the information would be used to the detriment of the third party by failing to indicate the facts upon which it came to such a significant conclusion. The Tribunal erred in that it failed to establish, as it was required to do by section 45, that the disclosure of such information would found an action for breach of confidence by the third party; the limited facts revealed in the judgment indicated that this would be very unlikely to be the case. The applicant also made oral submissions at the hearing, and was given leave to file submissions in reply after having perused the transcript, provided that they were consented to by the respondent. On 6 February 2006 the applicant advised that she did not wish to put on further submissions in reply. I have examined the documents. Some of the aspects of the Amended Notice of Appeal and of the submission implicitly invite a discussion of the documents. I do not propose to engage the submissions at a level which would require that to be done. The AAT approached the matter by first having regard to ss 4, 41(1) and 45(1) of the FOI Act. It then applied what Mansfield J had said in Ward v Centrelink [2005] FCA 73 at [27] - [29] in dealing with s 41 of the FOI Act. It also had regard to the judgments of the Full Court in Colakovski v Australian Telecommunications Corporation (1991) 29 FCR 429 and of Kiefel J in Kristoffersen v Department of Employment Workplace Relations and Small Business [2003] FCA 55. In relation to the question of confidentiality the Tribunal applied what it had said in Re Kamminga and Australian National University (1992) 26 ALD 585 where the Tribunal followed what Gummow J had said in Corrs Pavey Whiting and Byrnes v Collector of Customs (Vic) (1987) 14 FCR 434. Section 41 of the FOI Act In its consideration of s 41, the AAT examined the contents of the documents and concluded that it would be unreasonable to disclose what it considered to be personal information. The reasons given by the Tribunal were not detailed or lengthy. There is, of course, no vice in that, unless the reasons reveal some error in approach. Having referred to the judgments in Ward v Centrelink, Colakovski v Australian Telecommunications Corporation (1991) and Kristoffersen v Department of Employment Workplace Relations the Tribunal concluded: That there was no doubt that they contain information which would lead to others identifying the author. [This was undoubtedly correct. ] That the documents contained information personal about the third person. [This was undoubtedly correct. ] That it was clear from the documents themselves that to release the documents would cause distress to the third party. [This was undoubtedly apparently correct if one accepts some statements in the documents. ] That no good public purpose would be achieved by the release of the documents. The attack by the applicant upon the approach of the AAT, was, in substance, that these conclusions reflected a legally inadequate consideration in all the circumstances of the task set by s 41 of the FOI Act. First, it was said that the extent to which the information was personal to the third party was legally irrelevant. The applicant referred to what Kirby P said in Commissioner of Police v the District Court of New South Wales and Perrin (1993) 31 NSWLR 606 at 620 to the effect that the general objects of a provision such as s 41 were to protect private information of people who may be dealt with in agency documents. The provision did not extend to circumstances where persons wrote to the Department about another, so it was said. I reject these submissions. The words of s 41(1) are clear and simple. The personal information may be of someone in the position of the third party here. Next, it was said that the phrase "unreasonable disclosure" requires an examination of "all relevant circumstances". The fact, it was said, that the reasons do not deal with the circumstances in which the information was obtained by the agency, the relationship between the applicant, the third party and the agency, whether and to what extent the information affects or concerns the applicant, whether the disclosure of the information would only excite or satisfy the curiosity of the applicant about the person whose personal information would be disclosed, whether it is clear that the applicant intends to use the information for purposes that are illegal, malicious or otherwise not in the public interest. All these are considerations which could have been addressed by the Tribunal. None was mandated by the FOI Act to be considered. In reaching a decision as to whether there would be "unreasonable disclosure of personal information", the Tribunal was entitled to a significant degree in making such a value judgment to assess for itself what factors would make disclosure "unreasonable": cf Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 at 373-76. Notwithstanding the factors put forward by the applicant, it was open for the Tribunal to conclude in the light of the contents of the documents that there was no good public purpose to be achieved by the release of the documents and that the matters in [8] above, were, in all the circumstances, appropriate upon which to rest a conclusion as to s 41(1) of the FOI Act. The applicant submitted that there was a failure to balance the legitimate interest, of her as a party to enable her to test whether she had been accorded procedural fairness. I do not agree. Given the contents of the documents, the Tribunal was entitled to reach that view or work on that assumption. The functions and discretions committed to the RRT under the Migration Act , and to its officers as officers of an agency under the FOI Act, are distinct. That is not to say that the nature of the work of the RRT as a government agency is irrelevant to the exercise of discretion under the FOI Act. But a mandatory obligation which may have accrued under the former regime does not automatically translate into an obligation of disclosure under the latter. The Tribunal was entitled to assume, as it implicitly did, that the RRT would comply with any obligation to give procedural fairness, or to follow any mandatory procedure in the Migration Act . The giving to the applicant of the opportunity of seeing for herself that that was the case was not a consideration which, by law, the Tribunal was required to weigh in making its decision under s 41 of the FOI Act in the circumstances before it. Whether steps were required and were not taken, and whether the RRT has made a mistake in the conduct of the protection visa proceeding (see VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72) are not matters I need to decide. It is unnecessary for me to comment upon the relevance and engagement of VEAL in this case, particularly where at the time of argument a Full Court was, the parties informed me, reserved on the applicant's application for judicial review of the RRT's decision not to grant protection visas to her and her family. On the other hand the applicant also submitted that in looking at the issue of the relevance of the documents to the RRT proceedings to the extent that it did, the Tribunal fell into error. The Tribunal did so in the context that the Applicant had submitted that that was a relevant factor to take into account, a submission also made in this Court. As I have said it was legitimate for the Tribunal to conclude or proceed as it did and in so doing it did not trespass in any way upon the function or role of the RRT. The Tribunal said that the applicant claimed to know the identity of the third party. The Tribunal said this was irrelevant. I agree. I reject the applicant's submission that this claim of knowledge by the applicant required, as a matter of law, some different balancing considerations than were undertaken. As the Tribunal said, disclosure under the FOI Act is unrestricted. In any event, the fact that the applicant asserts that she knows who the third party is does not detract from the approach of the Tribunal otherwise taken and does not require the Tribunal to answer the assertion by way of confirming of denying the applicant's asserted suspicion or knowledge. Further, the statement of the Tribunal that the release of the information would cause distress to the third party "where no good public purpose would be achieved by its release" is, I think, properly read as the result of balancing of the position of the third party and (in all the circumstances, including what the Tribunal said at [4] of its reasons) of the applicant and the evident public purpose (which plainly goes without saying) of the disclosure of documents under the FOI Act. In other words, the Tribunal was clearly referring to no good countervailing public purpose. Thus I do not see any error of law in the approach of the Tribunal. Given the absence of any error of law in relation to the decision based on s 41 of the FOI Act it is strictly unnecessary for me to deal with the argument based on confidentiality in s 45 of the FOI Act. However as the parties presented argument, I will do so. The Tribunal rested its decision upon an earlier Tribunal decision in Re Kamminga and Australian National University (1992) 26 ALD 585 and a dissenting judgment of Gummow J in Corrs Pavey Whiting and Byrnes v Collector of Customs (Vic) (1987) 14 FCR 434. The Tribunal approached the matter similarly to Gummow J in Corrs Pavey Whiting and Byrne v Collector of Customs (Vic), though in dissent, who stated that under the then form of s 45 of the FOI Act it was necessary for the section to be made out for its disclosure to be actionable at general law. Thus, correctly, the Tribunal ascertained a number of issues: whether the information was able to be identified, whether there was the necessary quality of confidentiality, whether the information had been received by the defendant in such circumstances as to import an obligation of confidence and whether there was actual or threatened misuse of that information. The Tribunal concluded that these matters were satisfied. I do not see any legal error in the approach taken by the Tribunal in the circumstances. Given the nature of the communication and its form, the Department could have been restrained from making the information available publicly. It may be that for the Department to be restrained from disclosing the information to the applicant based on a view the Department might have entertained that its public law duties required it to do so (which was apparently not the position here), there may have been some contestable debate about whether such disclosure would be restrained. However, to the extent that the Department was to threaten to make some or all of these documents available there would be, it seems to me, legitimate grounds to commence proceedings to prevent that, certainly after the third party made plain that party's confidential intentions. It is unnecessary to decide whether such an action even if unsuccessful would suffice to allow the conclusion to be drawn that disclosure of the document would "found an action" for s 45. Given my views as to the operation of s 41 and the absence of any legal error in approach further discussion of s 45 is unnecessary. In all these circumstances the appeal should be dismissed. The applicant requested at the hearing that I allow her an opportunity to address me as to the question of costs. I therefore propose to adjourn the proceeding to 8 August for such argument. | personal information of author of a document to which access is sought where applicant claims to know identity of author of document where applicant also engaged in proceedings in refugee review tribunal claims that documents sought affect the question of whether that applicant has been accorded procedural fairness in the rrt proceeding freedom of information |
2 Section 255 of the ITAA 1936 provides a regime for the collection of income tax from non-residents by empowering the Commissioner to require a person having the receipt, control or disposal of money belonging to a non-resident to pay the tax due and payable by the non-resident. Communication of such a requirement to a person triggers an authority and further requirement in the person in respect of money which comes to him on behalf of the non-resident. 3 Section 260-5 of Schedule 1 to the Administration Act provides a regime for the collection of income tax from any entity, resident or non-resident, by empowering the Commissioner to require a third party which owes or may later owe money to the entity to pay to the Commissioner the whole or part of that money. 4 An analysis of the relevant provisions of s 255 of the ITAA 1936 and s 260-5 of Schedule 1 to the Administration Act is undertaken later in these reasons. 5 Underlying the current dispute is the substantive dispute between ECMI and the Deputy Commissioner as to whether ECMI is liable to pay Australian income tax on the capital gain it made on the sales of shares in Gribbles, as the Deputy Commissioner claims, or whether Australia is denied the right to tax that gain by virtue of the provisions of Article 7 of the Double Taxation Agreement between Australia and Belgium (Schedules 13 and 13A to the International Tax Agreement Act 1953 (Cth)), as ECMI claims: See generally 'Treaty Protection from Capital Gains Tax' by Ian V Gzell QC, (2000) 29 Australian Tax Review , 25 --- 49; by the same author, 'Treaty Application to a Capital Gains Tax introduced after Conclusion of the Treaty', (2002) 76 Australian Law Journal , 309 --- 327. In this regard, objections to the assessment and amended assessment referred to later in these reasons have not been determined and the substantive issue remains live for another day. 9 Prior to 2 November 2004 ECMI beneficially owned 194,516,455 ordinary shares ('the Shares') in Gribbles, representing 43.05 per cent of the issued ordinary shares in Gribbles. At the time, the ordinary shares in Gribbles were listed on the Australian Stock Exchange ('ASX'). ANZ Nominees was the registered holder of the Shares as trustee for ECMI and ANZ Bank was mortgagee of the Shares. 10 Prior to 2 November 2004 Healthscope announced that it proposed to make a takeover bid for all the shares in Gribbles at $0.60 per share. 12 On 3 November 2004 Healthscope acquired 44 million shares in Gribbles from ECMI at $0.63 per share pursuant to a share acquisition agreement. That agreement acknowledged ECMI's public announcement relating, inter alia , to ' the proposed dealing by [ECMI] with the remainder of the [Gribbles] shares of which [ECMI] is the beneficial owner' (cl 6(b)) . 14 By letter dated 8 November 2004 the Australian Taxation Office ('ATO') sent to the Public Officer of Healthscope a notice under s 255 of the ITAA 1936 ('the 8 November 2004 Notice'). 15 On 9 November 2004 Healthscope issued a takeover offer to the shareholders of Gribbles. 16 On 15 November 2004 ECMI entered into a nominee agreement with Investec Trustees providing for securities to be registered in the name of Investec Trustees or in the name of a sub-custodian appointed by Investec Trustees. 17 On 15 November 2004 Investec Trustees instructed ANZ Nominees to transfer 150,515,455 ordinary shares in Gribbles to the account of CSC 'with a trade and settlement date of 16 November, 2004'. 18 On 16 November 2004 ANZ Nominees confirmed that the transfer of the 150,515,455 ordinary shares in Gribbles to the account of CSC had been completed as instructed. 19 On 17 November 2004 five share sale agreements were entered into between ECMI, on the one hand, and each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger, on the other. (2) Each of Mr Armstrong and Mr Berger agreed to purchase from ECMI part of the remaining 150,516,455 Gribbles shares at $0.625 per share (cl 1.1.5), that is, 0.5 cents per share less than the price of $0.63 per share to be paid by Healthscope to ANZ Nominees. (3) Completion was to occur after Healthscope had paid for the remaining 150,516,455 Gribbles shares (cl 1.1.3). (4) Each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger agreed to purchase the remaining 150,516,455 Gribbles shares for the purpose of selling on to Healthscope (Recital C) and agreed forthwith to accept Healthscope's bid for Gribbles shares (cl 2.5 and Third Schedule in which instructions are given to Investec Trustees as custodian, and CSC and ANZ Nominees as sub-custodian for Investec Trustees to accept Healthscope's bid for the Gribbles shares the subject of the agreement). (5) On completion each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger agreed to pay the consideration to ECMI by such method as the parties agreed (cl 3.3). 21 On 17 November 2004 Mr Armstrong and Mr Berger opened trustee accounts with Investec Trustees. Investec Trustees became the custodian of the Gribbles shares acquired by each of Mr Armstrong and Mr Berger. Investec Trustees appointed CSC as sub-custodian of the shares which Investec Trustees held as custodian for each of Mr Armstrong and Mr Berger. 22 On 17 November 2004 each of Elsinora, Tioga and Perlette passed resolutions to appoint CSC as custodian of the Gribbles shares acquired by each of them and to open an account with CSC. The shares were transferred into the relevant CSC account on 17 November 2004. (b) CSC held 90 million shares as custodian for Elsinora, Tioga and Perlette. (c) CSC held 60,576,455 shares as sub-custodian for Investec Trustees. (d) Investec Trustees held 60,576,455 shares, in an account with CSC, as custodian for Mr Armstrong and Mr Berger. (b) Investec Trustees instructed CSC to release the shares to Healthscope's custodian in acceptance of Healthscope's takeover offer. (c) Elsinora, Tioga and Perlette instructed CSC to release the shares to Healthscope's custodian in acceptance of Healthscope's takeover offer. Accordingly, Healthscope continues to be a person having the receipt control or disposal of money belonging to ECMI and is expected to comply with the terms of the section 255 Notice. ECMI received the notice of assessment on or about 15 December 2004. 28 On 9 December 2004 the Board of Directors of Investec Trustees resolved that 'an account for Investec Trustees (UK) Limited be opened with Investec Bank (UK) Limited'. It was further resolved that 'Accounts specifically entitled "Investec Trustees (UK) Limited re EC Medical Investments NV" be established with Investec Bank (UK) Limited'. 29 On 21 December 2004 the Healthscope takeover offer became unconditional. It thereupon became liable to pay ANZ Nominees $0.63 per share for the remaining 150,516,455 Gribbles shares, being the sum of $94,825,366.65. 30 By letter dated 24 December 2004, the ATO sent to the Public Officer of Healthscope a further 'notice in respect of section 255 of the Income Tax Assessment Act 1936 ' ('the 24 December 2004 Notice'). 31 By letter dated 7 January 2005, the ATO sent to the Public Officer of ANZ Nominees a 'notice in respect of Section 255 of the Income Tax Assessment Act 1936 ' ('the 7 January 2005 Notice'). 32 On 19 January 2005 an account was opened for Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger with Investec Bank (Channel Islands) Limited to receive the proceeds of the sale by those persons of the Gribbles shares to Healthscope. This account was designated 'Investec Trustees (UK) Limited 81/S4513000'. 33 On 20 January 2005 the Deputy Commissioner wrote to ANZ Nominees informing it that Healthscope had agreed to retain the sum of $9,953,426.10 and that ANZ Nominees did not need to retain that amount under the 7 January 2005 Notice. 34 Under cover of letter dated 21 January 2005 from Allens Arthur Robinson, Melbourne, to ANZ Nominees two cheques were sent on behalf of Healthscope in payment of the consideration payable by Healthscope under the offer for the acquisition of the remaining Gribbles shares less the amount of $9,953,426.10 retained by Healthscope. 35 On 21 January 2005 CSC received from ANZ Nominees an amount of $84,871,940.55. This amount represented the proceeds of sale of the remaining Gribbles shares less the sum of $9,953,426.10 retained by Healthscope. The amount of $84,871,940.55 was credited to four accounts: one for each of Elsinora, Tioga, Perlette and one for Investec Trustees, for Mr Armstrong and Mr Berger. 36 On 21 January 2005 a notice of amended assessment was issued to ECMI. The amounts of taxable income, tax payable pursuant to the assessment and due date did not change from those in the notice of assessment issued on 1 December 2004 ([27] supra). 37 On 24 January 2005 Investec Bank (Channel Islands) Limited received an amount of $84,871,940.55 from CSC into the account named Investec Trustees (UK) Limited 81/S4513000. • 27 January 2005 --- $165,161.45 to each of Elsinora, Tioga and Perlette. • 27 January 2005 --- $131,410.74 and $131,410.73 (Mr Armstrong and Mr Berger). 40 By letters dated 2 June 2005 the ATO sent to the Public Officers of each of Elsinora, Tioga and Perlette and to each of Mr Armstrong and Mr Berger a 'notice in respect of Section 255 of the Income Tax Assessment Act 1936 ' ('the 2 June 2005 Notices'). 41 By letter dated 28 June 2005, the ATO sent to the Public Officer of ANZ Nominees a 'notice in respect of Section 255 of the Income Tax Assessment Act 1936 ' ('the 28 June 2005 Notice'). On the material available, I have also found that the non-resident will derive income, or profits or gains of a capital nature, and that such income has its source in Australia. The powers and functions of the Commissioner under s.255 have been delegated to me. On the information currently available to me that amount is no more than $9,953,426.10. Retention of that amount will satisfy your obligations under this notice. On the material available, I have also found that the non-resident will derive income, or profits or gains of a capital nature from a source in Australia. The Commissioner is also authorized to act under that provision. The powers and functions of the Commissioner under s.255 have been delegated to me. On the information currently available to me that amount is no more than $9,953,426.10. Retention of that amount will satisfy your obligations under s.255 of the Act as described in this notice. On the material available, I have also found that the non-resident will derive income, or profits or gains of a capital nature from a source in Australia. The powers and functions of the Commissioner under s.255 have been delegated to me. On the information currently available to me that amount is no more than $9,953,426.10. Retention of that amount will satisfy your obligations under s.255 of the Act as described in this notice. NSD 96 of 2005, including in particular paragraphs 10, 11, 12, 13, 19, 21 and 29 thereof, the Commissioner considers s. 255 of the Act applies to you and all other Applicants except the Sixth Applicant E. C. Medical Investments NV. A copy of the relevant Legislation is enclosed. Below are the procedures you must follow to ensure that you comply with this notice. MEDICAL INVESTMENTS NV. MEDICAL INVESTMENTS NV ("the debtor"), of (or previously of) C/- T M F TERVUKENLAAN 13A 1040 BRUSSELS, BELGIUM, who, in terms of section 260-5 of Schedule 1 of the Taxation Administration Act 1953 has a debt payable to the Commonwealth of $9,953,426.10. In exercise of powers conferred on me as Deputy Commissioner of Taxation by delegation from the Commissioner of Taxation under section 8 of the Taxation Administration Act , YOU, ANZ NOMINEES LIMITED, ARE REQUIRED TO PAY TO THE COMMISSIONER OF TAXATION the sum of $9,953,426.10 or, if the available money is less than $9,953,426.10, the whole of the available money. If you do not owe the available money to the debtor but you will later owe it to the debtor, the payment to the Commissioner of Taxation is to be made immediately the money becomes owing to the debtor. While the matter is not free from doubt, I have come to the conclusion that it is not necessary for the person to have the receipt, control or disposal of money belonging to the non-resident at the time of service of the notice and that the operative provisions of pars (b), (c) and (d) will be triggered if and when the person, subsequent to service of the notice of requirement pursuant to par (a), has that receipt, control or disposal. Such a construction promotes the section's undoubted legislative function and purpose as a tax collection mechanism. The contrary view would mean that the Commissioner would have to know when a person had the receipt, control or disposal of money belonging to the non-resident and serve him with a notice of requirement pursuant to par (a) before he ceased to have that receipt, control or disposal. In many cases the Commissioner will know that a person will, or is likely to, have the receipt, control or disposal of money belonging to the non-resident, but not when he will have it. The conclusion to which I have come avoids that dilemma. The reason is that in my opinion the recipient of a notice is required to satisfy that description (be a Controller) either at the first, or at either of those two times, but Mr Wong did not satisfy either formulation of the requirement. Is see no reason why notional words such as "at any time and from time to time" should not be understood to qualify "having" and "derives" in the prefatory words. In other words, a notice given under par (a) can be expressed to have an ambulatory or ongoing operation and to require the recipient to pay not only tax that is already due and payable, but tax which may become due and payable in the future, and will do so if the non-resident derives further income. This construction apparently treats "when" not as referring to a time for payment, but as meaning "if". The construction is supported by par (b). As his Honour says, such construction is supported by par (b). 53 However, in Wong , Lindgren J made it quite clear (at [23]) that, in his view, notice or other communication of requirement pursuant to par (a) is the 'trigger' which activates the operative provision of subs 255(1), in particular that without that requirement, the provisions of pars (b), (c) and (d) are not activated. I entirely agree with his Honour's view in this regard. 54 One issue which arises from the terms of subs 255(1) is, in what circumstances, outside circumstances which attract the deeming operation of subs 255 (2), will money in the receipt, control or disposal of a person belong to another person, being a non-resident. 55 The concept of money 'belonging to' someone is a reference to money as a form of property; either coins and notes as chattels in possession; alternatively in the case of bank notes they may also be choses in action; negotiable instruments as choses in action; commercially acceptable forms of payment such as bank transfers, credit cards and debit cards, although not charge cards; and even deposits and credit balances to current accounts with banks and comparable institutions: See generally Mann on the Legal Aspect of Money , Sixth Edition, by Charles Proctor, 2005, Oxford University Press, Chapter 1: The Concept of Money. See too Conley & Anor v Commissioner of Taxation & Anor (1998) 81 FCR 24 at 27, 28 per Davies J; on appeal (1998) 88 FCR 98 at 104, 105 per Emmett J. 56 The concept of 'belonging' in the context of property, being plant and machinery, has been held in a different statutory context, to require absolute ownership of the property in law or in equity: Melluish v BMW (No. 3) Ltd (1996) AC 454. However, having regard to the different forms money can take as an item of property and to its peculiar characteristic of fungibility, there may be, depending on the circumstances, an inherent tension in referring to money in the receipt, control or disposal of one person being owned by another person; in some forms, the money will be owned by the person having the receipt, control or disposal of the money even though that person may be under some obligation to account for that money to another person; and that may explain why the legislature chose to use the phrase 'belonging to' rather than 'owned by'. The phrase 'belonging to' is a more elastic concept and better accommodates a situation where a person having the receipt, control or disposal of money is under an obligation to account for that money to another person. 57 However, outside the deeming afforded in the circumstances described in subs 255(2), for money (the relevant money) to qualify as 'belonging to' a person (the first person) where another person has the receipt, control or disposal of it, there must be an obligation annexed to the relevant money itself in favour of the first person; it would not be sufficient, in my view, that the only obligation of the person having the receipt, control or disposal of the relevant money is to pay to the first person a sum equivalent to the relevant money because, for example, the first person is a creditor of the person having the receipt, control or disposal of the relevant money. In that situation the relevant money, in the hands of the person having the receipt, control or disposal of it, would not belong to the first person, but for the deeming provided by subs 255(2). 58 Subsection 255(2) of the ITAA 1936 is a deeming provision; it deems a person who is liable to pay money to a non-resident to be a person having the control of money belonging to the non-resident; it also deems all money due by him to the non-resident to be money which comes to him on behalf of the non-resident. Without the first deeming, the person who is liable to pay may not have control of any money and, if he does, the money may not belong to the non-resident; it may well belong to the person liable to pay. Without the second deeming, the retention mandated by par (b) may not operate. These deeming provisions are obviously designed to overcome such problems. 59 But like all deeming provisions, they have to be construed strictly and only for the purpose to which they are resorted: Ex parte Walton; re Levy (1881) 17 Ch D 746 per James LJ at 756; Federal Commissioner of Taxation v Comber (1986) 10 FCR 88 at 96 per Fisher J. In other words, it does not operate to deem a person to have the control of money belonging to a non-resident save where the person is liable to pay money to that non-resident. So if a person [A] is liable to pay money to a non-resident [B], and B is liable to pay the same amount of money to another non-resident [C], A is not, by virtue of subs 255(2), deemed to have the control of money belonging to C. Nor, in such a case, will A have the control of money belonging to C on the analysis in [57] supra. It provides when a person (the third party) is taken to owe money to another (the debtor). In its form and context it is exhaustive and extends to situations where, but for the deeming, the third party may not, or would not, be regarded as owing money to the debtor. Paragraph (a) is concerned with the standard situation where the third party is indebted to the debtor whether the debt is due or accruing due to the debtor. To attract the deeming operation, par (b) requires the third party to hold money for or on account of the debtor. Unless there is a holding of money by the third party, the deeming cannot operate. Paragraph (c) also requires the third party to hold money, not for or on account of the debtor, but on account of some other entity for payment by the third party, not the other entity, to the debtor. Finally, par (d) operates to deem the third party to owe money to the debtor if the third party has authority from some other entity to pay the money to the debtor. The notices are said to be invalid and of no effect. It seems to me that what most, if not all, of these grounds put in issue is the operative effect of the notices rather than their validity; in other words, whether, in the relevant circumstances, the relevant notice operates to impose a statutory obligation on the addressee of the notice, in accordance with its terms. 66 The notice did not purport to be, and could not be construed as, a notice under subs 255(1)(a) of the ITAA 1936, namely, a notice by the Commissioner requiring Healthscope to pay tax due and payable by ECMI. The proper construction of the interaction between pars (a), (b), (c) and (d) inter se and between those paragraphs and the rest of the subsection may not be free from doubt but, that said, it is clear that until a person is required by the Commissioner to pay tax due and payable by the non-resident, the provisions of pars (b), (c) and (d) are not triggered and do not operate: See [53] supra. 67 It follows, in my view, that the 8 November 2004 Notice did not impose any statutory obligation on Healthscope in accordance with its terms. Senior Counsel for the Deputy Commissioner conceded as much when he said the 'section 255(1)(b) notices ... have no operation'. 68 The other grounds of challenge relied upon are considered below at [96] --- [106]. 70 The terms of this notice are sufficiently similar to the 8 November 2004 Notice to make the observations and conclusion with respect to the 8 November 2004 Notice ([65] --- [67] supra), equally applicable to this notice. 72 The terms of this notice are sufficiently similar to the 8 November 2004 Notice to make the observations and conclusion with respect to the 8 November 2004 Notice ([65] --- [67] supra), equally applicable to this notice. It is common ground that at the time of the giving of this notice, Healthscope had retained and was, and still is, in control of $9,953,426.10 of the purchase price payable for the remaining Gribbles shares. 74 Unlike the earlier notices, this notice was given to Healthscope pursuant to subs 255(1)(a) of the ITAA 1936. It referred to the fact that the Commissioner had issued a notice of assessment to ECMI that imposed a liability to tax due and payable on 1 December 2005 and required Healthscope to pay the tax due and payable by ECMI being an amount of $9,953,426.10 on 1 December 2005. The terms of the notice would trigger the operation of pars (b), (c) and (d) of subs 255(1) if the other requirements of the subsection are satisfied. Not surprisingly, it is the alleged failure to satisfy these other requirements which grounds the applicants' case for impugning this notice. 75 It is said that Healthscope did not have the receipt, control or disposal of money belonging to a non-resident; it only ever had, both before and at the time of the giving of the notice, and has control of money belonging to a resident, namely, ANZ Nominees. 76 It was not contended on behalf of the Deputy Commissioner, correctly in my view, that Healthscope was liable to pay money to ECMI at the time of the giving of the notice, or is now so liable, so as to attract the operation of the deeming of subs 255(2) of the ITAA 1936. 77 For the Deputy Commissioner it was contended that between 17 November 2004 and 21 January 2005 the applicants and Investec Trustees agreed that the liability of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger to make payment to ECMI under cl 3.3 of the five share sale agreements (see [19](5), supra) should be discharged by ANZ Nominees paying to Investec Trustees the proceeds of the sale of the remaining Gribbles shares to Healthscope and Investec Trustees disbursing the proceeds as to 0.63 cents per share to each of Elsinora, Tioga and Perlette, as to 0.5 cents per share to each of Mr Armstrong and Mr Berger, and the balance to ECMI. By reason of this agreement, it is said, part of the proceeds of sale payable by Healthscope belongs to ECMI. Accordingly, Healthscope is a 'person' having the receipt, control or disposal of money belonging to ECMI. 78 A threshold difficulty with this contention is that if such an agreement came into existence, and there is certainly evidence to suggest it did, neither Healthscope nor ANZ Nominees was a party to it. The contract formed upon acceptance of the offer was a contract between Healthscope and ANZ Nominees. Any moneys payable by Healthscope pursuant to that contract were payable to ANZ Nominees. As against Healthscope, no one other than ANZ Nominees had any claim or entitlement to those moneys representing as they did, the purchase price of the shares. This applies as much to that part of the purchase price retained by Healthscope, $9,953,426.10, as it does to the part paid, $84,871,940.55. 80 But a notice pursuant to subs 255(1)(a) of the ITAA 1936 will not trigger the operation of the subsection unless the money belongs to a non-resident. It is common ground that ANZ Nominees is a resident. From the point of view of the person, Healthscope, having the control of money belonging to another, that money, if it belongs to anyone in the sense referred to above, belongs to ANZ Nominees; and following completion of the takeover by the transfer by ANZ Nominees of the remaining Gribbles shares to Healthscope, it is clear, in my view, that the money representing the purchase price of the shares, including the $9,953,426.10 retained by Healthscope, is money belonging to ANZ Nominees. The fact that ANZ Nominees, when it receives the $9,953,426.10 from Healthscope, will have the receipt, control or disposal of money belonging to a non-resident is not the point; that is a consideration which arises under the 28 June 2005 Notice. 81 It follows, in my view, that the 15 February 2005 Notice did not and does not impose any statutory obligation on Healthscope in accordance with its terms. 82 The other grounds of challenge relied upon are considered below at [96] --- [106]. It is common ground that at the time of the giving of these notices, neither Elsinora, Tioga, Perlette, Mr Armstrong nor Mr Berger had 'receipt control or disposal of money belonging to [ECMI]'. 84 These notices were also given to their respective addressees pursuant to subs 255(1)(a) of the ITAA 1936. They also referred to the fact that the Commissioner had issued a notice of assessment to ECMI that imposed a liability to tax due and payable on 1 December 2005 and required each addressee to pay the tax due and payable by ECMI being an amount of $9,953,426.10 on 1 December 2005. The terms of the notices would trigger the operation of pars (b), (c) and (d) of subs 255(1) if the other requirements of the subsection are satisfied. Again, it is the alleged failure to satisfy these other requirements which ground the applicants' case for impugning the notices. 85 It is said that at the date of service of the notices, none of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger had the receipt, control or disposal of money belonging to ECMI. So much is common ground. However, for the reasons canvassed at [51] supra, I do not think the fact that none of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger had the receipt, control or disposal of money belonging to ECMI at the time of service of their respective notices rendered the notices incapable of operation; on the contrary, if and when any one or more of them subsequently came to have the receipt, control or disposal of money belonging to ECMI, the operative provisions of pars (b), (c) and (d) would be triggered. 86 To date, none of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger has had the receipt, control or disposal of money, being the $9,953,426.10 retained by Healthscope on the purchase of the remaining Gribbles shares. The Deputy Commissioner contends that if and when Healthscope pays ANZ Nominees the retained moneys, each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger will have the receipt, control or disposal of money belonging to ECMI and the requirement in their respective 2 June 2005 Notices will operate with respect to each. The basis of this contention is that upon payment of the retained sum to ANZ Nominees each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger is liable under the share sale agreements to pay his or its proportionate part of the retained sum to ECMI and in that event each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger is a person having the receipt, control or disposal of money belonging to ECMI by virtue of the deeming worked by subs 255(2). In my view, this argument is flawed because it is quite clear from the share sale agreements, in particular cl 4 of each, that any liability on the part of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger to ECMI only arises '[U]pon the unconditional release of any Withholding Tax to the Purchaser ...', that is, Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger. Until that occurs, and it certainly does not occur upon payment of the retained sum by Healthscope to ANZ Nominees, none of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger has any liability to ECMI for his or its proportionate part of the retained moneys. Indeed, the term 'Consideration' is defined in the share sale agreements so as to exclude 'Withholding Tax', as defined. It follows, in my view, that there is no scope for the operation of the deeming worked by subs 255(2) upon payment by Healthscope of the retained sum to ANZ Nominees. 87 If further follows, in my view, that the 2 June 2005 Notices did not impose any statutory obligation on Elsinora, Tioga, Perlette, Mr Armstrong or Mr Berger at the time of their issue and will not impose any statutory obligation on any of them if and when Healthscope pays the retained sum to ANZ Nominees. 88 The other grounds of challenge relied upon are considered below at [96] --- [106]. It is common ground that at the time of the giving of this notice, ANZ Nominees did not have 'receipt control or disposal of money belonging to [ECMI]'. 90 This notice was also given to ANZ Nominees pursuant to subs 255(1)(a) of the ITAA 1936. It also referred to the fact that the Deputy Commissioner had issued a notice of assessment to ECMI that imposed a liability to tax due and payable on 1 December 2005 and required ANZ Nominees to pay the tax due and payable by ECMI, being an amount of $9,953,426.10, on 1 December 2005. The terms of the notice would trigger the operation of pars (b), (c) and (d) of subs 255(1) if the other requirements of the subsection are satisfied. Again, it is the alleged failure to satisfy these other requirements which ground the applicant's case for impugning the notice. 91 It is said that at the date of service of the notice, ANZ Nominees did not have the receipt, control or disposal of money belonging to ECMI. I have already dealt with this ground in relation to the 2 June 2005 Notices (see [85] supra). Suffice it is to say, I do not think the fact that ANZ Nominees did not have the receipt, control or disposal of money belonging to ECMI at the time of service of the 28 June 2005 Notice, would vitiate the triggering of the terms of the notice if and when ANZ Nominees, at a later date, has the receipt, control or disposal of money belonging to ECMI. While the notice might remain dormant until such time as ANZ Nominees has the receipt, control or disposal of money belonging to ECMI, if and when that occurs the provisions of subs 255(1) will be activated and pars (b), (c) and (d), in particular, will be triggered. 92 The Deputy Commissioner contended that upon payment of the sum of $9,953,426.10 by Healthscope to ANZ Nominees, it would be required by s 255 to retain that sum. 93 The submission proceeds on the basis that by reason of the agreement referred to in [77] supra, the withheld sum of $9,953,426.10 received by ANZ Nominees, belongs to ECMI. Accordingly, upon receipt of the money ANZ Nominees will be a 'person' having the receipt, control or disposal of money belonging to ECMI. 94 I cannot accept this submission. When ANZ Nominees receives the $9,953,426.10 from Healthscope, the money will not belong to ECMI. First, it will not belong to ECMI pursuant to the deeming provisions of subs 255(2) of the ITAA 1936; in other words, ANZ Nominees will not have any liability to pay an equivalent sum of money to ECMI. Secondly, nor will it belong to ECMI, otherwise than through the deeming worked by subs 255(2), because there will be no obligation annexed to the money of which ANZ Nominees has receipt, control or disposal, to account for it to ECMI. 95 The other grounds of challenge relied upon are considered below. (2) ECMI was not a non-resident 'who derives income or profits or gains of a capital nature, from a source in Australia'. The only nexus is whether the relevant profit or gain arises from a CGT event in respect of a CGT asset having the necessary connection with Australia: see ss 136-10, 136-25 of the ITAA 1997. If it does then, in my view, the profit or gain of a capital nature has a source in Australia for the purposes of s 255 of the ITAA 1936. In the hands of ECMI, the Shares in Gribbles were clearly a CGT asset having the necessary connection with Australia (Item 5 of the Table in s 136-25 of the ITAA 1997); equally clear, in my view, the source of the profit or gain of a capital nature is, in those circumstances, in Australia. (3) There was no 'tax due and payable by the non-resident' (ECMI) at the time of the issue of the subs 255(1)(b) notice or at all. No notice of assessment had been issued . (4) Even if Healthscope did have 'receipt control or disposal of money' that money was not 'money which comes to him [Healthscope] on behalf of the non-resident'. What is said at [97](1), (2) and (4) is equally applicable to this notice. The other ground of challenge at [97](3) is different. It is still contended that there was no 'tax due and payable by the non-resident' at the time of the issue of the s 255(1)(b) notice or at all, however, this time it is put on the basis that the notice of assessment dated 1 December 2004 was not a valid assessment within the meaning of the ITAA 1936. I deal with the validity of this assessment and the amended assessment issued by notice dated 21 January 2005 at [109] --- [114] inclusive, infra, however, for the reasons given at [52] supra, and repeated at [97](3), this ground of challenge cannot be sustained. In my view, the fact that at the time of the issue of a notice under subs 255(1)(a) a notice of assessment had not issued or, had issued but was not a valid assessment, with the consequence that no tax was due and payable by the non-resident at the time of the issue of the s 255(1)(a) notice, is not a bar to its validity as a notice. It can have an ongoing or ambulatory operation with respect to tax which may become due and payable in the future. ANZ Nominees did not receive any moneys until 21 January 2005, when it received the proceeds of sale of the Gribbles shares, less the withholding sum. It could not be deemed to be a person 'having the receipt control or disposal of money' belonging to a non-resident, pursuant to subs 255(2), because it was not 'liable to pay money' to ECMI . I have already dealt with this matter at [51] supra. On the view I take, the validity of the notice cannot be impugned on the basis that at the time of the issue of the notice ANZ Nominees was not a person 'having the receipt control or disposal of money belonging to a non-resident'. (2) If ANZ Nominees did have the 'receipt control or disposal of money belonging to a non-resident', the non-resident was not ECMI. The notice of assessment dated 1 December 2004 was not a valid assessment within the meaning of the ITAA 1936. Rather, ECMI is the 'non-resident'. If a 'person' was to be confined to a 'resident' then that latter word would have been used, cf., the use of the word 'non-resident' rather than 'person', and if a 'person' was to be confined to a person 'in Australia', the words 'in Australia' would have appeared after the word 'person', cf., s 18A of the Income Tax Management Act (NSW) 1912 . 103 However, having regard to what the Commissioner concedes is the undoubted purpose of s 255 of the ITAA 1936 --- 'to prevent the possibility of overseas dissipation by prescribing the retention of "money belonging to a non-resident"', in the face of the principle that the courts will not recognise or enforce, directly or indirectly, a foreign revenue claim: Rosanno v Manufacturers' Life Insurance Co [1963] QB 352; Government of India v Taylor [1955] AC 491 --- the construction of subs 255(1) which reads the word 'person' as being a resident or non-resident, whether in or out of Australia, can only have an effective operation in terms of its legislative purpose, if the person's receipt, control or disposal of the money (belonging to a non-resident) is in Australia. 104 It follows, in my view, that a requirement, in terms of par (a) of subs 255(1) of the ITAA 1936, by the Commissioner of a person who does not have the receipt, control or disposal of money (belonging to a non-resident) in Australia, will not be operative in accordance with its terms. 105 As to the second of these grounds of challenge, the terms of the notices, in my view, must be read and construed having regard to the provisions of par (c) of subs 255(1). If that construction of the notices is not to be adopted, then I would agree that the terms of the notices, at least to the extent that they require the recipients to pay to the Commissioner an amount in excess of the amount that the recipient has retained, or should have retained, under par (b) of subs 255(1), does not impose a statutory obligation on the recipient. 106 The 28 June 2005 Notice was impugned on the same additional grounds as the 7 January 2005 Notice --- see [99] supra --- and the observations there made at [99](1) --- (5) inclusive are equally applicable to the additional grounds of challenge to this notice. In the circumstances, I do not propose to deal with them further. 108 The s 260-5 Notices to each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger and to ANZ Nominees were each challenged on the basis that there is no debt or tax related liability payable because the assessment issued to ECMI by notice dated 1 December 2004 and the amended assessment issued to ECMI by notice dated 21 January 2005 were invalid. The same ground of challenge was raised in relation to the s 255 notices from and including the 24 December 2004 Notice, namely the 7 January 2005 Notice, the 15 February 2005 Notice, the 2 June 2005 Notices and the 28 June 2005 Notice. As the merit of this ground of challenge is not dependent on the particular notice, it is appropriate to deal with the ground on a comprehensive basis with respect to all relevant notices. There is, in those circumstances, no assessment at all. Unless, the 'minimum requirements' for such an assessment are met, s 175 does not apply. (2) The assessment (and amended assessment) purport to be assessments 'for the period 1 July 2004 to 30 June 2005'. However perfunctory --- or mathematically flawed --- there must be some consideration --- or assessment --- of deductions and, in the case of a capital gain, of capital losses as only the net capital gain for the period is brought into the assessable income. (4) The only available inference is that the assessments were issued to cover the entirety of the asserted tax payable on the capital gain without consideration being given to generally assessing the taxable income for the period. It has not been suggested that there are such losses or deductions, but even if there were, it would always be open to the taxpayer to deal with such matters by way of objection. 113 It has not been suggested, nor could it, that the Commissioner has not made a definitive, as distinct from a provisional or tentative, ascertainment of ECMI's taxable income for the year ended 30 June 2005 and the tax payable thereon. As an exercise of the power to assess, it has been asserted that it is not a bona fide exercise of the power but the only basis which has been put forward for this assertion is that the assessments were made for the purpose of supporting the various s 255 notices and s 260-5 notices, rather than generally assessing tax payable. I cannot accept this submission. The s 260-5 Notices were issued long after the issue of the assessment and amended assessment and, on the view I take of s 255 of the ITAA 1936, the validity of the s 255 notices is not dependent upon the existence of a valid assessment to the non-resident, in this case, ECMI. 114 This ground of challenge cannot be sustained. 116 This ground of challenge is said to be supported by a number of considerations --- common law and statutory presumptions that legislation is not to be construed as having extraterritorial effect; s 21(1)(c) of the Acts Interpretation Act 1901 (Cth) as an example of a statutory presumption and the non-rebuttal of such presumptions by the Commissioner; s 260- 5 creates an offence and exposes a person who fails to comply with a notice issued to the prospect of penalties and a liability to pay moneys and therefore should be construed strictly; it is not to be readily presumed that a non-resident of Australia should be made liable to pay tax imposed by Australian legislation --- indeed, it would be a surprising --- and perhaps unacceptable --- conclusion for Commonwealth legislation to be construed as authorising or otherwise permitting a notice to be served or given to a citizen or resident of a foreign jurisdiction requiring that citizen or resident to pay Australian tax or to pay moneys on account of tax assessed in Australia. 117 I am not convinced that any of these considerations should lead me to the conclusion that s 260- 5 cannot have an extraterritorial operation in the sense that it does not authorise the Commissioner to give a written notice to an entity which owes or may later owe money to the tax debtor where the entity is not a resident of Australia or is not in Australia at the time of the giving of the notice. I cannot identify any legislative policy underlying the introduction of Division 260, in particular subdivision 260-A in Schedule 1 of the Administration Act, replacing as it were s 218 of the ITAA 1936, nor anything in the context of those provisions, which would so circumscribe the operation of s 260-5. 118 Section 260-5 is not, like s 255 of the ITAA 1936, predicated on the person having the receipt, control or disposal of money belonging to a non-resident. On the contrary, subs 260-5(2) empowers the Commissioner to give written notice to an entity if the entity owes or may later owe money to the tax debtor. In other words, it is not even necessary for the entity to owe money to the tax debtor at the time of the giving of the notice. Moreover, the tax debtor need not be a non-resident unlike s 255 where the money of which the person has the receipt, control or disposal must belong to a non-resident. 119 This is not to say that the issue of a notice by the Commissioner pursuant to subs 260-5(2) to an entity that is a non-resident of Australia which owes money to another non-resident of Australia which is a tax debtor will have any utility as a garnishee mechanism. The likelihood, I would have thought, is that the entity served with the notice may well ignore it because the circumstances may be such that if it complies with the notice and pays the Commissioner, it may not be entitled to rely on the indemnity provided by s 260-15. Much will depend on the proper law governing the terms of the indebtedness between the entity served with the notice and the tax debtor. However, that is a totally different matter from the issue as to whether s 260-5 has an extraterritorial operation so as to entitle the Commissioner to give notice to an entity which is domiciled or resident outside Australia and otherwise has no presence in Australia. This must be right. At neither time does, or will ANZ Nominees owe money to anyone other than CSC as bare custodian for Elsinora, Tioga and Perlette and for Investec Trustees as bare custodian for Mr Armstrong and Mr Berger. Second, it is said that, even taking into account the deeming worked by subs 260-5(3), ANZ Nominees is not taken to owe money to ECMI at the time of the issue of the notice, nor will it be taken to owe money to ECMI if and when it receives the retained sum from Healthscope. Again, that must be right. At neither time does, or will, ANZ Nominees have any monetary obligation to ECMI which is due or accruing due. (2) Does ANZ Nominees hold money for or on account of ECMI: Par (b). Again, that must be right. At neither time does, or will, ANZ Nominees hold money for or on account of ECMI. At both times it will only hold money for or on account of CSC, Investec Trustees or Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger. (3) Does ANZ Nominees hold money on account of some other entity for payment to ECMI: Par (c). Again, that must be right. For the Commissioner it was contended that on its receipt of the retained sum from Healthscope, ANZ Nominees will hold money on account of CSC or Investec Trustees, or on account of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger, for payment to ECMI. In my view, that is not so. What par (c) of subs 260-5(3) is concerned with is situations where the entity concerned (ANZ Nominees) holds money on account of some other entity (CSC or Investec Trustees, or Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger) for payment by ANZ Nominees to the tax debtor (ECMI); in other words, where the first mentioned entity (ANZ Nominees) itself has a dual or split obligation to hold the money on account of some other entity for payment to the tax debtor (ECMI). It is not concerned with a situation where the first mentioned entity holds money on account of some other entity where that other entity is under some obligation to pay it to the tax debtor. In the present case, ANZ Nominees will not hold money on account of CSC or Investec Trustees, or on account of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger for payment to ECMI; on the contrary, it will hold money on account of CSC or Investec Trustees, or on account of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger, for payment to them. (4) Does ANZ Nominees have authority from some other entity to pay the money to ECMI: Par (d). Again, that must be right. (2) None of the s 255 notices addressed to ANZ Nominees, that is, the 7 January 2005 Notice and the 28 June 2005 Notice, will impose a statutory obligation on ANZ Nominees in accordance with its terms if and when ANZ Nominees receives from Healthscope the retained sum of $9,953,426.10. (3) None of the 2 June 2005 Notices will impose a statutory obligation on each of Elsinora, Tioga, Perlette, Mr Armstrong and Mr Berger in accordance with its terms unless and until the addressee has, in Australia, the receipt, control or disposal of the money representing the retained sum of $9,953,426.10. This will not occur until each has received its proportionate share of the retained sum. (2) The s 260-5 Notice addressed to ANZ Nominees will not impose a statutory obligation on ANZ Nominees in accordance with its terms if and when ANZ Nominees receives from Healthscope the retained sum of $9,953,426.10 because at that point in time ANZ Nominees will not owe money to ECMI nor will it be taken to owe money to ECMI by virtue of the provisions of subs 260-5(3) of Schedule 1 to the Administration Act. I have found that the assessment, issued by notice dated 1 December 2004, and the amended assessment, issued by notice dated 21 January 2005, are entitled to the protection of ss 175 and 177(1) of the ITAA 1936. I have also expressed the view that the challenges to the s 255 notices and the s 260-5 Notices go not so much to their validity, but whether they impose a statutory obligation on the addressee(s) in accordance with their respective terms. I have found that they do not but I do not think this entitles the applicants to the relief sought, namely declarations that the notices are invalid. 125 Likewise, the order for injunctive relief restraining the Deputy Commissioner from issuing further notices pursuant to s 255 of the ITAA 1936 to Healthscope and ANZ Nominees in relation to the sum of $9,953,426.10 retained by Healthscope on the purchase of the remaining shares in Gribbles and declaratory relief and ancillary orders was not pressed and I decline to make any such orders. 126 However, in view of my finding that none of the s 255 notices and the s 260-5 Notices imposes a statutory obligation on the addressee(s) in accordance with its terms, it follows that the Deputy Commissioner is not entitled to the declaratory relief sought in her cross-claim, namely the relief set out at [7](1) --- (5), supra. It also follows that I decline to make the orders sought in her cross-claim namely the orders set out at [7](6) and (7) supra. The cross-claim must be dismissed. 127 I am prepared to hear the parties on what orders, if any, consistent with these reasons, they would have me make in respect of the applicant's application. 128 The Deputy Commissioner must pay the costs of the applicants and the first and second respondents. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | income tax collection and recovery of tax income tax assessment act 1936 (cth), s 255 collection from person having receipt control or disposal of money belonging to non-resident where commissioner communicated requirement by notice at particular time whether relevant receipt control or disposal required at that time whether tax must be due and payable by non-resident at that time circumstances in which money belongs to another person whether obligation to pay equivalent sum sufficient operation of deeming provision where liability arises on fulfilment of condition taxation administration act 1953 (cth), sch 1, s 260- 5 collection from person owing money to taxpayer circumstances in which third party owes or may later owe money to debtor whether privity required effect of deeming provisions in s 260- 5 (3) 'money belonging to' taxation words & phrases |
The respondents primarily seek to have the proceedings dismissed or the pleadings struck out. 2 The applicant was formerly employed by the Australian Federal Police. In around July 2004, an internal investigation was commenced into certain complaints made against the applicant. The applicant's employment was ultimately terminated in December 2005. The proceedings brought by the applicant broadly concern this termination and the surrounding events. The applicant has filed an application for an order of review and a statement of claim in both proceedings, as well as a number of subsequent versions of these documents. Numerous causes of action are potentially raised. 3 The matter is complicated by the fact that the applicant is now a bankrupt. It is necessary to consider which if any of the causes of action the applicant maintains can continue in his name, pursuant to s 60(4) of the Bankruptcy Act 1966 (Cth). The Supreme Court proceedings were commenced on 14 December 2005, by application for an order of review. That application invokes the Administrative Decisions (Judicial Review) Act 1989 (ACT) ("ADJR Act (ACT)") although other legislation is also referred to, including the Human Rights Act 2004 (ACT). Statements of claim were later filed, the first of which was on 5 June 2006, apparently in response to an order of a judge of the Supreme Court of 4 May 2006. On 1 December 2006, an order was made transferring the proceedings to this Court pursuant to s 5(1)(b)(i) of the Jurisdiction of Courts (Cross Vesting) Act 1993 (ACT). Those proceedings are ACD 35 of 2006. It is unnecessary to address in these reasons, whether the proceedings should have been transferred, though I presently doubt that they should have. 5 On 4 July 2006, when the Supreme Court proceedings had not yet been transferred, the applicant commenced proceedings in this Court, again by way of an application for an order of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act") (ACD 17 of 2006). Filed together with the application was an affidavit of the applicant in which he apparently seeks to explain the delay in filing the proceedings in this Court (which is in terms of having first brought proceedings in the Supreme Court). It appears that the applicant would require an extension of time to file the application for an order of review in this Court, being outside the 28 day time limit: see s 11(3) of the ADJR Act . The respondents do not oppose any application for an extension of time. 6 The application primarily invokes the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act"), although again various other legislation is also referred to, including the Human Rights Act 2004 (ACT) and the Workplace Relations Act 1996 (Cth) ("WRA"). A draft statement of claim was filed on 11 August 2006, in response to a direction of Gyles J. 7 As noted earlier, the applicant has filed various amended versions of the application for an order of review and the statement of claim in each proceeding. He has also sworn numerous affidavits in the proceedings. The applicant has said that he seeks to rely upon all the documents he has filed to date, including all the pleadings, not merely the most recent versions. The pleadings in particular are discursive and largely in the form of submissions. They tend to be repetitive and difficult to follow. A number of orders have been made by this Court in an attempt to provide the applicant with an opportunity to better, more concisely and precisely articulate his case, as well as to ensure that the respondents are properly informed of the case to be met. Orders were also made by the Supreme Court apparently with the same purpose in mind. The respondents have also been directed to take a number of steps in order to assist the applicant in reformulating his case and to inform the applicant of the respondents' objections to the pleadings he has filed and to provide him with an opportunity to reformulate his case accordingly, should he wish. Unfortunately, despite these measures, the applicant's case is little clearer as a result. A summary of the relevant orders of this Court is as follows. 8 On 20 July 2006, at the first directions hearing, Emmett J directed the applicant to file and serve a statement setting out each decision in respect of which the applicant sought judicial review under the ADJR Act , the person who made that decision and the date on which it was made, the enactment under which the decision was made and the grounds in s 5 of the ADJR Act upon which he sought review. The applicant was also directed to file a draft statement of claim which he sought leave to file. The applicant filed the relevant documents in August 2006. Both the statement and the draft statement of claim are lengthy documents (31 pages and 28 pages respectively) and are generally in the form of submissions. The statement is in very similar terms to the application for an order of review, although it contains some additional references to legislation. In the statement, the applicant has attempted to identify the grounds and the relevant enactments. However, the grounds of the ADJR Act identified include every ground under ss 5 and 6 of the ADJR Act . The enactments he identifies as being those under which the "decisions" were made are numerous sections of several different Acts, including the Privacy Act 1988 (Cth), the WRA and the Evidence Act 1995 (Cth). The document is not readily comprehensible and did not clarify the applicant's case. The draft statement of claim is also difficult to follow. It is similar in content to the application for an order of review and refers to various legislation. It is by no means clear from that document which causes of action the applicant seeks to raise. 9 On 31 August 2006, when the matter was heard for directions by Gyles J, the respondents were directed to write to the applicant advising him of the defects in his statement of claim and application. The applicant was directed to serve an amended statement of claim and amended application for review in response or to advise that he did not intend to do so. His Honour also directed the respondents to either file a notice of motion to object to competency or seeking orders for summary dismissal or strike out, or advise that they did not intend to do so. 10 The respondents' solicitors duly wrote to the applicant by letter dated 14 September 2006, setting out in some detail the various legal difficulties with the applicant's case to assist him to reformulate his claims. The letter is annexed to an affidavit of the respondents' solicitor, Karina Harvey, sworn 21 June 2007. 11 On 25 September 2006, the applicant filed a number of documents. These included an amended application for order of review and an amended statement of claim. In the amended statement of claim, the applicant said that it had not been possible at that time to re-submit a complete version of that document. The applicant also filed an affidavit in which he apparently seeks to explain why he had been unable to file a "complete" document, referring to the lack of legal representation and matters of general background. 12 The matter came before me on 7 November 2006. I directed the applicant to file and serve an amended application for order of review and an amended statement of claim. A direction was also made regarding the respondents in the terms of the directions made by Gyles J on 31 August 2006. 13 The applicant proceeded to file the documents the subject of the direction, as well as another "statement". None of these documents provide any further real assistance, nor are they any more succinct. 14 Both proceedings came before me for directions on 15 December 2006, the transfer order having been made by that stage. The applicant was directed to file all his evidence, in the form of affidavits, on which he intended to rely. This direction was made before the respondents were required to file their response to the pleadings with a view to enabling the applicant to put his case as best he could and to hopefully allow the respondents to distil the causes of action relied upon the applicant and inform them of the case to be met. 15 In response, the applicant filed an affidavit of some 58 pages in length. It is similar in terms to the documents previously filed although contains further detail in some respects. Again, it is generally in the form of submissions and allegations. 16 On 8 March 2007, when the proceedings were again before me for directions, I directed the respondents to write to the applicant identifying what in their understanding were the decisions which the applicant sought to challenge under the ADJR Act . The applicant was directed to respond by indicating which if any of those decisions he sought to impugn. The respondents were directed to then file any notice of motion challenging the contention that such decisions were reviewable. 17 In accordance with the direction, the respondents' solicitors wrote to the applicant by letter dated 28 March 2007, setting out in detail the decisions which it apprehended the applicant was seeking to challenge and including references to the relevant documents filed by the applicant. That letter was also annexed to the affidavit of Ms Harvey sworn 21 June 2007. 18 On 10 April 2007, the applicant filed a statement in response to the letter received by the respondents' solicitors. The applicant took issue with the fact that the letter had apparently only sought to include those "decisions" which the applicant had identified in his most recently filed application for an order of review. The applicant asserted that all the evidence in his affidavit of 19 February 2007 (which was at that date the most recently of the applicant's affidavits) "is capable of being the subject of a judicial review". 19 The respondents' notices of motion were then filed on 3 May 2007. Statements of claim and "amended" versions were subsequently filed. In total in both proceedings combined, there are six applications for an order of review and five statements of claim. 21 The applications for an order of review in both proceedings may be considered together for present purposes. It is evident from the applications for an order of review, as well as his written and oral submissions, that the applicant seeks judicial review of a series of events leading up to and surrounding his termination. The applicant seeks to characterise every aspect of the process as an "administrative decision" of which review is sought. Many of these do not appear to be in the nature of decisions, even using that term in a non-technical sense. That order was made pursuant to s 111 of the Firearms Act 1996 (ACT) and prohibits the applicant from possessing or using a firearm. 23 The significance of the above three "decisions" is that the respondents concede, at least broadly, that they are amenable to review (although in the case of the prohibition order, not under the ADJR Act ). 24 The applicant has resisted confining his case for judicial review to the three "decisions" referred to earlier. It should be noted at this point that in some of the applications for an order of review, the applicant describes the many matters in relation to which judicial review is sought as both a "decision" and "conduct". The term "decision" is used in these reasons, for brevity. 25 Examples of the numerous other "decisions" which the applicant seeks to challenge include the decision by the second respondent to allow the applicant to continue as a serving member of the AFP whilst having a serious "criminal office" substantiated against him, and the "administrative decision" of the second respondent in failing to take proper or sufficient action in response to the eight written reports lodged by the applicant. 26 To the above list may be added the handling of the reports lodged by the applicant (or failure to take proper action in relation to those reports). The applicant appears to regard this as an important aspect of his case. 27 In additional to seeking judicial review, the applicant raises numerous other potential causes of action in both the applications for an order of review and the statements of claim. 28 To the above list may be added a complaint made by the applicant which appears in various pleadings concerning certain statements allegedly made by a solicitor for the respondents, who is not a party to these proceedings, on an occasion when the matter was in the Supreme Court. 29 The orders which the applicant seeks in the applications for an order of review are numerous. They include reinstatement, setting aside the termination and serious misconduct decisions, an order for the return of property seized from the applicant, and damages. In the statements of claim, the relief sought includes administrative law remedies as well as reinstatement and damages. The damages sought include damages for psychological injury. An application to set aside the bankruptcy notice had earlier been dismissed by the Federal Magistrates Court: see Fitzpatrick v Kidney [2007] FMCA 942. An appeal from those orders, and certain related orders, was dismissed by a judge of this Court (Madgwick J) on 19 September 2007: see Fitzpatrick v Keelty [2007] FCA 1658. His Honour did not "order a stay or injunction or do anything else of the kind that would prevent the ordinary operation of s 60 of the [Bankruptcy] Act" (see [38] of his Honour's reasons). Other orders had also been made by the Federal Magistrates Court on 3 August 2007 in the context of an application for annulment, which were somewhat unusual: see Fitzpatrick v Kidney [2007] FMCA 1422. The effect of the orders was to make an order for annulment, but to stay the operation of that order for 28 days and subject the annulment to the fulfilment of certain conditions. There has been no suggestion that the conditions the subject of the orders of 3 August 2007 have been satisfied. 31 Section 60 of the Bankruptcy Act relevantly concerns the stay of legal proceedings commenced by a person who subsequently becomes a bankrupt. The trustee was asked to advise of his election to prosecute or discontinue each of the actions within 28 days. Ms Harvey deposed that no response had been received. Accordingly, the proceedings are deemed abandoned pursuant to s 60(3). The issue is whether the applicant can continue any part of the proceedings in his own name pursuant to s 60(4). 33 At the time of the hearing of the present motions on 31 August 2007, the appeal to this Court (which led to the judgment of Madgwick J of 19 September 2007) was awaiting hearing. At the hearing before me, both parties made submissions concerning the effect of the orders of the Federal Magistrates Court. After Madgwick J's judgment was given, the parties were provided with an opportunity to make written submissions concerning the effect of that judgment on the present proceedings. Submissions were received from the applicant and the respondents. 34 The applicant's submissions, made both orally at the hearing and in written form afterwards, primarily concern the propriety and legality of the Federal Magistrate's orders of 3 August 2007. However, these proceedings do not involve a challenge to the Federal Magistrate's orders, nor were those orders challenged in the proceedings before Madgwick J: see his Honour's reasons at [33]. 35 The applicant also submitted, at the hearing, that the sequestration order has no effect on these proceedings. He indicated that he relied upon s 60(4) , although he did not elaborate on these submissions, other than to make allegations of impropriety and illegality of the various orders made by the Federal Magistrates Court. 36 The applicant's written submissions on the bankruptcy issue provided post-hearing are lengthy and contain numerous allegations of impropriety and corruption variously relating to the creditor, the trustee, the respondents' solicitors, the Federal Magistrates by whom the relevant orders were made and the judge of this Court dismissing the appeal, and the processes involved. In terms of the effect of the applicant's bankruptcy, the applicant submits that it would not be appropriate for me to adjudicate on the proceedings he has brought in this Court until "all such complaints and allegations [concerning the bankruptcy action] have been subjected to full and proper independent inquiry/investigation in the interests of justice and, the integrity of our judicial system". 37 The respondents submit that as a result of the deemed abandonment of the proceedings, the stay provided by s 60(2) continues to operate, referring to the discussion by Ipp J in Stobbart v Mocnaj (1996) 16 WAR 318 at 323. The effect of the deemed abandonment of the proceedings, where the applicant may not continue the proceedings in his own name, is that the proceedings are stayed: Daemar v Industrial Commission of New South Wales and Another (No 2) (1990) 99 ALR 789, per Kirby P at 790. 38 The respondents submit that neither of the proceedings fall within the description in s 60(4) (an action in respect of any personal injury or wrong) and thus neither may be continued by the bankrupt. The respondents also submit that to the extent that it could be said that the applicant has identified causes of action which individually fall within s 60(4)(a) , those causes of action have not been properly pleaded and should be struck out or dismissed. The test as to the meaning of the words "personal injury or wrong done to the bankrupt" is whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property: see Cox v Journeaux (No 2) [1935] HCA 48 ; (1935) 52 CLR 713 at 721 per Dixon J. 40 The meaning of s 60(4)(a) was also considered by the Full Court of the Federal Court in Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545. That is not to deny him his right to allege "personal injury or wrong done to" him or members of his family. But if the injury that was suffered or the wrong done arose as a direct result of the alleged infringements of his financial or property rights, as was the case in Faulkner v Bluett , then "the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt". (at 119) To apply the language of Handley JA in Manningell v Hewlett to Mr Bryant's circumstances his claims for stress and suffering were "consequential upon alleged breaches" of duty said to be owed to him by the Bank as a mortgagee or secured creditor and were not claims "without reference to [his] rights of property", within the principle stated by Dixon J in Cox v Journeaux . 42 The respondents have in effect submitted that in determining whether s 60(4) applies to the proceedings, the proper approach is to regard the proceedings as stemming from the termination of the applicant's employment. The respondents rely upon Pelechowski v NSW Land and Housing Commission [2000] FCA 233 in support of the proposition that s 60(4) does not apply to such proceedings . In Pelechowski , a judicial registrar had dismissed an application by the applicant for relief, finding that there was no substance in the application and that the applicant had been guilty of serious misconduct. Madgwick J concluded that proceedings for unlawful termination of employment under the WRA did not fall within the Cox test and thus s 60(4) did not apply, because an essential element of the proceeding was that one's economic relations with one's former employer had been disrupted and property rights were at the heart of such proceedings. His Honour's reasons were delivered ex tempore. His Honour noted that the applicant had principally sought reinstatement, that the relief sought was essentially of an economic nature, and that the application did not appear to have made any claim for compensation in the way of damages for personal injury. I am bound to follow this judgment unless I conclude it is plainly wrong. I have not reached that view. 43 Interestingly, in Pelechowski , the applicant had been an employee of the Department of Housing. His Honour noted that "[t]hose economic relations [with one's former employer] depend upon contract, or perhaps in the case of a public servant, a statutory relationship, but nevertheless of a contractual or quasi-contractual kind, that is to say, property rights are at the heart of the proceedings" (at [5]). His Honour's view therefore was that insofar as termination proceedings were concerned, no distinction was to be made between those employed pursuant to statute and other employees in the context of s 60(4). 44 Section 60(4) was also considered by the Court of Appeal of New South Wales in Daemar v Industrial Commission (NSW) (1988) 12 NSWLR 45 ("Daemar"). In Daemar , the applicant sought prerogative relief (as well as damages and declaratory relief) in relation to orders made by the Industrial Commission of New South Wales. Pursuant to s 88F of the Industrial Arbitration Act 1940 (NSW), the Commission had declared void a contract between a Mr Sheath (who was the applicant in the proceedings) and a company with which Mr Daemar was associated. The proceedings then commenced by Mr Daemar sought relief in relation to criticism of him by the Commission in its reasons. 45 Kirby P, with whom Samuels and Clarke JJA agreed, held that the proceedings brought by Mr Daemar did not fall within the exemption provided in s 60(4) of the Bankruptcy Act . His Honour noted the terms of s 116 of the Bankruptcy Act which provided for property which was divisible amongst the bankrupt's creditors and lists the exemptions of designated "property". This is so, notwithstanding that it involves personal inconvenience to the bankrupt: see Faulkner v Bluett (1981) 52 FLR 115 at 119. Indeed, it is so notwithstanding the fact that it deprives the bankrupt of important civil rights which he or she would otherwise normally enjoy. It is of the essence of bankruptcy, as provided for by the Act, that property which belongs to the bankrupt, including choses in action (other than those which are specifically exempted) are vested upon bankruptcy in the bankrupt's trustee. ... It could scarcely be otherwise for if it were, valuable interests which a bankrupt might have, in the form of choses in action would not be caught in the net cast by the very wide language of s 116(1). His is not the disinterested act of a public spirited citizen seeking, for whatever reason, to vindicate the rule of law. The whole purpose of his case is to seek specific redress against an order of the Commission which he claims to have been unjust and to have damaged him. His "action" is therefore of the very kind to which s 60(2) was designed to apply. Obviously, the prosecution of litigation commenced before bankruptcy by a person who later becomes bankrupt can involve the potential or actual diminution of the estate of the bankrupt available to his creditors. On occasion, it can, of course, provide a benefit to the creditors. That is precisely why Parliament has provided for the trustee to make an election. They must, in accordance with the ordinary canons of construction, be read in the context in which they appear. The meaning of the expression, taken from that context, has been explained in numerous cases. Although it is true that the claimant contends that a "wrong" has been done to him and that he has suffered hurt and even "defamation"... these contentions are irrelevant to the task of identifying, for the purpose of s 60(4)(a) of the Act, the nature of the action exempted from the stay. The exemption is limited to those cases where it has been considered appropriate to sever the personal interests of the person subsequently made bankrupt from his property, and to reserve to him the prosecution of and benefits derived from such litigation as not being legitimately entitlements of the creditors. In the present proceedings, there is nothing to suggest that the applicant's bankruptcy was connected in any way with the "personal injury" or "wrongs" of which the applicant now complains. However, his Honour's preceding observations concerning the nature of cases in which the exemption in s 60(4) applies are of general application. 49 An issue which has arisen in a number of cases is whether it is possible to sever or separate certain causes of action which would fall within s 60(4) from other aspects of the proceedings. In Byrant , Lockhart J (at 548-549) discussed a number of cases where there were mixed causes of action, some of which were found to have vested in the trustee and others not. From the cases considered by Lockhart J, his Honour distilled the principle that a claim for damages for injury to personal and mental health will not fall within the exemption in s 60(4) where the claim cannot be made without reference to the bankrupt's rights of property. 50 The Supreme Court of Queensland recently considered the issue of severance of claims under s 60(4) in Hamilton v Young [2007] QSC 160. The Court in Hamilton considered the issue of whether a claim for damages for the cost of raising an unplanned child can be characterised as claim for damages for "personal injury or wrong". The Court was not asked to stay the part of the bankrupt's claim for personal injuries, but was asked to stay that part of her action claiming damages for the cost of raising her child. Douglas J (at [11]) considered that the word "wrong" in s 60(4) identified a personal tort affecting the person or feelings of the bankrupt, and not, as in the circumstances in Hamilton , the loss to her of property caused by the expense of bringing up her child. In any event, I am satisfied that the judicial review proceedings the applicant has brought bear the same general character as the proceedings considered in Pelechowski and Daemar . In my opinion, all the "decisions" which the applicant seeks to challenge (leaving aside whether they are amenable to review) directly arise from or are incidental to the termination of his employment and do not fall within the exception in s 60(4). The ability for the applicant to continue these causes of action also depends upon these actions being severed from those parts of the proceedings which do not fall within s 60(4). I propose to deal with those causes of action on the assumption that they can be treated, individually, as falling within s 60(4), as the respondents' submissions appeared to accept. I am satisfied that the applicant has no reasonable prospect of successfully prosecuting that part of the proceedings concerning those causes of action and that judgment should be given for the respondents. 53 One of these potential actions is defamation. The pleadings filed by the applicant refer in a general sense to damage to his character and reputation and to "defamation", as well as more specifically in relation to the contents of the reports and statements made by the respondents' solicitor in Court. As the respondents have submitted, the applicant has not particularised the statements, other than in the case of the alleged statements of the solicitor in relation to which he has provided more detail. He has not particularised the effect of any statements on his reputation. As the respondents have submitted, even if statements made by the solicitor were defamatory, the express defence of absolute privilege may well apply. I am satisfied that to the extent that the applicant has raised a cause of action in defamation there is no reasonable prospect of successful prosecution. 54 The respondents submit that to the extent that the applicant has raised claims in negligence which may fall within the Cox test, the proceedings have no reasonable prospect of success. The respondents cited Tame v New South Wales; Annetts v Australian Stations Pty Ltd [2002] HCA 35 ; (2002) 211 CLR 317 in support of the proposition that an investigating officer does not owe a duty of care to a person whose conduct is under investigation because it is inconsistent with a police officer's duty. Investigators in internal disciplinary investigations also do not owe a duty of care to the employee being investigated: see State of New South Wales v Paige [2002] NSWCA 235 ; (2002) 60 NSWLR 371. The respondents also submit that there is no suggestion in the material filed by the applicant that the actions complained of occurred outside any officer's course of duty, and that the actions should therefore be dealt with in accordance with the authorities cited. The respondents also submit that to the extent that the applicant seeks damages for psychological injury, damages for negligence are not available for psychological injury falling short of a recognised psychiatric disorder: see Tame v State of New South Wales . The applicant has not pleaded any relevant psychiatric disorder. 55 The applicant's submission at the hearing that the relevant respondents were liable in negligence in the conduct of the investigation was bare assertion. I am satisfied that the pleadings concerning any action in negligence which the applicant seeks to raise should be dealt with on the basis that the applicant has no reasonable prospect of success, noting in this context that the proceedings need not be hopeless or bound to attract the application of s 31A(1) of the Federal Court of Australia Act 1976 (Cth) (see s 31A(3)). The applicant has been given a number of opportunities to re-plead his case. This included opportunities to file amended pleadings following the receipt of each of two letters from the respondents' solicitors, in accordance with directions of this Court. Those letters include details of the specific objections which the respondents had to the applicant's case as it concerned negligence. Notwithstanding this, the applicant's pleadings as they concern negligence do not set out, in an intelligible form, the material facts that make up the action in negligence. For the Court to consider the action in negligence raised by the applicant would, on the pleadings, require a roving inquiry into the investigation of which the applicant complains and the various steps taken as part of the investigatory process. The applicant's case is left at large. As the respondents submitted, they are entitled in justice to have the opposing party's case presented in an intelligible form and in compliance with the rules of pleading: see Davy v Garrett (1877) 7 Ch D 473, James LJ, CA at 486. Although this principle has somewhat less force where a party is unrepresented, the pleadings remain defective in a number of important respects. There would be no utility in affording the applicant any further opportunity to re-plead. 56 To the extent that the pleadings regarding injuries allegedly done to the applicant and members of his family, unlawful detention, deprivation of liberty, unlawful interference with and possession of personal property are intended to raise some cause of action other than negligence, there is no reasonable prospect of the applicant succeeding on those parts of the proceeding. No proper cause of action has been identified, nor have the material facts been pleaded, at least not in an intelligible form. 57 Another matter which may fall within s 60(4) is the potential claim made by the applicant for "misleading and deceptive" conduct, which term appears in a number of instances in the applicant's pleadings. To the extent that any such action could relate to personal injury or wrong, it should be dealt with in accordance with s 31A(1). As the respondents have submitted, if it is intended to relate to actions pursuant to the TPA or the Fair Trading Act 1992 (ACT), such actions only bind the Commonwealth where it is carrying on a business and in respect of conduct in trade or commence, which is not the present context. 58 It is unnecessary to consider whether time should be extended for the filing of the application for an order of review in ACD 17 of 2006 as the action in which an extension of time is required is stayed pursuant to s 60 of the Bankruptcy Act . 59 I have ordered that costs be reserved. My present view is that each party should bear their own costs. If any party wishes to make submissions to the contrary, such submissions should be received by 4 pm on 14 February 2008. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | consideration of motions for summary dismissal where applicant in proceedings became a bankrupt after proceedings commenced where applicant became a bankrupt after proceedings commenced where proceedings raise numerous causes of action, including claims under administrative decisions (judicial review) act 1977 (cth), relating to termination of the applicant's employment with the australian federal police where trustee deemed to have abandoned proceedings whether applicant can continue proceedings in own name under s 60(4) of the bankruptcy act 1966 (cth) practice and procedure bankruptcy |
It seeks an order that paragraph 5 of the First to Fifteenth Respondents' Defence filed 25 July 2008 be struck out. The proceedings were commenced by an Application filed 5 March 2008 which was supported by a Statement of Claim filed on the same day. An Amended Application was filed on 29 May 2008 which was supported by an Amended Statement of Claim also filed on that day. The employment of each of the Third to Sixteenth Respondents is subject to the provisions of the Construction Diving Services Pty Ltd (Bluewater) Employee Collective Agreement 2007, (" the CDS Collective Agreement ") registered under the provisions of the WR Act [a reference to the Workplace Relations Act 1996 (Cth) ('the Workplace Relations Act '] . In paragraph 4 of the Amended Statement of Claim the applicant alleged that each of the third to sixteenth respondents was employed by Construction Diving Services Pty Ltd to perform diving work at or about the applicant's construction activities at Kurnell and Botany in New South Wales, which construction activities were pursuant to a contract with Sydney Water to construct a desalination plant at Kurnell. CDS [a reference to Construction Diving Services Pty Ltd] employs divers under the provisions of the CDS Collective Agreement. Paragraphs 5, 23, 24, 25 and 26 are denied and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996 . The applicant's case concerns industrial action said to have been taken in early March 2008 by the third to sixteenth respondents which industrial action was said to have been contrary to the CDS Collective Agreement and to have been otherwise unlawful. It is unnecessary for present purposes to say any more about the applicant's claims for relief. Before the AIRC, it was contended that the said Collective Agreement applied, and that it created enforceable rights in, inter alia, the Third to Sixteenth Respondents. Accordingly, the provisions of s.31A FCA [a reference to the Federal Court of Australia Act 1976 (Cth) ('the Federal Court of Australia Act ')] and O.19r2 [presumably intended as a reference to Order 29 rule 2] and O.11r16 [of the Federal Court Rules ] ought be engaged to strike out the embarrassing pleading . It submits that an employee collective agreement was lodged with the Workplace Authority Director in accordance with s 344 of the Workplace Relations Act on 20 December 2007 (the date of its receipt by the Workplace Authority) and that by that lodgement the agreement came into operation within the meaning of s 347 of the Workplace Relations Act . The applicant placed particular reliance upon s 347(2). The respondents will submit at the final hearing that no employee collective agreement was made for the purposes of s327 of the WR Act. In particular, it will be submitted that for there to be an employee collective agreement there must be an act between the employer and the employees collectively of coming to a mutual arrangement. Selection of the manner in which approval for an employee collective agreement would be sought under s 340 was a matter for the employer (see s 337(4)(a)). Other pre approval requirements in respect of an employee collective agreement were set out in ss 337 and 338 of the Workplace Relations Act . Once an employee collective agreement was approved in accordance with s 340 of the Workplace Relations Act , the employer was required by s 342(1) to lodge the agreement with the Workplace Authority Director within 14 days after the approval. Under s 347(1) of the Act a workplace agreement came into operation on the day the agreement was lodged with the Workplace Authority Director. Under s 349 of the Workplace Relations Act an award had no effect in relation to an employee while a workplace agreement operated in relation to the employee. When in operation, a workplace agreement bound all persons whose employment was subject to the agreement, regardless of whether an individual employee cast a valid vote deciding, or otherwise decided, that the employee did not want to approve the agreement and of whether an individual employee was an employee of Construction Diving Services Pty Ltd at the time when the CDS Collective Agreement was made. By virtue of s 408 the Subdivision applied to a contravention by a person of a civil remedy provision in relation to a workplace agreement, several of which were listed in s 408. One such civil remedy provision was s 341(1) (see [17] above). In the event that the Court were to exercise its power to make an order declaring a workplace agreement to be void under s 409(a) , such an order would only take effect from the date on which the order was made or a later date specified in the order (see s 409(a) and s 412(1)). The gravamen of the applicant's challenge to paragraph 5 of the First to Fifteenth respondents' Defence seems to me to lie in the inclusion of the words 'and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996 . ... it can't be enhanced by pleading it in defence if the action is not available by declaratory relief or otherwise it's not available as a matter of defence. For instance, ... the agreement may have been by a show of hands. How does our client get access to the show of hands for the purpose of proving validity? It's hardly surprising that the legislature would intend that for third parties [such as John Holland Pty Limited] the agreement is taken to be valid so long as it stands. The applicant further submitted that it would be embarrassing to allow a party which had, in other proceedings, sought to rely upon the validity of the agreement to assert its invalidity. It was further argued that requiring the applicant to prove that the CDS Collective Agreement had been duly approved in accordance with s 340(2) of the Workplace Relations Act would cause delay in the proceeding that ought not to be permitted. A copy of what was said to be the CDS Collective Agreement was put into evidence on the hearing of the Notice of Motion filed 17 December 2008 (see paragraph 8 of the affidavit of Malcolm Davis affirmed 17 December 2008 and Annexure E thereto). It is highly doubtful that Annexure E was a copy of the CDS Collective Agreement as lodged with the Workplace Authority Director. Those pages were numbered i and ii. An 18 page document then followed. Page 16 made provision for an authorised representative of Construction Diving Services Pty Limited to sign the agreement on its behalf and page 17 made provision for an authorised representative of the employees to be bound by the agreement to sign the agreement on their behalf. As previously mentioned the form of agreement (Annexure E) was neither executed nor dated. However, the agreement which was said to have been made and to have come into operation was the subject of consideration in proceedings C2008/2281 before Commissioner Redmond in the Australian Industrial Relations Commission in an application under s 496(1) between Dempsey Australia Pty Ltd and the first respondent for an order against industrial action (see Annexure F to Mr Davis' affidavit). It seems clear that these proceedings were before Commissioner Redmond on 3 March 2008, 5 March 2008 and 6 March 2008. The transcript of proceedings on 5 March 2008 became Exhibit NMA (part 1) and the transcript of proceedings on 6 March 2008 became Exhibit NMA (part 2) on the hearing of the motion presently before the Court. On 5 March 2008 Mr C McArdle announced an appearance in those proceedings with Mr Fitzsimons and Ms C M Howell (referred to as Ms Howells in the transcript) announced an appearance with Ms T White of Slater and Gordon and Mr W Smith of the Maritime Union of Australia, the first respondent in the proceedings presently before the Court. Ms Howell is junior counsel for the first to fifteenth respondents on the hearing of the current motion. The transcript for 5 March 2008 included paragraphs numbered 1-1099 and that for 6 March 2008 included paragraphs numbered 1100-1766. Dempsey Australia Pty Ltd is a related body corporate of Construction Diving Services Pty Ltd, which is the employing entity if you like, the service company of the employees concerned. The directors of the two companies don't 100 per cent overlap. They have substantially the same number of directors. They fit every criteria of a related body corporate. But my friend raises a good point, which is quite a valid one, which is answered in our draft order that we've prepared. We seek an order on behalf of the party to the agreement, that is Construction Diving Services Pty Ltd, that will be the order that we seek. The order 3.1(d) is binding on employees of CDS the constitutional corporation who are eligible to be members of the union. I am instructed on behalf of the union, I am not instructed on behalf of any individual employees, be they union members or not. Mr McArdle, do you know whether these people are all members of the union or are there individuals that may not be? Because if there are individuals that are not members of the union you seek to have them bound by this order then I'm obligated to make sure they get a copy of the order so they can defend it. I am not representing those individuals. If I made the order it would only be those who are members of the union, yes. On 5 March 2008 Mr Brian Fitzsimons, who was apparently the project manager representative for Construction Diving Services Pty Limited, gave evidence before Commissioner Redmond in the then applicant's case in which he identified his place of business as the Sydney Desalination Marine Yard, Fishburn Road, Botany. He had apparently made an affidavit in the proceedings in the Australian Industrial Relations Commission, which became Exhibit MC1, before the Commissioner. Mr Fitzsimons was cross examined by Ms Howell about the making of what was said to have become the relevant employee collective agreement. In further evidence in chief given by Mr Fitzsimons at PN128 et seq reference was made to a document having been lodged that was signed on behalf of the divers. A copy of the document 'actually lodged at the Workplace Authority' was apparently obtained from the Workplace Authority and tendered. The signature on behalf of the divers on the document was identified as that of Scott Bedford (the third respondent in the current proceedings) and it was the original of this document that was apparently lodged with the Workplace Authority. Ms Howell indicated that the Maritime Union of Australia had no objection to the tender of the document whereupon a copy of the signed agreement became Exhibit MC2 before Commissioner Redmond. On 19 January 2008 the Workplace Authority Director appears to have issued a receipt for the lodgement of an employee collective agreement purportedly in compliance with her obligations under s 345(1) of the Workplace Relations Act . The employer has declared that a copy of an employee collective agreement named CONSTRUCTION DIVING SERVICES PTY LTD (BLUEWATER) EMPLOYEE COLLECTIVE WORKPLACE AGREEMENT 2007 was provided to the Workplace Authority. ... Once completed, we will write to you to let you know whether or not the agreement has passed the Fairness Test. --- Yes. --- Yes, the office in Mackay made the correction. ---- It was before the 13 th [of December 2007] , yes. This is what's happened in this thing is that we had the discussion with the living away from home allowance because that was an issue because some of the guys hadn't been paid it. When that got resolved we actually got that tidied up and everybody was then happy with the agreement because the agreement basically said if you live away from home you get that. We then signed it and then discovered the error with the divers rates, and then that was tidied up, and that's where we are. So what I was putting to you, Mr Fitzsimons, is that no one on behalf of the employees communicated to you that Mr Edwards was authorised to speak on behalf of the other divers?---Mr Edwards did. I think we'll find that what was filed was Scotty's, that's the one that got lodged, because the one that Glen signed had the mix up with the rates. So the one that was lodged - and just tell me if you need to have a look at it --- was signed by you?---Scotty. Yes, and Scott. So all the guys signed the agreement individually as well. I haven't seen it for a while but I believe there was. Were they the agreements before the diving rates for the two classifications were changed or after? ---After. Before I ask you that perhaps, who actually lodged the agreements?---It was posted. We filled it in on behalf of Construction Diving Services. The Workplace Authority came back with - actually said this is how the Workplace Authority's receipted it back to us. Do you have any idea why they would have done that? What was in the documentation that would have given them that?---It was Construction Diving Services and an ABN number. On 6 March 2008 an order was made by Commissioner Redmond directed at stopping the industrial action of which Construction Diving Services Pty Limited's had complained. That order bound Construction Diving Services Pty Limited, the Maritime Union of Australia (the first respondent in the present proceedings), officials, delegates, employees and agents of the Union including Warren Smith (the second respondent in the current proceedings) and employees of Construction Diving Services Pty Ltd, a constitutional corporation, who were eligible to be members of the Union. Commissioner Redmond's order came into effect at 7:30pm on 6 March 2008 and was expressed to cease to have effect at 5:00pm on 22 March 2008. In the foregoing context the first respondent as agent for the fourth, fifth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth respondents in the current proceedings filed an application in the Australian Industrial Relations Commission on 20 March 2008 seeking to have a dispute resolution process conducted. In that application it was alleged that the terms and conditions of employment pursuant to which the claims on behalf of the identified respondents sought relief were 'covered by the CDS Bluewater Employee Collective Workplace Agreement 2007'. The applicant contended that the identified respondents who sought relief as employees of Construction Diving Services Pty Ltd together with the first respondent as agent for those employees ought not to be permitted to challenge the validity of the CDS Collective Agreement in circumstances where they brought their claims before the Australian Industrial Relations Commission in reliance upon it. Whilst the signed agreement that was lodged with the 'Workplace Authority', a copy of which became Exhibit MC2 before Commissioner Redmond, was not tendered in evidence on the hearing of the current motion, it seems clear that on or about 13 December 2007 a number of copies of the agreement were signed by employees of Construction Diving Services Pty Ltd engaged on the Bluewater desalination plant project. It further appears that a copy of the agreement signed by Mr Scott Bedford purportedly on behalf of the employees on 13 December 2007 was lodged by Nicole Dempsey by post with the Workplace Authority and, by inference, the Workplace Authority Director. It would appear that it was received on 20 December 2007. Whilst, on the pleadings as they presently stand, further evidence could, theoretically, be given in relation to the making of the relevant employee collective agreement, the parties to it, its lodgement with the Workplace Authority and its coming into operation, there has been no suggestion that the agreement relied upon by the applicant has ceased to be in operation by virtue of one or other of the matters referred to in s 347(4) of the Workplace Relations Act . In the circumstances, the applicant submits that the CDS collective agreement came into operation on the day that it was lodged with the Workplace Authority Director and that it came into operation even if the requirements in ss 334 - 342 , including those referred to in s 344 (incorporated by reference to them in s 342) of the Workplace Relations Act and the requirements of Regulation 8.13 were not met in relation to the agreement (see s 347(2) and Regulation 8.13(5)). Whilst The State of Queensland v J L Holdings Pty Limited [1997] HCA 1 ; (1997) 189 CLR 146 ('J L Holdings') was a horse of a different colour, there were some observations made in that case that are germane to what may constitute a proper exercise of the Court's powers under Order 11 rule 16. In J L Holdings proceedings had been commenced in this Court in January 1994 seeking damages of approximately $60 million. Numerous causes of action had been pleaded. In June 1995 the primary judge had directed an extensive review of the pleadings to enable each party to prepare a final set of pleadings and in July 1995 orders were made for the filing of those pleadings in late 1995. It was anticipated that the hearing would occupy some four months. At a directions hearing in May 1996 the State of Queensland applied for leave to further amend the Defence. Hearing dates for the trial had by then been fixed, dates which might be lost if the amendment were allowed. Were the Defence to be amended the hearing might have been extended from a likely four months to six months. The primary judge refused leave to amend the Defence. An application for leave to appeal against the refusal of the primary judge to grant the application for leave to amend the Defence was granted by a Full Court, but it then proceeded to dismiss the appeal. The State of Queensland applied to the High Court for special leave to appeal from the judgment of the Full Court. The High Court indicated that it proposed to hear the application for special leave to appeal and the appeal at the same time. It did so on 2 December 1996 ordering, on that day, that there be a grant of special leave to appeal, that the appeal be allowed and that the respondents in the proceedings, the State of Queensland and another, have leave to amend their Defence. The Court's reasons for judgment were not handed down until 14 January 1997. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. Firstly, the Court should determine whether the issue/s raised in paragraph 5 of the Defence is/are 'fairly arguable'. Secondly, the Court should address the attainment of justice in the circumstances. It may be assumed that the power conferred upon the Court by Order 11 rule 16 , as with other powers conferred by the Federal Court Rules , was granted out of a recognition of the traditional role of judges 'to do justice according to law' (per Kirby J in J L Holdings at 167). If questions arise on the pleadings which are 'serious and disputable' I would consider them to be 'fairly arguable' (see per Gibbs J, as his Honour then was, in Theseus Exploration NL v Foyster [1972] HCA 41 ; (1972) 126 CLR 507 at 515). A court asked to strike out all or part of a pleading needs to be careful to ensure that giving effect to the application does not prevent a party from making a case which it is entitled to make. One has to err on the side of caution lest one deprive a party of a case which, in justice, it ought to be able to bring (per Sheppard J, with whose reasons for judgment Jenkinson and Drummond JJ agreed, in Trade Practices Commission v Pioneer Concrete (Qld) Pty Limited (1994) 52 FCR 164 at 175). If an application to strike out a pleading involves a prolonged and serious argument, the judge hearing the application should, as a general rule, decline to proceed with the argument unless he not only harbours doubts about the soundness of the pleading but, in addition, is satisfied that striking out will obviate the necessity for a trial or will substantially reduce the burden of preparing for trial or the burden of the trial itself (per Lord Templeman in Williams and Humbert Ltd v W & H Trademarks (Jersey) Ltd [1986] 1 AC 368 ('Williams and Humbert') at 435-436). In Williams and Humbert two cases were dealt with together. In the first, the primary judge ordered that a defence be struck out and in the second he ordered that an application to amend a defence should be dismissed. An appeal to the Court of Appeal was dismissed by a majority and a subsequent appeal to the House of Lords was dismissed unanimously. The hearing of the applications before the primary judge in relation to the pleadings occupied some 7 hearing days. In the House of Lords the appellants submitted that the application to strike out was misconceived and that the relevant issues should have been addressed under R.S.C. Order 33 rule 3 (the equivalent of Order 29 rule 2 of the Federal Court Rules ) rather than Order 18 rule 19 (the equivalent of Order 11 rule 16 of the Federal Court Rules ). Lord Templeman recognised the force of the argument. He said that the issues raised on the appeals were more appropriate to be decided under the separate questions rule rather than the strike out rule. In the Chancery Division the application under Ord. 18, r. 19 was heard in open court. Both parties were well apprised of the serious and lengthy questions involved and were armed with leading counsel and the appropriate authorities. ... In these circumstances the difference between the investigation undertaken by the judge under Ord. 18 r. 19 was no different from the investigation which would have been involved in the trial of an issue under Ord. 33, r. 3. If the application had been started under Ord. 18, r. 19 and the judge had required an alternative application under Ord. 33, r. 3 the time involved would have been the same. This consideration, as well as the context in which Ord. 18, r. 19 occurs and the authorities upon it, justifies a general rule that the judge should decline to proceed with the argument unless he not only considers it likely that he may reach the conclusion that the pleading should be struck out, but also is satisfied that striking out will obviate the necessity for a trial or will so substantially cut down or simplify the trial as to make the risk of proceeding with the hearing sufficiently worth while. The matter was fully argued by senior counsel for the respective parties, with further assistance provided by counsel for the intervener. I am satisfied that striking out part of the Defence, if appropriate, would substantially cut down or simplify the trial in this case, especially bearing in mind that the applicant was not itself a party to the relevant agreement. In Commonwealth of Australia v Dixon (1988) 13 NSWLR 601 an action had been instituted in the Victorian Registry of the High Court of Australia by a member of the armed forces who alleged negligence in relation to the surgical amputation of a leg in Sydney in 1965. The High Court ordered that the proceedings be remitted to the Supreme Court of New South Wales. Hope JA concluded that none of the defences were available to the Commonwealth. Samuels JA considered that the defence under s 14(1)(b) of the New South Wales Limitation Act should not be struck out, but that the other defences were not available to the Commonwealth. Mahoney JA concluded that the defence under s 5(6) of the Victorian Limitation of Actions Act was available to the Commonwealth but did not express any view as to the defences under the New South Wales Act. In the circumstances Hope JA expressed the opinion that it was not proper to say that the defences under either s 5(6) of the Victorian Act or s 14(1) of the New South Wales Act were so clearly untenable that they could not possibly succeed. In relation to the defence under s 63 of the New South Wales Limitation Ac t, Samuels JA agreed with the reasons for judgment of Hope JA. In the result the Court of Appeal set aside the orders of the primary judge striking out the defences under s 5(6) of the Victorian Act and s 14(1) of the New South Wales Act. A cross-appeal in respect of the defence under s 63 of the New South Wales Act was allowed whereupon the defence under that section was struck out. In addition the applicant alleged that the first and second respondents were involved within the meaning of s 728 in the contravention of s 494 of the Workplace Relations Act by the third to sixteenth respondents. The applicant's case is that as a 'person affected by the industrial action' alleged but not 'the employer concerned' (see s 494(7)) , it was entitled to apply for relief under s 494(5) of the Workplace Relations Act in respect of the alleged contravention of s 494(1). The applicant placed considerable reliance upon my judgment, at first instance, in Shop Distributive and Allied Employees' Association v Karellas Investments Pty Ltd (No. 2) [2007] FCA 1425 , which was affirmed on appeal by Moore, Marshall and Tracey JJ in Shop Distributive and Allied Employees' Association v Karellas Investments Pty Ltd [2008] FCAFC 42 ; (2008) 166 FCR 562 ('Karellas'). Karellas Investments Pty Limited was the proprietor of two retail grocery stores which traded under the 'IGA' banner, one of which was located at Cremorne and the other at Blaxland in the State of New South Wales. The Shop Distributive and Allied Employees' Association ('the union') alleged that Karellas contravened s 341(1) of the Workplace Relations Act when it lodged an employee collective agreement ('the 2007 Agreement') with the then Employment Advocate which it was said had not been approved in accordance with s 340 of the Act. At [82] I found that certain representations said to have been made by Karellas were false or misleading. I found that the employees of Karellas were misinformed in relation to the 2007 Agreement when contrasted with an earlier 2003 Agreement. In the circumstances it was found that all of the persons employed by Karellas in April 2007 whose employment would be subject to the 2007 Agreement, if approved, were not given by Karellas a 'reasonable opportunity to decide' whether they wanted to approve the 2007 Agreement or not. Accordingly, the 2007 Agreement was not approved within the meaning of s 340(2) of the Act, notwithstanding that a majority of those employees who cast a valid vote may have decided that they wanted to approve the 2007 Agreement. Nevertheless, s 347 of the Act made it clear that the 2007 Agreement came into operation on the day that it was lodged with the Employment Advocate and that it did so notwithstanding that, relevantly, the requirements of s 340(2)(a) had not been met in relation to it. Inter alia, the Full Court referred to passages from the Explanatory Memorandum to the Workplace Relations Amendment (WorkChoices) Bill 2005 at paragraphs 844 and 947-950. The question that arises ... is whether the failure of the employer to satisfy the requirements of s 340(2)(a) has any consequences under the Act, and, if so, what those consequences are. This will occur if the employer lodges the agreement with the prescribed statutory authority. Plainly, one of the requirements that would enable it to be said that the agreement had been approved, for the purposes of the Act, would not have been met. Nonetheless, the agreement came into operation, in accordance with its terms, on and from the date of its lodgment. Section 347(2) so provided. By s 351 , it was and remains binding on the employer and its relevant employees. If it is alleged that such an agreement has not been approved, a person who has standing under s 405 may seek certain forms of redress. One of them, as already noted, is the imposition, on the employer, of a civil penalty under s 341. Another is an order, under s 409(a) of the Act, declaring that the workplace agreement is void. Any such order operates prospectively: see s 412(1). ... The legislation treats collective agreements that have been lodged as having been made and approved unless and until they are set aside by order of the Court. In Karellas , what was considered was the effect of non compliance with s 340(2)(a). It is correct, as the applicant and intervener note, that s 347(2) had the effect that an agreement came into operation on lodgement regardless of failure to comply with Part 8 Divisions 3 and 4 and s342 of the WRA. Section 340(2)(a) fell within Division 4. However, because the respondents allege that the requirements of s327 were not met, and that which was lodged was not an employee collective agreement, the applicant and intervener must go significantly beyond the reasoning of the Full Court in Karellas to succeed in the present motion. However, it seems to me that there are other questions that may arise that are unrelated to the process whereby the alleged employee collective agreement came to be approved, made and lodged in this case, which are not covered by s 347(2). (b) If so, when was it lodged? (c) By whom was it lodged? (d) Was the person lodging the alleged employee collective agreement the employer referred to therein? (e) Was the alleged employee collective agreement an employee collective agreement within the meaning of s 327 of the Workplace Relations Act ? It does not seem to me to be open to the applicant to argue that it would be an abuse of process for the third, sixth and fifteenth respondents to raise these questions on the hearing of the proceedings. Furthermore, I am by no means satisfied that the fourth, fifth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth respondents and, in particular, the first and second respondents are precluded from raising these issues by virtue of any reliance that may have been placed upon the CDS Collective Agreement in the APPLICATION TO HAVE A DISPUTE RESOLUTION PROCESS CONDUCTED, dated 20 March 2008, which was filed in the Australian Industrial Relations Commission. The applicant's challenge to paragraph 5 of the first to fifteenth respondents' Defence overlooks, amongst other things, that in paragraph 5 of the Amended Statement of Claim the applicant has alleged that the CDS Collective Agreement was 'registered' under the provisions of the Workplace Relations Act when the key to the operation of an employee collective agreement is 'lodgement', not 'registration'. Furthermore, I am unable to see how any injustice could be said to arise from the applicant being put to proof in respect of the facts and matters alleged in paragraph 23 of the Amended Statement of Claim. Nothing that was said in Karellas or that is to be found in s 347(2) of the Workplace Relations Act bears upon that paragraph. In relation to paragraphs 24, 25 and 26 of the Amended Statement of Claim I cannot see that any injustice would flow from the first to fifteenth respondents denials of the facts and matters alleged in those paragraphs being allowed to stand. All of those seem to me to relate to the proper construction of the CDS Collective Agreement, rather than its coming into operation. However, I cannot see how any issues going to the process whereby the employee collective agreement was said to have been approved, made or lodged, could be said to be 'fairly arguable'. In the circumstances set out above, no injustice would be done if the first to fifteenth respondents were denied the opportunity to raise questions going to process which, in my opinion, are doomed to failure. In my opinion the first to fifteenth respondents ought not to be allowed to rely upon alleged non compliance with the requirements in relation to the process whereby employee collective agreements may be lawfully approved, made and lodged such as are referred to in subparagraphs (a) --- (d) inclusive of paragraph 10 of the first to fifteenth respondents' written submissions referred to above and in subparagraphs (c) --- (f) of paragraph 16 of those written submissions. The denials of paragraphs 5, 23, 24, 25 and 26 of the Amended Statement of Claim which are to be found in paragraph 5 of the first to fifteenth respondents' Defence filed 25 July 2008 should be permitted to stand. However, the words 'and the First to Fifteenth Respondents further say that the purported agreement described as the "CDS Collective Agreement" was not a valid agreement for the purposes of the Workplace Relations Act 1996 ' should be struck out. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | circumstances in which part of a defence may be struck out preliminary determination of a point that was not 'fairly arguable' under a strike out application, following full argument by senior counsel for the respective parties and submissions from the intervener fairly arguable practice and procedure words and phrases |
The order was made on a creditor's petition presented by Ms Heidi George and Ms George is the respondent to the appeal. The order was made on 19 July 2006. 2 A Registrar of the Federal Magistrates Court heard the creditor's petition and on 20 June 2006 she made a sequestration order against the appellant's estate. The Registrar also ordered that the petitioning creditor's costs be taxed and paid from the estate of the appellant in accordance with the Bankruptcy Act 1966 (Cth) ('the Act'). In hearing and determining the creditor's petition the Registrar was exercising a power delegated to her under ss 102 and 103 of the Federal Magistrates Act 1999 (Cth). 3 The sequestration order made by the Federal Magistrate on 19 July 2006 was made on a review of the Registrar's decision and order under s 104(2) and (3) of the Federal Magistrates Act 1999 (Cth). Such a review is to proceed by way of a hearing de novo and the powers of a Federal Magistrate on a review are set out in r 20.03 of the Federal Magistrates Court Rules 2001 . 4 There was debate before me as to whether, even if I concluded that the Magistrate was correct, it was appropriate for him to make a sequestration order. It was suggested that on reaching the conclusion he did, he should have done no more than dismiss the application for review. In view of the conclusions I have reached on the appeal, it is not necessary for me to resolve this particular issue. 5 The Acting Chief Justice has directed that the appellate jurisdiction of the Court in relation to this appeal be exercised by a single Judge: Federal Court of Australia Act 1976 (Cth) s 25(1A). 7 The starting point is the judgment debt which forms the basis of the creditor's petition. The respondent allegedly lent moneys to the appellant and those moneys were not repaid. On 12 November 2002 the respondent brought a claim in the Magistrates Court of South Australia to recover the moneys and on 25 August 2003 she obtained judgment against the appellant in the sum of $4,079.80. That judgment is the judgment debt. It was affirmed on review on 27 November 2003. The respondent could not recover the moneys from the appellant and on 24 June 2005 she issued a bankruptcy notice against the appellant. On 26 September 2005 the respondent presented a creditor's petition against the appellant. 8 The appellant claims that on 13 or 14 December 2003 she agreed to transfer to the respondent certain items of manchester (owned by the appellant) in satisfaction of the judgment debt. She claims that the items of manchester transferred to the respondent were valued at about $5,600. It is not clear why she transferred manchester items of that value having regard to the amount of the judgment debt, but the resolution of that question is not necessary for present purposes. The respondent denies that she reached any agreement or arrangement with the appellant and denies that she received any manchester items from her. 9 On 25 October 2005 the appellant brought a claim in the Magistrates Court of South Australia in relation to the events she said occurred on 13 or 14 December 2005. In those proceedings she claims either a declaration that the judgment debt has been satisfied, or alternatively, payment for goods sold and delivered by her to the respondent. It is important to note that in the proceedings in the Magistrates Court of South Australia the appellant does not assert that there was no judgment debt but, rather, that there was an accord and satisfaction whereby the debt was satisfied. Alternatively, she claims that she is entitled to a money judgment against the respondent greater than or at least equal to the judgment debt. I will refer to these proceedings as the State Magistrates Court proceedings. 10 I turn now to consider the proceedings which have taken place in the bankruptcy jurisdiction of the Federal Magistrates Court. A number of them took place before the commencement of the State Magistrates Court proceedings. 11 On 24 June 2005 the respondent issued a bankruptcy notice against the appellant based on the judgment debt and that notice was served on the appellant on 1 July 2005. 12 On 21 July 2005 the appellant applied for an order setting aside the bankruptcy notice: s 30 of the Act. She claimed that the judgment debt had been satisfied on the basis of the events which occurred on 13 or 14 December 2003. The application came on for hearing before Registrar Christie. After hearing evidence, Registrar Christie said that the appellant had not satisfied her on the balance of probabilities that the judgment debt was satisfied before the issue of the bankruptcy notice, or at all. It is not clear to me to what extent the appellant alleged before the Registrar that the bankruptcy notice was issued for an improper purpose or was an abuse of process but, in any event, the Registrar rejected both arguments. The Registrar made an order that the application to set aside the bankruptcy notice be dismissed and that the appellant pay the respondent's costs. 13 The appellant did not seek a review of the Registrar's decision. 14 On 26 September 2005 the respondent presented a creditor's petition against the appellant. That I am able to pay the amount of the judgment debt in which case I ask that this Honourable Court exercise the discretion afforded to it under section 52(2)(a) of the Bankruptcy Act 1996 and dismiss the petition. She adjourned the hearing of the petition to 17 February 2006. She delivered reasons for her decision to adjourn the creditor's petition in which she outlines the history of the matter and sets out her conclusions at that time on a number of issues argued before her. 17 The Registrar referred to the fact that interested creditors --- Bernsteen Pty Ltd (in liquidation) ('Bernsteen') and CFS Managed Property Limited and Perpetual Nominees Limited ('CFS') had filed notices of appearance and were given leave to be heard at the hearing of the petition. The Registrar referred to the various legal proceedings between each of the interested creditors and the appellant and between the respondent and the appellant. 18 CFS brought a claim against the appellant in the Magistrates Court of South Australia on 3 October 2002 for unpaid rent and outgoings pursuant to a lease. The appellant brought a counterclaim against CFS. The claim and counterclaim proceeded to trial and the result was a judgment in favour of CFS in the sum of $38,739.23 and an order dismissing the counterclaim. On appeal to the Supreme Court of South Australia, Duggan J, on 6 December 2005, reduced the judgment debt to $5,618.79 and dismissed the appeal in relation to the counterclaim. 19 Bernsteen is in liquidation and the liquidator is Mr Peter Macks. On 6 August 2002 Bernsteen brought a claim against the appellant for goods sold and delivered. The appellant brought a counterclaim against Bernsteen. The appellant failed to comply with certain interlocutory orders and Bernsteen obtained judgment against the appellant in the sum of $29,068.55. The appellant successfully applied to have the default judgment set aside and the counterclaim reinstated. Bernsteen obtained an order for costs in its favour and an interim allocatur was issued in the sum of $2,215.37. The appellant unsuccessfully appealed against the order for costs made against her to the Supreme Court of South Australia. Anderson J dismissed the appeal and ordered the appellant to pay the costs of the appeal. An interim allocatur was issued on 4 April 2005 in the sum of $1,903.20. In August 2004 and then in or about May 2005 the appellant unsuccessfully applied first to Anderson J and then to the Full Court of the Supreme Court of South Australia for leave to appeal against the orders of Anderson J dismissing her appeal. She was ordered by the Full Court to pay the costs of the unsuccessful leave application to it. The appellant has applied to the High Court of Australia against the Full Court's refusal to grant leave to appeal. 20 Bernsteen issued a bankruptcy notice against the appellant founded on the two interim allocaturs totalling $4,118.57. On 31 August 2005 the bankruptcy notice was set aside by a Registrar and Bernsteen was ordered to pay the appellant's costs. 21 On 25 August 2005 an allocatur was issued in Bernsteen's favour pursuant to the costs order made by the Magistrate on 25 March 2004 in the sum of $12,000, and on 25 October 2005 the Supreme Court issued an allocatur in Bernsteen's favour in the amount of $9,288.60 pursuant to the order made by Anderson J on 22 July 2004. 22 The Registrar noted that although the appellant asserted that she was able to pay her debts within s 52(2)(a), the appellant's submissions were focused mainly on whether there was 'other sufficient cause' why a sequestration order should not be made within s 52(2)(b). 23 The Registrar said that irrespective of the question of estoppel there was no evidence or fresh evidence which would cause her to alter the conclusion she had reached on the application to set aside the bankruptcy notice that it had not been established that the judgment debt had been satisfied, that is to say, that there had been an accord and satisfaction as alleged by the appellant or that the appellant had a good claim against the respondent based on the provision of items of manchester in December 2003. She said that she was not satisfied that the alleged accord and satisfaction and claim for goods sold and delivered, and the actions relating thereto, provide a basis for dismissing the petition. 24 The Registrar considered the evidence as to the appellant's ability to pay her debts (s 52(2)(a) of the Act). She described the evidence as 'limited in the extreme'. The Registrar took the view that the appellant had not put before the Court the evidence necessary to establish that she was able to pay her debts within s 52(2)(a) of the Act. 25 The Registrar considered whether there was 'other sufficient cause' why a sequestration order ought not to be made (s 52(2)(b)). She rejected an assertion of improper motive by the respondent and the other interested creditors. 26 Despite reaching these conclusions, the Registrar considered that there was good reason to adjourn the hearing of the petition for a relatively short period and in the circumstances she adjourned it to 17 February 2006. 27 The creditor's petition came back before Registrar Christie on 28 February 2006. She noted that the debt to CFS had been paid. She also noted that the appellant had tendered payment of the judgment debt and interest but this had been refused. She said that she remained of the view that the appellant had not shown that she was able to pay her debts. The Registrar said that she was unwilling to infer that the respondent's purpose in pursuing the creditor's petition was to 'stifle litigation in the Bernsteen action'. I have therefore formed the view that it would be appropriate to adjourn this matter to June, despite the fact that the petitioning creditor is not involved in the Bernsteen action, and although this is not the preferred course of either party, subject to the petitioning creditor's interests also being safeguarded. This should allow time for the Bernsteen action to be heard or resolved and, should the parties so choose, crystallisation of any other outstanding issues. On the review Federal Magistrate Raphael upheld the Registrar's decision to adjourn the hearing of the creditor's petition and in fact he altered the adjourned date from 5 June 2006 to 20 June 2006: George v Hamilton-Smith [2006] FMCA 566. The debtor claims she is solvent. She says that she has tendered payment of the petitioning creditor's debt and has a substantial cross claim against Bernsteen which would effectively nullify any debt that she has to that company. Bernsteen is not in a position to make any payment to her as it is a company in liquidation. She argues that another petitioning creditor, CFS, who had initially claimed a sum in excess of $20,000.00, has had its claim reduced to some $4,297.53 which has now been paid. What the debtor does not do is provide the court with any evidence about her financial circumstances. There is no affidavit indicating what real property she owns, what is the status of her bank accounts and what other assets are owned by her. There is no evidence of other creditors. There is no evidence that it was the debtor herself who paid the CFS debt or provided the funds for the tender to the petitioning creditor. This lack of evidence meant that Registrar Christie was unable to be satisfied that the debtor was solvent and I am likewise unable to be satisfied of her solvency. Even though the existence of the proceedings may not constitute sufficient cause to dismiss the sequestration order their existence might bear heavily upon an application for adjournment. We are now in April. The proceedings between the debtor and Bernsteen are set down for hearing in May. The proceedings between the debtor and the creditor are set down for hearing in early June. I have heard nothing about any additional creditors but I am aware that the debtor has obtained an order for security for costs in the sum of $6,000.00 against Bernsteen in respect of those proceedings. It is possible, given the existence of these proceedings, that Bernsteen could obtain a similar (and probably larger) order against the debtor if she was permitted to pursue her cross claim. I have taken all these matters into account when considering whether or not to adjourn this petition. As much as there is a public interest in bringing petitions to finality and thus preventing the possibility of insolvent trading or the incurring of debts a bankrupt is unable to repay there is also the fact that the making of a sequestration order has quasi criminal consequences: Re A Judgment Debtor [1908] 3 K.B. 474. It puts severe restraints upon a bankrupt's freedom of movement and ability to do business and it is these effects which must be weighed by a court considering an adjournment rather than the prejudice to the debtor or the prejudice to the creditor as suggested by Registrar Christie at [27] of her judgment. In truth evidence on both of these matters is sorely lacking but I note that the debtor has not been totally unsuccessful in her previous litigious skirmishes, e.g. in reducing the CFS debt down to a manageable figure. I am of the view that whilst the current timetable for the forthcoming proceedings remains fixed with hearings in May and June the petition should be adjourned to allow those proceedings to be heard. But if the debtor is unable to mount her cross claim without a significant adjournment or if the claim against the creditor is delayed then the rationale for the adjournment of the petition (the speedy resolution of outstanding disputes) will no longer apply. Registrar Christie was unaware of the date of the hearing of the claim in the Magistrates Court between the creditor and the debtor but I have been informed that it is to take place on 13 June. I will adjourn the petition until 20 June 2006 but I will grant the parties liberty to apply so that in the event that these hearing dates are not kept to an application can be made for an earlier hearing. The petition and any such application will be returnable before Registrar Christie. 30 On 5 July 2006 Federal Magistrate Raphael heard the application for review and on 19 July 2006 he made the sequestration order which is the subject of this appeal. Counsel for the appellant submitted that there were in effect four issues raised by the appeal and both his submissions and those of counsel for the respondent were directed to the four issues counsel had identified. The first issue is whether the Magistrate erred in being satisfied that the judgment debt was still outstanding. This was referred to in the course of submissions as the petitioner's debt point. The second issue is whether the Magistrate erred in failing to be satisfied that the appellant was able to pay her debts. This was referred to in the course of submissions as the solvency point. The third issue is whether the Magistrate erred in failing to find that the respondent was pursuing the petition for an improper purpose. This was referred to in the course of submissions as the improper purpose point. The fourth issue is whether, assuming the appellant succeeded on one or more of the preceding points, the discretion should have been exercised so as to dismiss or adjourn the petition. This was referred to in the course of submissions as the discretion point. I will also refer to the relevant issues in this way. 32 Before considering the submissions on appeal, it is necessary to examine the course of submissions before the Federal Magistrate and his reasons for judgment. I have read the relevant papers including the transcript of the submissions made to the Federal Magistrate. The course of submissions before the Magistrate must be considered because the respondent submits that the appellant's conduct of her case before the Magistrate is relevant to the assessment and determination of the appellant's submissions on appeal. It is unnecessary to refer in any detail to the events before the State Magistrate on 13 June 2006. The appellant applied for an adjournment of the hearing and, when that was refused, declined to proceed with her case. Judgment was entered against her. 34 Before the Federal Magistrate the appellant referred to her application for leave to appeal from the judgment entered in the State Magistrates Court proceedings. There were a number of submissions directed to the merits of her application and proposed appeal. The appellant submitted that she did not have to show that the application and proposed appeal would succeed but that it was sufficient that she establish a real and arguable case that the application and proposed appeal would succeed. She submitted that she had established that and, in those circumstances, the petition should be dismissed or adjourned because ultimately the appellant may establish in the State Magistrates Court proceedings that the judgment debt had been satisfied, or that she had a right to a money judgment against the respondent greater than or at least equal to the judgment debt. 35 The question of whether the appellant was submitting that she was able to pay her debts was raised by the Federal Magistrate with the appellant's counsel. He appeared to concede that that contention was not being put. 36 The appellant submitted that the creditor's petition was being pursued for an improper purpose and in support of that contention she sought to tender an affidavit sworn by a Mr Michael Gawronski on 9 June 2006. The Federal Magistrate rejected the tender (as had the Registrar on the application for discovery) of what were said by the appellant to be crucial paragraphs in the affidavit. Mr Gawronski has known the respondent 'on and off' for about 10 years. The respondent was a close friend of Mr Gawronski's ex-wife. Mr Gawronski states that he is aware of certain background details of the dispute between the appellant and the respondent. Mr Gawronski states that he had a conversation with the respondent in late January or early February 2006 at a shopping centre. 38 After that ruling the appellant did not apply to call Mr Gawronski to give oral evidence. Nor was any discussion on the application to tender of whether the respondent sought to cross-examine Mr Gawronski and, if so, whether he was available to be cross-examined. 39 I turn now to examine the Federal Magistrate's reasons for judgment ( George v Hamilton-Smith (No 2) [2006] FMCA 1018). The Magistrate noted that the appellant was unsuccessful in having the bankruptcy notice issued by the respondent set aside. He referred to the proceedings between Bernsteen and the appellant. Those proceedings involved a claim by Bernsteen and a cross-claim by the appellant and had not yet come on for trial. The Federal Magistrate did not consider those proceedings to be of significance unless Bernsteen sought to be substituted for the respondent. 40 The Federal Magistrate outlined the events before the State Magistrate in the State Magistrates Court proceedings on 13 June 2006 and the circumstances leading to the entry of judgment against the appellant with costs. The Federal Magistrate discussed the arguments that the appellant said that she would put in favour of her (then) application for leave to appeal from the orders made by the State Magistrate. He argues that given the small amount of the judgment debt this would be the appropriate course of action to take because of the lengthy delay that may occur between now and the final determination of the dispute, assuming that the Supreme Court of South Australia allows his appeal. Alternatively, he asks that the court adjourn the hearing of the petition until the matter is decided. He rejected the tender of the relevant paragraphs of Mr Gawronski's affidavit (ie, paragraphs 13.1 to 13.5 inclusive) because the paragraphs were not 'in proper form because the conversations deposed to were not set out in direct speech but consisted of a summary of the conversation'. The Federal Magistrate said that there was insufficient evidence that the creditor's petition was brought for an improper or collateral purpose. 42 On the question of whether the appellant was able to pay her debts, the Federal Magistrate said that the appellant had provided no evidence about her assets or liabilities. The Federal Magistrate said that he had commented on this in his reasons for judgment on 21 April 2006 (see [28] above), 'but no evidence has been tendered on this matter in this proceeding'. It is clear from those reasons if there was not to be a speedy resolution of the principle dispute concerning the manchester payment I was inclined to make the sequestration order. I had discussed the authorities on s.52(2). The views there expressed, which echoed those of the Registrar, indicated that the debtor had not satisfied the court of the existence of "other sufficient cause". The dispute concerning the manchester payment has not been resolved. I am advised that the Bernsteen proceedings have also been put off for some months. Whatever views I may have concerning the possibility of success on the appeal against the decision of O'Connor SM not to grant an adjournment, such an appeal would not conclude the matter. At best the case would be referred back to the Magistrates Court to be heard. Registrar Christie has already heard some evidence about that dispute and came to a conclusion prejudicial to the debtor. Her decision does not bind me in any way but her analysis of the evidence that was before her at the time is a matter I think I can legitimately take into account when deciding whether or not to exercise my discretion to dismiss the petition. He was not satisfied that there was 'other sufficient cause' within s 52(2) of the Act. I am of the view that the actions of the debtor are not consistent with my exercising my discretions in her favour. The provisions of s.52 have clearly been satisfied subject to the matter of affidavits to which I will later refer. Although it is clear there is a dispute between the debtor and the creditor about the manchester payment the manner in which the dispute has been litigated gives cause for concern. The case seemed to take quite a long time to come on for trial, and when it did we had the unexplained conduct of the debtor's counsel in withdrawing when it must have been clear that there was a possibility that the adjournment application would be not be granted. We have the situation of the appeal against the decision of O'Connor SM being brought as an application for leave to appeal where no holding or protective appeal was lodged. We have the continued refusal of the debtor to provide the court with any indication of her solvency and her financial situation. We have the further delay in the Bernsteen proceedings, and we have the failure of the debtor to put into admissible form what she claims to be a vital affidavit. These matters weigh heavily against the exercise of discretion even though I am troubled by the smallness of the debt and the refusal of the respondent creditor to accept the tender. In all the circumstances I am not satisfied as of today that there is "other sufficient cause" to dismiss the petition under s.52(2) and I would make a sequestration order against the estate of Tanya Hamilton- Smith. There is one problem however. Because a review of a Registrar's decision is a hearing de novo it is generally considered that an applicant for a sequestration order must establish those matters required by s.52 of the Act as at the date of the review hearing. This would mean that the applicant should file affidavits of search and debt. I am not aware that they did so. I will adjourn the matter until 2:15p.m. Sydney time on 19 July 2006 so that those affidavits can be provided by fax to my associate prior thereto. If they are provided and the usual undertakings are given to file the originals, I would propose to make a sequestration order in the usual form against the estate of the debtor. The hearing will be by video link, which has been arranged. The Federal Magistrate referred to the dispute between the appellant and the respondent in the State Magistrates Court proceedings. He did not try to resolve that dispute in the way the Registrar had on the hearing of the appellant's application to set aside the bankruptcy notice. His approach reflects the way in which submissions were made to him by the appellant's counsel. 2. The Magistrate was not satisfied that the appellant was able to pay her debts within s 52(2)(a). 3. The affidavit of Mr Gawronski was not admissible because it was not expressed in direct speech but was a summary of the conversation. There was no other evidence sufficient to establish that the creditor's petition was brought for an improper purpose. If findings are ultimately made in accordance with the evidence in those paragraphs a finding of an improper purpose may be appropriate and an order made that the petition be dismissed. The appeal must be allowed and the sequestration order made by the Federal Magistrate must be set aside. I will hear the parties on other appropriate orders. 48 I will deal with the appellant's submissions in the order identified in [31] above. In other words, she asserts not that there should never have been a judgment debt but, rather, that it has been paid. In the alternative, she asserts that she has a right to a money judgment greater than or at least equal to the judgment debt arising out of the delivery of manchester items to the respondent on 13 or 14 December 2003. I have some difficulty in seeing how the alternative case might be established if the appellant's primary case fails but that is not a matter I need to determine on the appeal. 51 On her application to set aside the bankruptcy notice, the appellant relied on these assertions as grounds to set aside the notice. After considering the evidence put before her, Registrar Christie did not accept that there was an accord and satisfaction or claim greater than or at least equal to the judgment debt. The application to set aside the bankruptcy notice was dismissed. 52 The appellant then set out to establish an accord and satisfaction or a claim greater than or at least equal to the judgment debt through the State Magistrates Court proceedings. At the time of the hearing before the Federal Magistrate, a State Magistrate in those proceedings had awarded judgment against the appellant with costs. That decision was the subject of a proposed appeal to a single Judge of the Supreme Court of South Australia. At the time this appeal was heard, the appeal to a single Judge of the Supreme Court was pending. 53 The submission put to the Federal Magistrate by the appellant was that the appeal or proposed appeal to the Supreme Court of South Australia was reasonably arguable and that in the circumstances the petition should be dismissed or at least adjourned pending the outcome of the appeal to the Supreme Court. That submission was rejected by the Federal Magistrate for reasons which I have quoted in [43] and [44] above. The main challenge on appeal was not to that conclusion. Insofar as there was a challenge to that conclusion, I would reject it. It was open to the Federal Magistrate to conclude that in the circumstances there was not 'other sufficient cause' to dismiss the petition, or indeed to adjourn it. 54 On appeal, counsel for the appellant approached the issue in a different way. He submitted that the Federal Magistrate should have determined for himself whether there had been an accord and satisfaction in relation to the judgment debt because that was relevant to whether the judgment debt was still owing within s 52(1)(c) or there was other sufficient cause why a sequestration order ought not to be made within s 52(2)(b). 55 The fact that the Registrar determined this question against the appellant on the application to set aside the bankruptcy notice did not give rise to an issue estoppel preventing the appellant from raising the question again on the hearing of a creditor's petition: Makhoul v Barnes (1995) 60 FCR 572. However, the Court is not bound to allow the matter to be raised again and ordinarily the Court will accept that the judgment debt is still owing. If the Court determines that the circumstances are such that the Court should go behind the judgment debt relied upon in a bankruptcy notice and having done so is not satisfied that there has been shown to be real consideration for it, it will, in the sense discussed above in the exercise of that discretion, dismiss the petition notwithstanding a proved act of bankruptcy. Where the Court has already investigated that question on an application to set aside the bankruptcy notice, it would no doubt rarely, if ever, do so again. But this is not because an issue estoppel has been raised. It is because the debt has already been investigated by the Court so that it would not be an appropriate case to revisit the matter. Rather, the Court would (at least ordinarily) accept the judgment as evidence of the debt. I have read the transcript of submissions before the Federal Magistrate and it was not put to him that he should investigate and determine the question of whether there had been an accord and satisfaction. Furthermore, his reasons for judgment suggest that he was not asked to do this. He does refer to the reasons for judgment of Registrar Christie on the application to set aside the bankruptcy notice but this was in a different context, namely, in the context of considering the appellant's prospects of success in the State Magistrates Court proceedings. 57 I have given anxious consideration to whether the appellant should be able to raise this point on appeal. If she is, it is a point that cannot be determined by me. The matter would need to go back to a Federal Magistrate for determination of the point after hearing evidence in much the same way as the Registrar did when she heard the application to set aside the bankruptcy notice. 58 On the one hand, it was in a sense obvious that the appellant was saying that the judgment debt was not still owing and of course it was for the respondent to satisfy the Court of the matters in s 52(1) including s 52(1)(c). On the other hand, a Court may accept that the matters in s 52(1)(c) are established by the affidavit of the petitioning creditor and there does not seem to be a right to re-litigate a matter effectively determined on an application to set aside the bankruptcy notice. More importantly, the appellant chose her 'battleground' after losing before the Registrar on the application to set aside the bankruptcy notice. She sought to prove her case through the State Magistrates Court proceedings and she elected not to ask the Federal Magistrate to hear her claim that there had been an accord and satisfaction. She should be held to that election, particularly as any other course would involve the matter going back for a rehearing on the facts. 59 I would not uphold the appeal on the petitioner's debt point. The onus of establishing that fact is on the debtor. The debtor must establish that he or she is able to pay his or her debts within a reasonable time. If a debtor establishes his or her ability to pay his or her debts then a sequestration order should not be made even if the debtor is unwilling to pay the debt which forms the basis of the petition: Re Sarina; Ex parte Council of the Shire of Wollondilly (1980) 43 FLR 163 per Deane J; (1980) 48 FLR 372 per Bowen CJ CA, Sweeney and Lockhart JJ. It is also true, as the appellant submitted, that a debtor with few or no assets and a modest income may have no difficulty in establishing an ability to pay his or her debts. At the same time a mere assertion of solvency or ability to pay debts may not be sufficient. A Court will assess the whole of the evidence and the fact that a debtor has not produced certain evidence relevant to his or her financial situation may be relevant to the question of whether the debtor has satisfied the onus of establishing the fact that the debtor can pay his or her debts. 61 In this case, the appellant's counsel conceded before the Federal Magistrate that he was not contending that the appellant could satisfy the Court that she was able to pay her debts. In my opinion, the concession made before the Federal Magistrate is an answer to the argument the appellant now seeks to put on the appeal. The Federal Magistrate would have been entitled to rely on the concession and simply to have noted that the submission that the appellant fell within s 52(2)(a) was not pressed. It was not a matter where the onus was on the petitioning creditor or one where the Court was under an obligation to investigate the matter; the onus was squarely on the appellant and it was open to her to abandon the point. 63 The appellant submitted that she is able to press the insolvency point on appeal because the Federal Magistrate did not rely on the concession. The focus of the Federal Magistrate's reasons is s 52(2)(b) of the Act and whether 'other sufficient cause' why a sequestration order ought not to be made had been established. He did say in the course of his reasons that although the appellant had asserted that she was able to pay her debts as and when they fell due, she had provided no evidence about her assets or liabilities. He referred to his observations in his reasons for judgment delivered on 21 April 2006 which are set out in [28] above. 64 It would not be proper to read the Federal Magistrate's reasons for judgment as if he had put the concession to one side. The concession was a concession that further evidence was required and yet had not been put forward and that, in those circumstances, the contention that the matter in s 52(2)(a) had been established could not succeed. 65 On appeal, the appellant's counsel submitted that no concession had been made or, alternatively, if it had it is irrelevant because the Magistrate did not rely on it. For the reasons I have given, I reject both of those submissions. It was not suggested that the concession was made by mistake or accident and that the appellant should be permitted to withdraw the concession on appeal for one or other of those reasons. 66 Even if I am wrong and the Federal Magistrate did not rely on a concession, in my opinion, a conclusion that the appellant had not established that she was able to pay her debts was a conclusion that was reasonably open to the Magistrate. The appellant's evidence consisted of, first, no more than assertion that she was solvent and able to pay her debts and, secondly, details relating to the claims of the respondent, CFS and Bernsteen. As at 6 April 2006 the appellant was working in a business and receiving an income of about $1,200 per week. 2. The debt which she owed to CFS had been paid although there was no evidence as to the source of the moneys used to repay the debt. 3. Bernsteen has a claim against the appellant for the sum of $29,068.55 and the appellant has a counterclaim against Bernsteen which she quantifies at a figure in excess of $50,000. There was no evidence as to the strength of either the claim or counterclaim and neither has come on for trial. 4. Bernsteen has obtained orders for costs against the appellant. The making of those orders is the subject of an application for special leave to appeal to the High Court of Australia. However, the orders have given rise to existing liabilities subject to any orders staying the enforcement of the liabilities. The liability of the appellant to Bernsteen for the costs awarded by the Magistrates Court of South Australia is for the sum of $12,000. The enforcement of that judgment has been stayed by order of a State Magistrate. The liability of the appellant to Bernsteen for the costs awarded by the Supreme Court of South Australia is for the sum of $11,191.80. The enforcement of that judgment has not been stayed. 5. Bernsteen has a liability to the appellant for the costs of the appellant's successful application to set aside the bankruptcy notice and that liability has been quantified or is likely to be quantified in the sum of $6,221.78. 6. The appellant has a liability (not yet quantified) for costs to the respondent upon the discontinuance of an application for a stay of the judgment debt and the appellant may have an offsetting claim for costs against the respondent for an unsuccessful attempt by the respondent to have the appellant's State Magistrates Court proceedings struck out as an abuse of process. However, the onus is not on the petitioning creditor; it is on the judgment debtor. Furthermore, the appellant's assertions of solvency cannot be given any great weight particularly in light of the approach she took before the Magistrate (see [61] above). 68 The appellant must have some ongoing expenses and, presumably she would say, some means of meeting some or all of those expenses. It was the absence of any evidence relevant to those matters which led the Magistrate to conclude that the appellant had not discharged the onus of establishing that she is able to pay her debts (see [28] and [42] above). That conclusion was open to him. 69 I would not uphold the appeal on the solvency point. 71 The relevant principles as to what constitutes an improper purpose were stated by the High Court in Rozenbes v Kronhill [1956] HCA 65 ; (1956) 95 CLR 407. The Court referred to a number of English authorities on what amounts to 'extortion'. The Court said that the question is whether the court process is being used for illegitimate purposes such as recovering a larger amount from the debtor than could be recovered by legal proceedings. There is an abuse of process if a pending bankruptcy petition, or a threat of proceedings in bankruptcy, is used as a means of extortion. The word "extortion" is not a technical term, and it has in bankruptcy law "no special and artificial significance divorced altogether from the ordinary implication of the word". The court will look strictly at the conduct of a creditor using or threatening bankruptcy proceedings, and extortion may be held to have taken place if the creditor has used, or attempted to use, a pending petition, or a threat of a petition, in order to extract from the debtor money which the debtor is not bound to pay, or in order to obtain some secret and unfair advantage over other creditors. But extortion will not be held to have taken place "in the absence of mala fides or anything amounting to oppression in fact". There must be a real intention on the part of the creditor to use the process for some other end than its legitimate end, and there must be a real exertion of pressure. The Court retains a discretion to make such an order. 73 Although the improper purpose point was not referred to in the appellant's Notice of Intention to Oppose Petition, there is no doubt that it was raised as a ground of challenge both before the Registrar on 20 June 2006 and the Federal Magistrate on 5 July 2006. 74 In support of this ground of challenge the appellant sought to put forward the affidavit of Mr Michael Gawronski. 75 Counsel for the appellant submitted that the Federal Magistrate erred in ruling that paragraphs 13.1 to 13.5 inclusive of Mr Gawronski's affidavit were inadmissible. Counsel submitted that those paragraphs support the appellant's case that the creditor's petition was brought for an improper purpose. 76 I should say that a submission was made to the Federal Magistrate that even without the evidence from Mr Gawronski there was sufficient evidence of an improper purpose on the part of the respondent. That submission was rejected, correctly in my view, by the Federal Magistrate and as I understand it not repeated by the counsel who appeared for the appellant on the appeal. In other words, counsel for the appellant accepted that if, contrary to his submission, the Federal Magistrate was correct to exclude the relevant paragraphs of Mr Gawronski's affidavit, then the improper purpose point must fail. 77 The Federal Magistrate ruled that paragraphs 13.1 to 13.5 inclusive of Mr Gawronski's affidavit were inadmissible and the transcript suggests that he delivered reasons at the time of his ruling but no copy of his reasons appears on the file. This potential difficulty is overcome by the fact that in his later reasons for judgment he sets out the basis upon which he excluded paragraphs 13.1 to 13.5 inclusive. Not having the relevant part of the affidavit in evidence I would not make orders for discovery or grant an adjournment on that ground. I can also only give very little weight to the allegations by the debtor of collateral purpose in relation to the bankruptcy proceedings. As things stand they amount to an assertion of such from the debtor, and a claim that her assertion is evidenced or corroborated by the fact that the creditor has consistently refused to accept her tenders for what is in effect a very small amount of money, and that both the creditor and the supporting creditor are represented by the same firm of solicitors. Mr Gawronski's evidence would obviously be very important and I have difficulty in understanding why, it having been rejected by Registrar Christie, it was not put into proper form prior to the hearing before me. I will proceed on that basis. 79 In theory, evidence of a conversation may be given in any one of three forms, namely, by recounting the actual words used by the parties to the conversation, or by recounting the substance or effect of what was said, or by recounting the witness's conclusions as to the effect of the conversation. At common law, evidence of the conversation given in the first form is admissible and evidence of the conversation given in the third form is not. At common law, evidence in the second form is routinely admitted. Often a witness will be asked if he or she can remember the actual words used and if (as is often the case) they are not able to, they are invited to recount the conversation in terms of the substance or effect of what was said. When I use the word 'effect' here, I mean the effect of what was said, not the witness's mere conclusions or impressions of the conversation. We disagree. There is nothing in the Treaty to limit the application of that provision in proceedings to which the Treaty applies; Article XI(3) merely requires the transmission of "such evidence, as according to the laws of the requested state, would justify his trial or committal for trial ...". The provision deals only with the sufficiency, not the form, of evidence. The rule that evidence of conversations shall be given in direct speech is, in Australia, a rule of practice rather than of law; a practice that is probably now disregarded as often as it is followed. To apply to affidavits prepared in another country the rules of mere practice of our own courts would be substantially to diminish the utility of the Act; cf R v Governor of Pentonville Prison; Ex parte Passingham [1983] 2 AC 464. Witnesses are commonly interrupted as they endeavour to recount conversations in indirect speech, and urged to give the actual words used. This is a counsel of virtue, but it is questionable whether it is a rule of law. A witness may give the witness's best recollection of the substance, effect or purport of what was said, even though the exact words cannot be recollected, and the witness may also recount the impression made on the witness by whatever words were used. If so, it is hard to see why witnesses must be compelled into uttering untruths on oath by giving a form of words in direct speech with which they are not happy and which they cannot actually recollect in preference to their own words in indirect speech, so long as mere conclusions are avoided. "The rule that evidence of conversations shall be given in direct speech is, in Australia a rule of practice rather than of law; a practice that is probably now disregarded as often as it is followed". This is particularly so where the conversations took place a long time ago. Similarly, there is no provision in the Cth and NSW: Evidence Acts 1995 or the Tas: Evidence Act 2001 which makes inadmissible evidence of a conversation given in indirect speech, though the possibility of discretionary rejection under s 135 is available. 82 In my opinion, by and large the relevant paragraphs fall within the second form referred to above. It would appear that the Federal Magistrate considered that the paragraphs fell within the third form (see his reference to a 'summary of the conversation') and, in so doing, in my respectful opinion, he erred. No doubt there appear to be one or two objectionable passages in the relevant paragraphs and I refer, for example, to the reference to the respondent bragging. Furthermore, the evidence is clearly only admissible against the respondent and is not admissible to prove Mr Macks' state of mind. Subject to those considerations, I think the evidence in the relevant paragraphs falls within the second form identified above and the only question is whether it should have been excluded because the appellant had not established by express evidence that Mr Gawronski could not give the evidence in direct speech. It would seem that that was not the basis upon which the Federal Magistrate excluded the evidence but it is a matter that needs to be considered. 83 In my opinion, there is a rule of practice at common law that requires a witness to recount the actual words used in a conversation if he or she is able to do that: Commonwealth of Australia v Riley (supra); LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (supra); J H Wigmore, 3 Wigmore on Evidence SS766 (Chadbourn rev 1970). If the witness is unable to recall the actual words used, he or she can give evidence of the substance or effect of what was said. A witness might say he or she cannot remember the actual words used. I think that as a matter of practice it is also open to the Court to infer that that is the case. I would be disposed to draw that inference in the case of the relevant paragraphs in Mr Gawronski's affidavit bearing in mind the lapse of time between the conversation and the swearing of the affidavit, the apparent length and complexity of the conversation and the fact that an actual word used is from time to time identified by quotation marks. However, I do not need to finally determine the point because I think the evidence is admissible by reason of the provisions of the Evidence Act 1995 (Cth). 84 Under the Evidence Act 1995 (Cth) evidence which is relevant is admissible subject to any exclusionary provision of the Act: s 56. The evidence in paragraphs 13.1 to 13.5 inclusive of Mr Gawronski's affidavit is relevant. The only possibly relevant exclusionary provision is s 135 and in my opinion there is no question of the exclusion of the evidence under that section. 85 In my opinion, subject to the matters I have mentioned, the Federal Magistrate erred in excluding paragraphs 13.1 to 13.5 inclusive of Mr Gawronski's affidavit on the basis upon which he did. 86 It is for the Bankruptcy Court to determine if a creditor's petition was brought for an improper purpose and if necessary to hear evidence relevant to that topic including cross-examination of witnesses. It is not for me to say how the point will be determined; it is sufficient for me to conclude that if findings are ultimately made in accordance with the evidence in the relevant paragraphs a finding of improper purpose may be appropriate and an order made that the petition be dismissed. The question of the discretion in relation to the improper purpose does not arise unless and until an improper purpose is found. I will hear the parties on other appropriate orders. I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | appeal against sequestration order made by federal magistrate order made on creditor's petition where concurrent proceedings in state court considering question of whether judgment debt satisfied where appellant asserts accord and satisfaction in respect of judgment debt where appellant elected not to prove accord and satisfaction before federal magistrate whether magistrate erred in finding debt still owing where appellant's counsel conceded in federal magistrates court that appellant could not prove solvency whether magistrate erred in failing to find that debtor was able to pay debts whether magistrate erred in failing to find that petition issued for improper purpose whether magistrate should have exercised discretion pursuant to s 52 of bankruptcy act 1966 (cth) to dismiss or adjourn petition. direct speech where evidence of contents of conversations given on affidavit where evidence of conversations not evidence of actual words used whether rule of practice that evidence of conversations be in the form of direct speech whether evidence of conversations may be in the form of indirect speech where direct speech not possible where witness did not directly state that indirect evidence represented best recollection whether impossibility of evidence in the form of direct speech can be inferred from wording of affidavit effect of s 56 of evidence act 1995 (cth). bankruptcy evidence |
In its original form, the subpoena required the production of one copy of the transcript of the examination of all persons examined by ASIC in the course of its investigation pursuant to s 13 of the Australian Securities and Investments Commission Act 2001 (Cth) ( the ASIC Act ) into the respondent and others arising out of or in connection with the supply of wheat to Iraq as part of the United Nations Oil-for-Food Programme ( the investigation ). The subpoena also required the production of all signed statements of witnesses obtained by ASIC during the investigation. When the subpoena was first returned before the Court, ASIC said that it would need several weeks in order to gather the documents called for by the subpoena and to consider those documents for the purpose of deciding what immunity and what privilege claims could and should be made. ASIC's position was made more complex by reason of certain proceedings brought by it in the Supreme Court of Victoria against several individuals who were formerly officers or executives of the respondent. The likely voluntary disclosure by ASIC of documents in the Victorian proceedings was said to be a matter which would inevitably affect the extent to which any immunity or privilege claims might be pressed. ASIC also raised the possibility that some or all of the examinees and persons who had signed statements might wish to make an appropriate application to the Court designed to prevent production of the documents called for by the subpoena or to prevent or restrict and control access to them. Negotiations between the legal representatives of the applicants and ASIC and its lawyers took place over the next several months. Eventually, on 5 June 2009, the applicants and ASIC came to an agreement as to the scope of the subpoena and as to how the requirements of the subpoena would be met. That agreement was put into effect on 5 June 2009 in the following way. First, the subpoena was narrowed so as to only require the production of one copy of the transcript of the examination of 10 named persons. The other requirements imposed by the subpoena in its original form to produce witness statements and the transcript of the examination of all examinees were abandoned. Second, the transcript of the examination of two of those persons (Mark Emons and Michael Watson) was agreed to be redacted in accordance with a protocol worked out amongst the relevant parties. Third, the documents were produced by ASIC to the Court on 5 June 2009 without objection. No objection to access was taken by ASIC. On 5 June 2009, Counsel for three groups of examinees appeared in relation to the subpoena. In addition, a partner in the Perth office of Corrs Chambers Westgarth, lawyers, had made submissions by letter dated 4 June 2009 in relation to the subpoena on behalf of Trevor Flugge. All examinees objected to any person having access to any of the documents produced by ASIC. It is common ground that the documents produced by ASIC comprise the transcript of the examinations of each of the 10 persons named in the subpoena ( the transcripts ) and nothing else. The transcripts have remained in my Chambers for safekeeping since 5 June 2009 and have not yet been inspected or looked at by any person. I have not read the transcripts. After the transcripts were produced to the Court, I heard full argument from the applicants, the respondent and all of the examinees on the question of whether access to any of the transcripts should be granted to any person and, if so, on what terms. I took the view that each of the examinees had standing to oppose access and a real and legitimate interest in doing so. These Reasons for Judgment determine the question of access to the transcripts. Their fallback position was that access should be strictly controlled. Counsel for the applicants and Counsel for the respondent both pressed for access to the transcripts. They agreed that the respondent (or, at least, its legal representatives) should have first access in order to enable the respondent to make any claims for legal professional privilege which it might wish to make. They also fairly much agreed on a set of orders that would sensibly give effect to that arrangement. Some minor differences remained between them but these were not substantial. It is convenient to deal with the matter by reference to the particular submissions made on behalf of the examinees. It was conducting that investigation as part of a joint task force with ASIC and other agencies. That risk appears now to have abated or, at least, been substantially diminished. ASIC has commenced civil penalty proceedings against Messrs Flugge, Lindberg, Ingelby, Stott, Geary and Long in the Supreme Court of Victoria. Those proceedings were stayed on 12 November 2008. I do not know whether the stay remains in place. Counsel for Michael Watson submitted that the privilege against self-incrimination (of which the right to silence is part) is a fundamental bulwark of liberty which is deeply ingrained in the common law of Australia. In support of that submission, Counsel cited Reid v Howard (1995) 184 CLR 1. In Reid v Howard 184 CLR 1 , former clients of a chartered accountant, having learned that he was misappropriating funds, applied for orders in the Supreme Court of New South Wales compelling him to disclose information about certain assets. The accountant claimed privilege against self-incrimination. The Court of Appeal accepted the claim for privilege but made orders compelling disclosure upon conditions intended to protect the accountant from the risk of prosecution. The Crown was not a party to the making of the orders. The High Court held that there is no scope for an exception to privilege against self-incrimination, in criminal or civil proceedings, other than by statute or waiver. Their Honours went on to hold that there was no scope for an exception to the privilege other than by statute (at 184 CLR 14). It was also submitted on behalf of Mr Watson that the privilege against self-incrimination has a role to play in related civil cases. That will not be difficult to show when, as here, the proceeding is aimed at proving that the directors engaged in conduct which would establish, or go a long way toward establishing, that they had also committed criminal acts. It must, however, be remembered that the examinations which are recorded in the transcripts were conducted as part of an investigation undertaken by ASIC pursuant to s 13 and ss 19---27 of the ASIC Act. In examinations conducted as part of such an investigation, the ASIC inspector may require the examinee to answer a question that is put to the examinee at the examination which is relevant to a matter that ASIC is investigating (s 21(3)). The examination is to take place in private (s 22) and a written record of the examination is to be created and kept (s 24). Under s 25(3), ASIC may, subject to such conditions as it may wish to impose, give to a person a copy of the written record of the examination. Under s 63(1) of the ASIC Act, a person must not intentionally or recklessly fail to comply with a requirement made under (amongst others) s 19 and s 21(3). Non-compliance with such a requirement is an offence. Section 63(5) relieves the person from liability for that offence if the person has a reasonable excuse for not so complying. Pursuant to s 68(1) of the ASIC Act, it is not a reasonable excuse for failing to give information that the information might tend to incriminate the person or make the person liable to a penalty. Section 68(3) ameliorates the impact of that provision to a significant extent. The transcripts were created pursuant to s 24 of the ASIC Act as a written record of the examination of each of the relevant examinees. The examinations themselves were conducted as part of a compulsory process. Original transcripts signed by the examinees are the property of ASIC and were created by ASIC as part of the conduct of those examinations in accordance with the relevant statutory provisions. Section 68(3) of the ASIC Act preserves the essence of the privilege against self-incrimination because it denies to the relevant prosecuting authorities the capacity to use the transcripts in a criminal proceeding or a proceeding for the imposition of a penalty other than in the limited cases contemplated by the subsection. All that the examinee has to do in order to invoke the privilege to the extent which the ASIC Act permits it to be invoked is to comply with s 68(2). I am entitled to assume that, during the course of the examinations which are recorded in the transcripts, each and every one of the examinees invoked the privilege to the full extent that the ASIC Act permitted and has thus secured such protection as is permitted under that Act. In terms of principle, the ASIC Act has modified the privilege against self-incrimination to some extent. As envisaged by the relevant statements of principle in Reid v Howard 184 CLR 1, the scope of the privilege has, to some extent, been modified by statute and that modification of the privilege is effective. However, the answers to the questions asked during the course of the relevant examinations which are recorded in the transcripts cannot be used in criminal proceedings other than as permitted by s 68(3) of the ASIC Act. This is not a case of a court in a civil proceeding seeking to override the privilege before the privilege can be invoked. The simple fact is that, to the extent permitted by law, the privilege in its modified form has already been invoked. For these reasons, I do not think that the examinees have made out their submission that access to the transcripts should be denied as a matter of law. Dr Lyon, who appeared for Michael Watson, also relied upon what he called " the common law right to silence " in support of his submission that access to the transcripts must be denied. He submitted that it is ordinarily the choice of the suspect as to whether he speaks and, if so, to whom. I do not think that this submission adds anything to the submissions based upon the privilege against self-incrimination. The simple fact is that Mr Watson and the other examinees were lawfully compelled by ASIC to answer questions during the course of their examinations and, to the extent permitted under the ASIC Act, were able to invoke the privilege when answering those questions. Dr Lyon SC submitted that, whatever use is ultimately made of the transcripts, Mr Watson's rights will be adversely affected. He submitted that there would be significant potential indirect impact upon those rights in a number of different ways. The conduct of the examinees would be subject to scrutiny, findings of fact, criticism and possibly media attention as well as the judgment of the Court before any potential criminal processes are determined. If the transcripts are made available, the examinees (or at least some of them) would be more likely to be called as witnesses in the present proceedings thus requiring them at the trial to confront on a question by question basis the difficult issue as to whether or not the privilege should be invoked. Inevitably, this would erode the common law rights ordinarily enjoyed by the examinees. Mr Studdy SC focussed more upon matters of confidentiality and relevance. There was evidence before me which satisfied me that the contents of the transcripts were very likely to be at the heart of the subject matter of the case. Originally, Mr Studdy SC urged upon me that I should send off the transcripts to an independent barrister with a request (or perhaps subject to an order) that that barrister read all of the transcripts and come to a view by reference to the pleadings which particular questions and answers might have some conceivable relevance to the issues in the case as discerned by that barrister. He or she would then mask those portions of the transcript which were considered to be irrelevant. During the course of argument, I indicated to Mr Studdy SC that I saw many difficulties with that approach. In the end, notwithstanding that he did not abandon the suggestion, he did not press it as vigorously as he had at the outset. I am not prepared to engage some third party in the manner and for the purposes suggested by Mr Studdy SC. Mr Studdy SC then urged upon me that I should perform the task that he said the independent barrister should perform. I decline to take that course. It is unnecessary. In addition, the respondent objects to my looking at the transcripts, in any event. All Counsel focussed on questions of confidentiality. These matters are more appropriately dealt with when I come to consider the terms upon which access might be granted. The legitimate concerns of the examinees raised in the submissions made on behalf of Michael Watson can, in my view, adequately be accommodated by imposing appropriate terms on any access to the transcripts by the parties or their legal representatives. I am not persuaded that the arguments advanced on behalf of the examinees are sufficiently strong as to justify the refusal of access altogether on discretionary grounds. That is a sensible requirement at this stage and I propose to incorporate it in the orders which I will make. The examinees resist any proposal that officers or employees of the respondent have access to the transcripts. This concern on the part of the examinees is an understandable and legitimate one. I do not propose to address it at the moment as I do not intend to allow access to any officers or employees of the respondent at this time. Should the legal representatives of the respondent form the view that access to the transcripts should be afforded to an officer or employee of the respondent, for good reasons, an appropriate application will need to be made pursuant to the liberty to apply which I will grant. Counsel for the examinees have submitted that express undertakings should be required by the Court in the circumstances of the present case and that the precise terms upon which access is to be granted should be spelled out in order to avoid any future misunderstanding as to those terms. Counsel for the applicants resists the imposition of such a term on the basis that it is unnecessary. He referred me to passages in Hearne v Street [2008] HCA 36 ; (2008) 235 CLR 125 which make clear that the implied undertaking not to use documents produced under compulsion in litigation for any purpose other than the purposes of the litigation for which they were produced is a substantive obligation and need not be incorporated into an express undertaking. Whilst the submissions advanced on behalf of the applicants in this respect may well be correct, I do think that there is some advantage in articulating with precision the precise terms upon which access is to be granted. This is not out of any concern that the legal representatives in the present case would not both understand and respect their obligations under the implied undertaking. It is simply the best way to ensure that all persons to whom access is granted have a very clear understanding of the terms upon which that access is being granted. I prefer to impose a requirement that express undertakings be given. The parties are also in broad agreement that I should provide that notice be given to the examinees if the transcripts are intended to be deployed at the trial. I will accommodate such a term in the orders which I will make. Finally, there is a dispute between the applicants, on the one hand, and the respondent, on the other hand, as to whether or not any claims for legal professional privilege intended to be made by the respondent should be dealt with by way of affidavit or by letter in the first instance. Given the fact that the commencement of the trial is fast approaching, I think that the best course is for the applicants' proposal to be adopted. I will therefore incorporate the applicants' suggested orders in this respect in the orders which I will make. I propose to make orders accordingly. All parties have acted responsibly in the disposition of the various applications determined by these Reasons. I think that there should be no orders as to the costs of these applications. Each party should bear his or its own costs. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | whether access should be granted to the parties and their legal representatives to transcripts of certain examinations conducted by australian securities and investments commission pursuant to pt 3 div 1 of the australian securities and investments commission act 2001 (cth) criminal prosecutions possible but not necessarily " on the cards " access granted on terms 27 , 63 , 68 , 69 practice and procedure australian securities and investments commission act 2001 (cth), ss 13 , 19 |
An appeal to this Court lies only on a question of law: s 44 of the Administrative Appeals Tribunal Act 1975 ('the AAT Act'). The existence of a question of law is now not merely a qualifying condition to ground the appeal, but also the subject matter of the appeal itself: TNT Skypak International Australia Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 per Gummow J at 178. It is for the applicant to precisely identify the question of law which founds the jurisdiction of this Court to hear the appeal: Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 at [18] . The following facts are largely taken from the respondent's outline of submissions and from the decision appealed against. The applicant failed to lodge her income tax returns for the years ended 30 June 1999, 2000, 2001 and 2003 by the prescribed dates. Reminder notices were sent to her on 29 October 2002 and 29 November 2002 in respect of her failure to lodge the 1999, 2000 and 2001 returns. On 3 May 2003 the respondent advised the applicant in writing that action to obtain lodgement of the 1999, 2000 and 2001 returns would be suspended until 16 May 2003. She was later advised by the respondent that action would be further suspended until 13 June 2003. On 2 December 2004, in relation to the applicant's income tax for the years ended 30 June 2001 and 2003, the respondent made a determination under clause 286-80 of Schedule 1, of the Taxation Administration Act 1953 (Cth) ('TAA') that a penalty amount of $550 for each year of income was imposed for failing to lodge the income tax returns for the years of income on time ('the FTL penalty decision'). The total amount of penalty therefore was $1100 which was payable by 29 December 2004. On 23 December 2004 the applicant wrote to the respondent requesting remission of the penalties. On 24 February 2005 the respondent advised the applicant, in writing, of the respondent's decision not to remit the penalties because the income tax returns for the years of income had still not been lodged by the applicant. On 22 April 2005 the applicant lodged a notice of objection against the FTL penalty decision and sought further time to forward grounds of objection. On 31 May 2005 the respondent disallowed the applicant's request for further time, again because returns had still not been lodged for the years of income. The respondent gave the applicant until 27 June 2005 to lodge the returns for the years of income and provide any further information. The returns were not lodged and, on 28 June 2005, the respondent disallowed the objection and sent a notice of decision to the applicant ('the FTL penalty remission decision'). The applicant sought review of the FTL penalty remission decision in the AAT under Part IVC of the TAA. The matter was heard by the AAT on 18 January 2006. It gave its decision on 13 February 2006. That is the decision which is the subject matter of this appeal. There was evidence before the AAT that the applicant carried on a business and, as such, was required to lodge business activity statements on a quarterly basis. The evidence was that she had lodged those statements, although usually late. At the hearing before the AAT the applicant gave evidence. The AAT further noted that it emerged from the applicant's evidence that the real reason that she had not lodged her 2001 and 2003 income tax returns was that she did not believe that she was liable to pay any income tax for those years. At the time of the hearing the applicant had still not lodged the returns for 2001 and 2003, although she stated that she intended to do so within the near future. It may be that, in fact, she lodged those returns on the same day as the hearing. ' The applicant lodged her notice of appeal to this Court on 15 February 2006. Evidence that were (sic) not relevant. On that day the applicant filed a document which purports to give particulars of the grounds of appeal. On this appeal the applicant sought to adduce further evidence. The material which is sought to be adduced did not come into existence until after the respondent had made the decision complained of. Indeed, the material did not come into existence until after the AAT decision. The applicant sought to tender the material for the purpose of inviting this Court to come to a different conclusion on the facts to that arrived at by the AAT. It should not be admitted: Servos v Repatriation Commission (1995) 56 FCR 377 per Spender J at 385. An examination of the notice of appeal and the particulars contained in that last mentioned document indicate that no question of law is raised on this appeal. Clearly, the grounds in paragraphs (b) and (c) are not questions of law. Nor, in my opinion, are the grounds in paragraphs (a), (d) and (e). In any event, the AAT was obliged to consider any relevant material which had been supplied to it by the respondent pursuant to the respondent's obligation under s 37 of the AAT Act. None of the information supplied was relevant. The complaint in paragraph (d) cannot be sustained. The AAT's reasons, to which I have already referred, show that the AAT did have regard to the applicant's evidence. The AAT was under no obligation to refer to each piece of evidence that the applicant had put before the AAT. Paragraph (e) is simply not relevant. At the time the respondent made the FTL penalty remission decision, which was subject to review before the AAT, the respondent did not know whether there was any tax payable by the applicant for the years under question because the applicant had not lodged her returns. They were still not lodged, I think, at the time that the AAT made its decision. The applicant argued on this appeal that the respondent should not have imposed a penalty because there was no tax payable in the two relevant financial years. That, as I have said, was not known to the respondent at the time the FTL penalty remission decision was made. Nor, if it is relevant, was that known to the AAT when it made its decision. In any event, that is not a question of law. She also argued that in the past the Deputy Commissioner had not imposed penalties on other people where no tax was payable. That was not a fact proved before the respondent or the AAT. It is not a relevant matter on this appeal. She also said that the respondent was unfairly targeting her. There was no evidence before the AAT of that and that does not raise any question of law. She contended that the AAT should be more sympathetic. That, again, unfortunately, is not relevant and certainly is not a question of law. In my opinion, the appeal does not raise any question of law. It is incompetent and should be dismissed with costs. I make the following orders: The appeal be dismissed. The applicant pay the respondent's costs to be taxed. | appeal from decision of aat affirming respondent's decision to not remit penalty imposed no question of law incompetent appeal appeal dismissed. administrative law |
This case concerns Worldwide Workers Pty Limited (in liquidation). 3 On 16 March 2005, Mr Purchas and Mr Malanos were appointed as the administrators of Worldwide Workers pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act). 4 On 9 May 2005, a Deed of Company Arrangement (the DOCA) was executed pursuant to a resolution of the creditors in accordance with s 439C(a) of the Act at the meeting convened under s 439A of the Act . 5 The Deed Fund under the DOCA was constituted by cl 4 and cl 5 of the DOCA which provided for, inter alia, Worldwide Workers to pay certain funds to the administrators at certain times. The Deed Fund also included the trading surplus from trading during the administration. Pursuant to cl 5 of the DOCA, the Retained Cash in the administration account as at the date of execution of the DOCA also formed part of the Deed Fund. 8 The administrators did not make any payments by way of dividend to Participating Creditors under the DOCA. 9 On 29 June 2006, the creditors passed a resolution at a meeting convened pursuant to s 445F of the Act that the DOCA be terminated and Worldwide Workers be wound up. The administrators were appointed as liquidators. 10 The current balance of the Deed Fund is the sum of $144 249.00. The likely dividend to participating deed creditors, if the Deed Fund is distributed to them on the terms set out in the DOCA, is estimated at approximately 5.9 cents in the dollar. If the Deed Fund is included as an asset available for distribution to all creditors of Worldwide Workers, the anticipated dividend to ordinary creditors is estimated at approximately 18 cents in the dollar. (2) A declaration, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Deed Fund is to be distributed to the Participating Creditors on the terms set out in the Deed of Company Arrangement entered into by the defendant dated 9 May 2005. (3) Alternatively, a declaration, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Deed Fund is available for distribution as part of the property of the defendant in the due course of the winding up of the defendant in accordance with the relevant provisions of Pt 5.6 of the Act. Directions will be given and an order for costs made for reasons given in that decision. | whether funds held pursuant to terminated deed of company arrangement are held for the benefit of deed creditors or property of the company in liquidation direction that the funds be administered as the property of the company in liquidation corporations law |
That company was represented and consented to the relief granted. Kelvin Mark Skeers, the first defendant, has not appeared on the hearing. The claims against the first defendant are undefended. They arise out of the same facts as were relevant to the case against the second defendant. Indeed, the second defendant accepted liability for the actions of the first defendant. Nonetheless, because declarations are sought that are novel, I reserved in order to consider whether there is a proper basis for those declarations. However, I have not approached that question as if this were a contested hearing. On that basis, I am satisfied that declarations and the order for costs are appropriate. 2 Counsel for the plaintiff, Australian Securities and Investments Commission (ASIC) made detailed submissions in writing as to the facts proved on the evidence and as to the applicable law and supplemented those submissions orally at the hearing and by two subsequent memoranda. I am satisfied that the factual content of the declarations sought is well founded. I should say something, albeit briefly, about the law. 3 Two general points can be made. First, each of s 12CB(1) and s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the Act) prohibits certain conduct by "a person" which, in the absence of any special definition, includes a natural person. As all of the conduct in this case occurred in the Australian Capital Territory, the sections apply according to their terms (s 4(1) together with the definitions of "Territory" and "this jurisdiction" in s 5 of the Act). Second, there is no difficulty in each of the first and second defendants being responsible for the conduct of the first defendant ( Houghton v Arms [2006] HCA 59 ; (2006) 225 CLR 553). "Financial service" is defined in s 12BAB of the Act. That, in turn, incorporates the definition of "financial product" in s 12BAA. A "credit facility" (within the meaning of the regulations) is such a product (s 12BAA(7)(k)). Regulation 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth) defines "credit facility" in a manner that is apt to pick up what took place between the second defendant, Mr Biega and Pepper Homeloans. 6 The conduct was, in all the circumstances, "unconscionable". That term, in this section, is not limited as it is in s 12CA by a connection with the unwritten law (cf s 51AA of the Trade Practices Act 1974 (Cth); Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 214 CLR 51; GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Pty Ltd [2001] FCA 1761 ; (2001) 117 FCR 23 at [113] ---[126]). Section 12CB is the equivalent of s 51AB of the Trade Practices Act (as to which, see, Australian Competition and Consumer Commission (ACCC) v Radio Rentals Ltd [2005] FCA 1133 ; (2005) 146 FCR 292 at [23] ---[24]). The width of the concept is underlined by the factors referred to in s 12CB(2). 7 It may be accepted for present purposes that, as the loan in question was required to complete the purchase of a private residence, the financial services were of a kind ordinarily acquired for personal, domestic or household use within the meaning of s 12CB(5). In my opinion, it was misleading and deceptive and was likely to mislead or deceive each of Pepper Homeloans and Mr Biega in the respects alleged. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | mortgage broker engaged in conduct alleged to be unconscionable, misleading and deceptive broker does not appear whether declarations of contravention appropriate financial services |
GRANTS leave to the plaintiffs to file a Notice of Motion in which they seek appropriate orders pursuant to O 33 r 13 of the Federal Court Rules against Peter Derek Holland, R & G Consulting Pty Ltd and Ian Kenneth Greenwood, such Notice of Motion and all affidavits in support to be filed by no later than 4.00 pm tomorrow, 28 October 2008. 2. ABRIDGES the time for service of that Notice of Motion and affidavits in support to 12 noon on Wednesday, 29 October 2008. 3. LISTS the hearing of that Notice of Motion on Friday, 31 October 2008 before Foster J with a marking of not before 11.00 am. 4. RESERVES the question of costs arising out of the service of the subpoenas on each of the named parties and of the application made today. 5. GRANTS leave to the plaintiffs to issue a Notice to Produce addressed to the first, second, fourth and fifth defendants requiring production to the Court of the documents called for in the Notice to Produce dated 3 October 2008, a true copy of which is included within the documents comprising Annexure "B" to the affidavit of John Llewellyn Burrell sworn on 16 October 2008, such Notice to Produce to be served by 12 noon on 28 October 2008 and to be made returnable before Foster J on Friday, 31 October 2008 at 11.00 am. 6. RESERVES the question of costs arising out of the service of the document dated 3 October 2008 styled "Notice to Produce" and the application made on 27 October 2008 in respect of that document. 7. GRANTS leave to the plaintiffs to amend their Statement of Claim in accordance with the document styled "Second Further Amended Statement of Claim", a copy of which is annexed to the affidavit of John Llewellyn Burrell sworn 16 October 2008 and marked with the letter "E", such Second Further Amended Statement of Claim to be filed and served by 4.00 pm on Tuesday 28 October 2008. The Court notes that the amendments sought are not opposed by the first, second, fourth and fifth defendants. 8. RESERVES the question of costs arising out of the amendment and of the Motion, insofar as it deals with the question of amendment. 9. DIRECTS the first, second, fourth and fifth defendants to file and serve any amended defence occasioned by the service of the Second Further Amended Statement of Claim by 4.00 pm on Friday, 31 October 2008. 10. DIRECTS the first, second, fourth and fifth defendants to file and serve by 5.00 pm on 13 November 2008 any affidavits upon which they propose to rely on the hearing of the balance of the Notice of Motion filed on 16 October 2008. 11. DIRECTS the parties to exchange Written Submissions in respect of the issues raised by the balance of the Notice of Motion filed on 16 October 2008 and to provide them to the Chambers of Foster J by no later than 4.00 pm on Tuesday, 18 November 2008. 12. FIXES 20 November 2008 at 10.15 am before Foster J for the hearing of the balance of the Notice of Motion filed by the plaintiffs on 16 October 2008. 13. GRANTS liberty to apply to all parties on two days' notice in respect of the balance of that Notice of Motion. 14. RESERVES the costs of and occasioned by the deferral of the hearing of that part of that Notice of Motion. 15. DIRECTS the plaintiffs to serve upon the solicitors for the first, second, fourth and fifth defendants, any report from Professor Walker which the plaintiffs are minded to file and to do so by no later than 26 November 2008. 16. FURTHER directs that a copy of that report be lodged with the Associate to Foster J at the same time, but not be filed in the Registry or otherwise attempted to be filed with the Court. 17. DIRECTS the first, second, fourth and fifth defendants to notify the plaintiffs, by no later than 5 December 2008, whether they maintain any objection to the filing of such a report or the reading of that report at the final hearing, which is fixed to commence on Monday 20 April 2009. 18. In the event that there is to be opposition of either kind to the use of that report, the Court directs the parties to notify the Associate to Foster J promptly after 5 December 2008 so that a further hearing date may be allocated to deal with any questions that arise. 19. If there is no contest arising out of the provision of such a report, the Court directs the parties to confer with a view to agreeing on any further directions that might be necessary arising out of the service and ultimate filing of such a report and to submit such further directions to the Associate to Foster J for consideration by Foster J. The Court notes in this context that it has been submitted on behalf of the plaintiffs that the report is only in reply, in which event there should be no need for such further directions. 20. RESERVES the question of costs arising out of today's argument in relation to the foreshadowed Walker Report. 21. GRANTS liberty to the parties to apply on two days' notice in respect of the subject matter of the Notice of Motion dated 10 September 2008. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . The text of entered orders can be located using eSearch on the Court's website. I intend to deal today with all matters raised to the extent that I am able. 2 The formal Notices of Motion being dealt with are those filed by the plaintiffs on 10 September 2008 and on 16 October 2008. I abridge the time for service of that Notice of Motion and affidavits in support to 12 noon on Wednesday, 29 October 2008. I list the hearing of that Notice of Motion before me on Friday, 31 October 2008 with a marking of not before 11.00 am. I reserve the question of costs arising out of the service of the subpoenas on each of the named parties and of the application made today. The document was sent under cover of a letter dated 3 October 2008. The document and the letter comprise annexure B to the affidavit of John Llewellyn Burrell sworn on 16 October 2008. Certain points were taken by the solicitor for the first, second, fourth and fifth defendants about that Notice to Produce in correspondence which followed service of the document. 5 In order to deal with the substance of the matter, I grant leave to the plaintiffs to issue a further Notice to Produce requiring production of the documents called for in the Notice to Produce dated 3 October 2008, such Notice to Produce to be served by 12 noon tomorrow and to be made returnable before me on Friday next, 31 October 2008 at 11.00 am. I reserve the question of costs arising out of the service of the document dated 3 October 2008 and the application made today in respect of that document. The amendments sought are not opposed by the defendants for whom Mr Thomson appears, being the first, second, fourth and fifth defendants. 7 Accordingly, I grant leave to the plaintiffs to amend their Statement of Claim in accordance with the document to which I have referred, such Second Further Amended Statement of Claim to be filed and served by 4.00 pm on Tuesday, 28 October 2008. I reserve the question of costs arising out of the amendment and of the motion insofar as it deals with the question of amendment. 8 I will also direct the first, second, fourth and fifth defendants to file and serve any Amended Defence occasioned by the service of the Second Further Amended Statement of Claim by 4.00 pm on Friday, 31 October 2008. That claim is resisted. Neither the plaintiffs nor the relevant defendants are ready to proceed today with that application. Procedural directions are required. 10 Accordingly, I direct the first, second, fourth and fifth defendants to file and serve by 5.00 pm on 13 November 2008 any affidavits upon which they propose to rely on the hearing of the plaintiffs' claim for interlocutory injunctions made in the Notice of Motion filed on 16 October 2008. 11 I also direct the parties to exchange Written Submissions in respect of the issues raised by the balance of the Notice of Motion filed on 16 October 2008 and to provide them to the Chambers of Foster J by no later than 4.00 pm on Tuesday, 18 November 2008. 12 I will fix the plaintiffs' claim for interlocutory injunctions for hearing on 20 November 2008 at 10.15 am before me. I will grant liberty to apply on two days' notice to all parties and I will reserve the costs of and occasioned by the deferral of the hearing of that part of the Notice of Motion filed on 16 October 2008. I indicate to the parties that what I have in mind is that, if there are difficulties that arise out of the production of the invoices and Memoranda of Fees called for in the plaintiffs' Notice to Produce, then the matter should be brought to my attention before 20 November 2008 pursuant to the liberty which I have granted. 14 There was no affidavit of Professor Walker in existence when that Motion was filed. There is still no affidavit of Professor Walker in existence. The approach taken by the plaintiffs is to seek the leave spelt out in paragraph 1 of the Notice of Motion, in principle, as it were, based upon indications as to what Professor Walker would say, according to evidence given by the solicitor for the plaintiffs. There has been some short argument this morning as to whether or not this course should be permitted. 15 Counsel for the first, second, fourth and fifth defendants opposed the leave being granted on the basis of lack of utility and prejudice in the nature of unnecessary and additional substantial costs being incurred which he contended may not be recoverable. During the course of that argument, both counsel have put to me various submissions based upon details contained in the evidence filed for the final hearing. Necessarily, those submissions have been selective --- and that is not meant to be critical --- but it simply highlights the problem with which I am confronted. It is at least arguable that some of that which is sought to be adduced in the foreshadowed report from Professor Walker may be evidence-in-chief, although it is impossible to determine that question without seeing the precise terms of his report. 16 For these reasons, I have come to the view that I should defer further consideration of the plaintiffs' Motion until a report has been prepared by Professor Walker and until that report has been served upon the defendants for whom Mr Thomson appears and made available to me so that, if there is any argument to take place, it can take place in a context which is much better informed than the present one. (2) I direct that a copy of that report be lodged with my associate at the same time, but not filed in the Registry, or otherwise attempted to be filed with the Court. (3) I direct the first, second, fourth and fifth defendants to notify the plaintiffs by no later than 5 December 2008, whether they may maintain any objection to the filing of such a report or the reading of that report at the final hearing, which is fixed to commence on 20 April 2009. (4) In the event that there is to be opposition of either kind to the use of that report, I direct the parties to notify my associate promptly after 5 December 2008 so that a further hearing date may be allocated to deal with any questions that arise. (5) If there is no contest arising out of the provision of such a report, I direct the parties to confer with a view to agreeing any further directions that might be necessary arising out of the service and ultimate filing of such a report and to submit such further directions to my associate for consideration by me. I note in this context, that it has been submitted on behalf of the plaintiffs that the report is only in reply, in which event there should be no need for such further directions. (6) I reserve the question of costs arising out of today's argument on this point. (7) I grant liberty to the parties to apply on two days' notice, in respect of the subject matter of the Notice of Motion dated 10 September 2008. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | case management practice and procedure |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs made on 19 February 1999, to refuse to grant a Protection Visa ('a Protection Visa') to the appellant. In October 1996 he applied for a protection visa with the Department of Immigration and Multicultural Affairs under the Migration Act 1958 (the Act). That application was withdrawn on February 3, 1997 and the [appellant] pursued other ways of gaining residence in Australia. On 16 November 1998 the [appellant] lodged another application for a protection (class AZ) visa. On 19 February 1999 a delegate of the Minister for Immigration and Multicultural Affairs refused to grant a protection visa and on 9 March 1999 the [appellant] applied for review of that decision. The [appellant] completed a university education in 1984 and moved to Dhaka where he became a cook and his previous political involvement resulted in him becoming a very active BNP member. During this time the [appellant] was tireless in his support for the BNP and as a result he became a target for Awami league hooligans. The [appellant] was attacked on 15 July 1996 and attacked by a number of Awami League activities and was hospitalised as a result. If he returns he will be killed by the Awami League. The applicant claims to come from a political family in Bangladesh --- his father and elder brother were involved in the war against Pakistan in 1971. As a result of their political activity their homes were burnt and looted and their family tortured by local Razaker and Pakistani military. Later his brother was jailed by the Mujib government and their family tortured by the Awami League. He claims that as a college student he became vice-president of the student wing of the Bangladesh Nationalist Party (BNP). After graduation he joined a BNP branch and led gatherings and meetings and was elected joint secretary of the BNP branch in Dhanmondi in 1987. The applicant further claims that from 1991 when the BNP came to power, till their leader Khaleda Zia resigned, he was targeted by a rival party, the Awami League. As a result of his support for the next BNP candidate in the 1996 elections, Colonel Ali, he was again targeted by Awami League members. When the BNP lost that election Awami League members started "taking revenge" on opposition members and leaders. False charged were filed against him with a view of throwing him in gaol. The applicant further claimed that Awami League activists in his home town of Jhenadi had gone to his home twice with the intention of attacking him. When they were unable to locate him they attacked his family instead. He claimed the reason for the attacks was his work for the BNP when at college. At the Tribunal hearing it was put to him that it seemd unlikely that he would be targeted for that sort of work which was undertaken more than ten years ago. In reply the [appellant] said that he was active in spreading BNP propaganda when he visited Jhenadi. On 15 July 1996 the [appellant] was attacked by Awami League activists with sticks and batons while passing Mirpur zoo. He alleges that they had lain in wait for him and bashed him. He was admitted to hospital for a few weeks as a result of the attack. The applicant realised he was not safe in Bangladesh. He fears persecution and says that the false cases against him are still pending. He cites the Awami League's policies which oppress BNP leaders and workers and their misuse of the Special Powers Act to arrest BNP members. The Tribunal affirmed the decision not to grant the appellant a Protection Visa, concluding that it was not satisfied that the appellant has a well-founded fear of persecution under the Refugee Convention. The fact that he followed this course of action on the advice of his agent suggests that the agent lacked confidence that the applicant's claims for protection could be properly substantiated. 10 The Tribunal found the appellant's claims lacked credibility. I am not satisfied that so big a discrepancy can be ascribed to a fading memory of events. In addition, the [appellant] was very vague indeed about the controversial political events leading up to the June 1996 election, repeatedly choosing instead to refer to the political events of 1991 and even the 1970s. He did not until belatedly state that there had been two elections in 1996, and although he knew that there had been a caretaker government between the elections he appeared to be under the impression that the BNP had wanted a caretaker government and had held the first poll simply in order to bring in such a government. The February elections were held to pass this bill. They [the BNP] got the majority and said, "Now we can pass the bill". I am prepared to accept an approximate number of votes but am not inclined to accept a figure that is about half the correct number. The applicant's wrong answer does not suggest to me that he was conscientiously engaged in the 1996 election campaign in Dhanmondi or even that he had a basic understanding of the size of the electorate in which he claimed to have been deeply involved in campaign strategy'. I am not satisfied that those who opt to take part in such aggressive activities invoke an obligation on the part of Australia to be given protection under the Convention. Independent evidence does not support this idea. I find that the applicant's evidence lacks credibility both in terms of plausibility and because it is unsupported by independent evidence relating to his claims. Thus I am not satisfied that he has a well-founded fear of persecution for a Convention reason in Bangladesh. Given this, I find it implausible that a low-ranking member of the BNP's youth wing, such as the applicant claims to be, faces persecution and requires protection overseas when his party, despite being in opposition, is strong and flourishing at all levels. On 11 March 2005, the appellant filed a Further Amended Application, and asserted three grounds for review. The appellant claimed that the Tribunal fell into jurisdictional error by failing to consider the particular vulnerability to harm of lower-level party workers such as the appellant; secondly by finding the attacks to the appellant did not amount to Convention-based persecution; and thirdly by failing to consider certain independent country information. The [appellant] is really asking the Court to engage in merits review, something it is not empowered to do. In my view the findings made by the Tribunal were reasonably open to it on the material before it. I am not satisfied the Tribunal made any legal error going to jurisdiction in coming to its decision. The Honourable Federal Magistrate erred in considering that the Refugee Review Tribunal (the Tribunal) made a jurisdictional error when the Tribunal made an inquiry about my information but the Tribunal did not inform me about the result of that inquiry which is a reason or part of the reason to reject my claim (page 20 paragraph 3(a) of the RRT decision) according to s.424A of the Migration Act 1958 . The Honourable Federal Magistrate failed to find out that the Tribunal was interested to reject my claim for protection. Because when the Tribunal failed to find out how the common law system works and the function, scope and provision, jurisdiction and the trial of the different kind of laws passed in the different time in the common law system. Such as The Penal Code 1860 (the criminal Act), the Special Power Act 1974 and the Public Safety Act 2000 (for a short period) in Bangladesh. The appeal be allowed. The order of the trial judge be set aside and the decision of the Tribunal also be set aside and a further order to the Tribunal to reconsider the appellant's protection visa application. A writ of certiorari quashing the decision. A writ of mandamus compelling the Tribunal to re-determine the matter according to the Law. Any other order the Court deem fit. An order for costs. In the absence of some comprehensible particulars, it is difficult even to determine if what is said to be an error by the Federal Magistrate was, in fact, a matter that had been put to his Honour. No basis appears for any relief in the appellant because of the assertions contained in this ground. 20 The first ground of appeal relates to part of the Tribunal's findings concerning the credibility of the appellant's various claims. It obviously means to assert that the Tribunal made a jurisdictional error in not informing the appellant of its inquiries concerning a Bengali newspaper in Australia for when the appellant claims to have worked, contrary to s 424A of the Act. The applicant claimed that he had not had time to make this claim during the hearing. I do not accept this as the hearing stretched for three hours during which a variety of claims were discussed, and the applicant had ample opportunity to make this claim. Accordingly, I find that he has either fabricated the claim of having worked for the newspaper as News Editor or, even if he did work for the paper in some capacity, fabricated a claim of facing persecution. I consider that he indulged in such fabrication after having realised, from questions and independent evidence put to him during the hearing, that his original claims of persecution were viewed by the Tribunal as questionable. 24 On 10 July 2000 the appellant had written to the Tribunal. This was provided to the Tribunal with a covering letter from Parish Patience, the appellant's then solicitors, dated 13 July 2000. Even though from this overseas still I just continue my activities through publications and many other public communication. I hope you will consider my case and allow me to accept as a refugee on this soil. 27 The Tribunal heard the appellant's application on 4 July 2000. The decision of the Tribunal is dated 31 July 2000, and was handed down on 15 August 2000. There can be no doubt that the Tribunal was subject to the duty in s 424A(1) to give to the appellant ' particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision under review '. 28 The application for judicial review by the Federal Magistrates Court was made on 16 August 2004. An amended application was made on 28 October 2004, and a further amended application on 11 March 2005. That proceeding, insofar as it concerned the applicant, was remitted to the Federal Court of Australia by order of Gaudron J made on 25 November 2002. That application was subsequently dismissed by Emmett J on 20 February 2004. The decision of the High Court in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 (' SAAP ') was handed down on 18 May 2005, after the hearing in the Federal Magistrates Court, but before judgment. In SAAP , McHugh, Kirby and Hayne JJ held that a breach of s 424A constituted jurisdictional error because of the mandatory language of s 424A. Non-compliance with s 424A will, in the conduct of a review, render a decision invalid. 31 Their Honours in the majority also concluded that there was no reason in the facts of that case to withhold discretionary relief. 32 The High Court allowed the appeal with costs, set aside the orders of the Full Court, and, in their place, ordered that the appeal to the Full Court be allowed with costs, set aside the orders of the primary judge and ordered, in the place of those orders that there be an order in the nature of certiorari to quash the decision of the Tribunal, and an order in the nature of mandamus requiring the Tribunal to review according to law the decision of the delegate to refuse the protection visas that had been sought by the applicants in that case, and the respondent Minister pay the applicant's costs. Whether those steps would be judged to be necessary or even desirable in the circumstances of a particular case, to give procedural fairness to that applicant, is not to the point. The Act prescribes what is to be done in every case. Before the Federal Magistrate, the appellant was represented by counsel. 35 Mowbray FM, in his reasons delivered on 28 February 2006, referred to SAAP but only for the purpose of joining the Tribunal as a party to the Federal Magistrates Court proceedings. 38 It seems to me that if there has been a breach of s 424A, the fact that it was not raised below does not prevent it being argued now. There are no aspects of a factual kind which would bear on whether there had been a breach of s 424A or not, which were not before the Federal Magistrate. 39 In particular, there was before the Federal Magistrate two file notes made by the member constituting the Tribunal. Or Directory Information. Official gave publisher's name and tel/fax number for Desh Kantha, which used to publish BH, now not in print. Ms Lovely Alam, publisher, PO Box 824, Darlinghurst, [omitted] . Number disconnected. Found publisher of Shadesh Barta by ringing Indian newspaper in Sydney who gave name of newsagent, Vikram, where she had seen a Bengali paper, who told me to contact Mr Nurul Azad at Tandoori-something in Oxford St, newspaper publisher. Rang him, mobile [omitted] . He said call back in 2-3 days to get no. for Lovely Alam. He said BH hasn't been published for 7-8 months. It is not to the point that the tribunal may have given the applicant particulars of the adverse information orally. It is also not to the point that in some cases it might seem unnecessary to give the applicant written particulars of adverse information (for example, if the applicant is present when the tribunal receives the adverse information as evidence from another person and the tribunal there and then invites the applicant orally to comment on it). If the requirement to give written particulars is mandatory, then failure to comply means that the tribunal has not discharged its statutory function. 43 In my judgment, it is competent for the appellant to rely on this ground of appeal on the appeal to this Court. 44 I have already set out the findings of the Tribunal in respect of the claim of facing persecution for having worked as a news editor for a Bengali newspaper published in Australia, at par 21 above. 45 Ms Rachel Pepper, counsel for the Minister, submitted that there was no breach of s 424A of the Act with respect to the information about the Bengali newspaper, because s 424A was not engaged insofar as that information was concerned. The Tribunal's statement that the newspaper had little support and had been defunct for years was an alternative finding only ("and even if I were to accept this claim ..."), that is, were it inclined to give the appellant the benefit of the doubt --- which it was not --- and as such did not form a part of its reasoning in affirming the delegate's decision. The Tribunal did not reject the claim of facing persecution for having worked as news editor of the Bengali Herald because that claim was made post-hearing. In its reasons, set out above, the Tribunal did not accept that the appellant did not make the claim at the hearing because he had no time to make the claim during the hearing. For that reason ('accordingly') the Tribunal found that he either fabricated the claim of having worked for the paper, or if he did work for the paper, fabricated the claim of facing persecution. The Tribunal expressed the view that the appellant resorted to such fabrication because of his assessment of how the Tribunal viewed his original claims. 50 It follows that part of the reason for the rejection of the claim that the appellant was facing persecution for having worked as news editor for a Bengali newspaper published in Australia, was information obtained by the Tribunal and not communicated to the appellant as required by s 424A. That failure to comply with the requirements of s 424A constituted jurisdictional error. It is not to the point that no error, jurisdictional or otherwise, is shown to have been made by the Tribunal in the rejection of other claims of persecution should the appellant be returned to Bangladesh. 51 In SAAP , there had been a failure to comply with the requirements of s 424A in that written communication of the information to the appellant was not given. The information had been conveyed orally at the time of the hearing, and both the primary judge and the Full Court had concluded that there was no denial of procedural fairness, in the common law sense, in that the appellant had been informed of the adverse information, and had the opportunity of meeting it. Nonetheless, the majority in the High Court concluded that the mandatory obligation in s 424A of written communication warranted the grant of prerogative relief. 52 In this case, the information obtained by the Tribunal from its own inquiries, on the material before me, was not communicated at all to the appellant. 53 The majority judgments in SAAP recognised that there was an undoubted discretion to refuse the relief that had been sought in that case. There has been no suggestion of delay, waiver, acquiescence or other conduct of the appellants said to stand in their way. It follows that, within the limits of their jurisdiction and consistent with their obligation to act judicially, the courts should provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in accordance with the laws which govern their exercise. The rule of law requires no less. That delay, it was submitted, ought, in the circumstances of this case, be a vitiating factor against the granting of relief. It was said that the delay was 'more than trivial', being slightly more than six months; the appellant arrived in Australia in 1996, that is to say, he has been here for ten years, and he deposed in an affidavit that he did not seek review of the Tribunal's decision until he was detained in Villawood. 55 It was also submitted that all of the claims of the appellant to be regarded as a refugee, save that made after the hearing in the Tribunal, have been rejected, and no legal error taints the rejection of those claims. 56 None of these factors persuade me that relief should be refused in this case, in the exercise of the Court's discretion. Because that is so, the best view of the section is that failure to comply with it goes to the heart of the decision-making process. Consequently, a decision made after a breach of s 424A is invalid. Appeal allowed with costs. 2. (ii) There be an order in the nature of mandamus requiring the Refugee Review Tribunal to review according to law the decision made by the delegate of the minister on 19 February 1999 to refuse the protection visa sought by the appellant. | whether tribunal acted in breach of s 424a of the migration act 1958 (cth) relief akin to prerogative relief should be refused for discretionary reasons migration |
The applicants are companies incorporated in Papua New Guinea (PNG), the second applicant being the sole shareholder of the first. The three respondents are companies which are incorporated respectively in Australia, PNG and the United Kingdom. 2 The proceedings arise out of a contract for the provision of catering services at the Ok Tedi mine in PNG. The applicants say, in effect, that they represent indigenous people in PNG who wanted to secure the contract in order to create employment and training opportunities for their communities. They say that they engaged the respondents to prepare a tender proposal under which the respondents would manage the contract for the applicants and that subsequently a management agreement was entered into. 3 The applicants have raised a variety of allegations and causes of action against the respondents. These range from pre-contractual conduct by way of representations said to have been misleading or deceptive to the receipt of secret commissions and breaches of fiduciary duty on the part of the respondents. Other causes of action are also raised together with a cross-claim. 4 A question has arisen about the venue for the hearing of the action. The applicants say that they have some 15 witnesses who are resident in PNG. Another two witnesses reside in Queensland and one in Victoria. They ask that so much of the trial as involves the PNG and Queensland witnesses be heard in Queensland. The respondents do not agree with that proposal. 5 The respondents point out that the proceedings were commenced in Perth in 2003 and that pre-trial case management has progressed in Perth ever since. A mediation was held in Perth. A container load of documents for inspection was provided to the applicants, having been sent from PNG through Queensland to Western Australia. The respondents say they are not willing to 'relocate their entire trial operation' because the applicants want to call witnesses all of whom resided in PNG at the time that the proceedings were instituted. The counsel and instructing solicitors for the parties are all in Perth. 6 There was some affidavit evidence from the solicitors for the parties about the costs of conducting the trial in Perth and Brisbane respectively. The applicants' solicitor says that the minimum costs to the applicant for the travel of 18 witnesses from interstate to Perth would be $33,642 based on return economy class airfares. On the other hand a travel consultant with the Flight Centre, Perth has told the solicitors for the respondents that the lowest cost would be $23,460. 7 Whether the witnesses are flown from PNG to Queensland and then to Perth or simply from PNG to Queensland, the PNG cost is an unavoidable constant. 8 The alternative of hearing the witnesses in Perth by video link from Brisbane is said to involve a cost of about $20,400 based on an average of two hours each for the evidence of the witnesses, including their cross examination at an estimated rate of $600 per hour. 9 If the witnesses were to remain in Brisbane and the trial were to be heard there, then the cost would be increased by the travel cost for the solicitors and counsel and also, of course, for the trial judge and court staff. 10 It is unfortunate that the matter of venue was not considered at a much earlier stage when the parties were instructing their solicitors. Had the proceedings been commenced in the Queensland Registry and Queensland solicitors and counsel engaged, the additional expense of travel between Brisbane and Perth could have been avoided. However the case is complex. A large number of documents has been discovered and inspected. It would be unreasonable and uneconomical for the parties now to have to change their legal representation simply to save the cost of solicitors and counsel travelling between Perth and Brisbane. In my opinion, it is clear that the trial of the action will most economically and expeditiously be conducted in Perth. Another benefit of the retention of Perth as the trial venue is that it will not be necessary to break up the hearing between opening and evidence, nor to transfer significant numbers of documents back to Queensland. 11 Should it be desirable to adduce the evidence of any particular witness by video link from Brisbane then an application for directions can be made in that regard. | venue of trial 15 witnesses resident in papua new guinea other witnesses in queensland and victoria proceedings commenced in perth registry counsel and solicitors in perth large quantities of discovered documents transported to perth no significant economic benefit derived from conduct of proceedings in brisbane direction that venue of trial be perth liberty to apply for particular witnesses to be adduced by video link practice and procedure |
2 Each of the respondent taxpayers claimed income tax deductions for the year ending 30 June 1997 for expenses that each had incurred as a licensee of Oracle Information and Communications Pty Ltd, arising from his participation in the Oracle International Project. 3 The applicant (the Commissioner) made determinations under s 177F(1) of Pt IVA of the Income Tax Assessment Act 1936 (Cth) (the Act) that each respondent had obtained, in connection with a scheme, a tax benefit within the meaning of s 177C(1) and s 177D. The Commissioner issued amended assessments to give effect to the determinations referred to by disallowing the claimed deductions and increasing each respondent's taxable income for the 1997 income tax year. The amended assessments also included, by way of penalty, additional tax. 4 Each of the respondents objected to the amended assessment, and subsequently appealed against the Commissioner's disallowance of the objection. Each appeal found its way to the Tribunal. 5 The Tribunal decided that the provisions of Pt IVA of the Act applied to disallow the claimed deductions for the income tax year ended 30 June 1997, except for certain actual cash payments which had been made. Accordingly, in light of the decisions in Starr and Hopkins, the Tribunal concludes that the [Commissioner] should not have imposed penalties under section 224(2) of the Income Tax Assessment Act 1936 . The Tribunal notes that the decisions in the Starr and Hopkins matters are on appeal to the Full Federal Court and in the event that the decisions at first instance are overturned then, if this takes place before amended assessments are issued by the [Commissioner] in the [sic] accordance with the Tribunal's decision as set out below, the [Commissioner] should have regard to the decision of the Full Federal Court in those matters. (b) No penalties were to be imposed on each respondent under s 224(2) of the Act. 7 The Commissioner appealed against the Tribunal's decision in respect of penalty tax. 8 In the amended notice of appeal, the Commissioner has identified the following questions of law. 10 Secondly, whether the Tribunal erred by failing to make any decision on each respondent's additional tax liability. 11 The orders sought by the Commissioner are that: the decision of the Tribunal, that no penalties are to be imposed on each respondent under s 224(2) of the Act, be set aside and the Commissioner's assessment of each respondent with additional tax under s 226 of the Act be affirmed. 12 The issue, therefore, on the appeal is whether the Tribunal erred in determining that s 224(2) of the Act was capable of application in the circumstances, so as to preclude the imposition of penalty tax. 13 In my view, the Tribunal erred in its construction of the Act and in its reliance upon, and reference to, the case of Starr v Commissioner of Taxation of the Commonwealth of Australia [2007] FCA 23 ( Starr ) as being applicable in the circumstances of each of the appeals. 14 Section 224(2) of the Act is not the relevant section under which penalties are imposed in circumstances where a determination has been made under Pt IVA. The relevant penalty section where there has been a determination under Pt IVA , is s 226. 15 The case of Starr which was referred to by the Tribunal, dealt with a penalty imposed by reference to a different section of the Act, namely, s 226L. The reference in that decision to s 224(2) of the Act arises by reason of the reference in s 226L(c) to a "tax avoidance scheme" within the meaning of s 224(1). That subsection in turn invokes s 224(2), which contains the definition of the "tax avoidance scheme" referred to in s 224(1). The imposition of additional tax by way of penalty in respect of the "tax avoidance scheme" referred to in s 224(2) and s 226L involves different considerations as to the taxpayer's intention, to the imposition of penalty tax under s 226 in relation to Pt IVA determinations (see Commissioner of Taxation v Starr [2007] FCAFC 204). 16 Accordingly, the Tribunal made an error of law in the construction of the Act. Therefore, the appeal succeeds. I certify that the preceding sixteen (16) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | penalty tax assessment to penalty tax in relation to a determination disallowing a tax benefit under pt iva of the income tax assessment act 1936 (cth) whether s 224(2) applicable income tax |
Mitsui has a wholly owned subsidiary, Mitsui & Co (Australia) Ltd ("Mitsui Australia"). 2 Salt Asia Holdings Pty Ltd ("SAH") is an Australian proprietary company. The shareholders of SAH (other than Mitsui and Mitsui Australia) are Hanwha (HK) Co Ltd ("Hanwha") (the respondent, a company incorporated in Hong Kong) and PT Sempurna Caturguna ("Sempurna") (a company incorporated in Indonesia). 3 Onslow Salt Pty Ltd ("Onslow Salt") is a wholly owned subsidiary of SAH. Prior to May 2007, SAH held a 92.7% interest in Onslow Salt. 4 Akzo Nobel Chemicals International BV ("Akzo") and Akzo Nobel NV ("Akzo NV") are companies incorporated in the Netherlands. These acquisitions by Mitsui constituted it a "90% Holder" in relation to securities in SAH by reason of s 664A of the Act. 7 On 19 January 2007, PKF Corporate Advisory Services (NSW) Pty Ltd provided Mitsui with its independent expert report. PFK concluded, among other things, that the terms proposed by Mitsui for the acquisition of Hanwha's and Sempurna's shares equalled or exceeded PKF's assessment of fair value for their shares in SAH. 8 Mitsui offered, under the compulsory acquisition notice dated 25 January 2007 concerning the shares of SAH ("Notice"), to pay Hanwha the same amount per share that Mitsui (and Mitsui Australia) paid Akzo under the Share Sale Agreement for its ordinary shares in SAH. Sempurna was offered the same price for its ordinary shares. 9 By the Notice, Mitsui offered to pay a cash amount that was effectively subject to four specified adjustments contained in a summary of the Share Sale Agreement (SSA) between Mitsui and Akzo and attached, as Annexure 'A' to the Notice. The 90% Holder hereby gives notice that it proposes to compulsorily acquire ordinary shares that you hold for the cash amount of $16.1657119780 per share, as calculated in accordance with item (e)(iii)(B) of Annexure A and subject to the further adjustments in items (c), (d) and (e)(ii) of Annexure A. . . At the date of this notice, there has been no adjustment pursuant to this provision. At the date of this notice, there has been no adjustment pursuant to this provision. This adjustment to Hanwha will be calculated by multiplying 0.0347 with any balance amount between the actual liabilities Onslow will incur for the repairs and the amount of the write-down of the fixed assets in the Completion Accounts (as defined in paragraph (e) below), according to the agreed scope of repair work under the SSA. (e) An adjustment is to be made to the Initial Purchase Price in the event that Akzo's interest in the net assets ("Net Assets Amount") of the Company and Onslow (together, the "Group") as at the close of business on 31 July 2006 ("Completion Date") as set out in audited financial statements for the Group ("Completion Accounts") is more or less than the aggregate of Akzo's interest in the net assets as at 31 December 2005 ("Accounts Net Asset Amount") and the estimated amount by which the Accounts Net Asset Amount changed between 31 December 2005 and Completion Date. . . . The Independent Accountant's determination will be final and binding on the parties and the Initial Purchase Price will be adjusted in accordance with that determination. The adjustment may be in accordance with the Completion Accounts as set out in paragraph (i) above, the 90% Holder's dispute notice or Akzo's dispute notice as set out in paragraphs (iii) or (iv) below, or such other amount determined by the Independent Accountant. It is expected that the Independent Accountant's determination will be finalised in February 2007. Sempurna has lodged an objection under s 664E of the Act to the compulsory acquisition of the 2,062,500 A class shares it holds in SAH. 11 Mitsui has applied, given the objections, for approval, under s 664F of the Act , of its compulsory acquisition of the ordinary and A class shares in SAH held by Hanwha and Sempurna. 12 By Orders dated 11 April 2007, Nicholson J, under para 2, ordered, relevantly, that Hanwha be entitled to file a statement listing the grounds of and reasons for its objection to the compulsory acquisition of its shares in SAH by Mitsui. 13 Hanwha filed such a statement on 4 May 2007 entitled "Hanwha's statement pursuant to paragraph 2 of the orders made by Nicholson J on 11 April 2007" (Hanwha's Statement). 15 It also sought an order that the period set out in section 664AA of the Act be extended, pursuant to s 1322(4)(d) of the Act , so that the period ends three months after the date of such an order being made ("Extension of Time Order"). The effect of s 664AA is that the 90% holder may compulsorily acquire the relevant securities only if it lodged the compulsory acquisition notice for the acquisition with ASIC within the period of 6 months after it became a 90% holder. 16 In order to avoid an interlocutory dispute in the present proceeding as to whether the Court has power to make the Extension of Time Order, Mitsui instituted a further proceeding, Action No WAD 203 of 2007, to seek the Extension of Time Order. By consent on 25 October 2007, orders were made, to the effect that ground 1(a) in Hanwha's Statement be decided as a preliminary issue to be heard at the same time as the applicant's Originating Process in Action No WAD 203 of 2007. 18 If the preliminary issue is decided in favour of Mitsui, it will proceed under s 664F of the Act to seek approval from the Court of its acquisition of the ordinary (and A class) shares of SAH held by Hanwha and Sempurna. 19 If the preliminary issue is decided against Mitsui, it cannot, without further order of the Court, seek to compulsorily acquire the ordinary shares, as the 6 month period for issuing a notice of compulsory acquisition has ended. In this event, it will be necessary to determine Mitsui's application, in Action No WAD 203 of 2007 for the Extension of Time Order. The offer could not be selective or conditional". The notice will set out the offer price for the securities to be acquired . . .". 25 The legislative scheme provides that within a specified period of 6 months after becoming a 90% holder, such holder can give a notice of compulsory acquisition setting out a cash price for the minority securities: see ss 664AA(b) and 664C (1). 26 The price must be a "cash sum" and not differentiate between minority holders: s 664B. No benefit outside the price formally notified can be offered to any individual holder at any time: s 664D. Under the statutory regime, minority holders are entitled to object to the acquisition: s 664E. Where persons who hold at least 10% of the minority securities object to the acquisition then the acquisition can proceed only if the Court gives approval: ss 664F , 664A (3)(b). 27 The Court must approve the acquisition if the 90% holder establishes that the terms set out in the notice "give a fair value for the securities": s 664F(3). Where fair value is not established, the Court must confirm that the acquisition will not take place: see s 664F(3). Otherwise it must confirm that the acquisition will not take place. Section 664B provides that Mitsui may acquire Hanwha's and Sempurna's shares in SAH for a " cash sum only ", but s 666B provides, in effect, that at completion of the acquisition Mitsui must pay, issue or transfer the "consideration" , which may include "money" . 33 Mitsui submits that the reference to payment of "consideration ", and not to a "cash sum" , in s 666B of the Act may be understood on the basis that s 666B concerns not only completion of a compulsory acquisition by a 90% holder in accordance with s 664A , as in this case, but also the completion of a compulsory acquisition in accordance with s 661A by a bidder under a takeover bid. Section 666B must use the more general term "consideration" because, under s 621(1) , a bidder may make an off-market bid by offering " any form of consideration ". However there is, in my opinion, a further reason for using the word "consideration", in ss 666A and 666B rather than say, relevant to a case such as this, 'cash sum'. It is because at settlement, the consideration paid in 'money' may or may not be the same as the 'cash sum' set out in the Notice. It may not be known at the date of compulsory acquisition notice whether any of the provisions in that section will have application because, for example, the 'differences' may only crystallise after the date of the notice and before settlement. 38 There may also be an equitable set off available to the acquirer arising from a distribution, in the case of units, or payment of a dividend in the case of shares, such that the consideration paid at settlement is less than the cash sum in the Notice: Capricorn Diamonds Investments Pty Ltd v Catto [2002] VSC 105 ; (2002) 5 VR 61 at [99] - [100] . See also Brierley v Dextran Pty Ltd (1990) 9 ACLC 30, although the adjustment at settlement there, arose not in equity or under any statutory provision but by reason of the terms of the offer referrable to accretions, accruing for whatever reason, directly or indirectly to the shares. The offer in that case was to acquire the shares, with accretions for a cash sum. Where the offerees prior to settlement received benefits by way of accretions to the shares (an interim dividend), there was a set-off available to the offeror to that extent. There was no issue as to what was the "cash sum", or whether the offer was for a "cash sum". The "cash sum" was $2.30 per share. The question was whether at settlement, the amount payable was the cash sum less the interim dividend paid on the shares to the offerees prior to settlement. 39 Capricorn was in similar vein. The cash sum offered in the notice of compulsory acquisition was $2 for each unit. The benefit of distributions undeclared at the time of a compulsory acquisition notice accrues to an acquirer under s 664A of the Act : Capricorn at [92]. The question in that case was whether at settlement the acquirer was liable to set off against the cash sum of $2 the amount of benefit by way of distributions paid to the offerees between the date of the notice of compulsory acquisition and settlement. Neither Brierley nor Capricorn , in my opinion, assists the construction of "cash sum". 40 The present case is very different. The question here is whether the base dollar figure subject to four adjustments together constitutes a "cash sum" within the meaning of s 664C(1)(a) of the Act . an arithmetical calculation. At first blush that is to agree with the submissions put by Mitsui. The difference between them is in the detail. 43 Mitsui relied upon a number of authorities in support of its submission that the language of s 664C(1)(a) squarely permits a construction under which "cash sum" includes a "money sum", payable at settlement, which is determined in a specified manner, and which will arrive at an objective and definite result, or determined by a mechanism which permits the definite calculation of the price. 44 Re Korda; in the matter of Stockford Ltd [2004] FCA 1682 , was concerned with what is meant by "such remuneration as is fixed by a resolution of the company's creditors ..." under s 449E(1)(a) of the Act . 45 A creditors meeting had purported to fix the administration remuneration by approving specific sums of money for each of the first two weeks of the administration and prospectively approving further remuneration by reference to hourly rates set out in the creditors report subject to the committee of creditors reviewing and confirming the details of the remuneration claim. The hourly rates contained in the creditors' reports included a range of rates the administrators were entitled to charge for the same types of work. The natural meaning of the word "fix" in the context of an entitlement to "such remuneration as is fixed by a resolution of [creditors]" is, so it seems to me, to quantify that remuneration, that is to calculate or ascertain the amount of remuneration: Mayne v Jaques [1960] HCA 23 ; (1960) 101 CLR 169, 173, 174, 180. See also In re Gallard; Ex parte Harris [1892] 1 QB 532, 544. Thus, remuneration will be "fixed" if it is stated as a money sum, or is based on a formula which is capable of being applied according to some objective standard so the sum "can be calculated or ascertained definitely": Fraser Henleins v Cody [1945] HCA 49 ; (1945) 70 CLR 100, 128. In the case of a formula all the objective elements must be identified. It is enough to refer to King Gee Clothing Co Pty Ltd v The Commonwealth [1945] HCA 23 ; (1945) 71 CLR 184 and Cann's Pty Ltd v The Commonwealth [1946] HCA 5 ; (1946) 71 CLR 210 . When that is done no certain objective standard is prescribed; it is not a calculation and the result is not a price fixed or a fixed price. In the same case, Williams J at p 208, repeated an earlier statement that "a bare power to 'fix' a price cannot be validly exercised without naming a money sum, or prescribing a certain standard by the application of which it can be calculated or ascertained definitely. " In Cann's Pty. Ltd v The Commonwealth , Latham C.J. said at p 217 that where the prices are fixed by reference to a standard, "the standard must not be such that any element therein can be ascertained only by the exercise of discretion in apportionment, allotment, allocation or otherwise. ": Cann's Pty Ltd v The Commonwealth at p 228. Dixon J said (p 128) that a "bare power to "fix" a price cannot be validly exercised without naming a money sum, or prescribing a certain standard by the application of which it can be calculated or ascertained definitely. Otherwise the price is not "fixed". It conceded, as I said, that a formula or mechanism for arriving at the "cash sum" may be used but submitted that it must be one that can be calculated or ascertained definitely; King Gee Clothing Co Ltd v The Commonwealth [1945] HCA 23 ; (1945) 71 CLR 184 at p 208 per Williams J. It must be a "method which will produce the same result whoever applies it so long as he uses it correctly": Cann's Pty Ltd v The Commonwealth [1946] HCA 5 ; (1946) 71 CLR 210 at p 228. 51 Hanwha submits that assistance can be drawn from other provisions in the Act which use the expression "cash sum". It is for that reason that s 621(4) provides that the value of consideration that is not a "cash sum" is to be ascertained as at the time the relevant offer, purchase or agreement is made. The "cash sum" is ascertained as at the time the relevant offer, purchase or agreement is made, since it is a fixed amount of money . It is clear that, to the extent that the consideration is a "cash sum", such amount included in the statement must be fixed and certain, in the same way that, to the extent to which the consideration is quoted securities, the bidder must set out the market price per security of those securities (that is, a fixed and certain amount) and, to the extent to which the consideration is neither a "cash sum" nor a "security", the bidder must set out the value per security of that consideration (that is, a fixed and certain amount). 54 Section 666A(1) of the Act relevantly requires a person entitled to acquire securities under s 664A to pay the consideration to the holder by the end of the period referred to in subsection (2) or (3). These subsections provide for a range of possible periods depending on whether for example no objection has been lodged or if an objection has been lodged the 90% holder has elected to seek Court approval under s 664F. 55 The earliest period relevant to a compulsory acquisition is provided for under s 666A(3)(a). It required completion by the end of the period of 14 days after the end of the objection period. 56 If the "cash sum" could be an uncertain, unquantified or conditional amount the 90% holder may very well not be able to comply with s 666A(1). Contravention of s 666(1A) is by virtue of s 666(1A), an offence of strict liability. It could, of course, be a combination of the two. The approach taken, analogously, in each Re Korda; Racecourse Co-operative Sugar also supports this construction. 58 Mitsui submits that the Notice does set out a "cash sum" because the four adjustments, when each is known and applied to the cash amount of $16.1657119780 per share contained in the Notice, will arrive at an objective and definite price. 59 However, I consider that, to the extent that "cash sum" is expressed in a formulative way, it must be capable of definite ascertainment as at the date of the notice. 60 I have had regard to the provisions of s 664B(2) and the cases of Brierley and Capricorn relied upon by Mitsui, but for reasons which I have already explained, these do not inform the meaning of "cash sum" in s 664C(1)(a) of the Act. Rather, they are concerned with the amounts paid in due course for the securities. 61 I have so concluded because where the Court is required to evaluate whether the terms set out in a notice of compulsory acquisition give a fair value for the securities, it must determine this at or about the date that the notice was lodged with ASIC and the notice was despatched to shareholders: Capricorn at [88]-[90]. This statutory evaluation by the Court necessarily requires that the "cash sum" be ascertainable as at the date of the notice. It would be an extraordinary result if this could be evaluated by the Court by reference to information not known or capable of being ascertained as at the date of the notice. Likewise the recipient of a notice of compulsory acquisition ought be able to calculate the definite cash sum in order, importantly, to decide whether or not to object. 62 A formula or mechanism which is incapable of ascertaining a precise dollar amount for each of the shares in question at or about the date of a notice of compulsory acquisition does not, in my opinion, constitute a "cash sum", within the meaning of s 664C(1)(a) of the Act. 63 It is not sufficient that at some indeterminate date in the future, if at all, a determinate amount of money may be calculated as the "cash sum" for the purpose of the Notice. This is a different matter from any statutory adjustment under s 664B(2) or equitable or contractual set offs to be applied to the cash amount offered in a notice of compulsory acquisition: Brierley and Capricorn. I accept those submissions. The conclusion is reinforced by the provisions in s 666A(1) and (1A) to which I have referred. 65 The notice in this case does not meet the test which I have posited. 66 The information necessary to ascertain definitely the "cash sum" in the Notice was not available at the date of the Notice. Indeed even at the date of the hearing before me such a calculation could not be made. There was not any certainty as to when it would, if at all, be made. 67 One adjustment, the Rainfall Adjustment [Annexure 'A' --- item (e)(iii)(B)], was finally determined on 21 September 2006 (ie, before the notice was issued) and was included in the base amount. Two adjustments, the "Cyclone Insurance Payment" adjustment [Annexure 'A' --- item (c)] and the "Completions Account" adjustment [Annexure 'A' --- item (e)(ii)] were finally determined on 28 April and 25 May 2007 respectively, i.e. after the notice was given. The fourth adjustment, the "Repair Liabilities" adjustment, [Annexure 'A' --- item (d)] has not yet been finally determined. 68 Senior counsel for Mitsui, quite rightly brought to the attention of the Court that the Notice contained a price determination mechanism which may not necessarily be capable of calculating a fixed sum by the "requisite settlement date". 69 Of course, that concession was directed to the characterisation of the mechanism set against the "requisite settlement date". I have concluded that the settlement date whatever it may transpire to be, if it occurs at all, is not the relevant date for a consideration of whether or not the Notice has set out a "cash sum". 70 I will invite counsel to bring in an appropriate Minute of Orders to give effect to these reasons. Mitsui will be liable for the costs of Hanwha. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application for approval of compulsory acquisition of securities in notice s 664f corporations act 2001 (cth) preliminary issue whether notice sets out "cash sum" s 664c(1)(a) applicant lodged notice with asic and despatched to minority shareholders offering a cash amount per share but subject to adjustment at some unstipulated time after date of notice notice did not set out "cash sum". "cash sum" s 664c(1)(a) corporations act 2001 (cth) corporations words and phrases |
5 In the present application the company is Capital Scaffolding Pty Ltd ACN 076 291 364 ('the Company'). The Company has two shareholders who are contributories, namely Slobodan Aleksic, also known as 'Denny Aleksic' and Robert Milicevic. The Company carries on business as a scaffolding contractor in the Australian Capital Territory, New South Wales and Queensland. 6 There has been some measure of disagreement between Mr Aleksic and Mr Milicevic as to the direction in which the Company should go, especially in respect of the proposed expansion of the Company's operations in Queensland. 7 The disagreement between the parties commenced in July 2007. Over the ensuing two months Mr Aleksic and Mr Milicevic sought to resolve their differences but were unsuccessful in doing so. After a number of different options were explored, they received advice that the most effective way to resolve the dispute was to put the Company into a members' voluntary liquidation. This they proceeded to do without understanding the full implications of such a move. 8 Under s 493(1) of the Act a company must, from the passing of a resolution for the voluntary winding up of a company, cease to carry on its business except so far as is in the opinion of the liquidator required for the beneficial disposal or winding up of the business. 9 Under s 495(2) of the Act all the powers of the directors cease on the appointment of a liquidator except so far as the liquidator or the company in general meeting with the consent of the liquidator approves the continuance of any of the powers of the directors. 10 It would appear that Ms Aleksic and Ms Milicevic did not intend that by placing the Company into voluntarily liquidation they would be visited with such consequences. In an affidavit sworn by Mr Aleksic on 21 September 2007 he deposed to the fact that the Company has 17 full-time employees and approximately 14 casual employees. He referred to the Company having ongoing work and obligations to meet to carry on the business. He indicated that at the time of swearing his affidavit the Company had approximately 46 contracts for the supply of scaffolding services and equipment to building sites in Sydney, Canberra and the Gold Coast. The contracts varied between minor ones and substantial ones, with six contracts being between $100,000 and $300,000 in total value. 13 Those contracts were ongoing and more contracts were expected to be entered into in the future. Mr Aleksic deposed that 'we', referring, I assume, to himself and Mr Milicevic, wished to continue carrying on the business and to implement an agreement reached between them in more recent times to continue to carry on the business with a minimum of disruption to the Company and its customers, maintaining the business of the Company --- including preservation of the position of employees, staff, business reputation, and relationships with contractors, suppliers, and customers --- for the future conduct of the business. 14 This application has come before the Court on short notice. Originally, it was proposed that relief of an interlocutory nature would be sought. As I said earlier, it is a most unusual application. 15 A balance sheet for the Company indicates that the company has net assets of $2,978,399.43 as at 11 September 2007. An income statement for the period 1 July to 11 September 2007 indicates that it traded at a profit of $71,769.45 in that period. 16 It is true that in the financial year ended 30 June 2006, the Company suffered a loss of $172,899.55 and that in the financial year ended 30 June 2007, it suffered a loss of $445,453.43. It has been observed, however, by Mr Senatore, one of the liquidators who was appointed, that the losses were accounting losses not cash flow losses because, for instance, in the financial year ended 30 June 2007, there was an allowance of $543,315 for depreciation and amortisation expenses. Equally, it is observed that no allowance for depreciation or amortisation expenses has been noted in respect of the calculation of the profit of $71,769.45 for the period from 1 July to 11 September 2007. 17 I have heard oral evidence from Mr Aleksic indicating that the Company has not received any statutory demands for payment of monies claimed to be due by the Company. I have also received evidence from Mr Aleksic that the Company has not provided any cheques which have not been honoured on presentation. All dealings have been conducted in an impeccable, forthright and professional manner with a history of meeting all financial commitments on time and without default. 19 In his affidavit, Mr Aleksic has deposed to an average monthly trading position with income in excess of $450,000 and outgoings of approximately a quarter of a million dollars, leaving a substantial cash surplus. He indicates that this is not a picture which applies in relation to the Christmas/New Year period, but represents a general state of affairs for the balance of the year. 20 It seems to me that the shareholders/contributories and directors, namely Mr Milicevic and Mr Aleksic, made a fundamental mistake when they saw fit to put the Company into voluntary liquidation. I earlier referred to the resolution whereby they did so. I omitted to include a note of the fact that when they resolved to wind the company up voluntarily, they also resolved to appoint Stephen Brennan and Ezio Marco Senatore as joint and several liquidators of the Company for the purpose of winding it up. Mr Senatore has been kind enough to attend Court today on the hearing of the plaintiffs' application and he speaks for both himself and Mr Brennan in so doing. 21 Mr Senatore has indicated that formally the liquidators neither consent nor oppose the application which has been brought. He does however also indicate that there is no information presently available to the liquidators which would warrant them taking any action under s 496(1) of the Act, which makes provision for liquidators who have doubts as to the ability of a company to pay its debts in full within the relevant period stated in the declaration, to seek an order that the company be wound up in insolvency, that an administrator be appointed or that a meeting of the company's creditors be convened. 22 It seems to me that it is highly desirable that the Company be put back in the market place under the control of Mr Aleksic and Mr Milicevic promptly. 23 There is also apparently an expected tax refund shortly to be paid by the Australian Taxation Office to the Company of the order of $280,000 to $300,000. 24 I am informed that the agreement reached between Mr Milicevic and Mr Aleksic to resolve the problems which they earlier experienced in relation to the direction of the company is shortly to be implemented. 25 In all the circumstances, it seems to me the proper course to follow is for an order to be made forthwith for the termination of the winding up. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | termination of a voluntary winding-up agreed upon in the mistaken belief that the business of the company could continue corporations |
2 The appellant had applied for a protection visa as long ago as 30 December 1999. An earlier dismissal by the Tribunal on 11 October 2001 of a review application was set aside by Madgwick J of this Court on 22 December 2003. However by its further decision handed down on 2 August 2004, the Tribunal again affirmed the delegate's decision of 21 January 2000. The appellant sought a review of the Tribunal's decision in the Federal Magistrates Court, however the decision of Nicholls FM made on 24 October 2005 was once more unfavourable to the appellant. 3 The appellant's claims as to fear of persecution made to the Tribunal related to his circumstances in Georgia said to involve and to result from his ethnicity and political opinion. He recounted to having been imprisoned on false charges by reason of having actively opposed the Georgian government's sale of military arms to Chechen rebels in the Russia --- Chechnya war. The appellant further recounted that on the way to a planned meeting with the then President Shevardnadze, he was arrested and charged with conspiracy to overthrow the government, being charges which were subsequently withdrawn. He further claimed however that thereafter he was falsely charged with robbery. Having been held in gaol, he testified to sexual abuse which was said to have caused a critical decline in his health. Yet despite being transferred to hospital, he recorded that he was sentenced early in 1997 to three years' jail, that being asserted by him to be well in excess of the terms of imprisonment the subject of sentences received by his 'accomplices'. 4 The political circumstances attending those events were further said by the appellant to have caused restrictions on his release from jail, involving house arrest and leading to his divorce. Following the disastrous results sustained by the People's Party in the ensuing election in Georgia, the appellant claimed to have been left with no one to defend or support him. After experiencing ongoing difficulty in obtaining a passport, the appellant finally departed Georgia in November 1999, his passport being said to have been back-dated in order to allow him to pass through any computer check. 5 At the hearing of the proceedings, the appellant presented as an earnest person with forceful views as to the circumstances prevailing in Georgia and the justification for his departure. He had difficulty in appreciating the limitations upon the foundation and scope of his entitlement to appeal, limited as it is essentially to issues of law. As almost inevitably occurs in migration appeals to this Court undertaken by unrepresented litigants, the appellant had no adequate or real appreciation of the limited scope of appeal from decisions of Federal Magistrates. He indicated his enlistment of legal assistance for the preparation of his unsigned written submissions from an otherwise unidentified source, but maintained an inadequate understanding of the legitimate parameters available to him as to any realistic prospect of a successful appeal. 6 The unsigned written submissions of the appellant's unidentified author of his written submissions failed to demonstrate any viable basis for the appeal. 7 As rightly submitted by counsel for the Minister, it is apparent that the appellant was unsuccessful in the Tribunal because of the view the Tribunal took of the facts, and in particular because of its finding that the appellant's claims were untrue and in some aspects fabricated. Findings of fact are of course essentially matters for the Tribunal to resolve and determine. The Tribunal's findings were open to be made for the reasons it gave, including the country information to which it referred. As I stressed to the appellant in the course of his address, the Court is not entitled as a general rule to review the merits of the Tribunal's decision-making as such ( Minister for Immigration and Ethnic Affairs v Wu Shan Ling [1996] HCA 6 ; (1996) 185 CLR 259 at 272). There is no error of law, let alone any jurisdictional error, involved in the Tribunal making a wrong finding of fact, assuming of course the making of any such wrongful finding being established ( Abebe v The Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510 at [137] ). 8 Before the Federal Magistrate, the appellant relied upon an application which claimed, without particularity, that the Tribunal erred in law and denied the appellant procedural fairness, and which in any event the appellant did not establish. Moreover the appellant filed with the Court submissions which his Honour comprehensively addressed at [5]-[10] of her reasons, concluding that no error was demonstrated in the Tribunal's decision, and that case related in any event to a privative clause decision within s 474 of the Migration Act 1958 (Cth). 9 The appeal must inevitably be dismissed with costs. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | unsuccessful appeal from federal magistrate no error of law exposed. migration |
It is unnecessary for me to refer to further alternative orders proposed. The amount claimed to be owed is in respect of a contract for services between the plaintiff and the defendant in which the plaintiff was engaged as group general manager of the defendant. On 20 December 2007 the defendant filed in the Supreme Court of Victoria an application to set aside the demand. That application was not served until 21 December 2007. This was one day beyond that specified in s 459G(3)(b) of the Corporations Act for service on the person who served the demand on the company. On 29 May 2008 the Supreme Court of Victoria dismissed the application to set aside the statutory demand on the basis that the application was served out of time and "the Court had no jurisdiction". The accompanying affidavit in turn referred only to Dromana's alleged indebtedness to Mr Gryst and to the failure to comply with the statutory demand. 4 The application clearly was formulated with "the presumption of insolvency" in mind. In this regard the application to set the statutory demand aside was not made "in accordance with s 459G" as it was served out of time and the time for compliance with the statutory demand was, in consequence, 21 days after the statutory demand was served on the plaintiff, not 7 days after the decision dismissing the application to set aside the statutory demand: cf s 459F(2)(b). (2) Further or in the alternative, the plaintiff has no standing as of right to make an application to wind up the defendant under s 459P of the Corporations Act because the defendant has an offsetting claim against the plaintiff and the plaintiff is therefore not a creditor, or alternatively, only a contingent creditor. (3) Further or in the alternative the defendant is solvent. The defendant also filed the present interlocutory process on 10 July 2007. 6 The affidavit in support of the interlocutory process annexed a number of communications between the parties which suggest that the failed application to set aside the statutory demand was based upon a claimed genuine dispute in relation to the debt the subject of the statutory demand. It also annexes a copy of a writ dated 27 June 2008 issued out of the Supreme Court of Victoria in which the defendant sought unspecified damages from the plaintiff in relation to what is claimed to be a breach of an agreement between the plaintiff and the defendant for the plaintiff to act as the defendant's group general manager and his failure in the course of that to exercise reasonable, proper or professional skill and diligence or act in the best interests of the defendant. Further material filed in support of, and in opposition to, the interlocutory process (which it is unnecessary to enlarge upon here) suggests that there is a significant and genuine dispute between the parties in relation to the debt. I mean no disrespect in not outlining those submissions here. Given the state of authority binding on me or which as a matter of comity I consider I should follow, the issue raised before me is not open to serious contest. 8 The short point raised in this matter is whether Dromana's failure to comply with a stale statutory demand without more can found Mr Gryst's application to have it wound up in insolvency under Ch 5 Pt 5.4 of the Corporations Act . The provisions of that Part have been the subject of considerable judicial attention most recently by the High Court in Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9 ; (2008) 243 ALR 207. To foreshadow what I have to say, central to the scheme of that Part is the device of the statutory demand the failure to comply with which, unless successfully challenged, gives rise both to a basis for winding up a company in insolvency and the s 459C(2)(a) presumption of insolvency. 459G(2) An application may only be made within 21 days after the demand is so served. 10 The two noteworthy aspects of these provisions for present purposes are, first, that the s 459F(2) period for compliance with a statutory demand turns in the first instance on whether or not a company has applied "in accordance with section 459G" to set aside the demand and, secondly, it will only have so applied in accordance with that section if it complies with the dual requirements of filing and service specified in s 459G(3)(a) and (b) within 21 days of the service of the demand. 11 It is now well settled that, if a s 459G application and affidavit are not filed and served within the time so specified, the Court has no power to extend the period for the making of such an application: see Aussie Vic Plant Hire at [3]; David Grant & Co Pty Limited (rec apptd) v Westpac Banking Corporation (1995) 184 CLR 265. In the present matter, the statutory demand was served on Dromana on 29 November 2007. The application to set it aside was filed in the Supreme Court of Victoria on 20 December 2007. It was not served on Mr Gryst until 21 December 2007. In consequence, that application was not one made "in accordance with section 459G" of the Act. The emphatic language of s 459G(3) admits of no other conclusion: see Pinn v Barroleg Pty Ltd (1997) 138 FLR 417; Deputy Commissioner of Taxation v Tixana Pty Ltd (2003) 202 ALR 401 ; Hardel Property Holdings Pty Ltd v Allmark Property Management Pty Ltd (2008) 26 ACLC 122 at [1]. While counsel for the plaintiff has sought to avoid this conclusion by recourse to "purposive legislation", the Parliament, in my view, has spoken on this matter with unmistakeable clarity. 12 The consequence of no application having been made in accordance with s 459G is that the time for compliance with the statutory demand was the 21 days specified by s 459F(2)(b). The date for compliance was, thus, 20 December 2007. 13 The date the s 459P winding up application was made was 10 June 2008. For the purposes of s 459C(2)(a) the presumption of insolvency could only arise if in the period three months prior to that date, i.e. on or after 10 March 2008, Dromana failed to comply with a statutory demand. Dromana did not fail to comply with the statutory demand during that period. In consequence, Mr Gryst cannot rely on the presumption of insolvency in prosecuting his winding up application as s 459C(2)(a) has not been enlivened in the circumstances: see Pinn v Barroleg Pty Ltd and Deputy Commissioner of Taxation v Tixana Pty Ltd with which decisions I respectfully agree. 14 I have already indicated that the plaintiff has not sought to rely upon any other basis for winding up Dromana than its failure to comply with the statutory demand. Shorn of the presumption of insolvency, that application has been so narrowly drawn as to be doomed to failure: see Ford's Principles of Corporations Law at [27.050]. While on a s 459P application the Court may order that an insolvent company be wound up in insolvency: see s 459A; there is no evidentiary basis before me that could suggest insolvency, other than the non-compliance itself. When viewed in the context of the affidavit evidence that has been filed in support of, and in opposition to, the present application, the position is no different. A serious dispute exists between the parties. But Dromana's insolvency is not suggested: cf Re Turf Enterprises Pty Ltd [1975] Qd R 266. Perhaps it was for this reason that counsel for Mr Gryst apparently accepted that the originating process as it stands could not succeed without the aid of the presumption. I am thus in the position of being satisfied in the circumstances that Mr Gryst has no reasonable prospect of successfully prosecuting his s 459P application. 15 I will in consequence order under s 31A(2) of the Federal Court of Australia Act that the originating process be dismissed. I have directed the parties to file and serve submissions relating to costs. 16 I would add that I have indicated that I would not at this late stage grant leave to amend the originating process to add other possible bases for winding up Dromana in insolvency: cf s 459B of the Corporations Act . Undoubtedly a serious dispute exists between the parties and on substantial grounds, as to Mr Gryst's claims and Dromana's offsetting claim against him. I seriously doubt whether proceedings for winding up in insolvency is an appropriate vehicle in which to resolve what appears to be no more than a commercial dispute: cf Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130 at [72] ff. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | ch 5 pt 5.4 of the corporations act 2001 (cth) s 459p application to wind up in insolvency operation of s 459c(2)(a) presumption of insolvency whether statutory demand 'stale' application summarily dismissed corporations |
Skywest Airlines Pty Ltd ("Skywest Airlines") and Aeropelican Air Services Pty Ltd ("Aeropelican") have come out of deed administration as a result of the sale of the shares in them to other entities. In a separate transaction, certain assets of Skywest Airlines and Aeropelican were transferred to Bodas Pty Ltd to hold as trustee in favour of creditors who may have had claims against the two companies as at the date of the appointment of the initial Administrators. 4 A substantial number of the companies in the Ansett Group had their own individual group of creditors. In the deeds of company arrangement entered into by most Ansett Group companies on or about 2 May 2002 (the "Ansett DOCAs"), there are provisions dealing with the pooling of assets and liabilities. 6 At the date of the commencement of the administration of the Ansett Group, the Skywest Group and Aeropelican were the operators of regional airlines. Early in the administration a proposal evolved to sell the business of the Skywest Group and the shares in Skywest Airlines and Aeropelican. The Skywest Group's activities were in Western Australia. Aeropelican's activities were in New South Wales. 7 The Skywest Group companies and Aeropelican executed deeds of company arrangements which, unlike the Ansett DOCAs, did not contain clauses relating to the identification of persons who had admissible claims, the distribution of assets or the possible pooling of the assets and liabilities of the Ansett Group. Each of Skywest Airlines and Aeropelican agreed to transfer to Bodas its shares and certain of its assets. Bodas sold those shares in February and March 2002 and held the proceeds of sale and certain of the assets as trustee. By a trust deed dated 7 March 2002 Bodas declared a trust over the assets transferred to it by Skywest Airlines in favour of creditors who may have had claims against Skywest Airlines as at the date of the commencement of the administration (the "Westsky Trust Deed" and the "Westsky Trust"). Similarly, by a trust deed dated 11 June 2002, Bodas as trustee declared a trust over the assets transferred to it by Aeropelican in favour of creditors who may have had claims against Aeropelican as at the date of the commencement of the administration (the "Pelican Trust Deed" and the "Pelican Trust"). 9 Each trust bound all persons having a debt owing by, or a claim subsisting against, the relevant company in favour of a person. The trust deeds did not provide a regime for the identification of persons who had admissible claims, the distribution of the trust assets or for the possible pooling of the assets and liabilities of the Ansett Group. Each trust deed provided that the Administrators who were appointed to act as agents for Bodas as trustees would call a meeting of creditors of the relevant company which would determine admissible claims and the method of their distribution. Each trust deed provided for the variation of its terms by a simple majority resolution of admitted creditors who attended the meeting, whether personally or by proxy. 10 Accordingly the Administrators have multiple roles in relation to each trust. They are the Deed Administrators of Bodas and therefore the controlling mind of the trustee; they are, under the terms of each trust deed, agents for the trustee; as Deed Administrators of AAL they control a beneficiary/creditor of each trust. 11 The course of action the Administrators propose to follow with respect to each trust is to pool the assets of the two trusts into AAL by moving, and voting for, a resolution that the whole of the assets of the trust be distributed to AAL. Such a course of conduct will involve the Administrators in a conflict of interest at a number of levels. In particular, by so voting, they will be acting contrary to the interests of a number of the beneficiaries/creditors of each trust. 12 A further trust situation arises in relation to the proceeds of sale of a number of real estate properties. The Administrators are uncertain as to which company was the beneficial owner of each of the properties and is therefore entitled to the proceeds of sale which are presently held by 501 Swanston Street Pty Ltd on trust for the ultimate identified beneficiary or beneficiaries. In substance, the Administrators have the duties of trustees in relation to the allocation and disposition of those proceeds. The SEESA Scheme was designed to effect early payment of the outstanding entitlements of certain unpaid Ansett Group employees, provided that the Commonwealth could be subrogated to the rights of those employees to recover their entitlements from the administration or liquidation of the Ansett Group. 18 The Administrators are administrators of each of the companies in the Ansett Group and will accordingly represent each of those companies as a creditor where there is a debt due to each such company from another company in the Ansett Group. 19 There are a considerable number of inter-company debts and the Administrators are entitled to vote as a creditor in respect of a large number of companies in the Ansett Group. The Administrators perceive, quite rightly, a conflict of interest and seek a direction from the Court that they may properly and justifiably cause each of the companies in the Ansett Group to vote in favour of pooling to the extent that each such company is entitled to vote as a Deed Creditor at a meeting of that company and that each Administrator in his capacity as Deed Administrator may properly and justifiably exercise a casting vote as chairman of the meeting in the event that no result is reached on the poll. 20 There are five major creditors of one of the Ansett Group companies, Ansett Aviation Equipment Pty Ltd ("AAE"), in respect of which issues have arisen as to the indebtedness of AAE to those creditors. The Administrators believe that, but for the compromise they have reached with some of those creditors, the creditors of AAE would vote against a pooling resolution. Those creditors and their claimed debts are: Ansett Equipment Finance Limited ($14,050,000), Australian Taxation Office ($3,500,000), National Australia Bank Limited (up to $179,600,000), Commonwealth Bank of Australia ($20,000,000) and BNP Paribas ($20,000,000), a total of up to $237,150,000. The Administrators have not admitted these claims and are confident that if the claims had to be resolved by litigation, it would be time-consuming and expensive. In any event, the Administrators are confident that regardless of the outcome of any litigation, third party creditors would control a significant majority of votes at a creditors' meeting of AAE. 21 The Administrators have reached a compromise with three of those creditors, National Australia Bank Limited, Commonwealth Bank of Australia and BNP Paribas (the "AAE Bank Creditors"). The compromise is contained in the AAE Pooling Compromise Deed made on 29 August 2005. The Administrators seek a direction from the Court approving the AAE Pooling Compromise Deed and a direction that the Deed Administrators may properly perform and give effect to the AAE Pooling Compromise Deed. 22 The financial position of AAE as at 15 August 2005 was that without pooling approximately $38 million was estimated to be available for distribution to its creditors. That estimate does not take account of any amount which might be received by AAE if the $150 million received under the MOU is apportioned; nor does it take account of the likely future costs of administering AAE separately if there is no pooling. 24 The consequence of the approval of the AAE Pooling Compromise Deed is that $38 million is transferred to AAL of which there is a net benefit to that company of $11 million which will be distributed to Ansett Group priority creditors. 25 Although there are advantages in pooling the assets and liabilities of all the companies in the Ansett Group there are two significant consequences of the pooling proposal. First, the Administrators, in respect of companies with substantial assets, will be voting in a way which is contrary to the interests of the creditors of that company. Secondly, some creditors of those companies which have substantial assets will be disadvantaged as they will receive a distribution less than they would likely receive if there were no pooling. For example, various Ansett Group companies shared personnel, assets, resources, intellectual property, information technology and software. The Ansett Group was treated as a whole for the purposes of taxation. Significant time and costs would be required to determine whether charge-backs should be, or could be, properly raised as between various companies in the Ansett Group. (b) It is impossible or impracticable without expending substantial costs and using substantial resources to determine which Ansett Group companies own certain assets, such as, the head office building at 501 Swanston Street, Melbourne, other Melbourne CBD properties, certain aircraft and engines, and information technology systems and software. (c) The operation of certain deeds of cross guarantee may affect the various companies in the Ansett Group in such a manner as will create substantial uncertainty as to their potential liability. The resolution of this issue will involve the use of substantial resources and the expenditure of large sums of money. (d) If pooling does not occur, the costs of the administration would need to be apportioned among the various companies in the Ansett Group given that to date they have been funded by AAL. (e) If pooling does not occur, the time and cost required to resolve tax issues would be substantial and without guarantee of accurate, fair or equitable results. (f) If pooling does not occur, significant time and costs would be involved in conducting a proof of debt process for each Ansett Group company. (g) It would be impracticable, if not impossible, to apportion money received under the MOU between the Ansett Group companies without seeking directions from the Court, and if monies were apportioned with directions from the Court, it would be likely to result in lengthy and costly litigation. (h) The provisions of the MOU require the Administrators to facilitate pooling and ensure payment in full of all priority entitlements held by employees. (i) The provisions of the SEESA Deed require the Administrators to seek pooling so as to maximise repayment of monies loaned to the Administrators. A saving in time means that the administrations will be finalised more quickly, with the consequent result that any distributions to be made will be made more quickly. A saving in costs of the administration will maximise the pool of monies available to be distributed to creditors. 28 However, pooling will have the result that some creditors of some Ansett Group companies will be disadvantaged, albeit to a small extent in Ansett Group terms, but nevertheless in not insubstantial amounts for individual persons, particularly former employees. This is dealt with in detail in pars [ 50 ] below and following. 29 I turn to examine in greater detail the Administrators' arguments for pooling. WTH Pty Ltd, a third party non-priority creditor of a number of the Ansett Group companies, appeared as a contradictor in this proceeding, represented by counsel. This was a course of action which I suggested and which was accepted by the Administrators, to ensure that a contrary argument was put before the Court. 30 Although the Ansett Group consisted of a number of separate and discrete companies, it was in many respects operated as a single business. However, it is not suggested that the creditors of the various companies in the Ansett Group regarded themselves as dealing with a single Ansett Group business or an organic entity rather than dealing with the particular or separate entities which became indebted to them. There was no evidence to this effect. 31 The Administrators relied, in part, in support of the proposition that the Ansett Group has operated as a single business, on the fact that some Ansett Group companies provided cash to other Ansett Group companies without the taking of security and without being repaid. Nevertheless, inter-company loan balances were adjusted to reflect these movements of cash and it is not suggested that the amount of the loan balances cannot be determined with a reasonable degree of precision. 32 The Administrators also relied on the fact that the companies in the Ansett Group shared Ansett Group employees between the various companies in circumstances where no charge-backs were raised by the employer company against the recipient company. The Administrators say that it is apparent that the Ansett Group workforce was viewed by executive management as a single team and they cite examples of how Ansett Group employees were shared amongst different entities within the Ansett Group. Charge-backs for the services rendered by the employing company to the recipient company were not always raised. Further, the Administrators have been unable to locate the source documents supporting some of the charge-backs which had been made. Nevertheless, in the absence of such documents, it is a matter for the Administrators to make a decision whether or not to accept the charge-backs made. 33 The Administrators also relied, in support of the proposition that the Ansett Group was operated as a single business, upon the fact that many companies in the Ansett Group shared numerous assets and resources in circumstances where the asset holding companies did not charge commercial rates to the recipient companies for the use of assets or raised charge-backs on an inconsistent and haphazard basis. Such assets included the Ansett Flight Simulation Centre, Ansett Group brands, trademarks and other intellectual property, software applications, the Ansett Group headquarters at 501 Swanston Street, Melbourne and adjoining properties. 34 In particular the Administrators say that despite their investigations they cannot determine which Ansett Group company beneficially owned the head office. The registered proprietor was 501 Swanston Street Pty Ltd although AAL treated the head office as its own asset, and arranged for parts of it to be sublet to other companies. Ansett Group companies, including AAL, always occupied at least 90% of the head office. 35 The Administrators have examined a number of documents in relation to the ownership of the head office at 501 Swanston Street, Melbourne. The Administrators say that "the best that we can surmise" is that up until at least 1997, 501 Swanston Street Pty Ltd held the head office property as trustee for AAHL and AAL pursuant to a unit trust but they have been unable to locate the unit trust document and they are unsure whether it was in existence after June 1997. 37 There were also complex leasing and financing arrangements in existence in relation to the use and operation of numerous aircraft by various companies in the Ansett Group. The Administrators contend that if the assets and liabilities of the Ansett Group are not pooled, they will need to undertake a detailed, costly and time-consuming investigation into the nature and extent of the aircraft leasing and financing arrangements and the effect of a number of associated guarantees. 38 The Administrators have established that the wider Ansett Group was treated as a tax group and that group tax returns were prepared for each income tax year. However, the Administrators say that the inter-company loan balances as at the date of the commencement of the administration may not accurately reflect the intra-Ansett Group treatment of Ansett Group tax losses. 39 Because of the manner in which the Ansett Group was run as a single business operation, the Administrators say they will need to spend a significant amount of time and incur significant costs in attempting to determine whether or not charge-backs should be raised in relation to the pre-administration use by some of the Ansett Group companies of particular assets and their use of tax benefits and the use of personnel. The Ansett Group has inter-company loan transactions to a total value of approximately $2.95 billion so that any charge-back adjustments would affect the inter-company loan position. In many instances the books and records contain insufficient information to determine whether the liabilities recorded are actually payable and, if so, whether those liabilities have, in fact, been paid. That exercise would be complex, time-consuming and costly. 41 The aircraft and engines of the Ansett Group were owned by a number of different Ansett Group companies and as a result of the swapping of engines among airframes from time to time (a common practice) it has been very difficult for the Administrators to determine which Ansett Group company owned a particular aircraft or engine. Although the Administrators have attempted to determine accurately the ownership of aircraft and engines and allocate accurately the proceeds of their sale to the relevant companies, there is a degree of uncertainty about whether the allocations are accurate. 42 The financial situation of the companies in the Ansett Group is complicated further by the existence of a number of deeds of cross-guarantee entered into by various Ansett Group companies in order to obtain Australian Securities and Investment Commission class order relief from certain statutory accounting and audit requirements. In return for the disclosure concessions granted under the class orders each class company, a party to a cross-guarantee, was required to cross-guarantee the debts of each other class company, a party to that same cross-guarantee. Under each cross-guarantee, each class company became co-surety for the deficiencies of the other class companies in the liquidation of any of them. The cross-guarantees are significant because the value of the combined net realisations of assets held in the class companies is approximately $512 million out of total net realisations of $590 million across the Ansett Group and, according to the Administrators, the claims of creditors under the cross-guarantees are likely to be admissible for voting and all other purposes in the administration of all class companies. 43 The Administrators, post-administration, continued the pre-administration practice of certain of the companies in the Ansett Group using assets owned by other companies until the relevant assets were de-commissioned or sold. If pooling does not occur significant time and costs will be required to raise charge-backs as between various companies in the Ansett Group for the post-administration use by some of them of particular assets and tax benefits and personnel. An example of what occurred post-administration can be seen in the sale of aircraft and engines by AAE. That company had no cash of its own although it had significant assets in the form of aircraft and engines to sell. In order to maximise the proceeds of their sale, that company used AAL's assets and resources to meet costs and expenses such as insurance, maintenance and preservation of certification records. 44 However, it does not appear that the raising of charge-backs or contra-entries to reflect such transactions cannot be undertaken. The extent of post-administration use of AAL's assets has been accurately recorded and it is not suggested that the charge-backs cannot be carried out or implemented. 45 Since the commencement of the administrations costs have been incurred in relation to particular transactions, dealings and litigation in relation to companies in the Ansett Group. These costs have been incurred by AAL. Examples of them include the MOU negotiations and Court applications, the SEESA negotiations and administration, the preparation of deeds of company arrangement, the convening and holding of meetings of creditors and the administration of Ansett websites. These post-administration costs have been accurately recorded but if pooling does not occur it will be necessary to undertake an apportionment of the costs incurred by AAL in relation to non-AAL transactions, dealings and litigation and apportion those costs to the relevant company which will be a time-consuming and costly exercise. 46 If pooling does not occur many pre-administration Ansett Group tax issues would need to be reviewed which will involve expenditure of a considerable amount of money and take, according to the Administrators, months or years to conclude. 47 The Administrators have not called for formal proofs of debt from unsecured creditors in the administrations but have rather reviewed the books and records of the Ansett Group to identify potential creditors and their values. 48 The Administrators' creditors' database lists 33,922 unsecured creditors of the Ansett Group which records claims in excess of $7.55 billion (later figures submitted by the Administrators suggest that there are 42,653 Deed Creditors). This includes 182 related party unsecured creditors with claims totalling approximately $2.95 billion and 33,740 other unsecured creditors (including employees) with claims totalling approximately $4.6 billion. The calling for and examination of formal proofs of debt will be extremely costly and time-consuming and the Administrators estimate that the number of proofs of debt likely to be submitted will be huge. If pooling does not occur it may be necessary to conduct a formal proof of debt process for each Ansett Group company which will be very time-consuming and costly. The Administrators initially estimated that the administrative costs alone of conducting a formal proof of debt process across the entire Ansett Group could be between $2 million and $4 million, if not more, which estimate did not allow for potential legal costs in excess of $5 million. Subsequently the Administrators attempted to formulate a better estimate of the likely costs of the formal proofs of debt process. The latest figures show that there are at least 42,653 Deed Creditors who may be entitled to a distribution (excluding Global Rewards and Golden Wing creditors). Allowing for the administrative cost of assessing claims and disputes, the Administrators estimate that the cost of the proof of debt process could be in the range of $5.5 million to $10 million including legal fees. 49 The Administrators are also concerned about the possibility of outstanding issues in relation to the MOU whereby $150 million was paid to the Administrators. As a result of issues raised by the Hazelton Group Administrator, litigation and directions sought from the Court in relation to apportionment as between the Ansett Group and Hazelton Group were settled on the basis of the Administrators paying the Hazelton Administrator $3.2 million in full and final settlement of Hazelton's claim. The Administrators are concerned that there is a real risk that the process of allocating the MOU monies among the companies in the Ansett Group will give rise to potentially costly disputes and litigation and conflicts of interest for the Administrators, as illustrated by the time and expense involved in settling the Hazelton dispute. The pooling of the MOU monies into a single Ansett Group company will avoid potential dispute and litigation about the allocation of those funds which the Administrators believe is impracticable, if not impossible, for them to apportion amongst the various companies in the Ansett Group. 50 I turn to the effect of pooling on creditors. The Administrators have prepared tables setting out their estimates of distributions to priority and non-priority creditors, which distributions reflect the Ansett DOCA priority regime. In the pooling scenario (with AAE compromise) all the $27 million goes to the AAE Bank Creditors and ordinary third party non-priority creditors receive no return. I do not see how a situation could be reached where there would be no pooling but with the AAE Pooling Compromise Deed being implemented. That Deed, in its terms, depends for its implementation on pooling being achieved. Although cl 2.1 of that Deed provides that the operation of the Deed is conditional upon the Court's approval of, or non-objection to, the Deed and the pooling of AAE, the Deed cannot be implemented unless there is pooling of the assets and liabilities of all the companies in the Ansett Group. The payments to be made to the AAE Bank Creditors pursuant to cl 3 of the Deed are to be made from "the Pooled Assets", which expression is defined as meaning "the assets of the Ansett Group Companies as pooled into AAL by way of Pooling". Thus, if there is no pooling of the assets and liabilities of all the companies in the Ansett Group, there is no fund out of which the payments to the AAE Bank Creditors can be made. The Administrators have formed a number of opinions as to these effects if there is pooling (assuming the AAE Pooling Compromise Deed is implemented). 58 The Administrators expressed the opinion that AAL's priority creditors would be better off under pooling by approximately $22 million, an increase of 1.5 cents in the dollar. However, the tables setting out the Administrators' estimates of distributions to priority and non-priority creditors do not disclose how this figure of $22 million is calculated. The relevant distribution table to consider is "Replacement Distribution Table 3". This sets out calculations under four scenarios --- pooling with the AAE Pooling Compromise Deed implemented, no pooling with the AAE Pooling Compromise Deed implemented, pooling without the AAE Pooling Compromise Deed being implemented and no pooling without the AAE Pooling Compromise Deed being implemented. 59 As explained above (par [55]), it seems that the correct comparison is between pooling with the AAE Pooling Compromise Deed implemented and no pooling without the AAE Pooling Compromise Deed being implemented. Using that comparison, it appears that AAL's priority creditors would be better off under pooling by approximately $20.08 million, an increase of 2.68 cents in the dollar. An average loss of $431.37. An average loss of $8,326.53. An average loss of $7,812.50. An average loss of $10,886.08. An average loss of $4,040.27. An average loss of $2,763.74. No similar calculations were made comparing a pooling with AAE Pooling Compromise Deed scenario with a no pooling without AAE Pooling Compromise Deed scenario (although the base figures are available as they are set out in Replacement Distribution Table 3). An average reduction of $10,000. (b) 66 priority creditors of Kendell would lose approximately $150,000, representing a maximum reduction in the likely distribution of 1.6 cents in the dollar. An average reduction of $2,272.72. (c) 7 priority creditors of the Pelican Trust would lose approximately $20,000, representing a maximum reduction in the likely distribution of 8 cents in the dollar. An average reduction of $2,857.14. An average receipt of $431.37. An average receipt of $8,326.53. An average receipt of $7,812.50. An average receipt of $10,886.08. An average receipt of $4,040.27. An average receipt of $2,763.74. The Administrators estimate that the administration costs likely to be incurred if the Ansett Group companies continue to be separately administered and not pooled, is in the range of $9.9 million to at least $24 million. This is dealt with in detail at pars [ 68 ] and [ 70 ] below. 64 Such separate administrations would mean that the net adverse or differential effect on the third party non-priority creditors would be less. At the end of the day, because of the extra costs in separately administering the Ansett Group companies, the financial benefits obtained by pooling for priority creditors do not necessarily correlate to the financial benefits that third party non-priority creditors would enjoy in a no-pooling scenario. A number of these further administration costs are referred to in par [69] below. These costs would no doubt differ from company to company. These are claims of creditors which would result in a dividend for an amount less than $25. These claims are extinguished by the Ansett DOCAs. As the definition of these claims is by reference to the amount of the dividend and not the amount of the claim then, for example, in the case of AAHL where the expected dividend is approximately 0.36 cents in the dollar, a Deed Creditor would need to have a provable claim worth at least $6,945 ($25/0.0036) to avoid extinguishment. As frequent flyer points are carried at a value of not more 0.2 cents per point, a Global Rewards creditor or Golden Wing creditor would need at least 3,472,500 frequent flyer points to have a provable claim in the administration of AAHL that was not extinguished having regard to the operation of the non-cost effective claims provision. According to Mr Korda, one of the Administrators, only one person had more than 3 million frequent flyer points on the commencement of the administration. However, as set out in par [ 20 ] above, they consider that were it not for the AAE Pooling Compromise Deed they are certain that the creditors of AAE would reject pooling. Those creditors have substantial claims. The Administrators have not admitted their claims and if AAE was to be separately administered the resolution of the consideration of formal proofs of debt would be very complex and time-consuming and expensive litigation would likely result. The Administrators are confident that if they called for and admitted proofs of debt in AAE third party creditors would control a significant majority of votes and would vote against pooling. 67 The Administrators entered into the AAE Pooling Compromise Deed in order to resolve existing disputes, avoid potentially costly and uncertain litigation and with a view to maximising returns to Deed Creditors. In those circumstances they consider that the compromise with the AAE Bank Creditors is in the best interests of the Ansett Group as a whole. 68 A relevant consideration in considering a pooling scenario as against a no-pooling scenario is the extent to which a no-pooling scenario will result in such an increase in costs so as to erode such advantages or benefits to creditors as might accrue. This issue requires a determination of what extra costs and expenses will be incurred in a no-pooling scenario which would diminish the return to creditors. The Administrators have made estimates of the costs likely to be incurred by the companies in the Ansett Group were they to continue to be separately administered and their assets and liabilities not pooled. The Administrators' overall costs estimate is within the range of $9.9 million to at least $24 million. This is a very broad range but the Administrators acknowledge that in their opinion it is extremely difficult to estimate accurately the costs likely to be incurred. They also observe that their estimate is more likely to increase rather than decrease as the relevant tasks are undertaken. The Administrators have not sought to apportion the costs, or allocate them, to particular companies. The Administrators estimate the costs of venue hire, legal fees, staff costs and administrative costs within the range of $200,000 - $300,000. 70 These costs have been estimated on a global basis. The Administrators say that it is either impractical or impossible to estimate the costs on a company by company basis. All the asset holding companies and AAHL, with some exceptions, are directly affected, or impacted, by the issues which give rise to the extra costs and expenses which will be incurred in a no-pooling scenario. But to what extent is not known. 71 The existence of the inter-company debts is significant when considering the votes which can be cast at any meetings of Deed Creditors called to consider a resolution to pool the debts and liabilities of all the companies in the Ansett Group into one company. The extent of the inter-company debts of the asset owning companies is such that (other than in relation to the Westsky Trust) the Administrators can either control or substantially influence the voting on the proposed pooling resolutions. The vast majority of Deed Creditor claims, by value, in the Pelican Trust, Kendell, and Show Group, in each case in excess of 78%, are inter-company debts, as are a majority of debts, by value, in Ansett International Ltd (56.8%). Further, if a majority in number of Deed Creditors or claimants were to vote against the pooling resolutions so as to create a deadlock between the number of creditors and their values then the Administrators would exercise their casting vote in favour of pooling. 72 The position is a little different in relation to the other asset owning companies (other than the Westsky Trust). Approximately 31% of Deed Creditors' claims against AAL, and approximately 27.5% of Deed Creditors' claims against AAHL are comprised of inter-company debts. As the Administrators point out, many creditors often choose not to turn up and vote at creditors' meetings. Thus it is possible that the Administrators will have a majority of votes in value at the meetings of Deed Creditors of AAL and AAHL. The Administrators say that if a majority in number of creditors of AAL and AAHL were to vote against pooling so as to create a deadlock between the number and value of creditors they would exercise their casting vote in favour of pooling the assets and liabilities of AAL and AAHL. For example, it does not extend to giving an administrator a direction as to a decision which is wholly business or commercial in nature. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised. It is insufficient to attract an order giving directions that the liquidator or administrator has a feeling of apprehension or unease about the business decision made and wants reassurance. There must be some issue which arises in relation to the decision. A court should not give its imprimatur to a business decision simply to alleviate a liquidator's or administrator's unease. There must be an issue calling for the exercise of legal judgment. The Administrators face a number of conflicts of duty and interest in relation to the pooling proposal having regard to their role as administrators of numerous companies, their role as trustees of various trusts and their role as representative creditor of a number of companies. They are not seeking the Court's direction on matters of business judgment. They cannot make a number of decisions in relation to the pooling proposal without involving themselves in a conflict of interest or conflict of duty. In short, they seek protection from potential liability for making decisions which, although in the overall interests of the Ansett Group as a whole, might be said are not in the interests of particular creditors of particular companies in the Ansett Group. 75 The power of the Court to give directions to administrators is also enhanced by the operation of s 447A of the Act as it enables the Court to order that the directions power in s 447D operate in relation to a particular company in a particular way: see Re Ansett Australia Ltd and Mentha (supra) at 615-616. Those objects include bringing about a better return for the particular company's creditors than would result from a liquidation. 76 I turn to the issues arising under the trusts. The Court has similar jurisdiction in relation to giving directions to trustees as to how they may discharge their obligations as trustees. Trustees can obtain protection by the obtaining of such directions if they are concerned that they may be acting in a manner contrary to the terms of their trust or otherwise beyond their power. But, in general terms, such directions will be given if the proposed course of action or course of conduct is for the benefit of the trust property or beneficiaries generally and not inimical to their interests. 77 The Administrators are seeking directions, in substance, that they can put, and vote in favour of, a resolution to transfer the funds held pursuant to the Pelican Trust Deed and the Westsky Trust Deed entirely to AAL. Under each trust deed the funds available are held for the purpose of paying claims determined by meetings of creditors of the relevant Skywest Airlines and Aeropelican. Unless otherwise determined by the Administrators, the meeting shall be held on or about the date to which the second meeting of creditors of the Ansett Group has been adjourned. They seek a further direction that they may properly exercise a casting vote as chairman of the respective meetings in favour of such a resolution. They draw in aid the provisions of s 447A(1) and s 447D(1) of the Act and they also draw in aid s 22 and s 23 of the Federal Court of Australia Act 1976 (Cth) in order to invoke the accrued jurisdiction of the court to the extent to which the direction is a direction given to a trustee. 78 In the absence of a direction, or some other protection from the Court, the Administrators, in seeking to put and vote in favour of such a resolution, are facing a clear conflict of interest, having regard to their role as administrators of other companies in the Ansett Group. Further, they are seeking to put resolutions and vote in favour of resolutions which are contrary, and indeed adverse, to the interests of the beneficiaries under each of the trusts, namely the creditors of Skywest Airlines and Aeropelican. 80 Does the Court have power to give such a direction? Sections 22 and 23 of the Federal Court of Australia Act 1976 (Cth) gives the Court power, in cases such as the case presently before the Court, to give directions to trustees but those sections do not provide a substantive or affirmative basis for directing the trustees that they may transfer or dispose of the trust property in a manner otherwise than in the interests of their beneficiaries. Similarly, notwithstanding the scope of the power under s 447A(1) of the Act, I do not consider that it extends to directing the Administrators in their capacity of trustees to act otherwise than in the interests of the beneficiaries under the trusts. I do not consider that s 447A(1) has any operation in a context where the Administrators are acting in a specific and discrete trustee capacity. 81 The proper characterisation of the actions which the Administrators want to undertake is that they are seeking the approval of the Court for them to dispose of the funds held under the trusts to persons other than the beneficiaries under the trusts. Although cl 6.1 of each trust deed provides that it is for the meeting of creditors to decide how the funds are to be distributed, I would expect that the creditors would vote in such a way as to ensure that the funds are made available only to those creditors of the relevant company. 82 Looking at the matter solely in the interests of the beneficiaries under each trust, I cannot see any basis upon which it would be appropriate or proper to give the Administrators the directions they seek. In substance the direction seeks approval for the Administrators to enter into a transaction and effect a distribution of the funds otherwise than in the interests of the beneficiaries. 83 If there be any power in the Court to give the Administrators qua trustees the directions sought, it is to be found in s 63 of the Trustee Act 1958 (Vic), a provision which is found in trustee legislation in numerous other jurisdictions. In Riddle v Riddle [1952] HCA 12 ; (1952) 85 CLR 202 the High Court considered the scope of the power of s 81 of the Trustee Act 1925 (NSW) which is in similar terms to the Victorian Act. The majority of the High Court construed s 81 in very wide terms. The sole question is whether it is expedient in the interest of the trust property as a whole that such an order should be made. The Court has only to be of the opinion that the trust property as a whole will in fact benefit from the making of the order. 85 In Re Royal Society's Charitable Trusts [1956] Ch 87, Vaisey J was asked by the Royal Society to permit it, inter alia , to consolidate various different trust funds of which it was trustee for investment and accounting purposes. Vaisey J held that the application did not come within s 57 of the Trustee Act 1925 (UK) (the equivalent section to s 63 of the Trustee Act 1958 (Vic)) or alternatively under what he called "the rather ill-defined scope of the court's general jurisdiction". However, he held that the Court had power under its special jurisdiction relating to charities to consider the applications. 86 I doubt whether s 63 provides a basis for the directions sought by the Administrators as they are seeking directions as to how they may exercise their power as trustees, rather than seeking a direction for a particular transaction, even though a particular transaction will result from the exercise of their power, if approved or directed by the Court. Notwithstanding the breadth of the definition of "expedient", I do not consider that it is expedient, in the interests of the trust properties or the beneficiaries under the trusts that the Administrators be given the power to put a resolution and vote in favour of it adversely to the interests of the beneficiaries. 87 I turn to deal with the issue of the pooling of assets and liabilities of companies. Pooling of assets and liabilities of companies in administration or liquidation as a concept is well known although it does not appear that pooling has been approved in circumstances where a number of the creditors of one or more of the companies have been disadvantaged by the pooling proposal and the creditors have not unanimously consented to, or approved of, the pooling proposal. 88 In Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209, Young J gave effect to pooling resolutions passed by creditors of two companies at s 439A meetings by recourse to s 447A of the Corporations Law . Powell J at 164 referred to the exception to the rule in bankruptcy that separate creditors could not have access to joint assets, namely that separate creditors could have access to a pool comprising joint and separate assets. However the order made by Young J approving of the pooling resolutions was made expressly subject to the opportunity given to the Deputy Commissioner of Taxation to apply to the Court to have the order discharged. As I said at 85, this normally means a scheme of arrangement, but if no creditor objects and it is impracticable to keep the assets and liabilities of different companies separate, and the consolidation is for the benefit of creditors generally, then the court might advise the liquidators concerned that they would be justified in consolidating the administration. A combined meeting of creditors of both companies had been unanimously in favour of the proposal. It does not appear from the judgment whether any creditors were disadvantaged by the proposal. 92 In Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (2004) 50 ACSR 15, Barrett J approved a pooling proposal by recourse to ss 447A of the Act for two companies in liquidation over the objection of one creditor. The dissenting creditor objected to the pooling proposal at a meeting of creditors held pursuant to s 439A of the Act, and also availed itself of the opportunity to have its grounds of dissent placed before the court. Barrett J was satisfied that the circumstances in which the pooling proposal was put before the creditors of the relevant company and voted upon justified a conclusion that the majority vote both by number and value ought to be recognised as a properly informed expression of the will of the creditors reflective of the interests of the general body of creditors. 93 In Mentha v GE Capital (1997) 27 ACSR 696, Finkelstein J accepted that in appropriate circumstances pooling of assets and liabilities of companies in insolvency might be "both just and equitable if not essential". There is no justification for a construction of this part of the Corporations Law that would lead to the conclusion that arrangements made pursuant to Pt 5.3A must be more narrowly confined than arrangements made under s 411. 94 In Humphris, Re ACN 004 987 866 (2003) 21 ACLC 1474, I approved of a pooling proposal where the creditors present at the meetings unanimously approved of the proposal to enter into deeds of company arrangements which contained provisions to pool the assets and liabilities of each company. In those particular circumstances, it was inevitable that if pooling did not occur, all creditors would be worse off. This was because the costs which would be incurred if there was no pooling would erode the balance available for distribution to creditors. 95 In Re Tayeh; the Black Stump Enterprises Pty Ltd (2005) 53 ACSR 684, an application for approval of a pooling proposal in a creditors' voluntary liquidation scenario was dismissed. What weighed heavily in the reasoning of Barrett J was the fact that the creditors as a body had not been given a clear opportunity to make a positive expression of their views. There was thus to be a forum for the positive statement of opinions and wishes actively sought, no doubt by way of proposed resolution in relation to a specifically identified proposal. The lack of objection contemplated there (as well as in Soluble Solution which involved a s 447A application) was in a context quite different from the context involved in the present case. Here, there has been no attempt to engage any of the statutory provisions under which rights in a winding up may be varied. 2005). The Court analysed In re Augie/Restivo 860 F.2d 515 (2 nd Cir. 1988) where the Court found that there were two rationales, to be extracted from previous decisions, for substantive consolidation. 98 Having analysed the competing lines of authority on substantive consolidation, the Court's conclusion was to follow the In re Augie/Restivo (supra) approach. The Court also rejected the proposition that the commingling of assets justified consolidation when the affairs of the companies were so entangled that consolidation would be beneficial. Moreover, the benefit to creditors should be from cost savings that make assets available rather than from the shifting of assets to benefit one group of creditors at the expense of another. Mere benefits to some creditors, or administrative benefit to the Court, falls far short. 99 I consider these principles appropriate to apply within the context of the proper approach to pooling in the Australian jurisdiction. They are not inconsistent with the Australian decisions on pooling to which I have referred and I consider that they complement the principles which underlie those decisions. 100 This review of the recent authorities on pooling leads me to the conclusion that there is no authority or support for the view that a Court will approve a pooling proposal in circumstances where a number of the creditors of one or more of the companies will be significantly disadvantaged. These authorities also proceed on the basis that it is not sufficient for an order for pooling that the administration or liquidation is complex or that the identity of creditors is difficult to determine. So much was stated by Powell J in Anmi Pty Ltd v Williams (supra) at 164 (par [88] above). The observation of Powell J was cited with approval by Young J in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (supra) at 213 and by Barrett J in Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (supra) at 17. 101 It is important to keep in mind that the Administrators are not asking the Court to make a pooling order per se but are rather asking the Court to give them a direction that has effect at an anterior point of time. In short the Administrators are asking for a direction as to the manner in which they may be the cause of the trusts and the companies voting in favour of the pooling resolution at the various meetings of creditors of the companies in the Ansett Group. Approval of the pooling resolution is not sought from the Court, nor is the Court being asked to sanction pooling. 102 The direction sought in relation to voting has two aspects to it. First, a direction that the Administrators may vote inter-company debt in favour of the resolution; secondly, a direction that they may exercise a casting vote in favour of the resolution, should the need for the exercise of a casting vote arise. Pursuant to s 600A of the Act the Court has the power, inter alia , to set aside a resolution passed at a creditors' meeting where the outcome was determined by a related entity. Section 600B of the Act gives the Court power to review a resolution of creditors passed on the casting vote of the person presiding at the meeting. 104 No guidelines are provided by the statute or the regulations as to the manner in which the casting vote may be exercised. The cases support the proposition that a person in the position of an administrator has a discretion as to how to exercise a casting vote at a meeting of creditors but that such a vote should be exercised honestly and in the best interests of the body of creditors as a whole: Re Coaleen Pty Ltd (Admin. Appointed ) [2000] 1 Qd R 245; Re Martco Engineering Pty Ltd (1999) 32 ACSR 487; Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21. 105 What is apparent from the authorities, is that when considering whether the Court ought to intervene with respect to the exercise of a casting vote, a relevant factor is whether or not any particular class of creditor would be unfairly affected by the vote. It is difficult in the circumstances of this application to see on what basis the Court could sanction the Administrators' exercise of their casting vote in the manner they propose in circumstances where it is likely that a particular class of creditor will be disadvantaged. 106 The Administrators have certain contractual obligations to pursue a process to achieve pooling but they recognise and acknowledge, as their counsel submitted, that they have a conflict of interest. They have come to the court acknowledging the conflict of interest, they have made full and frank disclosure as to what it is, how it arises and how they propose to deal with it. They recognise that, as they submitted "just like trustees" they were in a position of conflict that could not be resolved without seeking directions from the Court. 107 What is critical is that the Administrators are asking the court for a direction in relation to some of the companies in the Ansett Group that would authorise them to act in a manner which, absent the direction, would be acting in a manner opposite to that which would be their duty in the ordinary course. This would result in them acting in a manner disadvantageous to priority creditors of Show Group, Kendell and the Pelican Trust and to third party non-priority creditors of a number of companies in whose interests they are supposed to act as Administrators. 108 Section 447A of the Act has little room for operation in this context. That section enables the Court to say how the statute is to operate in relation to a particular company. That power must be considered against the backdrop of the object of Pt 5.3A of the Act which, according to s 435A is to provide, inter alia , in an administration scenario, for a better return for the company's creditors and members than would result from an immediate winding up of the company. In a group situation, like the Ansett Group, I do not consider that one can consider an exercise of power under s 447A without regard to the interests of the particular company, the subject of the exercise of this power, and its creditors. 109 The Administrators argued that the object of the Act in accordance with s 435A was to maximise the return to creditors and was not limited to particular entities. They further argued that the concept of pooling operated, particularly in relation to groups of companies, where one cannot identify precisely which creditors belong to which company. This argument over-simplifies the issue. I do not consider that one can disregard a corporate structure when one is seeking to exercise power under s 447A especially when the company has a group of clearly identified creditors who may be disadvantaged by the exercise of the power. There may be room to group companies together when the creditors of the various companies have, in substance, treated the companies in the group as one entity or, putting the matter another way, have relied on the group as such as the source for payment of their debts. 110 Certainly in the absence of an exercise of power under s 447A, or a direction from the Court, it is not open to an administrator to conduct the affairs of a company under administration in a manner detrimental to its creditors. This proposition is equally applicable, if not more so, to trustees of a fund for beneficiaries, a role undertaken by the Administrators in relation the Westsky Trust and the Pelican Trust. 111 The Administrators, as administrators of thirty-four of the companies in the Ansett Group, do not face this conflict. As a matter of practical reality as it does not disadvantage the creditors of each of those thirty-four companies if the Administrators vote in favour of pooling at any meeting of the creditors of that company. If anything, it gives them a potential source for repayment of their debt which they would not otherwise have, although on the present material the creditors of all those companies, save for AAL which is in a special position because of its number of employee priority creditors, have no interest one way or the other in how the Administrators vote on any pooling resolution. 112 Although the Administrators are administrators of all the companies in the Ansett Group they are not excused from their duty to act in the interests of the creditors of each of the companies. The Administrators submitted that a primary consideration for them is to exercise their vote "in the interests of the creditors as a whole". They submitted in substance that because the Ansett Group of companies was administered as a group, often without regard to which precise company should incur a liability, or the basis or terms upon which one company made an asset available to another company, the group's creditors should be considered and treated as a whole. 113 That proposition has an initial attraction as it provides for an element of equity and equality across the whole spectrum of Ansett employees, the priority creditors, and the financial institutions and trade creditors, the non-priority creditors. However the evidence does not support the proposition that all the employees, financial institutions and trade creditors regarded themselves as working for, dealing with, or having rights against, the Ansett Group as a whole rather than being in a relationship with a particular Ansett Group company. Particularly is this so in relation to the eighty-four employees who are likely to be disadvantaged by the pooling proposal for which the Administrators want to cast an affirmative vote. 114 I have not lost sight of the fact that the pooling proposal by the Administrators is sensible and advantageous to most of the creditors from a practical point of view. 115 However, I do not see my concern about, or objection to, the pooling proposal based on its disadvantageous consequence for a number of priority creditors in particular as a matter of applying a technical rule of insolvency. Nor is it a matter of inefficient conduct of the administration of the companies in the Ansett Group. Rather, I see my concern as being grounded in substantive principle having regard to the rights of creditors of companies under administration not to be disadvantaged. 116 An example of the effect of giving the directions sought by the Administrators can be seen by reference to the Show Group. Pooling is likely to result in 673 third party non-priority creditors of the Show Group losing out on a likely distribution of approximately $1.86 million representing a loss of 27.62 cents in the dollar, an average loss per creditor of $2,763.74. Show Group's 11 priority creditors are likely to suffer a maximum reduction in distribution of $110,000 representing a reduction of 12.64 cents in the dollar, an average reduction per creditor of $10,000. 117 The Administrators say that those calculations and figures do not make any allowance for separate administration costs, delay and uncertainty. But they are unable to apportion any part of the estimated $9.9 million to $24 million as the extra costs for the administration of Show Group. I can only assume in the absence of further evidence, that the creditors of the Show Group will be significantly disadvantaged if the Administrators of the Show Group vote in favour of pooling and pooling occurs throughout the Ansett Group. 118 The Administrators submitted that the financial disadvantage to Show Group's priority creditors was not a substantial reduction in the context of the overall way in which the other creditors are dealt with. I do not accept that submission. It may be that in money terms the total amount is a small proportion of the overall distribution to the employees of all the companies in the Ansett Group. But it is a not insignificant or insubstantial reduction for the individual Show Group employees involved. 119 The Administrators accepted that the interruption of the normal regime for the payment of creditors, brought about by the pooling proposal, would result in a disadvantage to some creditors. They countered this consequence with the proposition that that consequence had to be balanced against the benefits that flowed from pooling. I do not see the issue before the Court as a balancing exercise. Rather I see it is an application by the Administrators, albeit in good faith (and I make no criticism of them for making the application; indeed they were probably bound contractually to do so), for directions that they not act in accordance with their duties as administrators and trustees. 120 I am not satisfied that the circumstances involved in the administration of the companies in the Ansett Group and in particular, the asset owning companies, are such that it is appropriate that the Administrators be given a direction that they may vote at a meeting of creditors of those companies in favour of the exceptional situation of pooling all the assets and liabilities of all the companies and trusts in the Ansett Group into one company. I summarise my reasons for reaching this conclusion. 121 So to vote, in the case of the meetings of the asset owning companies and trusts is to vote in a manner adverse to the interests of a number of creditors of those companies and beneficiaries of those trusts. Although the casting of such a vote is intended and calculated to bring about a pooling of all the assets and liabilities of the companies and trusts in the Ansett Group, it is not appropriate in all the circumstances to which I have referred to give the Administrators the power to achieve that exceptional situation. 122 Although the Ansett Group historically operated as a single entity in many respects it does not appear that the various creditors of the companies, both priority and non-priority, dealt with the various companies as a single economic unit when their debts were incurred. It cannot therefore be said that the creditors, in substance, relied upon all the companies in the group as being responsible for the payment of their debts. 123 Although significant time and costs might be required to determine what charge-backs should be raised between various companies in the Ansett Group, it is not suggested that the task is impossible for all the companies, particularly the asset owning companies. It may be complex, it may be costly, but that is part and parcel of the administration of a substantial commercial enterprise. 124 It is not put that it is impossible or impracticable to determine the ownership of various assets of companies in the Ansett Group such as the head office building at 501 Swanston Street, Melbourne and certain aircraft, engines and information technology systems and software. Rather it is said that this cannot be done without the expenditure of substantial costs and the use of substantial resources. However, the expenditure of such costs is no reason to disadvantage creditors who would otherwise receive a particular distribution in a no-pooling situation. This is particularly so when it is not submitted that in a no-pooling situation they will inevitably get less than they would in a pooling situation. 125 The fact that the determination of certain questions, such as the apportionment of the Air New Zealand MOU monies and the determination of proofs of debt may involve seeking the directions of the Court is an insufficient reason to warrant pooling, particularly if that litigation can resolve the issues in an effective manner. 126 The fact that the Administrators may have a contractual obligation to seek, or to facilitate, pooling is no answer to the proposition that, in the case of particular companies in the Ansett Group, to vote in favour of pooling or to exercise a casting vote in favour of pooling would be a breach of the duty they owed to such creditors or beneficiaries. 127 The Administrators say that the figures set out in the distribution tables for no-pooling are best case figures as they do not take into account the substantial costs that would be involved in the separate administration of the companies. It seems to be suggested that those extra costs could in fact, produce a situation where companies such as, for example, the Pelican Trust and Show Group (which would otherwise seem to be better off under no-pooling) could be better off under pooling because of those extra administration costs. However, that proposition is not sustainable in circumstances where the Administrators have not sought to apportion any of the costs involved in the separate administration of the companies to each company, and in particular, the asset holding companies. The Administrators have determined the costs of separately administering the companies in the Ansett Group as falling within the range of $9.9 million to $24 million. That assessment has been determined on such a broad brush basis as to be of limited assistance in determining the costs of separate administrations. One does not know, for example, what are the costs involved in the separate administration of the Show Group or the Pelican Trust. It may be, for example, that there will be relatively limited extra costs involved in the further administration of that company and that trust. 128 If the Administrators could establish with a greater degree of precision the extent of the extra costs involved in the administration of each of the asset owning companies and trusts if there is no pooling, there would be a better opportunity to assess whether it is likely in a no-pooling situation that the extra costs of administration would erode the amount the creditors of those companies would receive in a no-pooling situation. If such a conclusion were to be reached then it might be said that pooling would benefit all creditors because, at the end of the day, all creditors are advantaged by the savings in the extra costs of administration and no creditor is disadvantaged. The creditors who otherwise might have become entitled to a greater distribution would have had the extent of that distribution eroded or eliminated by the extra administration costs that would have been incurred in a no-pooling situation. 129 At the present time the evidence is insufficient to enable me to reach that conclusion. If further evidence is available in relation to this issue I would be disposed to give the matter further consideration. 130 The Administrators say that no creditor, whether priority or non-priority has objected to the pooling proposal, other than the contradictor represented by counsel. I do not regard that as determinative in the circumstances which exist. The creditors adversely affected by the pooling proposal, particularly the priority creditors earlier identified, have not been put on notice of the monetary extent to which they may be adversely affected by the pooling proposal. Although the material before the Court has been placed on the Administrators' website and various related websites, my understanding of the evidence is that eighty-four priority creditors in particular did not receive letters of the type which were sent to various Ansett Group creditors on or about 15 September 2005. I am referring to the letters which are found in exhibits "AWK-9" to "AWK-12" to the affidavit of the solicitor Mr King sworn on 23 September 2005. 131 Although an advertisement was placed in a national newspaper on 21 September 2005 notifying all Ansett Group creditors of the application in the Federal Court in connection with the pooling proposal, the notice does not put the relevant creditors who may be disadvantaged by the pooling proposal on notice that they will be disadvantaged to the extent identified in the material before the Court. 132 Counsel for the ACTU and affiliated unions supported the application by the Administrators, and in substance, supported the pooling proposal. However, he did so on the basis of representing the interests of all former Ansett employees. His approach was that the ACTU was seeking to maximise the best possible position for the most number of the former employees who would be better off with the pooling proposal. Counsel for the ACTU had no instructions that the employees adversely affected by the pooling proposal had been put on notice that the ACTU was taking a position adverse to their individual interests. 133 I turn to the issue of the approval of the AAE Pooling Compromise Deed. I am disposed to approve of that Deed, on the basis that it provides benefits and advantages for AAE and for its creditors generally which would not otherwise be obtainable. The advantages of AAE entering into the Deed are supported by confidential legal advice given to the Administrators which I have read. The operation of the Deed is expressed to be conditional upon first "the approval of or non-objection to" the Deed by the Court in this proceeding and secondly, the pooling of the assets and liabilities of AAE into AAL. The first condition is satisfied by my approval of it. The satisfaction of the second condition must await the outcome of the meeting of creditors of AAE. 134 However, as I read the deed, it is not intended to operate or be carried into effect unless the assets of all the companies and trusts in the Ansett Group are pooled into AAL. So much follows from cl 3 of the Deed which provides for the payments to the Bank Creditors to be made from the "Pooled Assets" which are defined in cl 1.1 as "the assets of the Ansett Group of Companies as pooled into AAL by way of Pooling". In the absence of the directions sought by the Administrators as to the manner in which they may vote at creditors' meetings of the various companies in the Ansett Group, it is problematic whether pooling of the assets of the Ansett Group of companies into AAL will occur. Nevertheless I consider it appropriate that I approve of "the agreements and the companies documented" in the Deed as it is advantageous and beneficial for, the creditors of AAE and its administration. 135 The Administrators also seek a direction in relation to 501 Swanston Street Pty Ltd that as its deed administrators they may properly cause it to distribute the proceeds of the sale of the head office and other properties to AAL. I am not disposed at this stage to give such a direction as I do not know the extent to which, if any, there are any creditors of 501 Swanston Street Pty Ltd or any creditors of any other company in the Ansett Group which may be disadvantaged by such a direction. I am prepared to reconsider this matter on the basis of any further material and submissions which the Administrators may wish to file or make. 136 Consistently with my earlier reasoning, I consider that any notice of the proposed pooling meetings should be given specifically to those creditors, whether priority or non-priority, who may be disadvantaged by the proposed resolutions. I do not consider that it is sufficient, in all the circumstances, for those creditors only to be given notice through the publication of newspaper advertisements or the placing of relevant documents on the Administrators' website. 137 Having regard to the conclusions I have reached, I am not disposed at this stage to make any specific orders but will hear from the parties as to what orders and further directions, if any, should be made. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | application by deed administrators for directions pursuant to ss 447a(1) and 447d (1) of the corporations act 2001 (cth) where deed administrators seek to pool assets and liabilities of group of companies into one company where deed administrators seek to give effect to a deed of compromise between one company and three major creditors manner in which deed administrators seek to vote on pooling proposal at creditors' meetings exercise of casting vote voting inter-company debt where conflict of interest of deed administrators in capacity as deed administrators and as trustees where pooling proposal will disadvantage some priority and non-priority creditors of companies and beneficiaries of trusts where group of companies historically operated as a single business in some respects where administration is time-consuming and expensive if there is no pooling and each company continues to be administered separately corporations |
At that time, for reasons which I delivered ex tempore, I made an order that the application for winding up filed on 12 November 2008 be adjourned until 9.30am on 12 February 2009. I also made orders that the convening period prescribed by s 439A of the Corporations Act 2001 (Cth) (the Act) be extended to 13 February 2009. As a corollary, I ordered that the meeting of creditors held pursuant to s 439A of the Act be held no earlier than 14 February 2009. Earlier this month, I made orders further extending the time for the convening period. Scottsdale Homes No 3 Pty Ltd (Scottsdale Homes No 3) is the Respondent to a winding up application at the behest of a Deputy Commissioner of Taxation (Deputy Commissioner). The background to today's application is contained in the reasons for judgment which I delivered on 16 December 2008. Since then, and contrary to the expectation in December, and, for that matter, earlier this month, there has been what one might term, a refinement of proposal in relation to the refinancing of Scottsdale Homes No 3's debts. The basis for that proposal as refined is deposed to by Mr Bettles, who is an administrator under the deed of company arrangement. The basis for his knowledge in respect of that proposal is information which he believes to be true provided by Mr Dudley Quinlivan. In short, the position which emerges on material is that the proposal for refinancing sourced via professional mortgage providers has been the subject of further delay. It did not settle on the expected date namely, 17 February 2009. As a result, there has been an entry into negotiations by Mr Quinlivan with the National Australia Bank and Bankwest to refinance development properties owned by Croftworth Property Holdings, which is a company within the Quinlivan Group of companies, located at the Bundall Centre in the Upton Centre, in order to raise some $1.8 million within 14 days. An offer is expected within the next week in respect of the application to these banks for that finance. It seems that this particular refinancing is in the nature of an interim injection of capital with the substantive application for finance from Professional Mortgage Providers still on foot. The administrators depose (Mr Bettles deposes on behalf of the administrators) that it remains in the best interests of the creditors of the company that the matter be adjourned for a period of 14 days to enable the refinance proposal with the banks to be completed. It is also his view that it is in the best interests of creditors that the convening period and the holding of the second meeting of creditors, be extended until some time in the middle of March. There is but one major arm's length creditor. That is the Commissioner of Taxation in respect of revenue debts owed to the Commonwealth and payable to the Commissioner. It is a significant feature of the application today that the Commissioner, having considered the administrator's affidavit and, further, the material going to the absence of opposition on behalf of, what one might term, related party creditors in the Quinlivan Group of companies, does not oppose the orders that are sought by the administrator. To that end, the solicitors for the administrator and the Deputy Commissioner in her own right have signed orders which are proposed today. That signed order became exhibit 1 on the application. That there exists power to further extend the convening period is, in my opinion and clear: see Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 984. There is also, in my opinion, clear authority further to adjourn the winding up application: see Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 , and; Deputy Commissioner of Taxation v First Netcom Pty Ltd (2001) 19 ACLC 324. The question is whether or not, given that power exists, there should nonetheless be an extension and an adjournment in these circumstances? There is something of an interrogative note as to whether, in the end, it is a rainbow that is being chased in respect of the refinancing. The answer in respect of that interrogative note, or at least persuasive guidance, is to be expected to be provided and in this case has been provided by considered value judgments made, both on the behalf of the administrator and on behalf of the principal arm's length creditor - each of them approaching the matter separately and having regard to, on the one hand, duties that are conferred under the Act and, on the other hand, the interests of the Commonwealth in the recovery of revenue-debts who have each come to a view that the extension and the adjournment is warranted. That is a very persuasive fact indeed. This is to be balanced against the parliamentary intent evident in respect of Pt 5.3A of the Act, that the administration of a company ought not be a leisurely and extended affair. There is a further public interest in that this particular company failed to comply with the terms of a statutory demand and is therefore, prima facie, unable to pay its debts. As against that, the evidence is that the company is dormant. Further, it seems that the injection of an amount of $50,000 into the company means that funds which might otherwise be available for creditors, and are necessarily diminished by the legitimate expenses of administration, are not being diminished. Balancing these competing considerations, it seems to me that the orders proposed ought to be made. In so doing, I should indicate that, in the event of a further application, very compelling evidence indeed would be necessary, in my opinion, to warrant further adjournment or extension. However, one must not prejudge the course of events over the next fortnight or so. For these reasons then, I make orders in terms of the draft proposed by the parties. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | administration application for winding up creditors' meeting extension of time corporations |
A delegate of the first respondent refused the application for a protection visa on 21 April 2006. On 23 May 2006 the appellant applied to the Tribunal for a review of that decision. 3 Before the Tribunal the appellant claimed to have well-founded fear of persecution based on her religious beliefs as a member of an underground Christian church in China. The appellant claimed to have started to attend a bible study group in April 2004 and in August 2004 the appellant was baptised. In June 2005 after attending a religious gathering, the appellant claimed to have been accosted by a group of ruffians. When the police came to assist the appellant they found her bible in her handbag and she was taken to the police station and questioned. She claimed she was detained for one week and then released. In September 2005, police broke up a gathering the appellant had attended and the appellant was detained for one month. The appellant gave evidence that there were ten people at the gathering but only the appellant and another were detained. The appellant claimed that afterwards, the police continually watched her. It found difficulty in getting "any sort of clear idea" about the religious activities in which the appellant had engaged. The Tribunal was prepared to accept the appellant had attended some bible study groups at the invitation of a person whom the appellant met through business. The Tribunal noted from independent country information that these groups were not in themselves illegal. The Tribunal also accepted that the appellant was rescued by police from an attempted assault in June 2005 and that the appellant may have been questioned in passing by the police regarding the bible but nothing came of it as the appellant was released conditionally. The Tribunal was not satisfied the appellant was detained for a week, as it found it implausible in the confines of a small village police station. The Tribunal did not accept the appellant's account of events after June 2005, finding the appellant had changed and exaggerated her answers, or failed to answer questions. The Tribunal found the raid on the study group in September 2005 to be implausible as the police would not have allowed 80% of the attendees to avoid arrest, given they considered it to be an illegal gathering. Further, the Tribunal found implausible the claim that the leader of the group the appellant had attended, who was also the leader of five other groups, was able to arrange for the appellant's release, but she had never been arrested or detained herself. The Tribunal noted the appellant did not give a consistent story regarding her actions after leaving detention. The Tribunal was of the view that the appellant left China voluntarily, noting that the appellant's family were keen for her to undertake employment overseas. 5 The Tribunal found the appellant's account of her religious observance in Australia deeply confused. The Tribunal was not satisfied the appellant had sought religion in Australia "in the way that would be appropriate to someone who is afraid to worship in her country and who fled that country in order to find religious freedom". The Tribunal noted independent evidence which indicated that the local authorities in the appellant's area were not repressive to house churches or bible study groups not associated with overseas churches or not part of a well-organised network. 6 The Tribunal also noted the appellant had the option of attending a state-sanctioned church in her district without any adverse consequences. On the basis of the Tribunal finding that the appellant did not have "any deep theological convictions that would impel her to reject the state-sanctioned church", this seemed "a reasonable solution". The Tribunal noted that the appellant had never attended a state-sanctioned church and therefore had no basis upon which to say that it would not meet her spiritual needs. On the evidence, the Tribunal was not satisfied the appellant had ever suffered harm amounting to persecution for her religion. Submissions filed on 6 December 2006 also raised grounds of bias. In oral submissions the appellant claimed that the Tribunal had been selective with the country information relied upon and that the Tribunal had not provided such information to the appellant for comment. 8 The federal magistrate found no evidence of bias and no evidence of selective use of the country information. In relation to the s 424A(1) ground, the Tribunal's decision was largely based on the appellant's own evidence at the hearing and country information and thus fell within the exceptions provided in s 424A(3)(a) and (b). Further, there was no breach of s 425 as the Tribunal considered the appellant's claims in detail and that appellant was invited and did attend the hearing. 9 Counsel for the first respondent raised the fact that the Tribunal's reference to the appellant attending a state-sanctioned church may raise similar issues to those which arose in Appellant S395/2002 v Minister for Immigration & Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473. However, the federal magistrate distinguished this case on two bases. Firstly, here the Tribunal made a factual finding that the appellant had no deep theological convictions and this finding had no discernable error. There was no equivalent finding in Appellant S395/2002 216 CLR 473. Consequently, the finding based on country information that a person without a deep faith can worship at a state-sanctioned church was open to the Tribunal. Secondly, the Tribunal did not express as a requirement that the appellant had to modify her behaviour but rather was observing it was an option for the appellant. 10 His Honour also considered the decision of SBVC v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 76 , where Finn J upheld the Tribunal's conclusion that the manner in which an appellant practised her religion did not put her at risk of persecution from the Chinese authorities, and was satisfied that decision was applicable to the matter at hand and followed that decision. 11 The federal magistrate also had regard to Applicant NABD of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29 ; (2005) 216 ALR 1 at [8] and [158] where the High Court confirmed the necessity to focus on the individual claims rather than the class of persons being considered. His Honour found the Tribunal did focus on the specifics of the appellant's claims. As there was no jurisdictional error, his Honour dismissed the application. Particulars in support of these grounds indicated the appellant was asserting bias and breach of s 424A of the Act. Nothing before me demonstrates a "closed mind" on the part of the Tribunal: see SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] , referring to Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 530 per Gleeson CJ and Gummow J. The appellant has not identified any particular material or findings in support of any claim of bias, actual or apprehended, and I cannot be satisfied that a fair-minded and informed person might reasonably apprehend that the Tribunal might not have brought an impartial mind to bear on the decision: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 at 344; and NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 214 ALR 264 at [14]. 14 In relation to the reliance upon s 424A of the Act, the appellant has not been able to identify any "information" other than the independent country information. The federal magistrate, correctly in my view, held that the reasons for the Tribunal affirming the decision of the delegate were founded upon information either given by the appellant to the Tribunal at the hearing (thereby falling within s 424A(3)(b)) , or upon independent country information (thereby falling within s 424A(3)(a)). Accordingly there is no basis for this ground of appeal being successful. 15 The question then arises as to whether or not the Tribunal committed an error in respect of the Appellant S395/2002 216 CLR 473 issue. In the present case the Tribunal's observations were premised on its findings of fact concerning the scope and depth of the appellant's religious commitment and activities in China and Australia. As the Tribunal has not formed the view that the applicant has any deep theological convictions that would impel her to reject the state-sanctioned church, this seems a reasonable solution. The applicant herself has never attended a state-sanctioned church and has no basis on which to say that it would not meet her spiritual needs (not that she claimed this), other than having been told by Mrs Wei that such churches are "very bad". The Tribunal notes that the bibles in use by the state-sanctioned churches "differ very little from other versions available outside China and the Bible text remains sound and intact. It is normal for Patriotic churches to display crosses, crucifixes and portraits of Jesus" (UK Home Office, Country Assessment: China, April 2006 para 6.74). 17 The Tribunal asked itself the correct question --- did the appellant have a well founded fear of persecution on the grounds contended by her? The Tribunal clearly made an inquiry which was directed to the individual appellant and was fact-specific. The Tribunal did not ask (as in Appellant S395/2002 216 CLR 473) whether it was possible for the appellant to live in China in such a way as to avoid adverse consequences. The Tribunal did not ask whether the appellant could avoid persecution. It did not set out any requirement that the appellant modify her behaviour in order to practice her Christianity in China. In my view, an accurate assessment of the factual findings made and reasoning recorded in the Tribunal's reasons for decision discloses no error in this regard. 18 Finally, in submissions before me today reliance was placed upon s 425 of the Act. It seems to me in the circumstances and on the material before the Tribunal and the Federal Magistrates Court that the appellant had ample opportunity to give evidence and present arguments relating to the issues that were before the Tribunal. 19 Another issue was raised today of there being difficulties with the interpreter before the Tribunal. This matter has not been raised before. No specific instances were provided to demonstrate the difficulties. No evidence or material is before me which would enable me to conclude that the appellant was not given a fair hearing or was not able to put her submissions to the Tribunal or be given the opportunity to be heard on the basis of difficulties with the interpreter. I find no basis upon which this Court could intervene upholding this new ground raised today, there being no factual foundation for it. 20 Accordingly, in my view the appeal should be dismissed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | review of a decision of the refugee review tribunal ('the tribunal') whether tribunal committed an error of law whether any evidence of bias whether comments of tribunal amounted to a requirement that the appellant change her behaviour to avoid persecution no error disclosed migration |
On 24 February 2005 a judge of this Court granted leave to serve the proceeding out of Australia upon each of the first to fourth respondents respectively. The Application and Statement of Claim were served thereafter upon each of those respondents. The first and third respondents challenge service generally, whereas the second respondent objects to service in relation to paragraphs 2 and 3 of the Details of Claim. The second respondent does not now challenge service in relation to paragraphs 1 or 4 of the Details of Claim. The fourth respondent does not seek relief on the motion. 4 This is a review of the original decision to grant leave by way of rehearing ( Bray v F Hoffman-La Roche Ltd [2003] FCAFC 153 ; (2003) 130 FCR 317 at [53] ). Evidence has been tendered which was not before the judge who made the original order and I have had the benefit of detailed submissions from both sides. The substance of the motion requires the application of O 8 r 2 and, in particular, O 8 r 2(2). The applicants on the motion do not raise any issue as to compliance with to O 8 r 2(2)(a) or (b). It is submitted that the applicants in the proceeding (together called Akai) do not have a prima facie case for the relief sought within the meaning of O 8 r (2)(c). The burden of establishing a prima facie case lies upon Akai who obtained leave to serve out of the jurisdiction. 5 Akai initially took a preliminary point based upon lack of evidence which was overtaken by events, but which, in any case, did not take account of the nature of the proceeding on the motion. 6 It is necessary to bear in mind that the requirement of a prima facie case has to be met at the outset of proceedings, usually on an ex parte basis. A prima facie case in this sense does not amount to a prediction of an outcome or a conclusion that a finding for the applicant is the likely ultimate result of a case. It is necessary that there be a foundation established for an arguable case ( WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 per Beaumont J at 476; Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549). It has been said that 'a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed' ( Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager appointed) (1991) 30 FCR 102 at 110; Bray v F Hoffman-La Roche Ltd (above) per Carr J at [17]; and Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2005) 212 ALR 551 at [23]. See also Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 per Heerey J at 390. The case concerns financial dealings by Akai Australia in the months prior to the appointment of the provisional liquidator. Akai Australia was a wholly owned subsidiary of a Japanese company Akai Electric Limited (Akai Electric), the ultimate holding company of which was a Hong Kong company, Akai Holdings Limited (Akai Holdings). Akai Australia was, until shortly before the appointment of the provisional liquidator, the sole distributor in Australia and New Zealand of the 'Akai' brand of electronic goods. It had offices in Australia and New Zealand and a number of employees. Its head office was in Sydney. Its stock was imported from suppliers in various locations throughout south-east Asia. 8 By the second half of 1999 the Akai group of companies was in financial difficulty. An arrangement was come to between that group, on the one hand, and a group of companies of which the third respondent, The Grande Holdings Limited (Grande Holdings), a Bermudan company listed on the Hong Kong Stock Exchange, was the ultimate parent. The arrangement involved, amongst other things, the second respondent, The Grande Group Limited (Grande Group) managing the business of Akai Holdings, its subsidiaries and affiliates. That part of the arrangement was formalised by an agreement dated 12 November 1999 between Akai Holdings and Grande Group (the Agreement). In consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Akai has transferred to Grande all authority to manage the Business of Akai. It is intended that this agreement will evidence that Grande is authorized to perform all actions, execute all documents, and otherwise conduct the Business of Akai in such a manner as Grande shall consider appropriate, in the sole discretion of Grande, including, without limitation, (i) managing all financial matters of Akai, (ii) managing all legal matters involving Akai, including defending all litigation to which Akai is a party, or bringing lawsuits on behalf of Akai against third parties, retaining outside counsel and consultants to represent Akai in litigation proceedings for or against Akai and filing all documents and taking all action in such proceedings on behalf of Akai, (iii) executing and filing on behalf of Akai claims Akai has against third parties, (iv) causing Grande employees to be responsible for the financial, accounting, operational, legal, corporate, administrative or other matters involving Akai, and (v) generally conducting all aspects of the Business of Akai in such a manner as Grande shall consider appropriate. The Grande group of companies also included Toyo Holdings Limited (Toyo), another Hong Kong listed Bermudan company. 10 Christopher Ho (Ho), the first respondent, was the President and Group Chief Executive of Grande Holdings. He indirectly controlled 74.9 per cent of the issued share capital of Grande Holdings. Ho signed the Agreement with Akai Holdings for Grande Group. 11 There is ample material in the evidence that, if accepted, would establish that the provisions of the Agreement were implemented as far as Akai Australia was concerned in the sense that the executives of Akai Australia acted upon instructions from persons connected with the Grande companies. There is a live issue as to responsibility amongst the respondents for the instructions which were acted upon. 12 There is a prima facie case, which has not seriously been challenged, that Akai Australia was insolvent by at least 12 November 1999 and continued to be insolvent thereafter. There is an ample prima facie case that there were reasonable grounds to suspect that insolvency at all material times. The Statement of Claim identifies three causes of loss to Akai Australia thereafter: general insolvent trading; a transaction on or about 17 January 2000 known as the 'Capetronics transaction'; and events in February 2000 known as the 'Silver Phoenix transaction'. There is a prima facie case that each involved vulnerable transactions, as pleaded, causing loss. 13 The first basis for relief (as appears from paragraph 1 of the Details of Claim) is the shadow director or officer basis. Ho and Grande Holdings deny the existence of a prima facie case against either of them respectively. There is no evidence of any direct instruction from Ho to any of the Australian executives leading to any of the impugned transactions. There is no evidence of any express instruction in the name of Grande Holdings to any Australian executive in relation to the impugned transactions. The fourth respondent, Michael Binney, gave most of the relevant instructions, although each of Messrs Yuen and Tony Lam did give instructions to, or make requests of, the Australian executives. There is no direct evidence that any of Messrs Binney, Yuen or Lam were officers of Grande Group. Nonetheless, counsel for Ho and Grande Holdings submits that the only reasonable inference to be drawn from the circumstances is that such instructions as were given to the executives of Akai Australia were given by virtue of the power in the Agreement with the authority of Grande Group. It is said that there is no occasion to, nor basis for, attributing any different or wider authority. 14 Counsel for Akai submits that there is a body of evidence which points to the inference that Messrs Binney, Yuen and Lam were each, in fact, acting upon instructions given to them by Ho on behalf of Grande Holdings. There is a sound factual basis for the submissions by counsel for Akai bearing in mind the interlocutory nature of this proceeding and the admissibility of hearsay evidence ( Bray v F Hoffman-La Roche Ltd (above) at [58]). 15 Binney made it clear at his public examination that he acted upon the instructions of, and reported to, Ho in connection with the affairs of Akai Australia. There is documentary evidence of the direct involvement of Ho in decision making in relation to the Silver Phoenix transaction. There is also documentary evidence that Ho was effectively in charge of negotiations concerning the refinancing and restructuring of the whole Akai group, including Akai Australia. Paragraph 26 of the Statement of Claim particularises a number of actions of officers connected with the Grande companies other than Binney related to the giving of instructions to officers of Akai Australia. Although there appears to be an error in describing Mr Tony Lam as a director of Grande Holdings, there is material in the evidence to support the contention that each of the parties particularised (including Mr Tony Lam) was acting as an officer of Grande Holdings or upon the instructions of Grande Holdings in relation to the affairs of Akai Australia. In particular, this applies to Yuen. 16 Nonetheless, the point remains that the Agreement underpinned the dealings and can be seen as the legal foundation for giving and receiving the instructions. Counsel for Ho and Grande Holdings makes the point that the involvement of Ho and Grande Holdings in negotiations concerning the overall restructure of the worldwide Akai Group, including the relevance of that restructure to Australia, is a different subject from, and should not be confused with, the day to day administration of the Agreement which it is submitted formed the basis of the dealings with Akai Australia. 17 A shadow director of a company includes a person who is not validly appointed as a director where the directors of a company are accustomed to act in accordance with the person's instructions or wishes ( Corporations Act 2001 (Cth) (the Act) s 9). There is authority that a corporation can be a shadow director ( Standard Chartered Bank of Australia Ltd v Antico (1995) 131 ALR 1; (1995) 38 NSWLR 290 at 323). . 18 A prima facie case has certainly been established that the directors and officers of Akai Australia regarded themselves as bound to follow the instructions of Grande Group during the relevant period. The question is whether there is a prima facie case that they were accustomed to act in accordance with the instructions or wishes of Ho and Grande Holdings. The mere fact that Grande Group was a subsidiary of Grande Holdings and that Grande Holdings was accustomed to act in accordance with the instructions or wishes of Ho would not be sufficient to establish such a case ( Standard Chartered Bank (above) at 324B and 327G). It seems to me, however, that a possible view of the facts at a prima facie level is that the directors and officers of Akai Australia were prepared to, and did, accept instruction from those whom they regarded as speaking for the Grande group of companies as a whole and, in particular, from those speaking with the authority of the ultimate holding company, Grande Holdings, and its effective controller, Ho. Binney does not appear to have been a director or officer of Grande Group and the communications, generally speaking, do not purport to emanate from that particular company. I have already referred to the evidence of involvement of officers acting on behalf of Grande Holdings. 19 In my opinion, there is a prima facie case that Grande Holdings was a shadow director of Akai Australia. I am not persuaded that the same conclusion should be reached in relation to Ho. It needs to be borne in mind that the question is not one of actual or ultimate control by Ho but, rather, concerns the propensity of the local executives to act upon the instructions and wishes of Ho. I cannot see a sufficient basis for raising an arguable case that Ho gave any direct instructions to any such executive, or that there is a proper basis upon which it could be concluded that those who did give instructions gave them in the name of Ho. Even if there were, there is nothing to indicate that Ho was acting as an individual rather than as the chief executive of Grande Holdings. 20 However, paragraph 1 of the Details of Claim also alleges that Ho and Grande Holdings are deemed officers of Akai Australia. It would follow from what I have already said that, in the particular circumstances of this case, there is a prima facie case in relation to Grande Holdings. The more important practical question is whether the same can be said in relation to Ho. The relevant allegation appears in paragraph 30 of the Statement of Claim, although there was little separate attention paid to the point during the course of argument. 22 The particular definition of 'officer' was introduced to the Act in 1999 by the Corporation Law Economic Reform Program Act 1999 (Cth). However, like issues have arisen in relation to similar provisions at various times. A useful summary appears in the judgment of McColl JA in Forge v Australian Securities and Investments Commission (2004) 213 ALR 574 at [183]---[195]. A very wide application was given to the definition by Santow J in Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission (ASIC) v Adler [2002] NSWSC 171 ; (2002) 168 FLR 253, (2002) 41 ACSR 72 at [55] ---[75]. There does not appear to have been any discussion about that aspect of the judgment on the appeal ( Adler v Australian Securities and Investments Commission [2003] NSWCA 131 ; (2003) 179 FLR 1, (2003) 46 ACSR 504). Austin J also recently discussed some former similar provisions in Australian Securities and Investments Commission v Vines (2006) 55 ACSR 617 at [1030]---[1056], [1123]---[1131], [1266]---[1276] and [1415]---[1425], although the factual situation in that case differed substantially from the present facts. 23 The facts in Australian Securities and Investments Commission v Adler are somewhat closer. Adler was a director of HIH Insurance Limited (HIH) from 16 April 1999 to 26 February 2001. He joined the Investment Committee of HIH on 2 June 1999 and was a member of that Committee throughout 2000. HIH Casualty and General Insurance Co Limited (HIHC) was a wholly owned subsidiary of HIH. Adler had no office in that company. It was held that Adler was an officer of HIHC by virtue of his participation in decisions by the Board of HIH and the Investment Committee of HIH affecting the affairs of HIHC. It was found that he was one 'who makes or participates in making, decisions that affect the whole, or a substantial part, of the business of HIHC', namely investment decisions, and also, as a director of the parent HIH, had at the relevant times 'a capacity to affect significantly the corporation's (HIHC's) financial standing'. 24 That reasoning is not directly applicable to the present circumstances as it was a case of parent and subsidiary. However, it can be argued that the effect of the Agreement is to substitute the board of Grande Group for the board of Akai Australia for all practical purposes and it can also be argued that the position of Ho viz a viz Grande Group is more significant than was the role of Adler in relation to HIHC. Whilst any such conclusion, and indeed the correctness of the reasoning in Australian Securities and Investments Commission v Adler, may be debateable, the issue is appropriate to be settled at trial rather than at this interlocutory stage. I thus conclude that there is a prima facie case that Ho was a deemed officer of Akai Australia at the relevant time, although not a deemed director. As appears from paragraph 1 of the Details of Claim, there are relevant differences in the effect of being a deemed officer as compared with a deemed director as some consequences of being a director are not suffered by officers (eg, there is no liability under s 588G). All of paragraph 1 of the Details of Claim is predicated upon the respondents being directors or officers. 25 The next issue is whether there is a prima facie case that either Grande Group or Grande Holdings was a holding company of Akai Australia such as to lead to the potential contravention of s 588V as alleged in paragraph 2 of the Details of Claim. By s 9, 'holding company', in relation to a body corporate, means a body corporate of which the first body corporate is a subsidiary. Whether a body corporate is a subsidiary is determined by the application of ss 46, 47 and 48 of the Act. It is suggested that here each of Grande Group and Grande Holdings controlled the composition of the Board of Akai Australia and was in a position to cast, or control a casting of, more than one-half of a maximum number of votes that might be cast at a general meeting of Akai Australia. 26 In the case of Grande Group, it is alleged that the prima facie case followed from the Agreement and the control it could exercise directly and through Akai Electric; and, in the case of Grande Holdings, by virtue of its shareholding in, and control of, Grande Group. 27 In my opinion, no such prima facie case has been established. The Agreement is not capable of any reasonable construction which would give Grande Group any power of control of the composition of the Board or any power to cast or control the casting of votes at a general meeting of Akai Australia. Any suggestion that this could be achieved through Akai Electric is speculation not supported by any reasonable evidentiary base. I do not regard the decision of Santow J in Bluebird Investments Pty Ltd v Graf (1994) 13 ACSR 271 at 279---284 as providing any support to Akai in that respect. The case against Grande Holdings cannot rise above that against Grande Group. This affects the whole of paragraph 2 of the Details of Claim in the Application. 28 It is alleged in Paragraph 3 of the Details of Claim that each of Grande Group and Grande Holdings are vicariously liable for the conduct of Ho and Binney as employers and principals. Paragraph 72 of the Statement of Claim carries that allegation no further in substance. There have been no detailed submissions addressed to the point and no authorities cited in support of it. As submitted on behalf of the respondents, vicarious liability is a principle of the law of torts and its application in these circumstances is far from self explanatory. In the absence of an explanation, no prima facie case is established. 29 There is now no challenge to the paragraph 4 of the Details of Claim, being the claim against Grande Group arising out of the Agreement. 30 A prima facie case of one sort or another has been found against each of Ho, Grande Group and Grande Holdings. It is submitted for Akai that this is sufficient to lead to dismissal of the motion as a whole in view of the decision of the Full Court in Bray v F Hoffman-La Roche Ltd (above) . Counsel for the Grande parties accepts that I am bound by that decision, although the formal submission was made that the dissenting judgment of Finkelstein J is to be preferred. One set of claims was based on a series of communications between them and the Australian Aventis Respondents. The other was put on the basis that the Aventis Foreign Respondents were at all times active in Australia. The alternative possibility is that it is sufficient that a prima facie case for the relief sought is made out on one of the causes of action relied upon. As is mentioned above, that meaning is the remedy sought by the applicant in the proceeding rather than the relief sought pursuant to each cause of action to be relied upon. The court might be satisfied of those matters but nonetheless decide, in the exercise of its discretion, to refuse leave to serve outside of the Commonwealth. Alternatively, the court could give leave to serve outside the Commonwealth but make such leave subject to terms and conditions which the court considered appropriate. I am not presently able to think of any reason why a condition imposed on the leave to serve could not, in an appropriate case, limit the causes of action which the applicant was entitled to plead in the statement of claim or rely upon in the affidavit should a statement of claim not be appropriate (O 4 r 6). In my view, O 8 r 2(2)(c) requires the court to be satisfied that the party has a prima facie case for the remedy sought by the applicant in the proceeding. That relief is declaratory relief pursuant to s 163A of the TPA, damages pursuant to s 82(1) of the TPA, injunctions under s 80(1) and possibly, relief under s 87(1) of the TPA. I agree, for the reasons given by Carr J, that it was open to the primary judge to be satisfied that the applicant has a prima facie case for the relief sought by her in the proceeding within the meaning of O 8 r 2(2)(c) of the Rules. In their opinion, if an applicant makes out a prima facie case for the relief (that is, the remedy) he seeks the condition will be satisfied, whether or not that relief is based on more than one cause of action. I accept, of course, that this construction of the rule is open, though it is not the construction which I prefer. Moreover, it is a construction which has the potential to bring about some unusual results. Let it be assumed that three plaintiffs each bring an action for two causes, one in contract and the other in tort, and that each cause of action arises out of the same facts. In one case the plaintiff seeks specific performance of the contract and damages for the tort. This plaintiff will be required to establish a prima facie case in respect of each cause of action because each gives rise to different relief. The second plaintiff claims damages for breach of contract and tort and, let it be assumed, when properly assessed the measure of those damages will be the same for each cause. This plaintiff will only be required to establish a prima facie case for one cause of action. The third plaintiff is in the same situation as the second save that the measure of damages for each cause is different. It is not clear what this plaintiff must prove to satisfy the condition. He may be required to establish a prima facie case for each cause of action because the measure of damages is different. On the other hand, the answer may depend upon the manner in which this plaintiff has formulated his relief; for example, he may only seek "Damages" or he may describe the nature of those damages in a way which indicates they are different. Whatever be the position, I see no reason in principle why any one of these plaintiffs should be treated differently from the others. On the construction of O 8 r 2(2)(c) which I prefer each will be treated in the same way. That question can be illustrated by considering the position of Ho. The only relief sought against him is in the first paragraph of the Details of Claim. I have held that there is no prima facie case against him in relation to paragraphs 1.1 and 1.2. I have found that there is a prima facie case against him in relation to part of paragraph 1.3. It can be concluded that a case against Ho has been made in relation to the relief identified in paragraph 1.5, namely, orders pursuant to s 1317H of the Act requiring him to compensate the first applicant in respect of damages resulting from such contraventions. When the Statement of Claim is considered (as it should be in view of its incorporation in the Details of Claim) it is clear that those orders relate to the three heads of loss earlier identified, namely, general insolvent trading, the Capetronics transaction and the Silver Phoenix transaction. Indeed, that relief, in substance, is also sought in paragraph 1.2. 32 If, in substance, the one form of monetary compensation is sought by way of relief based upon various causes of action, then the case is on all fours with Bray v F Hoffman-La Roche Ltd (above) . If not, then it seems to me that Bray v F Hoffman-La Roche Ltd (above) should be applied as if the principle related to each separate and independent form of relief. As pointed out by Branson J in Bray v F Hoffman-La Roche Ltd (above), the same practical result can be achieved by imposing terms. 33 I am satisfied that the relief sought in paragraphs 1.2 and 1.5, when understood in the light of the Statement of Claim, is, in substance, the same and can be regarded as the same relief for present purposes. Thus, Ho is not entitled to have service upon him set aside in any respect. I am not disposed to impose terms at this stage limiting the effect of service by excluding the shadow director allegations. The underlying facts are likely to be similar in relation to all aspects of paragraph 1 of the Details of Claim and a decision as to whether that part of the claim should be struck out is best made in the context of the overall management of the case. Consideration will also need to be given to paragraphs 1.4 and 1.6. 34 I take a different view in relation to paragraphs 2 and 3. It is questionable whether the relief sought is the same relief as that involved in paragraphs 1 and 4 and, in my opinion, is sufficiently distinct from it to make it unnecessary and undesirable that an overseas party should be put to the trouble and expense of coming to Australia to defend. 35 I have found that there is no prima facie case against Grande Group pursuant to paragraphs 2 or 3 of the Details of Claim. Grande Group does not challenge service in relation to paragraphs 1 and 4 of the Details of Claim. On one view, the substance of the relief sought in paragraphs 1, 2, 3 and 4 of the Details of Claim is the same --- designed to recoup the identified losses. If that were so, Bray v F Hoffman-La Roche Ltd (above) would indicate that Grande Group is not entitled to relief on the motion --- otherwise then pursuant to the general discretion. I am not satisfied that the relief sought in paragraphs 2 and 3 of the Details of Claim is identical to that sought in paragraphs 1 and 4. I am prepared to set aside service in relation to paragraphs 2 and 3. Even if I am wrong in that, I would achieve the same result by imposing terms. 36 Grande Holdings is implicated in relation to more of paragraph 1 of the Details of Claim than Ho and is in the same position as Grande Group in relation to paragraphs 2 and 3. 37 The Application and service of the Application upon each of Grande Group and Grande Holdings will be set aside in so far as paragraphs 2 and 3 of the Details of Claim are concerned. Subject to submissions to the contrary, the Application should be amended to delete paragraphs 2 and 3 of the Details of Claim and the Statement of Claim should be amended accordingly. As the major relief sought in the motion has not been granted, but there has been a measure of success, 50 per cent of the costs of the respondents to the motion (the applicants in the proceeding) will be the applicants' costs in the cause. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | service outside the jurisdiction whether prima facie case whether shadow directors and officers whether deemed holding companies practice and procedure corporations |
Each appeal is against an assessment under the Fringe Benefits Tax Assessment Act 1986 (Cth) ("the FBTA Act "), the three years in question being those ended 31 March 2001, 2002 and 2003. The proceeding was conducted on the basis that no distinction was to be made between the years to which the three appeals relate. 2 The applicant is a not-for-profit company, limited by guarantee, which provides private health insurance. It is not suggested that such an activity is charitable as such; rather, the applicant's claim to be a charitable institution is based upon the limitation, in its rules, of the class of persons whom it may accept as members of the fund which is conducts. Broadly, that class is confined to serving members of the Navy (and other arms of the services) who have dependants and other identified categories of persons having particular connections with the Navy (or the other arms). The applicant contends that its objects are thus to promote the efficiency of the Defence Forces and thereby manifest a concern with the benefit of the community as a whole sufficient to invoke the fourth class of charitable purposes identified in Lord Macnaghten's speech in Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531. On 4 January 1955 a memorandum over the hand of T J Hawkins, "Secretary" (possibly of the Department of the Navy) to the Assistant Secretary, Department of the Treasury, referred to the proposal for the formation of a Naval Health Benefits Society. They are also subject to frequent transfers from state to state, shore to sea, and to overseas locations and because of this factor, many are deprived from obtaining the benefits receivable by other members of the community, brought about by their difficulty in maintaining continuity of membership of local societies and also the lack of facilities for becoming a member of such a society when serving in certain posts. It is therefore thought most desirable that an organisation be provided which will ensure that Naval personnel receive in respect of their dependants the benefits applicable to other members of the community, and at the same time allow him a concession in respect of his own non-insurable status. The lower deck committee of the R.A.N. Central Canteen Fund has also considered this matter and has recommended that a substantial grant be made from Canteen Funds to establish the society. Implementation of the proposal was approved by the Naval Board on 6 May 1955. 4 The Society was duly formed. The constitution provided for the establishment of a medical benefits fund and a hospital benefits fund. It provided for the circumstances in which benefits would be paid to members or their dependants. It set out the contributions which members were required to pay. It provided for general meetings of members, and for other matters commonly found in the rules of voluntary associations. If the Society were dissolved, its funds, property and assets remaining after the payment of outstanding claims, debts and liabilities were to be applied "as the Naval Board shall direct". At its formation and, it appears, throughout its life, the Society was a true association of members. Its particular feature, of course, was that the contributions which members made as such went into the fund from which benefits were paid in the case of illness or injury. 5 As appears from the provision defining eligibility for membership, a particular feature of the Society was that a member of the naval forces without dependants was not eligible. This was consistent with one of the originating purposes which led to the foundation of the Society, and to which I have referred above, namely, to provide a scheme which would, for an attractive family contribution rate, provide cover only for dependants. As I have said, serving members of the Navy did not (and still do not) require health insurance for themselves. Another feature of the Society which should be noted is that civilians employed in the Department of the Navy were also eligible for membership. Such persons were not provided with medical and hospital benefits as part of their employment, and were, in that respect, in the same position as members of the community having no connection with the Navy. However, apparently it was thought appropriate to include within the range of persons who would be eligible for membership of the Society the civilian employees of the department. Accordingly, there was a contribution rate for civilian members without dependants (whereas there was, for the reasons I have explained, no such rate for naval members without dependants). The family contribution rate for civilian members was higher than the corresponding rate for naval members. 6 The Society apparently operated as intended for many years. However, in 1972 the Society found itself in circumstances which, according to the evidence, made it "technically insolvent". As a result, it sought a loan of $30,000 from the RAN Central Canteens Board, and that loan was approved on 27 September 1972. On 14 June 1973 the loan was renewed, at which time the board also agreed to guarantee the operation of the Society "until it is overtaken by the National Health Scheme in July, 1974. " It seems that the loan was never repaid, and was effectively forgiven, and treated as a donation. 7 In 2000, substantial changes were effected to the National Health Act 1953 (Cth) ("the NH Act "), under which the applicant was registered. These changes were introduced by the Health Legislation Amendment Act (No 3) 1999 (Cth) ("the 1999 Act "). At the same time, s 73AA was introduced into the NH Act , by which an existing unincorporated registered organisation (such as the Society) was required to "arrange for the health insurance business of the organization to be transferred to a company of a kind that would be eligible under section 68 to apply for registration as a health benefits organization". 8 As a result, the applicant was incorporated on 2 May 2000. There is no evidence of the mechanism by which the assets and liabilities of the Society were taken over by the applicant, but, in practical terms, it appears that the applicant thereafter operated in the same way as the Society had done previously. 9 In the years to which the proceeding relates, the applicant was a registered organisation within the meaning of the NH Act . The NH Act prohibited the carrying on of health insurance business save by a registered organisation. An "organisation" was "a society, body or group of persons, whether corporate or unincorporate, which conducts a health benefits fund". Rather, it referred to membership of, or to membership as a contributor of, a fund. It seems that the concept of "membership" which the definition of "restricted membership organisation" contemplated was not that of membership of the organisation, but rather that of membership of the health benefits fund conducted by such an organisation. As a company limited by guarantee, the applicant did not itself have any such restriction on eligibility for membership as the definition contemplated. As it happened, the applicant had one member only (a matter to which I shall return). What the applicant (in common it seems with other registered organisations) referred to as its "members" were in fact its contributors, ie persons who, by their contributions, paid premiums for health insurance at various levels, or, in other words, the applicant's customers. Save where the context requires otherwise, in these reasons where I refer to "members", I mean members in this sense. 11 Many of the provisions of the NH Act contemplated that a registered organisation would have a "constitution". Without restricting the meaning of the above it is expressly declared that rights and privileges which may be accorded to contributors to the funds conducted by the Company may be dealt with by rule or regulation. If the applicant were dissolved, all its funds, property and assets that remained after payment of outstanding claims, debts and liabilities, were to be applied to another organisation or institution with objects similar to that of the applicant, which prohibited the distribution of income and assets to its members, and which was exempt from the payment of income tax. A person might have become a member of the applicant (ie as distinct from a member of the fund) by agreeing to be bound by its constitution, by the Chief of Naval Staff agreeing that he or she may be a member and by the directors admitting the person to membership. (The applicant had one member only: NHBS Company Ltd, which in turn had seven members, namely, the delegate of the Chief of Navy, three approved serving Navy personnel, two non-executive members and a Managing Director (who was also the Managing Director of the applicant)). 13 The management of the applicant was under the control of a board of directors, in the membership of which there were four serving Navy personnel. The Chief of Naval Staff might remove any director. The applicant had a general manager, who was appointed by the board with the approval of the Chief of Naval Staff. There was a Health Benefits Fund, to which had to be credited the whole of the income arising out of the carrying on by the applicant of the business of a registered health benefits organisation. No amount could be debited to that fund other than payments of benefits to contributors or their dependants, costs incurred in the carrying on of a business of a registered health benefits organisation, and other related activities. They can opt to be a Navy Health member by choosing to pay the Civilian Contribution rates. A member paying the Defence contribution rates can leave the Defence forces and become a Civilian member. If they rejoin the Defence forced they are eligible to return to a Defence membership which offers a discounted rate to the Civilian membership. g. Any person, who at some stage is eligible to join Navy Health, is able to join at any stage, regardless of wether their eligibility status at the particular time of joining has changed. h. Other such persons approved by the Board. It was common ground that par a. made eligible for membership any person employed full-time in the Navy, Army or Air Force, other than a person without dependants. It may seem curious that a person employed directly by the Navy, Army or Air Force who had no dependants was not eligible for membership. This arose from the fact that a serving member of the armed forces was comprehensively covered as part of the conditions of his or her service for medical and hospital treatment in the event of illness or injury and would, therefore, have had no need for privately arranged health insurance. That cover, however, would not have been available in the event of an illness or injury befalling one of the serving member's dependants, such as a member of his or her immediate family. By offering family cover only in such circumstances, the applicant effectively provided cover for the dependants, but not for the serving member. Thus the serving member without dependants was not within the applicant's cohort of potential customers. 15 The rules of the applicant also covered such matters as membership (ie of the fund), contributions, benefits and claims, and contained detailed tables of benefits applicable in particular circumstances. Save in the case of a member whose services had been terminated for misconduct, discreditable service or inefficiency, a member who ceased to be employed on full-time duty in the Navy, Army or Air Force, or in the department, was eligible to continue membership of the fund. Where a member died, his or her dependants might have continued unbroken membership of the fund, and were deemed to be civilian members, but might have, for a period of 12 months after the death of the original member, continued making contributions at the defence rate. Where a dependant of a member had attained the age of 22 years and was no longer dependant, he or she might have continued membership in his or her own right in accordance with the rules. Likewise, where a spouse was no longer a dependant, he or she might have continued membership in his or her own right in accordance with the rules. Where the suspension has been approved in writing by the fund, members will be advised of the conditions relating to waiting periods and pre-existing condition rules which may be applied upon reinstatement of membership. The agreed suspension period is not subject to change without written notification to and written confirmation from Navy Health. There were many variations of "Top Hospital" cover, some of which were called, for example, "Top Hospital Saver 1 with Top Extras", "Top Hospital Saver 1 with Premium Extras" and "Top Hospital Saver 1 with Single Selection". There was a "Basic Hospital" table, together with other tables involving basic hospital cover, including, for example, "Basic Hospital with Top Extras" and "Basic Hospital with Budget Extras". There was a "Pay & Save" table, a "Couples Choice" table, a "Lifestyle" and a "Couples Econo Cover" table. Those to which I have referred were some only of the more than 30 tables for which the rules provided. 18 The applicant placed in evidence before me a copy of its health cover guide and application forms dated 1 April 2005. Although that publication is subsequent to the years to which the proceeding relates, both parties agreed that I might take it as indicative of the kind of guide which the applicant published in the years in question. Navy Health began its life in 1955 to provide for the unique needs of defence personnel. The membership eligibility criteria has since extended to include others who have provided support to the defence community. Navy Health is a fund belonging to the members. It is not for profit and is registered as a Restricted Membership Organisation under the National Health Act . Approximately 30,000 people have chosen Navy Health as the fund of their choice. Under the headings "Advantages of Private Health Insurance", "Rebated Premiums", "Lower Premiums --- For Life" and "Save on your Tax" the guide makes broad promotional and informational statements about private health insurance as such, without any particular focus upon circumstances which set the applicant apart from other private health insurance providers. On discharge you will receive immediate benefits and will be entitled to the discounted family premiums for a further 12 months.... The guide then refers to "Other Services" provided by the applicant, being travel insurance and total and permanent disability insurance (each provided through the agency of a separate insurance company) and home loans, available through the mortgage broking arm of the applicant. 21 The guide next turns to a detailed explanation of the medical and hospital benefits provided by the applicant, under the various tables. Details of premiums are set out. A feature of these is that there are separate tables covering "Military Family Premiums" and "Civilian Family Premiums". The consequence of the fact that a member who is enlisted in the armed services will not, himself or herself, be covered is to be seen in a comparison between the military family premiums and the civilian family premiums. Taking the example of top hospital cover, the non-rebated fortnightly contribution for military family premiums is $86.05, whereas the corresponding contribution for civilian family premiums is $101.30. This is regarded as the equivalent of private health insurance and as such no Lifetime Health Care penalty applies to members of the ADF when they separate, providing they take out private health insurance within 90 days. For the serving member waiting periods and pre-existing ailment restrictions can be avoided if you join within 90 days of discharge and the membership application takes effect from the day following the discharge. Families with one serving member can opt to pay the Military family premium. This premium excludes the cost of one adult and this adult can NOT make any claims on the fund. Refer to the Military family premium table on page 24. Families with two serving members can also opt to pay the Military family premium. This premium excludes the cost of two adults and these two adults can NOT make any claims on the fund. Refer to the Military family premium table on page 25. Benefits are based on the Australian Exchange rate as at date of service. Any claims for services rendered overseas must be fully paid and receipted prior to claiming. We caution members, that these benefits may not be sufficient to give reasonable cover for hospitalisation in many countries. Medicare and Gap Medical Benefits are not payable and as a result the patient is solely responsible for the cost of all associated medical services. As a consequence we strongly advise all members to link their normal health insurance with Navy Health Travel Insurance when travelling overseas. (Refer to page 4 for further details. In it, the applicant's Managing Director provided his "Review of Operations". He referred to matters of financial and economic efficiency, both in the trading result of the applicant itself and in relation to the private health insurance sector as a whole. He referred in particular to the need for the continuation of Federal government support by way of the 30% rebate on private health insurance contributions. There is a considerable difficulty in making direct comparison between the various insurance products offered by the open funds compared to the restricted funds. However, there is sufficient evidence to demonstrate that the latter offers significantly more attractive benefits than the open funds at highly competitive contribution rates. There has been a level of market driven rationalisation over the past 12 months with Goldfields and IOR being acquired after suffering financial difficulties and NRMA (SGIC) and IOOF being taken-over in an open commercial environment. In this context, it was very pleasing to note that Navy Health was rated in the August/September edition of the Choice magazine in the top four in each of the hospital tables assessed by the Australian Consumers Association. The competitiveness of the restricted funds can be attributed in a large part to two major initiatives. In 1994 when the then Labor Health Minister, Graeme Richardson, threatened to reduce the number of registered funds to "no more than twelve" the restricted funds were instrumental in founding the Australian Health Service Alliance (AHSA), which after controlled expansion, now counts 27 funds in its membership. AHSA as an umbrella buying group and data manager is the second largest purchaser of health services in Australia. This ensures that AHSA on behalf of its membership is able to negotiate very competitive hospital and medical contracts. A capacity that none of the member funds would be able to address individually. AHSA, by pooling the utilisation data of all its member funds has an enviable performance and cost history on providers and is regarded by the Commonwealth as the source of the most reliable and best quality, utilisation, cost indices and trend analysis data. Within the same approximate time-from the restricted funds acquired a specialist software house, Hamb Systems Limited, from National Mutual. Today there are 23 funds utilising the second version of the Hamb's Software and this has enabled containment of what would otherwise be an extremely volatile cost centre. The restricted funds have appreciably improved their representation politically and to Government bureaucracy by strengthening the resources of their dedicated industry body, the Health Insurance Restricted Membership Association of Australia (HIRMAA). The financial difficulties encountered by a number of funds have resulted in the Government regulator, Private Health Insurance Administrative Council (PHIAC), institute a more formal and regulated review process of each individual fund. Navy Health had a three day review conducted in December 2003. The Company was pleased with the process and the outcome and the various recommendations emanating from the review will provide the foundation for another level of improvement in our governance and compliance practices. Overall, the company has invested significant resources into ensuring that our corporate governance meets the highest standards and there are many examples where the company has shown considerable innovation in embracing advanced techniques to underpin our objective of "being second to none" in this area. Manifestly, the applicant recognised the reality that it was a commercial enterprise operating in a competitive market, notwithstanding that it was a fund of restricted membership eligibility, and that it was a "not- for-profit" organisation. Indeed, the operating surplus for the applicant's fund for the 12 months to 30 June 2004 was $2,261,000 on contribution income of $26,977,000. 25 It is common ground that, in legislation of the kind presently before the court, a "charitable" institution is an institution which is charitable by reference to the preamble to the Statute of Elizabeth, and the four classifications propounded by Lord Macnaghten in Pemsel . The contentious question is whether the applicant was such an institution. It was not suggested by the respondent that the applicant was not an institution. To determine whether it was "charitable" requires a consideration of its objects, to be discerned from its constitution, its rules and its activities. As stated in its constitution, the single purpose of the applicant was to conduct a health benefits fund. To secure a finding that its objects were charitable, therefore, the applicant needs to go beyond the constitution to its rules and activities. I shall consider each of these in turn, and certain other circumstances upon which the applicant relied in support of its proposition that it was a charitable institution. 27 Unlike the other health insurance funds referred to in the evidence, the applicant offered premiums for "military families" which were, in the examples before the court, some 15% less than the corresponding premiums which it charged for civilian families (or 30% less where the military family had two serving members). This distinction was a reflection of the circumstance that, in the case of a military family, the member himself or herself was not covered. To take the example of a family of four, whereas the civilian family would have all four members covered by benefits under the fund, the military family would have three members only so covered (or two members only if two members of the family were serving members of the forces). This reduced level of coverage was reflected in a comparison between military family premiums charged by the applicant and corresponding premiums for family cover charged by other general health benefit organisations: the former were cheaper, by about 18% on average in the case of the top product tables and by about 12% on average in the case of the basic product tables. The point which the applicant made was that its premiums were specifically designed to meet the needs of families, at least one of whose members was a serving member of the forces. It was submitted that, in the case of other health benefits organisations, the option of securing, for a competitive premium, family cover which excluded one or more members of the family because their hospital and medical needs were provided by the Commonwealth, would not be available. In this sense, it was said, the applicant's products were specifically tailored to the needs of Defence Force (particularly Navy) families. 28 The applicant next relied upon the second of the two main reasons for the formation of the Society, namely, that it provided uninterrupted coverage for the families of its members when they travelled interstate and overseas. This was said to be a feature of the applicant's offerings which placed it apart from the generality of private health insurance funds. 29 It appears that there was no uniform practice amongst health insurance funds on the matter of the continuation of coverage where a member travelled interstate. The practices of four of the major general funds were the subject of evidence. One of them --- MBF --- was in the same situation as the applicant in that it provided uninterrupted coverage, at a single premium, wherever in Australia the member and his or her family happened to be. So was HBF, but, being a WA-based fund, local arrangements in that State did not apply to members in other States. The other two --- Medibank and BUPA --- had what were described as "state specific" premiums, which meant, I presume, that a member moving interstate was required to pay the premium which related to the State where he or she was at the time when each premium fell due. The coverage itself was uninterrupted. Clearly, depending upon the State from which, and the State to which, the member travelled, the move might involve a higher, a lower, or the same, premium. On this evidence, I could not conclude that a member of the applicant, of MBF or of HBF, would necessarily be better-off, in relation to interstate travel, than a member of one of the latter two funds. 30 Turning to the situation where a member and his or her family travelled overseas --- such as, for example, in the case of a serving member of the Navy who was posted to another country --- the starting point is to note that Australia has signed reciprocal health care agreements with New Zealand, the United Kingdom, Ireland, Sweden, the Netherlands, Finland, Italy, Malta and Norway. This meant that Australian residents were entitled to assistance with the cost of medical treatment required when in those countries, but the nature and extent of the entitlement varied from place to place. It appears that, in most if not all cases, some further coverage was required if the traveller desired to be covered to the same extent as would have been the case under existing private health insurance arrangements in Australia. 31 The applicant provided health benefits to members and their families who incurred health care expenses overseas. Benefits were those to which a corresponding entitlement arose under the particular level of cover to which the member in question had contributed, and were based on the exchange rate at the date of service. The applicant cautioned its members that the benefits so provided may not be sufficient to cover the expenses in fact incurred, and encouraged them to take out travel insurance. If such insurance were taken out, the applicant required the member to claim on that insurance first, and limited its liability for the payment of benefits to the sum necessary to bridge the difference between the amount paid by the insurer and the amount to which the member was entitled under the rules of the applicant. 32 With very limited exceptions, the four general funds mentioned in the evidence did not provide coverage for medical or hospital expenses incurred overseas. The respondent did not contend that the more favourable coverage provided by the applicant in this respect was in effect counterbalanced by less attractive service definitions or more costly premiums. I think the appropriate conclusion in the circumstances is that the applicant provided some assistance to its members in relation to overseas travel that was not generally available to contributors to other health funds. 33 Associated with the matter of overseas travel is the next point which the applicant emphasised: the conditions under which membership of a health fund may be suspended. I have set out the applicant's relevant rule in this regard at par 16 above. It will be seen that the fact of suspension, and the conditions attaching to suspension in particular cases, were wholly within the discretion of the applicant. The evidence of its practice in this regard is a statement in the affidavit of its Managing Director that the applicant permits suspension "while the serving member and their family are overseas and lifts that suspension on their return without potential hardship or inconvenience as to waiting periods or ineligibility due to pre-existing conditions". The four general funds referred to in the evidence provided for suspension of membership in circumstances more clearly defined. HBF permitted suspension for overseas travel of more than 8 weeks, with no upper limit. Members were required to re-activate their membership within 30 months of their return to Australia. Medibank permitted suspension for overseas travel of between 2 months and 4 years. A longer period of suspension was available on application, but only after the member had completed a 6-month intervening period of re-activated membership. The other two funds permitted suspension for overseas travel of between 2 and 24 months, after which, at MBF, members could apply for an extension of the suspension or, at BUPA, they could suspend for a further 24 months, but only after completing a 2-month intervening period of re-activated membership. In the case of both of these funds, members must have been in the fund for certain periods before qualifying for suspension. 34 If one looked only at the applicant's rules, one could not conclude that the applicant provided a more beneficial product than the other funds on the matter of suspension. Under those rules, a member's entitlement to suspend lay wholly in the discretion of the applicant. In the case of the other funds, there were more clearly defined rights, notwithstanding that they are subject to various conditions. However, looking also at what the Managing Director said was the applicant's practice, it seems that the discretion was generally exercised in favour of permitting serving members and their families to suspend, without further conditions, in the event of overseas travel. I think the appropriate conclusion is that this aspect should be added to the one previously dealt with in support of a general conclusion that the applicant's benefits were provided in a way that was, in practice, generally of greater utility to serving members of the forces than were the benefits of other funds. 35 The applicant relied also upon what were said to be special benefits provided to, or arrangements made in the case of, persons taking their discharge from the armed forces. In this respect, I need to consider first one aspect of the statutory framework which bore upon the circumstances of such persons. Under s 73BAAA of the NH Act , it was a condition of registration that an organisation comply with Sched 2. That schedule set up a system by which, unless a person had "hospital cover" by his or her 31 st birthday, the contributions which he or she was required to pay to a registered organisation for such cover had to be increased in accordance with a formula, such that, the longer the person was without hospital cover, the more expensive it would be for him or her to contribute for such cover if and when he or she chose to do so. Part of the formula provided that, if a person did have, but ceased to have, hospital cover, the contributions which he or she would be required to pay would increase by 2% for each year (calculated by reference to fractions of a year) that the absence of hospital cover continued. However, the first 730 days after a person ceasing to have hospital cover were not counted. The term "hospital cover" was so defined that a person would be taken to have such cover if he or she were included in a class of persons specified in the regulations. Regulation 6(1)(b) of the National Health (Lifetime Health Cover) Regulations 2000 prescribed, as a relevant class of reasons, members of the Australian Defence Force on continuous full time service whose health services were provided by the Force. The general effect of these provisions, relevantly to the present case, was that a serving member of the forces over the age of 31 was insulated from the risk that the contributions which he or she would eventually have to pay in the event of taking out private health insurance after discharge would increase each year in accordance with the legislative formula; and that he or she had a period of two years after discharge within which to take up private health insurance without being subject to the adverse impact of the formula. 36 In so far as the legislative and regulatory provisions to which I have just referred were concerned, the applicant was in no different a position from that of any other health fund. A discharging member of the forces could join any fund within two years and still be treated as having had lifetime health cover. However, there were several aspects of the products offered to such members by the applicant which, it submitted, set it apart from other funds. 37 For the single person, the policy of the applicant was not to enforce waiting periods and existing ailment restrictions, normally applicable in the case of a person newly joining the fund, so long as the person joined within 90 days after discharge from the armed forces. The same policy seems to have applied in the case of someone who wished to take up family coverage for the first time upon discharge. The period of grace allowed was shorter in the case of the other four general funds: 30 days for BUPA and two months for Medibank, MBF and HBF. Service in the armed forces was regarded by the applicant as equivalent to coverage at the highest level, such that the 90-day policy had the practical result that the discharging serviceman or woman could take up the highest level of coverage offered by the applicant within that period without waiting periods and existing ailment restrictions. It is said by the applicant that the other funds were less generous in this regard, but it is not clear to me from the evidence exactly what the position was there, and I do not make any finding about it. 38 As an incentive for discharging personnel to join the applicant's fund, the applicant offered coverage at the military family rate (where one family member was serving) for the first 12 months of civilian family coverage, so long as the full 12-month contribution was paid in advance. To reflect payment in advance, the applicant provided a further 4% discount on that first contribution. After the 12 months, contributions reverted to the normal civilian family rate. There appears to have been no corresponding provision made by the four general funds referred to in the evidence. 39 The next matter on which the applicant relied was the composition of its board, and the particular powers and functions which the Chief of Navy had in connection with the applicant. It is said that these indicated a continuing close relationship between the applicant and the Navy. It was pointed out that the Chief of Navy was not separately remunerated for his or her services in relation to the applicant, the implication being that the Navy itself was thereby assisting to keep the applicant's operating costs down, to the benefit of its members. The applicant also pointed out that although its potential membership was very wide, its practical focus was upon those directly or indirectly connected with the Navy itself. As is apparent from the passages to which I have referred above in the guide which it publishes, the applicant promoted itself as the most suitable fund for Navy personnel and Navy families. The evidence is that the applicant often had a promotional presence at Navy functions, and at places where Navy personnel, and their families, had cause to gather. 40 The applicant submitted that, quite apart from the matter of cheaper military family premiums, the benefits provided by the applicant at any given level of cover were more generous than those of the general funds under comparison. I have reviewed the material upon which the applicant relied in this regard, but ultimately I do not consider that I should make any such finding as a generalisation. The market for private health insurance was, it seems, quite competitive. The funds all had their own tables of benefits --- hospital, medical and ancillary --- and they all provided various conditions attaching to the receipt of those benefits. Whether one package would be more beneficial than another would, I consider, depend very substantially upon the circumstances of the contributor in question. For example, it was pointed out on behalf of the applicant that BUPA had longer waiting periods than the applicant for laser eye surgery, whereas HBF had longer waiting periods than the applicant for joint surgery. It would be quite unsafe for a court to conclude that one fund, overall, provided "better benefits" than another fund or all other funds. 41 The applicant also placed considerable reliance upon the history of its predecessor, the Society. The special circumstances which brought the Society into existence in the 1950s were said to bespeak a purpose of benefiting Navy families, particularly in so far as the Society was established by a grant from the Navy Central Canteen Fund. 42 Summarising the matters to which I have referred and upon which the applicant placed particular reliance, I would find first, that the applicant provided a product that was especially beneficial to serving members of the forces with dependants, in the sense of offering them a limited form of cover not generally available; secondly, that coverage under the applicant's fund continued while a member (and/or his or her dependants) travelled overseas, in which respect the applicant's products were superior to those offered by the general funds; thirdly, that the applicant generally offered a facility of suspension in a way that was of greater utility to serving members, and their dependants, than any corresponding facility offered by the general funds; fourthly, that the applicant's arrangements for the transition between military and civilian membership (or between an absence of membership in the case of serving personnel without dependants and civilian membership for such personnel) were generally more favourable than like arrangements elsewhere; fifthly, that there was a close relationship between the applicant and the Navy at board level; sixthly, that the applicant concentrated its promotional efforts amongst Navy personnel and Navy families; and seventhly, that the applicant's origins, in the formation of the Society in the 1950s, involved a conscious endeavour to establish a system that would be of particular benefit to Navy personnel, as undoubtedly it proved to be thereafter. However, I also find that the applicant's fund was conducted under conventional commercial arrangements and that the members of the fund derived no greater benefits than were fairly reflected in the premiums which they paid, notwithstanding that it was no part of the applicant's purpose to earn a surplus or profit for the benefit of its shareholder. 43 The matters to which I have referred in the previous paragraph might be regarded as qualitative indicators of the applicant's activities, and therefore of its object. Quantitative indicators must also be considered. 44 The applicant was a restricted membership organisation. The nature of the restrictions on its membership gave definition to the kind of fund which it conducted, and thereby to its purposes. In the list above, I have identified the second appearance of each sub-clause with the subscript " 2 ". One may now see that the applicant had what I shall call primary classes of membership, being those persons who, without reference to a relationship with another person or to any previous circumstance, were eligible. In those classes I would place the persons referred to in (a)-(f) above. Next, the applicant had classes of membership which were referable to the previous circumstances of the person concerned. In those classes I would place the persons referred to in (g)-(j) and (m) above. Next again, the applicant had classes of membership which were referrable to an existing or previous relationship of dependency apropos another person who was, or had been, eligible. In those classes I would place the persons referred to in (k), (l) and, to an extent, (m) above. Finally, the applicant had an open class of membership at the direction of the board ((n) above), but it was not suggested by the respondent that that class would, of itself, have affected the outcome of the matters which I have to decide. 46 There was no evidence as to the relative size, in the overall revenue of the applicant, of contributions received from the various categories of members; nor as to the relative size, in the overall outlays of the applicant, of benefits paid to those various categories. In financial terms, therefore, the court does not know whether the centre of gravity of the applicant's operations lay in that part of its membership in relation to which it claims to be different, especially Navy families. However, counsel for the applicant provided, without objection, certain information as to the composition of the applicant's membership in 2001 which was said to be typical. At that time, 21.5% of members were current serving military personnel and 37.2% of members had been serving military personnel and had carried over their memberships after discharge. Apparently a very small number of the latter had been in the Army or the Air Force. The remaining 41.3% of members were distributed among the other membership categories, but counsel for the applicant were able to go no further than to inform me that this group would have consisted of those who had been in the forces but who either had not had continuous unbroken membership or had joined for the first time only after discharge, and those who were "civilian members". Again without objection, counsel informed that his instructions were that less than 10% of the applicant's members were "civilian". Other than may be implicit by exclusion of the other classes, counsel did not specify what they meant by "civilian". Some classes of membership should obviously be so described --- eg (d)-(f), (i) and (j). Others may be less clear --- eg persons eligible under class (k), such as the adult (and no longer dependent) children of serving or former members of the forces. The applicant made it clear that its case did not depend on the direct proposition that it provided benefits to serving and previous members of the Navy (or of other arms of the services) as individuals. Rather, it relied upon a line of cases that have upheld as charitable trusts --- or institutions --- which "promote the efficiency" of the armed forces. That is said to be a purpose which falls within Lord Macnaghten's fourth class in that it benefits the community as a whole. 48 The line of cases upon which the applicant relies commences with In re Good [1905] 2 Ch 60. There, the testator left his residuary personalty upon trust for the officers mess of his old regiment, the income to be applied in maintaining a library for the mess, and any surplus to be expended in the purchase of plate. Within the residue there were also two houses, and the testator directed that they be for the use of "old officers of the regiment" at a small rent during their lives. Dealing first with the bequest, Farwell J referred to an affidavit by the Assistant Adjutant General in the Army which stated that many messes already had libraries, and that the military authorities had considered whether a library should be regarded as part of the necessary equipment of a mess "on the ground that access to books, and particularly books dealing with military matters, is conducive to military efficiency". His Lordship held that the bequest was charitable under the fourth class. It is the public, not the officers, that are benefited by better means being put at the disposal of the officers to enable them to make themselves efficient servants of the King for the defence of their country. On that ground I think this gift can be upheld. I may observe that Kekewich J. in In re Stephens held that a prize for shooting is a good charitable gift; and Romer J. in In re Lord Stratheden and Campbell considered that a gift to a volunteer corps was a good charity. I think it would be difficult to say that money given to be expended in terms in some specific way in order to increase the efficiency of a regiment in a particular mode is not a good charity. This gift, to my mind, does tend to increase the efficiency of the army by giving the officers greater opportunities of providing themselves with literature. It is suggested that the literature that may be bought may not necessarily be confined to military literature; but I cannot regard that as a consideration in this case any more than the Courts have considered that in the case of a provision for a public library the library may contain rubbish as well as useful books. I must assume that the books bought will be books of merit, and, after all, so long as they are books of merit they need not necessarily be confined to military literature. An officer is all the better equipped if he can speak several languages, and if he knows the history and geography of his own nation as well as many other nations, as well as being instructed in the military art. I should be sorry to have to hold that any gift which tends to educational equipment in that way is not a charitable gift. It was conceded that, if the word "old" in the passage "old officers of the regiment" meant "former", the gift was bad. His Lordship held that it did mean "former" and, therefore, that the gift failed. 49 Good was followed by Romer J in In re Gray [1925] Ch 362. There the testator had left a sum of money to form the nucleus of a fund for his old regiment "for the promotion of sport (including in that term only shooting, fishing, cricket, football and polo)". I think it is reasonably clear that it was his intention to benefit the officers and men of the Carabiniers by giving them an opportunity of indulging in healthy sport. It is to be observed that the particular sports specified were all healthy outdoor sports, indulgence in which might reasonably be supposed to encourage physical efficiency. He took the view that the judgement of Farwell J was based primarily on the ground "that the gift on trust for the maintenance of the library was a gift tending to increase the efficiency of the Army" ([1925] Ch 366 and 367). But it is obviously for the benefit of the public that those entrusted with the defence of the realm should be not only mentally but also physically efficient, and I think I am justified in coming to the conclusion that there is no difference between mental and physical efficiency for the present purpose. There, the testator had devised and bequeathed his residuary estate for a number of purposes, any one or more, or all, of which might have been resorted to by the trustee. 51 Downing involved a question which arose under the Estate Duty Assessment Act 1914 (Cth). Section 8(5) of that Act exempted from assessment dispositions and gifts for a range of purposes there set out with considerable specificity, not including the purpose identified in the final part of the disposition of residue to which I have referred above. This had the result that, if that disposition were good, estate duty would be assessed. On the other hand, if the disposition were bad, it could be ignored, and, since the other elements of the disposition of residue were within the exceptions set out in s 8(5), estate duty would not be assessed. The question which came before the High Court was whether the final part of the disposition of residue was good, it being contended by the executor that it was not, because it tended to perpetuity and was not charitable. The central issue, therefore, was whether the disposition was charitable. 52 The primary basis upon which Walsh J decided Downing was that the disposition was for the relief of poverty, and thereby charitable under Lord Macnaghten's first class. His Honour reached that conclusion because of the use of the word "amelioration", holding that the object was "to benefit persons whose lot needs improvement" (125 CLR at 194). Alternatively, his Honour held that, even if the relevant part of the disposition did not refer exclusively to dependants who were poor in the relevant sense, nonetheless "its main object is to enable relief to be given to persons of the specified description, who are through poverty in real need of such relief. " (125 CLR at 195). He held that s 131 of the Property Law Act 1958 (Vic) might then have operated to validate the trust (ie on the basis that it included invalid, as well as valid, purposes). However, he proceeded to consider the validity of this part of the disposition from yet another angle which might, depending upon the outcome, have rendered it unnecessary to turn to s 131 at all. He considered whether, even apart from its tendency to fall within Lord Macnaghten's first class, the disposition was for charitable purposes within the fourth class. If it were (and proceeding still on the basis, contrary to his Honour's primary conclusion, that the notion of "amelioration" involved in the disposition did not refer exclusively to the relief of poverty), there would be no need to have recourse to s 131. It is at this point, and at this point only, that Downing becomes relevant to the question presently before the court. But that does not seem to be a satisfactory basis for the rule as it has developed and, in my opinion, trusts which tend to increase the efficiency of the armed forces, as well as trusts which tend to encourage recruitment to them (see Re Meyers (1951) Ch 534, at p 544), may be regarded as beneficial to the public in a way which the law regards as charitable, because they assist in the promotion of public defence and security. I am of opinion that there is no justification for laying down a rule that either a trust for the benefit of ex-servicemen or a trust for the benefit of the dependants of ex-servicemen cannot be a valid charitable trust. I do not accept the cases to which I have just referred as authorities which on that point should be followed. A trust of either of those kinds may tend to promote the efficiency of the armed forces and to promote the security of the country and may be held for that reason to be charitable. He said that it stood in the way of holding that no trust for the benefit of ex-servicemen could be valid under the fourth class. In Verge , there had been a bequest to the trustees of "the 'repatriation fund' or other similar fund for the benefit of New South Wales returned soldiers". Much of the opinion of the Judicial Committee in that case was concerned to deny the proposition that, to be valid under Lord Macnaghten's fourth class, it was necessary that the purposes of the trust be in some sense directed to the assistance of the poor. It is a public trust and is to benefit a class of the community - namely, men from New South Wales who served in the war and were returned or to be returned to their native land. Further, if it were necessary to consider at all the question of a trust for the poor, it is a gift which is to benefit that class in some sense expressed by the word "repatriation. " This does not mean simply restoring them to New South Wales by paying their fare home. They may be "returned" already, not "returning" soldiers. It means restoring them to their native land and there giving them a fresh start in life. Their Lordships have no doubt that this is a charitable purpose. If it were (which in their opinion it is not) necessary to find that need of assistance is to be a qualification for benefit - that the gift is charitable in the sense of assisting the needy - they find that the words "Repatriation Fund," in relation to the facts as to the Australian Repatriation Fund of which no doubt the testator had knowledge, indicate an intention to benefit the needy. If his words "Repatriation Fund or other similar fund" are referable at all to the statutory Australian Soldiers' Repatriation Fund, and if it were necessary to find a reference to poverty, their Lordships have no difficulty in finding it. Rather, Verge was decided on the basis that repatriated service personnel were themselves a significant class of the community who would benefit as individuals, and that the spirit and intendment of the Statute of Elizabeth was satisfied in their case. It was said that a gift for the setting up again in civilian life of ex-servicemen could be regarded as analogous to "the maintenance of sick and maimed soldiers and mariners", mentioned in the preamble. But I am unable to agree that the re-establishment of ex-servicemen is analogous to the preamble in a way in which other forms of assistance to them cannot be, or that re-establishment (independently of indigence) should be placed in a special category governed by a special rule. Nor do I think it is fatal to the validity of a trust in which the object is indicated of assisting ex-servicemen, that an application of the fund for the benefit of their children or of their dependants is also permitted. It is to be noticed that although the gift in Verge v Somerville [1924] AC 496 was "for the benefit of New South Wales returned soldiers" and did not mention their dependants, their Lordships referred [1924] AC, at pp 505---506, to the Acts under which repatriation benefits were provided, and those benefits included the assistance of dependants. In Re Elgar (deceased) (1957] NZLR 556, the primary object of the trust was the re-establishment of members of the forces but the trust allowed the trustees to apply the fund otherwise for their benefit or for the benefit of their children. It was held to be a good charitable trust. That decision was not challenged when an appeal on other grounds was brought [1957] NZLR 1221. In my opinion the decision was correct. It is in keeping with the generally accepted view that it is part of the responsibility of the community to care for the welfare not only of servicemen but also of their dependants. For example, the object of a gift may be merely of a social or of a sporting character or of some other character such that the purpose could not be classed as one which the law would recognize as charitable. But I am of opinion that valid charitable trusts may be created for purposes relating to the welfare and to the assistance of ex-servicemen or of their dependants, as well as for the welfare and assistance of persons who are still serving members of the forces, if the purposes can reasonably be considered to advance the safety and security of the country. I am of opinion that a trust may be considered to tend towards that result by means of providing aid comfort and encouragement to the armed forces or a section of them, notwithstanding that those who will directly benefit from the trust are those who have ceased to serve or their dependants. If there were a settlement as such to establish a fund to meet the hospital and medical expenses of such persons, there could be little doubt but that it would come within the principle for which Downing stands. That such persons should be relieved of the concern otherwise occasioned by the potential exposure to substantial hospital and medical expenses has, in my view, all the qualitative elements of "aid, comfort and encouragement" to which Walsh J referred. There is, of course, also the question whether such a purpose would be within the spirit and intendment of the Statute of Elizabeth. From the fact that the purpose of providing comfort etc to the dependants of former members of the forces was held to be charitable in Downing (although the matter was not specifically mentioned by Walsh J), it would seem to be so. However, it is sufficient for present purposes to point out that the preamble itself refers to "the maintenance of sick and maimed soldiers and mariners". I consider that such a purpose should be regarded as closely analogous to this provision in the preamble. 57 Applying this line of jurisprudence to the circumstances of the present case, there are two particular matters which have the potential to stand between the applicant and the conclusion which it seeks, namely, that it was charitable in the years to which this proceeding relates. The first matter is whether a difference is made by the circumstance that the health cover provided by the applicant was not given to its members, nor even made available to them at heavily subsidised rates. Rather, that cover was sold to those members at normal premiums much in the way that any health cover would be sold by any registered organisation. Given the absence of private gain, it is clear that these circumstances would not disqualify the applicant's activities from being regarded as charitable: Incorporated Council of Law reporting (Qld) v Commissioner of Taxation [1971] HCA 44 ; (1971) 125 CLR 659, 669-670; Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation [1967] UKHL 3 ; [1968] AC 138; and see Dal Pont, Charity Law in Australia and New Zealand , OUP, 2000, pp 25-26. 58 The second matter is more complicated. It relates to what is sometimes referred to as the problem of "mixed purposes". The problem arises from the fundamental requirement that a bequest or gift (etc), and therefore, I consider, an institution, is not charitable unless (in the case of a bequest or gift) the property or funds may be applied to charitable purposes only or (in the case of an institution) its objects are charitable ones only. It is sufficient to refer to A-G (NSW) v Adams [1908] HCA 51 ; (1908) 7 CLR 100 and to Smith v West Australian Trustee Executor & Agency Co Ltd [1950] HCA 32 ; (1950) 81 CLR 320 in this respect. I consider that this requirement informs the construction of s 65J(1)(b) of the FBTA Act , although I note that many of the authorities commonly referred to on the question of the proper characterisation of a body with multiple, or mixed, objects are found, on the examination, to arise under legislation in which the relevant quantitative requirement is stated in terms. Thus one finds that, in what is often treated as a leading Australian case on the subject, Salvation Army (Vic) Property Trust v Shire of Ferntree Gully [1952] HCA 4 ; (1952) 85 CLR 159, the question was whether the lands in question were used "exclusively for charitable purposes". One finds also that many of the English cases --- of which Commissioners of Inland Revenue v Yorkshire Agricultural Society [1928] 1 KB 611, Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] UKHL 1 ; [1953] AC 380 and Commissioner of Inland Revenue v Royal Naval and Royal Marine Officers' Association (1955) 36 TC 187 are examples --- were concerned with the question whether a body was established "for charitable purposes only". To the extent that such cases are of interest in the present context, it is because of their approach to the problem of mixed purposes, rather than because they establish the basal requirement that, for an institution to be charitable, it must be exclusively so. That requirement, I consider, is part of the general law. 59 There is an exception to the requirement that the purposes of an institution must be wholly charitable if it is to meet the description of a charitable institution. Such a body is a charity even if some of its incidental and ancillary objects, considered independently, are non-charitable. The main object of the Union is predominantly the advancement of religion. It is a religious institution composed of ministers and members of Congregational churches combining for certain religious purposes of common interest and a bequest to a religious institution is prima facie a bequest for a charitable purpose ( Re White; White v White [1893] 2 Ch 41). In a recent case in this Court, Salvation Army (Vic) Property Trust v Fern Tree Gully Corporation [1952] HCA 4 ; (1952) 85 CLR 159, cases were cited in which it was held that an institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose. 60 The same conclusion was expressed by Gibbs J, with the assent of a majority of the court, in Stratton v Simpson [1970] HCA 45 ; (1970) 125 CLR 138. In that case, a testator had directed that his residuary estate be held upon trusts for "the institutions and bodies ... in respect of which ... any gift devise bequest or legacy is exempt from duty under [s 134] of the Administration Act , 1903-1956 ...." Relevantly for present purposes, the question was whether certain institutions or bodies, identified in s 134 by reference to their "main objects" (which were, as so identified, undoubtedly charitable ones) were themselves charitable so as to save the trust from the consequences of the rule against perpetuities. It is established that "an institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose" or in other words if each of its objects is either charitable in itself or should be construed as ancillary to other objects which themselves are charitable: Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR, at pp 442 and 450. If however the non-charitable purpose is not merely incidental or ancillary to the main charitable purpose, the institution will not be charitable: Oxford Group v Inland Revenue Commissioners (1949) 2 All ER 537; and In re Harpur's Will Trusts (1962) 1 Ch 78, at p 87. There is no evidence to show whether at the date of the testator's death there was in Western Australia any institution which answered the description contained in para (d) or (e) of s 134(1) and yet was not charitable because it had a non-charitable object which although not its main object was not merely incidental or ancillary to a charitable object. It is further conceded that although the assistance and care of soldiers, sailors and airmen and other members of the Forces wounded and incapacitated would be a charitable purpose, nevertheless the words used by the testatrix are not apt to confine the institutions to those which are exclusively devoted to charitable objects. It follows, therefore, inevitably, that unless the Charitable Trusts (Validation) Act, 1954 , can be invoked to save the provision, that provision must, according to the well-established law, be held invalid and ineffective. I should treat that assumption as carrying the approval of the High Court in Stratton , subject only to the permissible existence of objects which were incidental or ancillary to the charitable object. More importantly, his Honour proceeded to apply the provisions of s 102 of the Trustees Act 1962 (WA) to save the gift from invalidity in relation to institutions which were not exclusively, but only mainly, charitable. 61 An authority which is often referred to in this area of the law, and which is binding on me, is the judgment of the Full Court in Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82. That case concerned a company which conducted a social club but which also provided facilities for a rugby league football club. The question which arose was whether the company was "established for the encouragement or promotion of an athletic game or athletic sport in which human beings are the sole participants" within the meaning of what was then s 23(g)(iii) of the Income Tax Assessment Act 1936 (Cth) . Lockhart J undertook a detailed examination of the five separate judgments of the High Court in Royal Australasian College of Surgeons v Federal Commissioner of Taxation [1943] HCA 34 ; (1943) 68 CLR 436, where the question was whether the College was a scientific institution within the meaning of s 23(e) of the Act of 1936, which exempted from tax "the income of a religious, scientific, charitable or public educational institution". In none of the judgments do I see support for the proposition that, if the promotion of the professional interests of the members concerned was not properly characterised as concomitant, incidental or ancillary to the main object of the promotion of the science of surgery but was a secondary purpose, it would bar the College from the exemption offered by s 23(e). For the reasons which I have given I cannot distill that proposition from the Royal Australasian College of Surgeons case myself and respectfully disagree with Waddell J: see also R W Parsons, Income Taxation in Australia (1985), par 2.63. The view that the existence of an independent or secondary purpose precludes another purpose from being the main purpose within s 23(g)(iii) is one which I reject. It implies that a purpose may not be the main purpose simply because some other purpose is regarded as secondary or independent. There are cases, however, where one can discern a main or predominant purpose and other purposes, not being merely ancillary or incidental thereto, but secondary and even independent of the main purpose, yet this would not detract from the former purpose being correctly described as the main purpose. To say that the presence of a secondary purpose prevents another purpose being the main purpose is really to say that the main purpose must be the sole purpose. I do not, however, consider that his Honour's reasoning is transferable in this way. Cronulla was an appeal from a judgment which had relied upon the reasoning of Waddell J in Waratahs . Stratton's case concerned an originating summons seeking a declaration that the residuary bequest contained in cl 15 of the testator's will was void and that there was an intestacy as to the residuary estate. The case turned on the terms of the will and the provisions of s 134 of the Administration Act 1903 (WA) and s 102 of the Trustees Act 1962 (WA). For a body to be a charitable institution its main purpose must be charitable, although it may have other purposes concomitant and incidental to that purpose: Congretational Union of New South Wales v Thistlewayte [1952] HCA 48 ; (1952) 87 CLR 375 at 442; and other cases cited by Gibbs J in Stratton's case at 160. Stratton's case has, in my view, no application to the interpretation of s 23(g)(iii) of the Act which is a different area of discourse. 63 The other member of the majority in Cronulla , Beaumont J, relevantly based his judgment on College of Surgeons . He said that it was sufficient if the object that met the description in s 23(g)(iii) was the main or predominant object. If the institution has such a purpose, that will be the intrinsic character of the object it seeks to promote and the existence of merely incidental functions and purposes will not destroy the claim for exemption. Although the third member of the Full Court, Foster J, relevantly agreed with Lockhart J, he was in dissent in the outcome, which circumstance complicates, to say the least, the court's task of identifying what, if anything, was the ratio decidendi of the case as a matter of the construction of that provision. However, that issue need not concern me here, since, as I have said, I think that (although it might be considered to be obiter in the circumstances) Lockhart J did accept what I would call the Beaumont J approach in relation to the question whether a body was a "charitable institution". 64 For the above reasons, I consider that I am bound by Stratton to conclude that a body cannot be regarded as a "charitable institution" so long as it has a non-charitable object, or objects, which is, or are, more than merely incidental or ancillary to its main charitable object or objects, and that Cronulla does not stand in the way of that conclusion. The conclusion is consistent with two recent judgments of single members of the court to which I was referred. There may be objects that are incidental or ancillary to the main object, but an object that is not charitable, and not incidental or ancillary, will disqualify the institution as a charity. Rather, they have required that object not be of substance in its own right, but only to be something which tends to assist, or which naturally goes with, the achievement of the main object. Thus in Salvation Army , it was held that trading in the inevitable produce of a training farm established for delinquent boys did not mean the lands in question were not used exclusively for charitable purposes. Thus in Yorkshire Agricultural Society the receipt of private benefits by members --- free admission to shows, access to reading rooms, reduced fees for analysis of manures and foodstuffs, special railway facilities, and the like --- were held not to disqualify the society from being regarded as charitable. 66 The authorities also show that the need to discriminate between the various objects of an institution --- for the purposes of identifying the main object and of deciding whether objects are merely incidental or ancillary --- often in practice arises in two quite different contexts. The first is where there is a single bundle of activities, as it were, and the question is whether they are engaged in for charitable, or for non-charitable, purposes, or both. That question is essentially one of characterisation. It arose, for example, in Glasgow Police , where an association was formed by serving and retired police officers to organise and conduct healthy sporting contests and recreational pastimes. It was contended that the association was charitable in that it promoted the efficiency of the police. While recognising that that object was most probably achieved as a result of the association's activities, the House of Lords nonetheless held that it was not the association's main purpose, which was the recreation and amusement of the members themselves. A question of this kind arises where the legal principle remains expressed in a fairly abstract way, such as that an institution which has the purpose of promoting the efficiency of the armed forces (or, by analogy, the police) should normally be regarded as charitable. The next issue, in an actual case, will be whether the activities of the institution in question clearly bespeak such a purpose. It was upon that issue that Glasgow Police turned. In Australia, however, and in the context of the present case, I consider that Downing has taken the law a step further. I refer to what I have said in par 56 above. Subject to the exclusion of benefits or gifts to which Walsh J referred as being "of a social or ... sporting character", it is no longer open to ask whether the purpose of providing aid, comfort and encouragement to serving and former defence personnel and their dependants would tend to promote the efficiency of the forces. That question was, I consider, resolved in the affirmative by Downing . For that reason, the matter of characterisation to which I refer in this paragraph does not present a problem for the applicant. 67 The second context of discrimination between objects is that in which an institution, say, has different categories of purposes reflected by different activities in which it may, or does, engage. This is the Salvation Army , Thistlethwayte or Stratton kind of case. Here the institution will have a main object which is charitable and, consistently with the authorities to which I have referred, the question will be whether the other objects (in practice, the other activities) are more than merely ancillary or incidental to the achievement of that main object. It is in this area that I consider that the applicant is in some difficulty. 68 In the absence of other evidence --- the onus to call which lay upon the applicant --- I consider that the applicant's membership categories should be used to identify what was its main object and any other objects, at least for the purpose of fitting the present case into the conceptual framework provided by Downing . Of the classes set out in par 44 above, clearly those in (a) and (g) would fall within the principle in Downing . To the extent that they were dependants of those in (a) or (g), those in (l) would also be included. I am not sure whether members of the Reserve would fall within Downing , and cadets would probably be regarded as more doubtful again. Both, it seems to me, were in something of a grey area. On the other hand, there were several classes which, on any view, fell outside Downing , namely those in (d), (e), (f), (i), (j) and (k). 69 Going on the figures referred to in par 46 above, about 58% of the applicant's membership in 2001 consisted of serving military personnel and those who had been serving personnel and who had retained their membership of the applicant's fund on discharge. Clearly this group would come within Downing . Something less than 10% were purely civilian members. Clearly that group would fall outside Downing . Because the applicant called no evidence on these important statistics, and gave only a very broad indication from the Bar table, exactly who were regarded as "civilians" is unclear. 70 I was informed that the remaining 32% or thereabouts consisted of former members of the forces who were not members of the applicant's fund at the time of discharge but subsequently became so, and of those who were members at discharge, but who had subsequently allowed their memberships to lapse, and later re-joined the fund. This information was neither given in the form of evidence nor tested in cross-examination. Counsel for the respondent said that they did not object to the court being informed in this way, "subject to questions of weight, of course". I do not know what to make of that qualifier: either the information is correct or it is not, and it is the only information available to the court on something that has become rather critical. 71 It in the circumstances, I have no option but to accept that, numerically, something less than 10% of the applicant's membership in the relevant years was in classes that would not be covered by the Downing principle. Since the applicant did not tell me how much less than 10% this proportion was, I cannot assume, in the applicant's favour, that it was anything more than insignificantly less than 10%. That such a group of persons, numerically minor though they were in the overall scheme of the applicant's operations, should be within the cohort of persons whom the applicant benefited does, in my view, demonstrate that the applicant had as an object the provision of health benefits to persons who fell outside the Downing principle. This object could not be described as ancillary or incidental in the sense explained above. The object was, I consider, a substantive and free-standing one in its own right. Indeed, it may be noticed how much wider the applicant's membership eligibility rule was in the relevant years than had been the Society's rule in 1955. It may have been convenient, and consistent with a "Navy family" approach, for the applicant to have made these others eligible to participate in its health cover, but I could not regard it as no more than an incident of the carrying into effect of its main object. The persons concerned were distinct members of the applicant to whom the applicant provided benefits from its fund. 72 I also consider that the actual proportion of persons in the non- Downing classes within the applicant's membership from time to time should not --- de minimus situations aside --- bear conclusively on the question whether the applicant was, or was not, a charitable institution. If the applicant had the scope within its rules to accept as members persons in those classes, I cannot understand why its objects should not, at least to an extent, reflect that circumstance. Potentially, the class was rather wide. The applicant's Managing Director gave evidence that the reference to "persons employed in the Australian Public Service" was limited in practice to those seconded to, or directly associated with, the Department of Defence or the Navy. Even so, when taken with the reference to employees of that Department as such, the cohort of potential membership would have been, I infer, quite large. The inclusion of those who had been, but were no longer, dependants, and anyone who had, at any time in the past, been eligible for membership, were further examples of the width of the applicant's potential for membership. I can think of no reason not to align the applicant's objects with these classes of membership. In my view, they go beyond anything which could be regarded as ancillary or incidental to the applicant's main object in the relevant sense. 73 On this aspect of the case, I need to say only two further things. First, the applicant placed much store by the particular design of its products, and by the focus of its promotions amongst Navy personnel. I accept that these factors bespoke an especial concern with such personnel and their families. Ultimately, however, they do not bear upon the question I consider to be determinative. That is to say, I accept that, to the extent that the applicant offered its products to what I have called the Downing classes of persons, it offered products of some special utility to them, to some of them, or to all of them in some circumstances. I accept that the applicant's activities in that area reflected its main object. But the fact remains that the applicant had other, not merely incidental, objects as I have identified them above, and that creates a problem for the applicant in the present case which the factors referred to in this paragraph do not address. 74 Secondly, I recognise the force in the applicant's reliance on the circumstances that surrounded the formation of the Society in the 1950s, but those circumstances do not affect the findings which I have made. The purposes behind the formation of the Society remained within the applicant's objects down to the period with which this proceeding is concerned, and may be discerned within what I have described as its main object. But their significance cannot, in my view, extend into the area of membership in relation to which the applicant offered conventional health insurance products to persons who were not within the Downing classes. 75 For the above reasons, I am not satisfied that, in the three years ended 31 March 2001, 2002 and 2003, or in any of those years, the applicant was a "charitable institution" within the meaning of s 65J(1)(b) of the FBTA Act . As I have noted elsewhere in these reasons, the applicant was a company limited by guarantee, with one member only. Notwithstanding the fact of incorporation, I would be prepared to accept that an incorporated body, including a company, with two or more members might, without inaccuracy, be described as an "association". However, the applicant was not such a body, since it had one member only. 77 On any natural reading of the word, "association" denotes a grouping, or coming together, of two or more persons. Relevantly for present purposes, the dictionary meaning of the word is "a body of persons who have combined to execute a common purpose or advance a common cause ..." (OED, 2 nd Ed). Unless required to decide otherwise by authority, I consider that the proposition that a single person, whether or not incorporated, might constitute an "association" is quite at odds with the natural meaning of the word, and with normal, everyday, usage. 78 The applicant, however, contended that it was an "association" in the relevant years substantially for two reasons. First, it pointed to the comment by James LJ in Smith v Anderson (1880) 15 Ch D 247, 273 that there was no difference "between a company and an association". It followed, according to the applicant, that every company was, at the same time, an association. I cannot accept that submission. Nothing in Smith v Anderson was concerned with a question even remotely similar to the present. Indeed, in the judgments of each of their Lordships in the Court of Appeal, there was clearly an assumption that an association, whatever it otherwise was, would involve a duality or multiplicity of persons. Their Lordships were concerned with s 4 of the Companies Act, 1862 (UK), which proscribed the formation of companies, associations and partnerships of more than 20 persons for certain purposes, unless registered under the Act. Manifestly, "company" in this context was a reference to an unregistered body of persons. It was in that context that James LJ found it difficult to see the distinction between a company and an association. The context is irrelevant to the present circumstances. 79 The applicant also contended that, since 1998, it has been permissible for companies registered as such in Australian to have one member only. It was said that, to decide that a company, which otherwise met the requirements of s 65J(1)(j), should nonetheless be denied rebatable status merely because it took advantage of the facility of having one member only, would be anomalous. The difficulty with this approach, in my view, is that it commences from a starting point that s 65J(i)(j) embodies an assumption that, whatever else, a company was intended to be covered. That starting point may well have been informed by the circumstances of the applicant itself, but it derives no support from the terms of the legislation. For my own part, I can find nothing in those terms which, as a matter of construction, should lead me to regard it as anomalous that a one-person company is unable to satisfy the requirements of par (j). 80 I was referred to some other authorities in connection with this aspect of the case, but none, in my view, has any useful bearing on the question whether a one-person company should be regarded as an "association" under s 65J(1)(j) of the FBTA Act . For the reasons stated above, I am of the view that such a company could not be so regarded, and that the applicant was not such an association in the years to which this proceeding relates. 81 Although not strictly necessary, for the sake of completeness I shall deal also with the question whether the applicant was "established for community service purposes". When used in such a context, "established" refers to the contemporary existence, rather than to the original formation, of the body concerned: see Cronulla 23 FCR at 89 and 116-117. 82 There is, apparently, no authority on the meaning of "community service" in s 65J(1)(j) of the FBTA Act . The words "for community service purposes" are not defined but are to be given a wide interpretation. The words are not limited to those purposes beneficial to the community which are also charitable. They extend to a range of altruistic purposes. The words would extend to promoting, providing or carrying out activities, facilities or projects for the benefit or welfare of the community, or of any members of the community who have particular need of those activities, facilities or projects by reason of their youth, age, infirmity or disablement, poverty or social or economic circumstances. An exclusion from the exemption will apply to bodies established for political or lobbying purposes. ... When purposes are directed to the benefit or welfare of members of the community in particular need, that need must arise by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances. These causes of need are intended to be read broadly. Infirmity or disablement, for example, could be intellectual or physical, and could be congenital or the product of disease or of injury. Similarly, social or economic circumstances could include such varied matters as sex, living in a remote area, or inability to speak English. However, it is clear that the words are not limited to charitable purposes. But neither should the paragraph be applied, in my view, merely as a fall back position for anybody which almost, but not quite, achieves recognition as a charity. 83 Although a composite expression, I consider that the essence of "community service" is that a service is provided to the community, or a section of the community. Here the word "service" is used in the sense of "help, benefit or advantage", particularly "the action of serving, helping or benefiting, conduct tending to the welfare or advantage of another" (OED, 2 nd Ed). I consider that the sale of a product at normal market rates is inconsistent with this understanding of the word "service". The applicant's operations during the years in question, therefore, should not be regarded as the provision of a "service" to its contributors. Neither was there any other person, or group of persons, with respect to whom those operations might have been regarded as the provision of a service. 84 That brings me to the concept of "community". I accept, of course, that the word refers not only to the community as a whole but also to any identifiable section of the community, but it does not follow that the receipt of a service by any group of persons should be regarded as the receipt of that service by a section of the community. Those who actually received the applicant's services in years in questions were not a section of the community: they were those who, by their own consumer choices, purchased the applicant's products. Neither, in my opinion, is the broad concept of community benefit upon which the judgment of Walsh J in Downing was based transferable into the context of s 65J(1)(j) of the FBTA Act . His Honour held that, by having a purpose of providing aid, comfort or encouragement to existing or former members of the armed forces, a benefactor (or, in this case, an institution) likewise had the purpose of benefiting the community as a whole, in the sense of promoting the efficiency of those forces. But that is a concept quite different from the one with which I am presently concerned. Section 65J(1)(j) deals with "service" in a much more concrete setting, and requires, in my view, the community, or a section of the community, to benefit by way of the receipt of some identifiable help, benefit or advantage bestowed or provided directly by the putative benefactor. Such a requirement, I consider, is not satisfied merely because, in this case, the operations of the applicant had a tendency to promote the efficiency of the armed forces, thereby benefiting the community as a whole. 85 For the reasons explained above, I am not satisfied that, in the three years ending 31 March 2001, 2002 and 2003, or in any of those years, the applicant was a "non-profit association, ... established for community services" within the meaning of s 65J(1)(j) of the FBTA Act . I shall so order. I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. | charities whether applicant a "rebatable employer" for purposes of fringe benefits tax whether charitable institution within the meaning of s 65j(1)(b) of the fringe benefits tax assessment 1986 act (cth) whether applicant an institution which "promotes the efficiency" of the armed forces whether an institution must be wholly charitable to meet the description of charitable institution whether applicant's non-charitable objects are more than merely ancillary or incidental to the achievement of main object. whether applicant a "rebatable employer" for purposes of fringe benefits tax whether applicant a "not-profit association, ... established for community service purposes" within the meaning of s 65j(1)(j) of the fringe benefits tax assessment act 1986 (cth) whether a body can be an "association" with only one member what constituted "community service" taxation taxation |
The hearing was to take place on 9 February 2006. In response to the invitation the appellant wrote back saying that he did not wish to attend the hearing and consented to the tribunal proceeding to determine the review without it. The tribunal then made a decision to affirm the decision of a delegate of the Minister refusing the appellant a protection visa. The tribunal's decision was said by it to have been made on 6 February 2006, some three days before the scheduled hearing. 2 On 7 February 2006 the tribunal sent a letter to the appellant notifying him that it would hand down its decision on 16 February 2006. There is no evidence as to when, if at all, the appellant received the letter of 7 February 2006, but no complaint is taken that he was not notified of the decision when it was actually handed down on 16 February 2006. The tribunal's written decision handed down on 16 February 2006 recorded that the decision itself had been made on 6 February 2006. The appellant says that the tribunal had no statutory authority under the Act to make a decision prior to his failure to attend the scheduled hearing on 9 February 2006. 3 The trial judge dismissed the appellant's application for constitutional writ relief which had raised a number of other grounds. The only ground argued on the appeal was the one I have described above. In carrying out its functions the tribunal is required to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick (s 420(1)). And, in reviewing a decision, the tribunal is not bound by technicalities, legal forms or rules of evidence. It is required to act according to the substantial justice and the merits of the case (s 420(2)). Division 4 of Pt 7 of the Act contains an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with, as provided in s 422B(1). The period of notice given must be at least the prescribed period or, if no period is prescribed, a reasonable period. The letter invited the appellant to a hearing to give oral evidence and present arguments in support of his claims. He was also told that he could ask the tribunal to obtain oral evidence from other persons. (I should note that there was no argument concerning the question whether the tribunal's invitation to attend the hearing of 10 January 2006 contained a statement of the effect of s 426A as required by s 425A(4). Accordingly, I need not deal with that issue. Accompanying the letter was a response to hearing invitation form. (No such form is contemplated in Div 4 of Pt 7 of the Act. He caused it to be returned by facsimile to the tribunal. The next step was that the tribunal wrote to his migration agent on 7 February 2006 informing it that the tribunal had considered all the material relating to his case and had made its decision. This letter said that the decision would be handed down on 16 February 2006. The decision record of the tribunal notes that the date the decision was signed was 6 February 2006 and that it was handed down on 16 February 2006. 8 The appellant gave no evidence that he changed his mind after signing the consent form. There was no evidence that the appellant attended, at the nominated time and place for the hearing on 9 February 2006, or that he decided not to do so in consequence of any communication from the tribunal to him that it had already made a decision prior to that date. The appellant gave evidence before his Honour. 10 His Honour found that by signing the form, the appellant had given his consent to the tribunal deciding the review without him appearing before it within the meaning of s 425(2)(b) of the Act. That finding has not been challenged. No doubt this was because he had communicated he did not wish to attend a hearing and had consented to the tribunal proceeding. His only contention was that the tribunal had no power to make a decision prior to 9 February. This is because s 426A was, the appellant argued, the tribunal's only source of power to make a decision once the appellant had been invited to a hearing under s 425. 12 The appellant argued that the proper construction of the Act raised issues of importance beyond the facts of his own case. He pointed to the possibility that even if an applicant for review responded to the invitation from the tribunal by saying that he or she did not wish to attend a hearing, there was no statutory authority for the response to the invitation for hearing form to be framed in the way it was. He argued that an applicant for review could change his or her mind and still arrive at the tribunal at the time appointed in the invitation. He contended that this possibility showed that the tribunal could not make a decision on 6 February, rather than on 9 February even if it came to exactly the same decision because s 426A did not authorise the tribunal to make a decision earlier than the time specified in the invitation. 13 The appellant also responded to the Minister's argument that the trial judge's finding of consent to the tribunal deciding the review without him appearing before it did not authorise the tribunal to make a decision prior to the day, time and place at which he had been invited under ss 425(1) and 425A (1) to appear because s 426A did not permit such a course to occur. He contended that even if an applicant for review lost an entitlement to appear before the tribunal under s 425(3) by consenting to the tribunal deciding the review without that applicant appearing before it in accordance with s 425A(2)(b) , the tribunal still had authority to permit the applicant to appear before it at the hearing. He contended the statutory scheme left a discretion in the tribunal to permit an applicant to appear although he or she was not entitled to do so provided he or she turned up on the day at the time and place at which the hearing had been scheduled and to which he or she had been invited. Thus, he argued, the tribunal could not make a decision before the date and time it had fixed for the hearing. However, in Minister for Immigration v SZFML [2006] FCAFC 152 ; (2006) 154 FCR 572 at 585-587 [54] - [64] Spender, French and Cowdroy JJ considered the operation of Div 4 of Pt 7 of the Act in the context where an applicant for review had instructed her migration agent that she wished to attend a hearing of the tribunal in response to its invitation under s 425(1) , but the agent, purportedly on her behalf informed the tribunal that she did not wish to appear. 15 Their Honours referred to the fact that the tribunal had followed a similar administrative procedure to that used here. It had combined the invitation under s 425(1) with a notification of the date, time and place of the appearance pursuant to s 425A(1) ( SZFML 154 FCR at 586 [61]). They went on to consider what they identified as the 'logical structure of ss 425 and 425A '. They held that this involved the following theoretical sequence ( SZFML 154 FCR at 586 [62]). If it so finds, it can make the decision immediately and end the review. Otherwise it has to issue an invitation unless one or other of the conditions in ss 425(2)(b) or (c) is satisfied. (2) The tribunal asks the applicant for review whether he or she consents to it deciding a review without him or her appearing before it. If that consent is given, the applicant is not entitled to appear and the tribunal can then proceed to decide the review. (3) However, if the applicant does not give that consent, the tribunal must consider whether ss 424C(1) of (2) applies to him or her, and if not, then the invitation must be issued. (4) The tribunal must give the applicant notice of the day on which, and the time and place at which he or she is scheduled to appear. A minimum time between the giving of that notice and the actual hearing is prescribed in Reg 4.35D. (5) If the applicant does not appear at the hearing, then the tribunal is authorised to make a decision on the review without any further steps to allow or enable the applicant to appear before it. (6) Notwithstanding the above, the tribunal has a discretion to reschedule an applicant's appearance before it. That provision only operates where an applicant has been invited to appear before the Tribunal and does not appear at the time and place at which the applicant is scheduled to appear. In this case the Tribunal proceeded on the basis of the apparent consent tendered on behalf of SZFML . It did not proceed on the basis of her non-appearance at a scheduled hearing. The duty of the Tribunal under s 414(1) to review the delegate's decision (which arose once the appellant had applied for review) continued until one of the outcomes described in s 415(2) was arrived at, for example, the affirming, the varying or the setting aside of the decision. The duty to review therefore entailed a statutory duty to consider the arguments presented and in that way to afford the appellant procedural fairness. That implied that if the Tribunal thought that the arguments had been presented so inadequately that the review could not be completed until further steps had been directed and performed, it could not be peremptorily concluded by the making of a decision before that direction was complied with or withdrawn. He pointed to what Spender, French and Cowdroy JJ had said in SZFML 154 FCR at 585 [58], namely that where one of the conditions set out in s 425(2) is satisfied, the entitlement to appear before a tribunal established under s 425(1) either did not come into existence or ceased to exist and the tribunal's duty to invite the applicant for review to appear before it was thus discharged. The appellant riposted that the structure of s 425 implied that the consent referred to in s 425(2)(b) had to antedate the issue of the invitation and that once issued the invitation could not be withdrawn. 19 I do not accept the appellant's argument. After issuing an invitation but before the date of the hearing, the tribunal could decide the review in favour of the applicant for review. If it did that, further conduct of the review would be otiose. Not only would there be no need for a hearing but there would be nothing for the applicant for review to put to the tribunal, since the decision already made by it would have granted the applicant what he or she had applied to get in the first place. A reconsideration by the tribunal after issuing an invitation to a hearing under s 425(1) resulting in a decision to grant the applicant for review a protection visa would enable the tribunal to pursue the objective in s 420(1) of providing a mechanism of review that, among other things, was quick. There would be no purpose in continuing to a hearing or suspending the notification to the applicant for review of the favourable decision until some future time simply because, the earlier review of the tribunal was that a hearing ought to take place. A saving of the tribunal's time, public expense, and, possibly, expense for the applicant would ensue from the immediate notification of a favourable decision prior to the scheduled hearing date. 20 The appellant did not advance any reason why the Parliament would have intended the Act to be construed in a way which prevented the tribunal from coming to a decision in an applicant for review's favour before a hearing either on reconsideration of the original material before it or on subsequently becoming aware, say, of country information, perhaps recent or up to date or from conducting another review, which supported a result favourable to that applicant. This beneficial construction is open. There is no reason to reject it: ASIC v DB Management Pty Ltd [2000] HCA 7 ; (2000) 199 CLR 321 at 338 [34] - [35] . 21 Again, it is difficult to see any purpose in the legislative scheme to require the tribunal to go through the empty form of holding a hearing when it had been informed by the applicant for review that he or she consented to the tribunal deciding the review without him or her appearing before it, even after the invitation to attend the review had been issued. Such a consent, if given after the applicant for review has been informed that the tribunal did not consider that it should decide the review in the applicant's favour on the material before it and thus wished to invite him or her to a hearing so as to persuade it to the contrary, would be an informed consent to a decision being made against the interests of the applicant. Such a consent engages the operation of s 425(3) so that after it has been given the applicant is no longer entitled to appear before the tribunal. As Spender, French and Cowdroy JJ considered, once the applicant for review consents to the tribunal deciding the review without him or her appearing before it, the tribunal can proceed under ss 425(2)(b) and (3) to determine the application for review on the basis of the consent: SZFML 154 FCR at 587 [64]. Their Honours distinguished that mode of the tribunal proceeding from its acting on the basis of the power to decide the review under s 426A(1) following the non-appearance of an applicant. The applicant for review by rejecting an invitation to appear under s 425(1) , can waive his or her right to a hearing. That has the effect of an applicant for review consenting to the tribunal deciding the matter without him or her appearing before it. 22 For these reasons, the tribunal was entitled to proceed on the basis that the applicant had consented to it determining the review pursuant to s 425(2)(b). (2) WHAT WAS THE DATE OF THE DECISION? He argued that this provision had the effect of deeming the decision to have been made on a date different to that which it actually records as being the date on which it was made. The appellant argued that until a decision to which s 430B(1) applied was handed down, the tribunal could change its mind on the course or decision it had previously decided to adopt. 24 Similarly, as Minister for Immigration v Bhardwaj (2002) 209 CLR 597 held, a decision affected by jurisdictional error is treated as being no decision at all (see also Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 506 [76] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ). There, the tribunal had made a decision in ignorance of a medical certificate provided by the applicant for review to the registrar of the tribunal notifying it that he was unable to attend at the hearing. The Court held that in law no decision had been made and the tribunal was free to exercise its powers on the review, as it had done, once it became apprised of the true position that it had not afforded the applicant for a review hearing in accordance with the Act. 25 The appellant here argued that because the tribunal's decision recorded that it was made 10 days before it was handed down, the deeming in s 430B(4) that it was in fact made when it was handed down cannot overcome what the decision record actually states. 26 I am of opinion that this argument ought be rejected. The tribunal was authorised to make a decision on the review without the applicant for review appearing before it once his consent was given under s 425A. By force of s 430B(4) the date of the decision is the date on which it was handed down, not i.e. 16, not 6, February 2006. Whatever the tribunal had done internally prior to its handing down the decision did not have the legal effect of finalising the review, because a necessary step in that process was the handing down of the decision in accordance with s 430B. That only occurred on 16 February 2006 and s 430B(4) provided that that was the date of the tribunal's decision. The tribunal had no statutory authority to make a written decision having legal effect where, as here, the applicant for review is not in immigration detention, earlier than the date of handing down its decision under 430B(4). The appellant has not shown him to have erred. However, I prefer to base my decision on his Honour's finding of consent to the tribunal deciding the review without the appellant appearing before it. I am of opinion that the absence of any evidence that the appellant acted or intended to act inconsistently with that consent at any time prior to the decision being handed down on 16 February 2006, demonstrates that the outcome of the review was not affected by the tribunal making up its mind on 6 February 2006, three days before the scheduled hearing. There was nothing unfair about the tribunal doing so in the circumstances that the appellant had said that he did not want a hearing and consented to the course being followed, which the tribunal adopted, of proceeding to make up its mind. Even so, until the decision was handed down on 16 February 2006, it was not made because s 430B(4) so provided. 28 The Court has a discretion to refuse to grant a writ of prohibition where an applicant unjustifiably allows an inferior court to proceed to judgment in excess of its jurisdiction without having set up the objection. The conduct of a party seeking the remedy of prohibition is relevant to the exercise of the discretion to grant it: see Zimpel v Allard [1904] HCA 56 ; (1904) 2 CLR 117 at 120 per Griffith CJ, Barton and O'Connor JJ applying Willes J's advice to the House of Lords in Mayor of London v Cox (1866) LR 2 HL 239 at 283. I am of opinion that the principle applies equally to an administrative body exceeding its jurisdiction when a party before it unjustifiably (in the context of his, her or its subsequent challenge) allows it to do so. 29 In SZBYR v Minister for Immigration and Citizenship [2007] FCA 26 ; (2007) 235 ALR 609 at 618 [28] Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that the grant of a constitutional writ is a matter of discretion. They said that the discretion is exercised by the Federal Magistrates Court and this Court pursuant to s 39B of the Judiciary Act 1903 (Cth) on the same principles as are applicable by the High Court. They approved what Gordon and Gummow JJ had said in Re Refugee Tribunal; Ex parte Aala [2000] FCA 57 ; (2000) 204 CLR 82 at 108 [56] that some, though not exhaustive, guidance as to the circumstances which may attract an exercise of the discretion to refuse relief to an applicant could be found in the judgment of Latham CJ, Rich, Dixon, McTiernan and Webb JJ in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd [1949] HCA 33 ; (1949) 78 CLR 389 at 400. They held that the writ of mandamus could be withheld if a more convenient and satisfactory remedy existed, if no useful result could ensue, if the applicant had been guilty of unwarrantable delay, or if there had been bad faith on his or her part, either in the transaction out of which the duty to be enforced arose, or towards the Court to which the application was made. He consented to the tribunal deciding the matter without affording him a hearing. He cannot point to any consequence, amounting to an unfairness, in the procedure which the tribunal adopted of making a decision three days before the hearing date it had indicated he could have, but which he consented not to use. On the evidence, he lost no opportunity to appear before the tribunal, give evidence or present arguments. This is because he did not want to do so and had told the tribunal that. I am of opinion that no useful result could ensue from granting constitutional writ relief to the appellant. 33 For these reasons I would dismiss the appeal with costs. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | refugee review tribunal invited applicant for review to hearing pursuant to s 425(1) migration act 1958 (cth) applicant for review responded by signing 'response to invitation for hearing form' saying that he did not want to attend hearing and that he consented to tribunal deciding review without taking any further action to allow or enable him to appear before it whether signing form indicated that 'applicant consent[ed] to the tribunal deciding the review without the applicant appearing before it' pursuant to s 425(2)(b) whether tribunal's statement that its decision was made on a date before it was handed down had any legal effect whether s 430b(4) operated to make date of decision date on which it was handed down discretion of court to withhold relief no evidence that useful result would ensue from grant of relief migration migration migration |
A United States Drug Enforcement Agency ('DEA') officer, Mr Livanis, has given evidence in an Athens Court that he had received information from Australian authorities about Mr Samsonidis' activities. The information allegedly came from the tapping of Mr Samsonidis' telephone by Australian authorities. Mr Livanis summarised the content of the alleged conversation in his evidence in Athens. Mr Samsonidis disputes the accuracy of the alleged conversation and wishes to obtain a transcription of it. He has been unable to do so from the Greek authorities. 2 Mr Samsonidis' solicitors have requested a copy of the transcript of the alleged conversation but the Australian Federal Police ('AFP') have refused to supply it to them. Mr Samsonidis then applied to the Court seeking various remedies designed to enable him to access the transcript. He applied under s 39B of Judiciary Act 1903 (Cth), ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 21 of the Federal Court of Australia Act 1976 (Cth). 3 At the hearing of the application Mr Samsonidis sought a declaration that Telecommunications (Interception and Access) Act 1979 (Cth) ("the TIA Act ") permits the AFP to provide him with the material he seeks. The respondent Commissioner contends that s 67 of the TIA Act confers a discretion on an officer of the AFP to disclose information in certain circumstances. However, he argues that the discretion cannot be exercised lawfully to permit disclosure to Mr Samsonidis, for his purposes at this point in time. He says the purpose for which Mr Samsonidis seeks release of the particular information is not a "permitted purpose" within the TIA Act . 4 Mr Samsonidis contends that the TIA does not prohibit the Commissioner from providing him with the material he seeks but, on the contrary, the Commissioner has a discretion to provide him with the relevant documents. That is the issue which I am required to resolve. That affidavit discloses that on 28 June 2006, in the Athens Court of First Instance, a DEA agent gave evidence that he had received information from Australian authorities concerning lawfully intercepted telephone conversations involving Mr Samsonidis. The DEA agent's statement to the Athens Court is exhibited to Mr Nikakis' affidavit. It refers to a conversation between Mr Samsonidis and another on the evening ("Melbourne time") of 2 March 2006 in which a discussion occurred concerning the sale of illegal drugs. 6 By letter dated 20 July 2006, Mr Nikakis wrote to the AFP requesting a copy of the transcripts of "telephone intercepts" of conversations involving Mr Samsonidis for use in Mr Samsonidis defence in Athens. 7 By letter dated 1 August 2006, an agent with the AFP responded to Mr Nikakis, saying amongst other things, that the communication of lawfully intercepted material was prohibited by s 63 of the TIA Act . 8 By letter dated 15 August 2006, Mr Nikakis wrote to the AFP, attaching the relevant parts of the transcript of the DEA officer's evidence. Mr Nikakis sought copies of documents containing or referring to the information mentioned in that evidence. He said that the information and the document sought by him were "now well and truly in the public arena" and not exempt under the Freedom of Information Act 1982 (Cth) ('the FOI Act'). 9 The 15 August 2006 letter prompted a response from the Freedom of Information section of AFP's legal area by letter dated 4 September 2006. It advised Mr Nikakis that access to the documents had been "deferred" under s 21(1)(c) of the FOI Act. It said that "their premature release" would be contrary to the public interest. One of these, in par (ab), is for lawful telephone interceptions. 12 Section 63 of the TIA prohibits the communication of lawfully intercepted information or the making use of it or the recording of it. 14 Relevantly, "permitted purpose" is defined in s 5 as a purpose connected with the investigation by the AFP of a prescribed offence, the making of a decision by the AFP whether or not to begin a proceeding, or a relevant proceeding in relation to the AFP. 15 Section 11 of the FOI Act allows a person access to documents of an agency such as the AFP, "other than an exempt document". Under s 38 of the FOI Act a document is exempt if disclosure of the document or the information contained in it is prohibited by a provision of another Act which is specified in Sch 3 or if s 38 is expressly applied to the document or the information by that provision or by another provision of that or another Act. Section 63 of the TIA Act is mentioned in Sch 3 of the FOI Act but s 67 of the TIA Act is not. 16 The parties agreed that the hearing would be limited to the question of the effect of the TIA Act and that the question whether there are any other grounds on which production of the information might be resisted by the respondent could be addressed at a later time. What is now known as 'lawfully intercepted information' was previously called 'lawfully obtained information'. What is now known as 'interception warrant information' was previously called 'designated warrant information'. There are minor differences in the changed definitions however they are not presently relevant. Section 63 has not otherwise been amended. It follows that references to 'designated warrant information' in earlier cases must be read as applying equally to 'interception warrant information'. 18 Mr Samsonidis' first submission is that s 63 of the TIA Act does not apply to lawfully intercepted information that has been published. He relies on the decision of the Full Court in Kizon v Palmer (1997) 72 FCR 409. That case concerned 'designated warrant information', which at the relevant time was defined in s 6EA of the TIA Act as being various information connected with a warrant issued under that Act. As with 'lawfully obtained information', s 63 generally prohibits the communication of 'interception warrant information' and, in its earlier form, prohibited the communication of 'designated warrant information'. 19 The applicant in Kizon v Palmer was aware of 'designated warrant information' that was to be used against him in a drug offence trial. He was aware of it because it was contained in an open affidavit, filed in proceedings to which he was a party. Lindgren J, with whom Jenkinson and Kiefel JJ agreed, said that a purposive construction of 'designated warrant information' was required and he referred to s 15AA(1) of the Acts Interpretation Act 1901 (Cth). It would be absurd that the prohibitions in s 63 should continue to apply to information of a kind referred to in the definition of 'designated warrant information' once that information is in the public domain by, for example, having been given in evidence publicly in a prosecution. There is no provision in Pt VII of the TI Act which expressly permits further divulging of designated warrant information which has been publicly given in evidence in a prosecution, yet according to a non-purposive construction, the prohibition would prevent a reporting of the evidence. This result cannot have been intended. The opening words of par (b) of the definition, 'any other information that is likely to enable the identification of', suggest that par (a) is concerned with information about the fact that a TI warrant was or will be applied for (subpar (i)), was issued (subpar (ii)), existed or exists or did not or does not exist (subpar (iii)), or expired or will expire (subpar (iv)), which will enable identification of that which was not previously identified, namely, the particular telephone service in question or the particular person specified in the warrant as a person using or likely to use that service (see ss 45 and 46 of the TI Act). Schmidt J held as much in the New South Wales Industrial Relations Commission in Ryan v Director-General of New South Wales National Parks and Wildlife Service [2004] NSWIRComm 160 at [48] (that case actually concerned 'lawfully obtained information' under the previous s 63). 21 There are a number of differences between the current definitions of 'interception warrant information' and 'lawfully intercepted information'. Importantly, the definition of 'lawfully intercepted information' does not include the words "any other information that is likely to enable the identification of", which were words that Lindgren J said gave specific support to a purposive interpretation. It is not surprising that the definition of 'lawfully obtained information' does not include those words. This is because 'lawfully intercepted information' necessarily encompasses a more readily determinable class of information. It is information that is obtained by lawfully intercepting a telecommunication. 'Interception warrant information' on the other hand encompasses information about the application for, issuing of, existence of and expiry of a warrant, together with "information that is likely to enable the identification of" the relevant telecommunications service or a person likely to use that service. It thus encompasses a wider class of information. The absence from the definition of 'lawfully intercepted information' of the words referred to by Lindgren J does not provide a reason for departing from the purposive approach. At any rate, as I read Lindgren J's reasoning on the textual analysis point, it is additional to, and not merely a part of, his Honour's primary reason for preferring a purposive approach, namely that not to do so would result in absurdity. 22 A further distinction between the two concepts is to be found in their treatment in s 63, the full text of which I have set out above at [12]. Curiously, the prohibition on communication is expressed differently for each concept. For 'lawfully intercepted information' a person shall not communicate it in the relevant circumstances, whereas for 'interception warrant information' a person must not communicate it. Nothing appears to turn on this difference. The two sub-sections of s 63 prohibit the same four acts, namely the communication of, making use of, making a record of and giving in evidence, either 'lawfully intercepted information' in the case of sub-section (1) or 'interception warrant information' in the case of sub-section (2). However, the two sub-sections are organised differently. It is almost as if the drafter chose to adopt different formulations in order to avoid repetition. If that is the case, it is unfortunate; where two concepts are intended to be treated identically in legislation, the preferable course is to apply identical language to them. At any rate, I can see no presently material difference between the treatment of 'lawfully intercepted information' and 'interception warrant information' and so the decision in Kizon v Palmer must apply equally to the former. 23 The purposive approach to the construction of s 63 was taken by Merkel J in Carmody v MacKellar [1996] 791 FCA 1 , which involved a challenge by a practising barrister to the issuing of warrants under the TIA Act that allowed the AFP to intercept his telephone communications. The basis of the challenge was that the intercepted conversations would necessarily involve privileged communications. These proceedings could also be taken by his clients, being the persons whose privacy and confidentiality is sought to be protected. Yet, if the AFP's submission is correct s 63(2) would operate to prevent those persons from seeking to protect their privacy by appropriate proceedings, by denying access to the very information they require to maintain such proceedings. Such an approach to construction impedes proceedings against law enforcement agencies for the protection of the very privacy the amendments were to procure. A number of cases have held that "[t]he fundamental objective of the [TIA] Act is to protect the privacy of communications passing between users of telecommunications systems": Taciak v Commissioner of Australian Federal Police (1995) 59 FCR 285 at 297 per Sackville J; see also Brown v Commissioner of Australian Federal Police (1988) 83 ALR 477 at 480; Edelsten v Investigating Committee (NSW) (1986) 7 NSWLR 222 at 229. This purpose is evidenced by s 7(1) which provides that telecommunications are not to be intercepted. Subsequent sub-sections provide exceptions to that general position. The second purpose is to assist law enforcement by allowing the contents of certain conversations to be intercepted and used as evidence: Kizon v Palmer (1997) 72 FCR 409 at 442. In a more general sense, the purpose of the TIA Act is to strike a balance between, on the one hand, allowing law enforcement authorities to have access to important information and, on the other, protecting the privacy of members of the public. It does this by providing for a general prohibition on the interception of telecommunications and then providing narrow exceptions. 25 The respondent submits that Kizon v Palmer (1997) 72 FCR 409 does not apply to this case because it is relevantly distinguishable. The first point of possible distinction is that in Kizon v Palmer , the 'designated warrant information' had been published in Australia, whereas in this case it is alleged to have been published in Greece. I do not think anything turns on this distinction. The relevant purpose to be considered here is the law enforcement purpose. The reason why the Full Court in Kizon v Palmer found that it would be absurd to maintain the s 63 prohibition was that once information is public there is no purpose to be served in attempting to keep it confidential. This reason is of equal force whether the publication is in Australia or elsewhere. 26 The next point of possible distinction is the nature of the publication. In Kizon v Palmer , the authority that had gathered the 'designated warrant information' had chosen to publish it in open court. Here, any publication to Mr Samsonidis has been by the DEA and not by the respondent. In my view this is not a relevant distinction. Assuming the DEA officer's evidence to be correct, the respondent has published information to the DEA. Whether the DEA has breached s 63 of the TIA Act is not an issue before the Court; if the respondent has concerns about the way the DEA has used the information, that is a matter between them. What matters for present purposes is that the information has been published and that publication has come to the attention of Mr Samsonidis. It is this that demands the application of the purposive approach referred to in Kizon v Palmer . 27 The final point of distinction is related to the difference between the 'publication' evidence in the two cases. In the present case there is a paucity of evidence as to the circumstances in which the alleged conversation was adduced in court in Athens. Mr Livanis, the DEA agent, gave evidence to an Examining Magistrate, which was recorded in a Report, a translation of which is before the Court. Mr Livanis deposed that information concerning Mr Samsonidis came to his agency from "the Australian authorities". The DEA then conducted an investigation and determined that Mr Samsonidis and two others were said to be the heads of a drug network. The DEA then "contacted the Australian authorities to release the police records" of those three, "an action which they performed". Further on in the Report it is said that "On 2/3/2006, after the legal, according to Australia laws, tapping of Samsonidis' phone they heard at eleven o'clock at night Australian time, namely three pm Greek time, when Skouras contacted Samsonidis by phone and they told me that the two of them spoke in a foreign language between them, obviously in Greek". It is not clear who precisely the word 'they' in the above passage is intended to refer to. 28 It is evident from the Report that a conversation between Mr Samsonidis and a Mr Skouras was tapped (which I understand to mean was intercepted) and that the DEA was aware of the contents of that conversation. It is not clear that a transcript was made of the conversation, or by whom the conversation was intercepted. The respondent has neither confirmed nor denied that it is in possession of 'lawfully intercepted information'. All of this must be contrasted with the position in Kizon v Palmer , where the evidence was perfectly clear that the 'designated warrant information' had been referred to in an open affidavit filed in Australian court proceedings. 29 Because of the nature of the relief sought --- to which I will come in due course --- it is not necessary to resolve all the evidential issues disclosed by what is recorded at [27] and [28]. In particular, I do not need to decide whether the respondent did in fact intercept a telephone conversation involving Mr Samsonidis. The uncontested evidence of Mr Samsonidis' solicitor is that reference was made in a Greek court to what was said to be an intercepted communication involving Mr Samsonidis. How publicly this evidence was given is not clear, but I do not think this matters. The purposive approach mandated by Kizon v Palmer does not apply only where there has been publication to the world at large. That would lead to just as unjustified a result. The mischief in a non-purposive approach that was recognised by Merkel J in Carmody v MacKellar is that a person who knows his communication to have been intercepted could not have access to the evidence of that communication that was needed to challenge its legality. Similarly, the mischief in the non-purposive approach in Kizon v Palmer is an accused person not having access to information that is to be used against him in criminal proceedings in order that he may rebut that information. 30 The purposive approach means, at the least, that it cannot be the intention of the legislature that a person to whom 'lawfully obtained information' is published cannot use that information either to challenge the legality of its being obtained or to defend himself against any allegations made as a result of that information. In the latter case, such an interpretation would run contrary to the well-established principles of justice and fairness that require prosecutors to disclose materials to defendants: see R v Reardon [2004] NSWCCA 197 at [46] ---[55] per Hodgson JA; R v Ulman-Naruniec [2003] SASC 437 at [136] ---[146] per Sulan J. In circumstances where --- as may be the case here --- publication has not been to the world at large, s 63 of the TIA Act may still prohibit dealings that involve publication of 'lawfully intercepted information' to those not already aware of it. In this case, Mr Samsonidis has had published to him the purported fact that 'lawfully intercepted information' concerning him has been obtained. An interpretation that denies him access to that 'lawfully obtained information' would be absurd and, on the authority of Kizon v Palmer , such an interpretation must be rejected. Section 67 provides an exception to s 63 and allows the respondent to deal with 'lawfully intercepted information' for 'permitted purposes', which include a purpose connected with the investigation of a prescribed offence. Much argument was directed to the meaning of 'connected with' in this context. Since Mr Samsonidis has succeeded on his s 63 argument, it is not necessary for me to consider this argument. The respondent submitted that if I were to find for Mr Samsonidis the matter should be adjourned to allow for argument on the question whether there are any other grounds on which production of the information might be resisted by the respondent, or the further question of the application of the FOI Act. 33 It is clear that this judgment is not the end of the matter, since the parties agreed before the hearing that the FOI Act point would be raised at some later stage. There will need to be orders allowing for this. There will also be a declaration as to the effect of s 63 of the TIA Act on the information sought. There is some uncertainty as to the precise wording of the declaration sought. The form of words in the application --- "production to the Applicant of the materials is not prevented by the provisions of [the TIA]" --- is clearly too broad. In those circumstances, I will order that the parties bring in short minutes reflecting these reasons for judgment. | telecommunications (interception and access) act 1979 'lawfully intercepted information' transcript of telephone interception whether respondent is prohibited from communicating lawfully intercepted information to person to whom it has already been published administrative law |
He served as an Aircrew Observer. In December 2000 he developed an undiagnosed viral illness while on duty in the Solomon Islands, which precipitated post viral fatigue syndrome. Mr Perry lodged a claim for compensation with the Military Rehabilitation and Compensation Commission ('the Commission') in October 2001 and liability was accepted in February 2002. That is, Mr Perry sustained an injury that led to impairment, which impairment was accepted by the Commission. Mr Perry was discharged from the Navy on 7 July 2002 with the rank of Lieutenant. As of that date, Mr Perry was a person who had ceased to be employed by the Commonwealth. 2 Persons serving in the Navy in Mr Perry's position were entitled to flying allowances based on seniority which increased automatically every two years until "top tier" ('the increment'). Mr Perry was in receipt of the increment as at his date of discharge and would have been entitled to the increment had he not been medically discharged due to his compensable condition. • On 1 October 2001 the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 (Cth) ('the Amending Act') which amended the Safety, Rehabilitation and Compensation Act 1988 ('the SRC Act') came into force. Relevantly s 8(9) of the SRC Act was repealed and replaced with ss 8(9) and 8(9A) to (9D). Mr Perry was still in employment. • On 29 October 2001 Mr Perry lodged a claim for compensation. • On 4 February 2002 the Commission accepted liability for the condition. • On 7 July 2002 Mr Perry was discharged from the Navy and became a person who ' has ceased...to be employed by the Commonwealth ' within s 8(9B) of the SRC Act as amended ('the Act'). I further determine that you are not eligible for any further incremental increases of your allowance, and that your allowance should only increase by the Wage Cost Index increase which occurs annually on 1 July. Mr Perry, who had been receiving the increment, was told that he had been overpaid $5,914.30. 6 Mr Perry sought reconsideration of the Determination and asserted that he remained entitled to the increment, as provided for in s 8(6) of the Act. The decision under review ('the Decision') was made on 10 May 2006. The decision maker affirmed the Determination and stated that she was satisfied that the issue was whether s 8(9B) of the Act applied and not s 8(9) of the SRC Act. 7 On review of the Decision, the Administrative Appeals Tribunal ('the Tribunal') decided that s 8(9B) of the Act did not have retrospective effect so as to preclude Mr Perry's entitlement to the increment. The Tribunal rejected the arguments that the legislative intent was to alter the basis upon which any right to compensation was to be calculated where a person had ceased to be employed by the Commonwealth. It looked to the presumption against retrospective operation and the justice of the case and concluded that s 8(9B) was not applicable to Mr Perry. Accordingly, the Tribunal set aside the decision under review in so far as it directed Mr Perry to repay the amount of $5,941.30, which had been said to represent an overpayment relating to the time period in question (at [47]). 8 The Commission seeks to set aside the order of the Tribunal and to affirm the Decision. There is no provision in s 14 for the method of calculation. Formulae for the calculation of compensation for injuries resulting in incapacity are provided for in s 19 of the Act. The formula for that payment is based on the amount of the employee's normal weekly earnings. "Normal weekly earnings" are defined in s 4 to mean ' normal weekly earnings of an employee calculated under section 8 '. Section 8 applies to ascertain the normal weekly earnings where an employee has been injured and is incapacitated for work, for the purposes of the calculation in s 19. That is, if the employee is injured, Comcare is liable to pay compensation once the injury results in incapacity. That payment is calculated and paid for each week of incapacity. It accrues and stands to be determined on a weekly basis. Section 19(2) of the Act provides that an employee is to be paid for each week during which the employee is incapacitated. 10 The issue in these proceedings is how s 8(9B) of the Act applies to Mr Perry, who had suffered an "injury" as defined in s 4 (which includes "disease") prior to the commencement of that subsection and had ceased to be employed by the Commonwealth after its introduction. The increment is one such allowance. 14 The Commission agrees that Mr Perry would have been entitled to receive the increment by the application of s 8(6) had he remained in employment as part of his normal weekly earnings. Section 8(6) applies to the employee as an individual. Section 8(9), by s 8(9A), applies to the employee as a member of a class of employees. 15 There was no change to s 8(6) in the Amending Act. In deciding whether s 8(9B) of the Act applied to Mr Perry to preclude him from entitlement to incremental increases, the Tribunal did not consider the operation of s 8 generally, the construction of s 8(9B) or the reference to ss 8(1) to 8(8). It only examined the question of retrospectivity. That reflected the way the case was argued in the Tribunal. That was also the way the matter first proceeded in this Court. The matter was adjourned after preliminary submissions to enable the parties to consider the effect of s 8(6) of the Act on the construction of s 8(9B). 19 Mr Perry now contends that, if the Tribunal erred in its conclusion that the Amending Act had no application to an employee who suffered an injury before the commencement of the Amending Act, there is still no basis for setting aside the Tribunal decision. This is because he says that the increment, payable to the employee by reason of s 8(6) of the Act, continues to be taken into account in the calculation of the normal weekly earnings of an employee before any application of s 8(9) and, in particular, of s 8(9B). 20 It is not in dispute that Mr Perry had been a person to whom s 8(6) applied prior to his discharge. The Commission says that s 8 of the Act provides that the increment is only payable to persons who remain employed by the Commonwealth, doing work such as Mr Perry was doing at the time that he was injured. Those amounts are not, the Commission contends, payable once the employee is discharged. With the passage of the Amending Act, once Mr Perry was discharged, the increment is said to be no longer payable. Normal weekly earnings can then only be further increased after discharge for the purposes of calculating any entitlement to compensation in accordance with s 8(9B) of the Act. That means, according to the Commission, s 8(9B) to the exclusion of any further application of s 8(6). It is not in dispute that Mr Perry is, by the application of s 8(9B) of the Act, entitled to increases by reference to the percentage increase of a prescribed index ('the Wage Cost Index'). 21 The Commission relies on the fact that the Amending Act was intended to substitute a new, simpler regime for further altering normal weekly earnings of a person with respect to future weeks and that that regime involves a distinction between those who continue to be employed by the Commonwealth and those who do not. That may be so but it does not answer the question of the increases to which the further increase provided for in s 8(9B) applies. The Commission submits that subs (9B) applies to further increases to the normal weekly earnings after cessation of employment ' calculated only in accordance with that subsection ', that is by application of the Wage Cost Index. This does not, however, address what constitutes normal weekly earnings. The Commission submits that the first indexation increase would work upon a base figure. That base figure is what, prior to the person becoming a person who has ceased or ceases to be employed by the Commonwealth, were ' the normal weekly earnings of (the) employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9) '. That is, are the normal weekly earnings calculated under subs (6) and, if the employee has ceased to be employed, further increased by reference to the Wage Cost Index? • If not, does s 8(9B) have retrospective operation to deprive the employee of the increments otherwise payable under s 8(6)? That is, are normal weekly earnings increased by the application of ss 8(6) and 8(9) up to the date of cessation of employment and thereafter increased only by reference to the Wage Cost Index? 24 The effect of the construction contended for by the Commission is that the normal weekly earnings as calculated under subs (6) must, once he has ceased to be employed by the Commonwealth, be further increased (that is after he has ceased to be employed) only by reference to the Wage Cost Index. 26 Section 8(9B) of the Act deals with an injured employee ' if the employee has ceased, or ceases, to be employed '. "If" means in context ' in case that; granting or supposing that; on condition that ' (Macquarie Dictionary Revised Third Edition). 27 The normal weekly earnings of the employee are as calculated under ss 8(1) to 8(8) of the Act. That includes the increment (s 8(6)). Section 8(6) is directed to increments in remuneration payable to an employee by reason of the attainment of a level of seniority or the passage of time, including actual increments and hypothetical increments. Section 8(6) applies to injured employees who continue to be employed by the Commonwealth and, as is apparent from ' would have been increased if the employee had continued in that employment' , continues to operate in respect of employees after employment has ended. That is, the subsection provides that, whether in employment or whether employment has ceased, the normal weekly earnings shall be increased by the percentage by which they would have been increased before injury. 28 Sections 8(9) and 8(9A) are directed to increases in remuneration payable to a class of employees, to which a continuing employee continues to belong, where those increases come about because of the operation of the law or an industrial determination or agreement. Those increases are applicable while the employee continues to be employed. The increases in remuneration contemplated by ss 8(9) and 8(9A) are not increments that become payable to a particular employee because of the attainment of a level of seniority or the passage of time. Those employees have the benefit of the "relevant percentage" defined in s 8(9A) to operate with respect to a class of employees. That increase or decrease operates on the normal weekly earnings calculated under the preceding subsections including, relevantly, s 8(6). 29 The "relevant percentage" (ss 8(9) and 8(9A)) is not concerned with individual entitlements or the kinds of factors as set out in subss 8(6)(a) to (c). It applies after increases due to classification of or allowances due to the employee. The relevant percentage is referable to increases and reductions by operation of law. This separation is emphasised in s 8(9B), which separates the calculations under ss 8(1) to 8(8) and the increases or reductions under s 8(9). 30 Section 8(9B) refers both to increases in remuneration payable to the individual employee and to increases payable to the class of employees to which a former employee had belonged. That definition requires the taking into account of not only the operation of law but also, for example, the making or alteration of awards or industrial agreements. The Wage Cost Index provides a substitution for that calculation of the increase. The amendment is proposed to provide that the normal weekly earnings of people who are no longer employed by the Commonwealth be updated by reference to a prescribed index. The updating of normal weekly earnings for former employees under the existing subsection 8(9) has, however, become problematic due to the increasingly decentralised nature of wage fixing. This has resulted in uncertainty and delay for recipients in receiving their correct entitlements. The provision will allow for the annual indexation of the 'normal weekly earnings' by increasing the minimum amount per week payable to the employee at the date of the injury by reference to a prescribed index. The indexation date has been identified as 1 July following the date on which the Act received Royal Assent or the date of cessation of employment (which last occurs) and each subsequent 1 July. The index is applicable over the one year ending on 31 December preceding each indexation date. Regulations may specify the manner in which the increase is calculated by reference to the prescribed index. The Explanatory Memorandum referred to ' changes in awards, agreements or other instruments affecting ordinary hours and hourly rates of pay ' (at [2.27]). There was, however, no statement that it was intended to affect the correlation between incapacity payments and increments that were or would have been payable within the terms of existing awards, agreements or other instruments or payments or increments payable to individual employees by reason of seniority of position. 34 The Second Reading Speech to the Amendment Bill addressed the compensation of former employees. Senator Campbell said that the Amendment Bill ' ensured that compensation payments for former employees are maintained at 70% of indexed normal weekly earnings and that normal weekly earnings of former employees are updated by reference to a prescribed index '. 35 Therefore, the purpose of the Amending Act as outlined in the extrinsic material does not appear to extend to affect the operation of s 8(6). The language of subs (9B), taken in isolation, says that the normal weekly earnings continue to be calculated under, relevantly, subss (6) and (9) and then, on cessation of employment, further increased by reference to the Wage Cost Index. This would mean that the normal weekly earnings of an employee who has ceased to be employed by the Commonwealth after an injury would be higher than those of an injured employee who remains in employment. By subs (10), the normal weekly earnings would be reduced by the excess. That makes this construction of the section unlikely. 37 That is, the first construction provides to the person who has ceased to be employed his or her normal weekly earnings (including the increment), the relevant percentage and the Wage Cost Index. This in turn requires the normal weekly earnings to be reduced under s 8(10). 38 The second construction differentiates between the normal weekly earnings of the individual employee as calculated under subs (6) and the increase or reduction applicable to the employee as a member of a class of employees by operation of subs (9). The further increase on cessation of employment by reference to the Wage Cost Index replaces the increase due to the class by application of subs (9). This accords with the apparent intention of the amendment as described in the Explanatory Memorandum. 39 That is, the second construction provides to the person who has ceased to be employed his or her normal weekly earnings (including the increment) and the Wage Cost Index. 40 The reference to "further increased" in s 8(9B) is equivocal. Mr Perry emphasises those words as an indication that the increases in ss 8(1) to 8(6) continued to apply and that they, in turn, were additionally or further increased, with effect from each indexation date, by reference to the Wage Cost Index. However, the words could also indicate that, once the injured employee has ceased employment, additional or further increases after that cessation are by reference to the Wage Cost Index only. 41 The third construction is that the normal weekly earnings are as calculated under subs (6) and as increased or reduced by the application of subs (9) while the injured employee remains employed. Upon cessation of employment, all further increases are by reference to the Wage Cost Index and the employee is not entitled either to the increment under subs (6) or to the increase or reduction by application of subs (9). The apparent inconsistency with subs (6) is answered by the fact that subs (6) applies "subject to" the section, specifically in this case subs (9B). This can be said to be not inconsistent with the Explanatory Memorandum which refers to the replacement of subs (9) and is silent on the effect of the amendment on subs (6). 42 That is, the third construction provides to the person who has ceased to be employed his or her normal weekly earnings (but not including the increment) with increases by reference only to the Wage Cost Index. 43 Each construction faces problems with the language of subs (9B), the context s 8 as a whole, the Explanatory Memorandum and common sense. 44 It is not logical that the intention was to make the normal weekly earnings of an employee who ceased employment higher than those of an employee who remains in employment. There is no point in making the earnings higher and then reducing the excess by application of subs (10). Contrary to the third construction, subs (6) clearly provides that increments payable under that subsection remain payable to the individual employee upon cessation of employment. If it were intended to remove the right to this payment, it would be expected that the Explanatory Memorandum, which did address the effect of the amendment on subs (9), would also address the effect on subs (6). There is a difference between increments due to the individual employee by reasons of his or her position such as the flight allowance, and the adjustment by the relevant percentage of subs (9). The reason for the replacement of a percentage determined by the operation of law or an industrial agreement by a prescribed percentage is explained in the Explanatory Memorandum. If that is what was intended, the employee, on cessation of employment, does not receive more than he or she would have earned if the employment continued and does not lose the benefit of increments due to the employee by reason of age, period of service or position or appointment. I am of the view that the second construction applies to subs (9B) and that it is neither an unreasonable nor unnatural construction ( Newcastle City Council v GIO General Ltd [1997] HCA 53 ; (1997) 191 CLR 85 at 113 per McHugh J). Section 8(9B) does not apply to deprive Mr Perry of the increment. It follows that the decision of the Delegate was correct and the Decision incorrect. That is, Mr Perry is entitled to continue to receive the increment as part of the calculation of his normal weekly earnings. Does s 8(9B) have retrospective operation? However, as that was the basis of the Tribunal decision, I shall consider it briefly. 48 Both before and after amendment, s 8 applied to persons who had been injured. Section 8(9B) refers to the circumstance ' if the employee has ceased, or ceases, to be employed...' . These are words which should be given a meaning ( Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at [71] per McHugh, Gummow, Kirby and Hayne JJ). Section 8(9B) specifies application both to a person who has been injured and has already ceased to be employed and to a person who has been injured and who ceases to be employed. Contrary to the Tribunal's conclusion and Mr Perry's submission, the subsection does apply to persons injured before the commencement date. It applies to periods of incapacity after its commencement and changes the method of calculation of normal weekly earnings. 49 As s 8(9B) is drafted, it is not the injury but the cessation of employment that is the condition that imports the application of the subsection, with effect from each future indexation date in relation to that cessation, by reference to the Wage Cost Index. There is no dispute that Mr Perry suffered an injury prior to the commencement of the Amending Act and the operation of s 8(9B) and ceased to be employed after that date. Mr Perry contends that, if s 8(9B) applies to preclude him from payment of the increments to which he would have been entitled under s 8(6) but for the amendment, it will visit new legal consequences on facts or events occurring before its commencement. 50 Mr Perry contends that his rights to compensation by way of payments calculated under s 8(9) before amendment accrue as at the date of injury, or impairment. He says that those rights to payment continue in perpetuity until certain events prescribed in the statute take place, which are not relevant, or Parliament legislates to alter or remove those rights. That must be done clearly and the intent made clear before such an amendment would have retrospective effect to take away his rights ( Kraljevich v Lake View and Star Ltd [1945] HCA 29 ; (1945) 70 CLR 647). The right to payment or compensation extends to the manner of calculation ( Kraljevich at 650 per Latham CJ). If s 8(9B) affects those rights to compensation, he submits that it operates retrospectively. Accordingly, he submits, the subsection does not apply to an injury which occurred before the commencement date. 51 Subject to a reasonably certain intention to the contrary, an amending Act should be understood as not applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events ( Maxwell v Murphy [1957] HCA 7 ; (1957) 96 CLR 261 at 267 per Dixon CJ). Prima facie, it is construed as having a prospective operation only and as not attaching new legal consequences to facts or events which occurred before its commencement ( Fisher v Hebburn Ltd [1960] HCA 80 ; (1960) 105 CLR 188 at 194 per Fullager J). 52 Mr Perry relies on s 8 of the Acts Interpretation Act which provides that, unless the contrary intention appears, the repeal of s 8(9) cannot affect his rights acquired under the SRC Act. He submits that the language of the Amending Act and s 8(9B) in particular, does not include clear indicia of retrospectivity nor clear indication that the "unjust result" or "palpable injustice" of an effect on his right to compensation were intended ( Doro v Victorian Railways Commissioners [1960] VR 84 at 86 per Adam J). 53 The words of s 8(9B) make it clear that the subsection is intended to apply to former employees and also to a person who subsequently ceases to be an employee. This is also apparent from the extrinsic material. The Second Reading Speech refers to "former employee" and the Explanatory Memorandum to ' people who are no longer employed by the Commonwealth ' as well as to ' former employees '. 54 The right to this compensation under s 8(9B) is not a right unlimited as to time or entitlement. It is activated when the employee ceases employment. It ceases if the employee ceases to be incapacitated. Weekly payments of compensation under the Act with respect to future weeks are contingent upon the employee being incapacitated for work as a result of his or her injury during those future weeks. 55 It is not the injury itself that creates the liability to pay compensation; it is the fact that the injury results in incapacity. Compensation is payable while that incapacity results in loss. If the conditions contained in s 19 of the Act are fulfilled, liability arises under s 14 to compensate the employee for incapacity for work. Mr Perry was, upon injury and incapacity, entitled each week to normal weekly earnings calculated to include the s 8(6) increment, adjusted by the "relevant percentage". After the amendment, his entitlement to normal weekly earnings is maintained. Even if he lost the right to the increment on cessation of employment by reason of subs (9B), the subsection did not operate on the right to compensation but on the method of calculation of the amount of compensation. The method of calculation of that compensation for future weeks is, in accordance with the Act, variable. There was no existing substantive right to the precise method of calculation which is made weekly. There are no entrenched rights to the method of quantum of payment. 56 Mr Perry's situation is different to those in Kraljevich and Esber v Commonwealth [1992] HCA 20 ; (1992) 174 CLR 430. In Kraljevich it was held that the injured employee had an entitlement to be compensated ' for a sum of money calculated in a particular way ' (at 650 per Latham CJ). This was, however, in the context of a right of redemption, which accrued on injury. Similarly, in Esber , there was a substantive right in existence at the time of the relevant repeal and amendment. 57 Section 8(9B) does not have a retrospective operation. The amendment has a future action on past events and not a prior effect on past events (Pearce DC and Geddes RS, Statutory Interpretation in Australia at [10.4], Coleman v Shell Co of Australia Ltd (1943) 45 (SR) 27). ' It takes account of antecedent facts and circumstances as a basis for what it prescribes for the future, and it does no more ' ( Robertson v City of Nunawading [1973] VR 819 at 824). 58 The Amending Act does not differentiate between injuries that occurred before and after it came into force. It does not affect employees' rights to payments due on cessation of employment but only the calculation of those payments as made from week to week, the procedure or mode of calculation (cf Kraljevich ). The rights of the employee are fixed by reference to the injury and the continuation in or cessation of employment. The changes brought about by amendment were not to those rights but to the practice and procedure applied to enforce or calculate them ( Maxwell at 267 per Dixon CJ). Those changes do not have a retrospective operation on Mr Perry's rights. Neither s 8(9) as it stood before the Amending Act nor s 8(9B) as it stood after the Amending Act, had any relevance to that calculation. Section 8(9B) affects the increases or decreases that would have been applied by s 8(9) of the SRC Act. 60 Although the Tribunal did not consider the proper application of the subsection, the Tribunal's decision to restore the incapacity payments determined by the Commission on 18 August 2005 and to set aside the Officer's decision to recover overpayments said to have been made in consequence of the Commission's determination was the correct decision. However, the Tribunal's conclusion that s 8(9B) of the Act should be regarded as prospective in operation and inapplicable to employees whose injuries arose prior to the date of commencement of the Amending Act was incorrect. The legislative scheme does not give an accrued right to a particular amount of compensation on injury alone but a right to compensation while incapacitated and payments calculated from time to time in accordance with the Act. 61 The decision of the Tribunal, in so far as it restores the incapacity payments determined by the Commission on 18 August 2005 and sets aside the Officer's decision to recover overpayment from Mr Perry, is affirmed. 62 Both parties are to provide written submissions as to costs within seven (7) days of judgment. | appeal from administrative appeals tribunal effect of amendment to s 8(9) of safety, rehabilitation and compensation act 1988 (cth) whether s 8(6) of act continues to apply to commonwealth employee who has ceased to be employed how s 8(9b) of act applies where injury suffered prior to commencement of subsection section 8(9b) of act provides for continued application of s 8(6) whether s 8(9b) has retrospective operation amendment has future action on past events and is not retrospective administrative law |
Originally, there were numerous respondents but the proceeding has been disposed of against all of them but the present respondent, Page Kirkland Management Pty Limited ('PKM'). The proceeding came before me originally in my capacity as List Judge, following the untimely death of Hill J. 2 The applicant, Leighton Contractors Pty Limited ('Leighton'), seeks orders for preliminary discovery by PKM, pursuant to Order 15A rule 6 of the Federal Court Rules . Leighton seeks discovery in order to determine whether it has a right to obtain relief in the Court from PKM in connection with a contract made by Leighton on 26 August 2002 concerning the design, construction and completion of work at the Capitol Centre, 255-259 Pitt Street, Sydney, which includes the Sydney Hilton ('the Contract'). The other parties to the contract were Admiral I Pty Limited, Admiral II Pty Limited and Admiral III Pty Limited (together 'the Principal'). Under the Contract, Leighton was required to design, construct and complete the Works (as defined) and maintain a certain part of the Works. The Principal was to pay Leighton the Contract Sum (as defined). PKM was involved in the Contract as Superintendent. That requires the Court to conclude, at least, that there is reasonable cause to believe that each of the elements of the relevant cause of action might be made out. The test for whether there is such reasonable cause for belief is an objective one. It is not necessary to prove that each of the elements exists. The rule contemplates only that there be reasonable cause to believe that Leighton may have a right to obtain relief. On the other hand, mere speculation or suspicion that the relevant elements might exist is not sufficient. There must be some positive basis for the belief. 6 The question of insufficiency that is raised by the second prerequisite has both subjective and objective aspects. Thus, if the evidence establishes that Leighton was able to decide whether to commence a proceeding by, for example, showing that Leighton has already decided to do so, it may be that the second prerequisite would not be satisfied, even though, from an objective point of view, the information available was insufficient for such a decision to be made. On the other hand, the fact that Leighton genuinely feels unable, because of an insufficiency of information, to decide to commence a proceeding, is not sufficient of itself to satisfy the second prerequisite. Leighton must establish, from an objective point of view, that it lacks sufficient information. The question may be formulated as whether it is reasonable for Leighton to make a decision, without having the information that might become available from inspection of the documents in respect of which discovery is sought. 7 Ultimately, the question of whether discovery should be ordered is a matter involving the exercise of judicial discretion. The question raised under Order 15A rule 6 must be answered in the context of the adversarial system of forensic contest that underlies any proceeding in the Federal Court. Thus, ordinarily, PKM would be entitled to withhold its evidence until a claim is formulated against it. While Order 15A is a significant erosion of that principle, the principle must be borne in mind in the exercise of the discretion. Thus, it is relevant to consider the extent of the uncertainty as to the elements of the postulated causes of action. While uncertainty as to only one element of the cause of action might be compatible with the first prerequisite, uncertainty as to a number of the elements may be sufficient to undermine the reasonableness of the cause to believe that there may be a right to belief. 8 Leighton claims that there is cause to believe that it may have the right to obtain damages under s 82 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act ') as a consequence of contraventions of s 52 of that Act by PKM, or as a consequence of contraventions by the Principal in which PKM was involved. There are four causes of action on the basis of which Leighton asserts that it may have a right to obtain such relief. Leighton has formulated its putative causes of action in a document filed on 30 January 2006, pursuant to a direction that I gave following oral argument. 9 PKM says that there is no reasonable cause to believe that Leighton has or may have a right to obtain relief as it claims. Further, PKM says that the second prerequisite of r 6 has not been satisfied. However, it has not been suggested by PKM that, if the first two prerequisites of r 6 are satisfied, there is no reasonable cause to believe that PKM has or is likely to have documents relating to the question whether Leighton has the right to obtain the relief postulated. 10 Leighton relied on the affidavit evidence of Mr Peter Thomas Pether, who is a partner of Mallesons Stephen Jacques. Mallesons Stephen Jacques act for Leighton and Mr Pether has been instructed to advise Leighton on whether it has sufficient prospects of success to warrant commencement of a proceeding against PKM. If a proceeding is commenced, he will be required to certify, in relation to any pleading filed on behalf of Leighton, that the factual and legal material available to him at present provides a proper basis for each allegation in the pleadings. He will also be required to ensure that any such pleading states all necessary particulars of any claim pleaded by Leighton. The Contract consists of a formal instrument of agreement dated 26 August 2002, which incorporates AS4300-1995 ' Amended General conditions of contract for design and construct ' ('the General Conditions'). The approval may be conditional. Clause 47.2 then provides a regime whereby a dispute may be submitted to particular officers of each party who must meet and attempt in good faith to resolve the dispute. A contractor such as Leighton is entitled to rely on the Superintendent as bringing an independent and impartial mind to bear on determinations that affect contractual rights and obligations under the Contract. To deprive Leighton of that impartiality would constitute a substantial and serious breach of the Contract. The first three causes of action arise out of the same facts and circumstances. They relate to the express term of the Contract that the Superintendent is to act honestly and fairly, and an alleged implied term that the Superintendent would act independently in exercising, assessing, certifying or determining functions under the Contract. (2) The form of contract issued to Leighton required that the Superintendent would act honestly and fairly and would act independently in exercising, assessing, certifying or determining functions. (3) The Superintendent during the precontract negotiations with Leighton was intended by the Principal and PKM to be either PKM or Mr Randall Haynes. (4) By virtue of its involvement in the precontract negotiations, PKM knew or ought to have known that Leighton would, unless told otherwise, assume and believe that the person identified in the Contract as the Superintendent was the Superintendent and that that person would act honestly and fairly and would act independently in exercising, assessing, certifying or determining functions. (5) In those circumstances, in order to avoid the likelihood of Leighton being misled, it was necessary for PKM, and the Principal, to disclose any arrangement between them that would or might have the effect that the Superintendent would not act honestly and fairly and would not act independently in exercising, assessing, certifying or determining functions. (6) By proffering, and dealing with Leighton on the basis of, the form of contract which they did, and by failing to disclose any contrary arrangement, PKM impliedly represented that the Superintendent identified in the Contract would act honestly and fairly and would act independently in exercising, assessing, certifying or determining functions. (7) At the time of the precontract negotiations with Leighton and at the time of entry into the Contract, PKM and the Principal intended or contemplated that the Superintendent identified in the Contract would not act honestly and fairly and would not act independently in exercising, assessing, certifying or determining functions, but rather, at least in determining whether to grant claims for variations and extensions of time by Leighton as the Contractor under the Contract, would act as discussed and decided with the Principal without the knowledge or participation of Leighton. (9) By reason of those matters, PKM engaged in conduct that contravened s 52 of the Trade Practices Act. (10) In the alternative, by reason of those matters, the Principal engaged in conduct that was in contravention of s 52 of the Trade Practices Act and PKM was a person involved in that contravention. (11) Leighton suffered loss or damage by the contravening conduct. (2) In the course of administering the Contract, PKM purportedly acting as Superintendent, acted in accordance with private arrangements and discussions with, and decisions of, the Principal, including in determining Leighton's variation and extension of time claims, and thereby failed to act honestly and fairly, failed to act independently, and failed to act in accordance with the Contract. (4) The Principal's said breaches were repudiatry breaches which, if the material facts were fully known to Leighton, would have entitled it to terminate the contract. (5) PKM owed to Leighton, as Contractor, duties of honesty and fairness in relation to its administration of the Contract. (6) PKM knew or ought to have known that Leighton would, unless otherwise told, assume and believe that the Superintendent was acting and would act honestly and fairly, was acting and would act independently in the exercise of assessing, certifying or determining functions and was acting and would act in accordance with the Contract and knew or ought to have known that that was a significant matter to Leighton. (8) PKM and the Principal failed to disclose to Leighton the private arrangements, discussions and decisions referred to above. (9) In answer to direct requests on behalf of Leighton, PKM and the Principal refused to disclose the manner in which PKM was administering Leighton's claims and, in particular, failed to disclose that it was doing so in accordance with the private arrangements set out in the letters of 5 September 2002 and 22 October 2002. (10) In the circumstances, PKM's conduct contravened s 52 of the Trade Practices Act. (11) In the alternative, the Principal engaged in conduct that contravened s 52 of the Trade Practices Act and PKM was involved in that contravention. Leighton's contention that there is reasonable cause to believe that such elements may exist is based on communications of 5 September 2002 and 22 October 2002 from officers of the Principal to officers of PKM. The two relevant flow charts are those relating to Building Contract Variation and Extension of Time, which are set out in the Schedule to these reasons. It referred to the email of 5 September 2002 and said, in effect, that the Principal had ' implemented procedures and authority levels to ensure control of items that may have a financial impact on the Design and Construct Contract '. Leighton says that the requirement in those communications is entirely inconsistent with the regime under the Contract, which does not envisage the Superintendent conferring with one party in the absence of the other prior to making its decision. Leighton contends that the Contract should be treated as an exhaustive statement of the mechanism by which the Superintendent was to exercise its or his specific functions. Leighton says that the flow charts establish that the Principal was instructing the Superintendent to exercise its or his functions in a specific way. 31 Leighton also asserts that there is reasonable cause to believe that, having regard to the flow charts, there was an arrangement between PKM and the Principal that before PKM, as Superintendent, approved any building contract variation or extension of time, it would consult with the Principal before entering into negotiations with Leighton, as Contractor. It says that a formal direction in terms of the two communications from the Principal to PKM, as the Superintendent, is, at least in part, inconsistent with the contractual regime and neither the Principal nor PKM provided Leighton with a copy of the flow charts before the Contract was entered into. If Leighton, as the other party to the Contract, was not advised of the direction, there is reasonable cause to believe that there may have been an improper arrangement between PKM and the Principal. 33 PKM, on the other hand, says that the arrangements evidenced by the two communications and the flow charts do not contain the slightest suggestion that either PKM or the Principal intended that the Principal act in breach of its obligations under the Contract in connection with the performance of functions by PKM as the Superintendent. The flow charts simply contemplate a procedure that ensures that all parties are aware of the existence and the time and cost implications of building contract variation claims and extension of time claims and the efficient consideration and communications in connection with such claims. 34 I do not consider that there is reasonable cause to believe, in consequence of the communications and the flow charts, that there was an intention that PKM was not to act honestly and fairly, was not to act independently and was not to act in accordance with the Contract. The documents relied upon do not suggest any impropriety of the kind alleged. Mere suspicion of such a serious matter is not sufficient. Any suggestion along the lines asserted by Leighton is, in my view, no more than speculation. Compliance with the flow charts is quite consistent with absence of any improper intention on the part of PKM as to the manner in which it might exercise functions as Superintendent under the Contract. 35 There are other elements of the first postulated cause of action that are challenged by PKM. It is unnecessary to deal with those elements in the light of the conclusion that I have reached concerning the pivotal basis for alleging an arrangement of understanding that PKM and the Principal intended or contemplated that the Superintendent, whether it was PKM or an employee of PKM, would not act honestly and fairly and would not act independently in exercising independent functions under the Contract or would not act in accordance with the Contract. 36 The second cause of action involves the assertion that, in the course of administering the Contract, PKM, as Superintendent, acted in accordance with private arrangements and discussions with, and decisions of, the Principal and, thereby, failed to act honestly and fairly, failed to act independently in exercising functions under the Contract and failed to act in accordance with the Contract. Leighton relies on the communications of 5 September 2002 and 22 October 2002 and on conduct on the part of the Superintendent. (3) PKM's belated and wrongful rejection of a claim by Leighton. (4) PKM's delay and course of conduct in dealing with particular variation claims by Leighton. 39 The third postulated cause of action alleges that PKM caused a breach of the Contract on the part of the Principal. The basis for that is the assertion that, in the course of administering the Contract, PKM acted in accordance with private arrangements and discussions with, and decisions of, the Principal and thereby failed to act honestly and fairly, failed to act independently and failed to act in accordance with the Contract. Those assertions have already been dealt with. As I have said, I do not consider there is reasonable cause to believe that there was such an arrangement as is postulated on behalf of Leighton. 40 It follows that Leighton is not entitled to discovery of the documents sought in relation to any of the first three causes of action. I am not persuaded that there is reasonable cause to believe that Leighton has or may have the right to obtain relief in the Court on the basis of any of those causes of action. On 9 February 2005, Henry Davis York, PKM's solicitors, wrote to Mallesons Stephen Jaques. The letter asserted that Leighton's application did not set out the reasonable enquiries Leighton had made prior to seeking preliminary discovery pursuant to Order 15A. The letter also enclosed a number of documents, including the communication of 22 October 2002. 43 On 17 February 2005, Mallesons Stephen Jaques responded to Henry Davis York. To the extent that the Superintendent made the determinations, was the Principal's consent first sought? To the extent the Superintendent made the determinations, was the Principal's consent first sought. If that is not the case, we require you to make full disclosure of the true position. We are instructed that our client, similarly, does not understand the flowcharts to describe a process that is inconsistent with the procedures contemplated under the contract and does not believe that the flow charts have in any way impeded the performance of its duties as Superintendent during the course of its administration of the Contract. However, I do not consider that the evidence establishes that there is insufficient information in relation to the other elements of the causes of action to enable a decision to be made whether to commence a proceeding on the basis of those causes of action. 46 In particular, I do not consider that documents relating to the appointment, retainer or engagement of PKM, or any of its employees or officers, is material that is needed to enable a decision to be made as to whether to commence a proceeding based on the first three causes of action. One element of Leighton's first cause of action is the assertion that the Superintendent was intended to be either PKM or Mr Randall Haynes. Leighton says that it is not practicable for Leighton to obtain information as to that matter otherwise than from PKM or the Principal. 47 Leighton accepts that PKM provided documents that suggest that PKM was appointed as the Superintendent. Leighton says, however, that there are other documents created by, or on behalf of, PKM and the Principal that suggest that individuals, including Mr Haynes, were appointed as a Superintendent. 48 Leighton has drawn attention to correspondence from PKM signed by Mr Haynes as ' Superintendent '. However, by letter dated 6 August 2003, PKM informed Leighton that, pursuant to clause 24 of the General Conditions, from 6 August 2003 the Superintendent's Representative would be Richard Wilkinson. The letter of 6 August 2003 was signed by ' Peter Morgan Superintendent '. Mr Pether says in an affidavit that Leighton had not been notified that the Superintendent was Mr Peter Morgan or anybody other than Mr Randall Haynes of PKM. Mr Pether ends by saying that Leighton has no means of knowing who, if anybody, was in truth appointed from time to time to act as Superintendent or as Superintendent's Representative. 49 After 6 August 2003, Leighton received correspondence from PKM signed by Mr Wilkinson, sometimes as ' Superintendent's Representative ' and sometimes as ' Superintendent '. From 4 May 2004, Leighton and PKM engaged in correspondence in which Leighton sought clarification of the proper appointment of the Superintendent and the delegation of functions to a Superintendent's Representative and sought a copy of any instrument of appointment. PKM and Mr Pratt, apparently on behalf of the Principal, asserted that the Superintendent named in the Contract was not Mr Haynes, but was PKM, that the Superintendent had remained PKM throughout, that Mr Wilkinson had been the Superintendent's Representative for all purposes since 6 August 2003 and that Leighton had no entitlement to see any instrument of appointment and none would be provided to it. 50 Whether PKM or Mr Haynes was appointed as Superintendent involves a question of the proper construction of the General Conditions. Any dispute as to who was Superintendent appears to relate to the identity of the original Superintendent. An instrument appointing the Superintendent would shed no light onto the proper meaning of the General Conditions. I do not consider that Leighton has established that it does not have sufficient information concerning the identity of the Superintendent to enable it to make a decision as to whether or not to commence a proceeding based on the first three causes of action. (2) The Principal and PKM were aware of a number of matters that were inconsistent with the information provided by them to Leighton, namely, the information referred to in paragraphs 3.3.5 to 3.3.40 of the Notice of Dispute. (3) Those matters would have conveyed a very different impression of the design risk and were obviously highly material to Leighton's tender, including the matters referred to in paragraphs 3.3.42 to 3.3.57 of the Notice of Dispute. (4) Neither the Principal nor PKM disclosed those matters to Leighton. (5) By reason of the foregoing, PKM engaged in conduct that contravened s 52 of the Trade Practices Act. (6) In the alternative, the Principal engaged in conduct that contravened s 52 of the Trade Practices Act and PKM was involved in that contravention. In the short tender period, Leighton was selectively provided with only information that conveyed the impression that the design documentation was all but complete, fully coordinated and properly validated against the existing building, with very little design work remaining to be done. The impression was conveyed that the state of the existing building, including the condition, locations and dimensions of services and structure, had been taken into account and difficulties resolved. The project was sold as one that involved minimal design risk. (2) that was false. Leighton was passed a design risk that was vastly different from that represented. The design documentation did not take proper account of the state of the existing building, was not coordinated and its shortcomings have been progressively revealed during demolition and construction. (3) It will take a Court no time to conclude that the Principal's conduct in providing and withholding was materially misleading. There are many instances where it will be a difficult for a court to escape the conclusion that the Principal must have known that the true state of affairs differed from what it represented. (4) The true design position, concealed by the Principal, has led to very substantial delay and disruption to Leighton's work. The problems on site, which were unforeseen by Leighton, have required a massive increase in design resources to design around problems, fix the Contract design documents and continue to move the project forward. Architectural resources required have more than doubled that which was planned and structural engineers resources have been required to be increased more than seven-fold. That is a measure of the misrepresentation of how advanced the design was. Each of the Principal's principal consultants was presented, who demonstrated by extensive reference to the design documentation that they had carried out a very significant amount of design, development and detailing. 3.3.7 Leighton was informed that there had been detailed consideration of various complex matters and generally that the design process of all consultants, as coordinated by the architect, was so far advanced that it was practically complete, and essentially capable of implementation, with only the remaining detailing outstanding which one would ordinarily expect in the course of construction, including the preparation of shop drawings. 3.3.14 Given that the Project involved extensive remodelling and refurbishing of an existing building, with considerable structural complexity, it was of obvious importance to Leighton that the services and structural consultants had, in preparing their designs, first taken proper steps to ascertain the state of the existing building. If this were not the case, one might anticipate numerous design issues arising during construction, with potential for significant delay, disruption and extra cost. 3.3.17 The architect's schedule required it to coordinate and integrate all design work of the other consultants into the architectural documentation. 3.3.18 That was a normal and expected role for the base building architect on such a project, and it was of importance to Leighton that the architect's scope included such a role. It was important that all services, structural details and architectural elements, both new and existing, had been coordinated so that clashes had been identified and eliminated and such matters as layouts, set downs, ceiling heights etc were checked to ensure that they would work. 3.3.19 The architects scope contained no material exclusion of services, other than the tenancy fitout. 3.3.20 Accordingly, it was reasonable to conclude in the absence of contrary advice that the architect's services extended to the design, including coordination, of the entire building except those interiors where the services extended to coordination only. 3.3.21 Part of the background information provided with the request for tender was a summary outline of scope of services for tender allowance, which scheduled the novated consultants and their services for both the base building and the ' Living Well ' tenancy. The architect's services were stated to cover the construction documentation for the base building, and the structural engineers services were stated to cover the construction documentation for both the base building and the Living Well tenancy. That confirmed that the design services for the building were comprehensive save as expressly identified. 3.3.22 By a spreadsheet provided to Leighton on 3 June 2002, the Principal conveyed the information that, as at 31 May 2002, the architect had been paid about 80 per cent of its fees for all work up to and including design and documentation, the structural engineer about 82 per cent and all consultants on average about 84 per cent. As design work was continuing during the tender period, that reinforced the impression that had been conveyed that design and documentation would be all but completed by the time of commencement of the Contract. 3.3.26 Leighton expressed to the Principal its concern to ensure that the amounts said to be outstanding to the consultants were adequate to cover any design and documentation that remained to be done. 3.3.27 At this time, Leighton was told that the design and documentation was virtually complete, with only a small amount of work remaining to be carried out. 3.3.31 Leighton's tender letter of 21 June 2002 contained the assumption that the Principal has received completed Consultancy Agreement Schedule 12 Certificates from all consultants for all work up to the Construction Attendance Stage and that the Principal's silence implicitly affirmed that assumption. 3.3.37 In the light of all the information provided, it was reasonable to conclude that, by the time of the Contract, the design documentation of all consultants was virtually complete in accordance with their retainers, including all that was necessary to verify the state of the existing building, and including coordination and integration of all designs by the architect. 3.3.40 Leighton was required, in the short tender period allowed, to determine the level of design risk and what contingency or qualifications to allow for it in its tender. The Principal had gone out of its way to provide only information to Leighton that conveyed the overwhelming impression that the design and documentation would, by contract date, be all but complete, fully coordinated and properly validated against the existing structure and services, so that very little design work would be required after Contract other than normal detailing during construction. 3.3.41 It now appears that the Principal, in particular identified officers of the Principal, were aware of a large number of matters, which were inconsistent with the information referred to above, which would have conveyed a starkly contrasting impression of the design risks, which were obviously highly material to Leighton's tender, and which the Principal did not disclose. Nor had they carried out the surveys to document the existing structure and services. Nor had they prepared the reports on the extent and accuracy of the available existing building documentation and building services documentation. 3.3.43 The structural engineers have not carried out verification of the existing building as required. 3.3.44 Such survey of the existing building as had been carried out was clearly no substitute for the survey and verification work that was provided for in the consultancy deeds. 3.3.45 The scope of services negotiated by the Principal with the architect was in fact far less comprehensive than the scope indicated in the material provided to Leighton. 3.3.48 The fact that the architect's scope excluded the hotel rooms and was very limited in other design areas resulted in an absence of coordination in these areas. 3.3.49 There had also been extensive negotiations between the Principal and the structural engineer bearing on scope of services, survey and coordination, which were not disclosed to Leighton. 3.3.50 Given that Leighton was being asked to assume design risk, a course of correspondence detailed in paragraph 3.3.49 ought to have been fully disclosed to Leighton. The Principal should have disclosed to Leighton certain identified matter. 3.3.51 It is difficult to understand how the Principal, acting in good faith, could have chosen not to disclose the structural engineer's correspondence, or the substance thereof, to Leighton. 3.3.52 The combined effect of incomplete scopes of services for the consultants, and inaccurate and incomplete survey information, exacerbated by late design changes and given the extremely tight constraints of an existing structure, was that the coordination of the design documentation of the various design consultants was of utmost importance but was not adequately provided for. 3.3.53 The survey and coordination services called up by the consultancy deeds would have substantially eliminated the risk of the very problems that have occurred. 3.3.54 As a result of the limited scopes of services for the architect and the structural engineer, and the consequential lack of appropriate survey information and proper coordination, the design was in fact not nearly as advanced or reliable as represented by the Principal. As detailed in Schedule 3 of the Notice of Dispute, a large number of existing fire detection and EWIS systems and equipment were depicted in the tender drawings as to be reused. On post-contract investigation, many of these systems were found to be grossly non-compliant, non-functioning or non-existent. Yet the Principal had provided information to authorities, in the form of annual compliance certificates, that the services were compliant with BCA and NSW Fire Brigade requirements. 3.3.57 The presence of asbestos provides another illustration of the state of the existing building, which was not properly examined by consultants and not disclosed by the Principal. This is detailed in Schedule 2 of the Notice of Dispute. The assertion is that the Principal and PKM engaged in conduct that had the effect of conveying to Leighton the impression that the design risk being assumed by the successful tender was minimal. Whether or not that conduct reasonably conveyed such an impression and whether Leighton gained that impression are matters entirely within the knowledge of Leighton. Despite the assertion in paragraph 3.3.41 of the Notice of Dispute, which is highlighted in the summary above, the state of mind or state of knowledge of the Principal and PKM does not appear to be an element of the cause of action. 57 It is difficult to see why the fact that the Principal was aware of a large number of matters, which were inconsistent with the information provided to Leighton, is relevant to a cause of action based on contravention of s 52 of the Trade Practices Act . Either the conduct alleged was misleading or deceptive or it was not. There is no element in the putative cause of action, for example, that the Principal represented that it had made full disclosure to Leighton of matters known to the Principal. Nevertheless, subject to that comment, the detailed material contained in the Notice of Dispute may well support a conclusion that there is reasonable cause to believe that Leighton has or may have a right to obtain relief against PKM on the basis of contravention of s 52 of the Trade Practices Act . However, Mr Pether also says that, in relation to the fourth cause of action, he will need to know what information on the scope and state of completion of the design consultants' respective briefs was in the possession of PKM, as distinct from the Principal, at the time the Contract was entered into. 59 Leighton contends that PKM was aware of a number of matters that were inconsistent with the representations said to have been made by PKM to Leighton. Leighton says that, while it had sufficient information to be able to trigger the dispute provision of the Contract, the information required to trigger such a dispute is far less than the information required to determine whether or not a right to relief exists that can be the subject of a properly pleaded claim in the Court. Leighton says that the material in respect of which discovery is sought would enable Leighton to determine the extent of PKM's knowledge at the time the alleged representations were made. Leighton says that that information is required in order for Leighton to determine whether or not there is reasonable cause to believe that PKM did in fact engage in conduct that was misleading and deceptive. 60 However, that contention appears to involve a misapprehension. The extent of PKM's knowledge is irrelevant to the question of any representation that it made was misleading or deceptive, except to the extent that the representation relates to PKM's state of knowledge itself. Whether or not PKM had information that would enable it to conclude that a representation is misleading or deceptive is irrelevant to the question of whether or not, in all the circumstances, any representation was misleading or deceptive. There was no allegation of fraud and no suggestion of a knowingly false representation on the part of PKM. 61 The detail contained in the Notice of Dispute is immense. I consider that it would be extraordinary for a claim such as is made in such detail in the Notice of Dispute to be made if Leighton does not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain the relief that is claimed by the Notice of Dispute. It is inconceivable that responsible officers of Leighton could be parties to the making of such a claim as is formulated in the Notice of Dispute unless those officers had sufficient information to make a decision as to whether to commence a proceeding in the Court to claim the relief that is sought by the Notice of Dispute. 62 I am not persuaded that the second prerequisite in relation to the fourth postulated cause of action is made out. | application for discovery order 15a r 6 of the federal court rules whether there is reasonable cause to believe applicant has or may have right to obtain relief against respondent whether even after making all reasonable enquiries applicant has insufficient information to decide whether to commence proceeding whether there is reasonable cause to believe respondent is likely to have documents relating to whether applicant has right to obtain relief. practice and procedure |
Had not the appellant been in immigration detention, I would have taken some more time writing these reasons. The necessity for prompt disposition of the matter, once I had concluded that the appeal should succeed, necessitated that any possible improvement in felicity of expression should give way to despatch. 2 The relevant Tribunal decision was made on 9 February 2007, after a hearing on 17 January 2007. An earlier Tribunal hearing had taken place on 26 May 2006, prior to an earlier decision by the Tribunal made on 15 June 2006. That earlier decision had been set aside by orders made by consent in the Federal Magistrates Court. 3 I granted leave to file in Court an amended notice of appeal that had been prepared by Dr Griffiths SC, who appeared pro bono pursuant to a request made by the Registrar after an order was made pursuant to Order 80 of the Federal Court Rules . Reliance on that amended notice of appeal was opposed by the Minister, on the grounds that it raised factual matters not argued at first instance that would, or could, have been affected by evidence. The Minister also submitted that, taking the appellant's complaints at their highest, the appeal should be dismissed because the supposed procedural unfairness complained of could not possibly have affected the result. These contentions (which were not the totality of the Minister's submissions) require me to explain something of the background as to the conduct of the matter below and how the matter came to this Court on appeal, in the form it does. 4 The applicant is of Indo-Fijian ethnicity, born in Fiji in April 1956. He arrived in Australia in January 1999. He did not apply for a protection visa until 23 February 2006. The appellant's claims, in summary, were that he was a businessman, who, from 1987 until January 1999, owned his own electronics shop in Suva. He claimed to fear for his safety from indigenous Fijians, citing the events of the 1987 coup and threats and physical abuse since then. He claimed that his wife had been raped by indigenous Fijians in 1987. He claimed some notoriety in Fiji as a prominent businessman and supporter of the Fiji Labor Party. 5 The reasons of the Tribunal, after reciting his claims, described the hearing on 17 January 2007. It is clear from that part of the reasons that the Tribunal had difficulty accepting a good deal of the evidence of the appellant. On the day following the hearing, 18 January 2007, the Tribunal sent a letter to the appellant's migration agent, as his "authorised recipient" under the Migration Act 1958 (Cth) and Migration Regulations, Ms Beatriz Stotz of "Playfair Visa and Migration Services". (Ms Stotz had appeared for the appellant at the Tribunal hearing. ) In its reasons, the Tribunal said that the letter was sent "pursuant to s 424A of the Migration Act ". Five lengthy paragraphs of factual observations set out inconsistencies between information that had been previously provided and that had been provided to the Tribunal. This was said to be relevant because of possible adverse credibility findings on the basis of such inconsistencies. However, you did not apply for asylum on that occasion. Moreover, you returned to Australia in January 1999, but did not apply for asylum until 23 February 2006. This information is relevant because it may cast doubt on the genuineness of your fear of persecution in Fiji. Your comments are to be in writing and in English. They are to be received at the Tribunal by 25 January 2007. On 29 January 2007 the Tribunal wrote to the applicant's adviser informing her that the Tribunal has not granted an extension of the time for provision of comments. However, she was also advised that the Tribunal would not take any steps to finalise the case until 31 January 2007 and would consider any material which is submitted on or before that date. The appellant was comprehensively disbelieved. The inconsistencies in his evidence " throughout the process " were said to "cast considerable doubt on his reliability as a witness and the credibility of his claims". The perceived failure to respond to the letter sent on 18 January 2007 played a part in the Tribunal coming to the view it did, saying that the "applicant did not respond to the Tribunal' s 424A letter in which these matters were put to him for his comment. In the Tribunal's view, his application for a protection visa was a final attempt at securing residency in Australia ". In fairness, the basis of the disbelief of the appellant went far wider than the stated failure to respond to the s 424A letter. 11 The amended application for review filed in the Federal Magistrates Court had two grounds. The second can be ignored, as it played no part in the appeal. The references in the particulars were to the three page letter sent on 18 January 2007 by the Tribunal to Ms Stotz (the "Decision Record CB 228-230") and a confidential facsimile from Ms Stotz at Playfair to Ms Marilyn McPherson, one of the Tribunal case officers (the "Decision Record CB 233"). That latter document is attached as annexure 'A' to these reasons. 13 Annexure 'A' is the form of document kept by Playfair. The "faxed" stamp was put on at Playfair. It can also be seen that the first paragraph of the facsimile, expressed in the present tense , stated that the response to the invitation letter was being forwarded. The second paragraph commenced by a reference to "this opportunity" (that is while something was being done) being taken to request extra time to provide further information. 16 The Federal Magistrate found, and no appeal is made from the finding, that only the cover sheet and not any enclosure was received by the Tribunal. 17 Notwithstanding the lack of appeal from that finding, it is necessary to examine what occurred before the Federal Magistrates Court, not only in the immediate resolution of the appellant's appeal, but also by way of comment on the findings made about Ms Stotz. 18 The appellant conducted the hearing before the Federal Magistrates Court without legal assistance. (b) She prepared the cover sheet. (c) On 25 January 2007, she requested the office manager at Playfair that the documents (6 pages in all) be sent by facsimile to the Tribunal. Ms Stotz did not say that she had sent them or that she observed them being sent. (d) It was standard office practice at Playfair to contact the Tribunal to confirm receipt (that is, by the Tribunal) of a facsimile. (e) In the afternoon of 25 January 2007, she received a call from a Tribunal officer on her mobile phone. " I said thank you and we finished the conversation. Her answer was tolerably understandable and conformable with common sense. ---Well, the normal procedure is a fax will be sent and then the Tribunal will be called to check that the fax has been received. If the Tribunal will ring the case officer, or the person who the fax was addressed to, if the person, for example, is not there, then --- whoever answers the phone --- we will say, " We are ringing about --- to confirm that this message --- this fax transmission has been received. " Sometimes the person who takes the call will confirm --- sometimes the person who takes the call says, " I will let the case officer know, " and sometimes the case officer will say, " well, I don't have it yet but I will ring you to confirm when I have it. " So my understanding on that day is that I was out of my office, I received the call, it was a confirmation, " yes, the fax is here . It may also be noted that her recollection in the last sentence was "Yes, the fax is here" not, as it was elsewhere in her evidence, " Yes, here it is, 5 pages. Did you receive the fax? " and she said, " No. Let me go and check ," and then, about a minute or two later, she said, " Yes, it's here , the fax of around five pages ," and I said, " Yes, okay. Great ," she said, " Yes. Good ," and that is all the conversation that took place. The officer stated that a Fax was going to be forwarded to my office stating that the Member had not agreed to an extension of time to provide further information as requested in my Fax Message but the Member would not finalize [name of appellant] 's case until January 31, 2007 so I could still forward information until such time. She had dealt with a number while acting for the appellant. 21 It is also important to understand that the appellant's case was not pleaded, but was asserted in the application in the way that is set out above. 22 The first respondent relied on two affidavits from one deponent, Mr Jonathan Willoughby-Thomas, the New South Wales District Registrar of the Tribunal, and the Migration Review Tribunal (the "MRT"). Mr Willoughby-Thomas said that he had " overall responsibility for receiving and managing review applications lodged in the MRT and the Tribunal in the New South Wales District Registry, including the management of all correspondence relating to applications for review. He gave a commentary (not admissibly) as to what the markings on the coversheet showed and meant. He then gave evidence (in part inadmissibly) as to what all officers of the MRT and the Tribunal were told about "case notes" (by which he meant diary notes) of discussions and what the procedure was for entering a note of conversations in the computer system. Annexed hereto and marked "C" is a copy of an email I sent to all New South Wales registry team leaders and managers on 14 July 2006 giving them instructions on the use of case notes. The MRT-RRT produced a CMS "Leader Guide" which was used to train officers when the CMS was introduced. The Leader Guide relevantly states "Case notes replace the need to write Post-it notes, Word memos or emails" and "if it is about a case it must be in the case". Annexed hereto and marked "D" is a copy of the relevant extract from the CMS Leader Guide. The document was plainly tendered as a complete record of all conversations. Mr Willoughby-Thomas, could not, of course, prove any such thing. The limit of his knowledge was the system, including the instructions that had been given to case officers and any standard of compliance with the system that he had observed (though he gave no evidence of this latter kind). Annexed hereto and marked "E" is a complete copy of the case notes taken in the applicant's matter. The absence of cases notes in relation to the conversations described at paragraphs 11 to 15 of the affidavit of Ms Stotz suggests to me that those conversations may not have taken place. None gave evidence. The evidence disclosed that they all were still employed by the Department. 26 On this state of the evidence, all that could be said about the case note document was that it was the document kept as a record of conversations, that the system was that notes of conversations were supposed to be entered, and that there was an instruction to that effect. There was no evidence as to whether instructions were invariably followed. There was no evidence from those who handled the appellant's file. --- Yes. If you turn over ---? ---Yes. --- Yes. --- Yes. --- Yes. --- That's not correct. Apart from any other difficulty, the question was misleading because of the lack of proof of the completeness of the document as containing all conversations in the period. 28 There was no doubt, however, that in the cross-examination here and elsewhere Ms Stotz was clearly challenged on her version of events about the conversations taking place. She was not challenged at all, however, about preparing the five page response submission. 29 Mr Willoughby-Thomas was called on 10 May 2007. In his evidence in chief, he was asked a question and gave an answer which if viewed as evidence as to the system was unexceptional (though repetitive), but if given to show the completeness of the case notes document as recording all the conversations was plainly beyond his knowledge. --- Okay. The Tribunal keeps a record of all communication, correspondence or telephone conversations between the Tribunal and the applicant or their representative. All staff are instructed to- on every occasion that they deal with the applicant or their representative, that they are to record that information on the case management system, as a case note. The system is relatively user-friendly, you just click in on "Case note" and type it in, save it and it's saved in the system, but all dealings with the applicant are recorded on Casemate. --- Well, it would be fair to say, yes, that any dealings with the applicant that are recorded on Casemate, as they should be, would not necessarily be also on the file. Importantly for the proposition put by Mr Roberts SC, on behalf of the Minister, that the amended notice of appeal contains a new case, it should be noted that the appellant cross-examined for a time assuming that Mr Willoughby-Thomas was correct that the five page response was not received. Because you only received one page, which is the coversheet, which states that, "Coversheet plus five pages ---"? --- Right . --- No, I'm assuming not, because it says only the one page was received. --- Right. If a case officer had picked that up and had, you know, been aware, yes, they may have rung but we receive hundreds of faxes a day and often they are printed off and placed on the file. --- I would say --- I would say they didn't --- they're not obliged to. They're obliged to receive the information that the applicant sends. Right? Should there have been somebody responsible to at least do something about it, that they did not receive the five pages of the fax? --- It would really depend on the officer receiving it. They may or may not have rung, but, receiving hundreds of these faxes, often they are, generally, printed off and placed on the file for consideration by the member. --- I won't say it wasn't done but I --- there's no evidence that it was done. " --- No. I'm saying that there's no evidence that it was done. I don't know. I didn't personally do it. I don't agree with Mr Mitchell's objection but, by the same token, I don't think this line of questioning is of any help to me. Can you suggest why it would be? I'll give you an example, your Honour. For example, if somebody send me a fax with a coversheet that says, "Coversheet plus six pages", and I don't receive that six pages, I will definitely give them a call, saying that I only received one coversheet, not the six pages. That is the issue. I think that the witness has said is that there is no evidence one way or the other. I'll give you one or two more questions on the point but I think you should move on. No error is demonstrated by the Tribunal not correcting the applicant's adviser's error. 35 The above is enough to demonstrate that the argument sought to be propounded under the amended notice of appeal was run at the trial. There was no pleading. The amended application contained an assertion of a failure to afford procedural fairness. The appellant said that the cover sheet and five pages had been received. The Minister said that only the cover page had been received. The appellant said that even if that were so, the Tribunal should have taken steps to find out about the five pages, given the face of the cover sheet. The Minister said that there was no duty to inquire. The Federal Magistrate agreed with that last proposition. The appellant, through Dr Griffiths SC in the amended notice of appeal, challenges that conclusion. He is entitled to do so. 36 Before turning to the argument on that issue, it is necessary to say something further about the Federal Magistrate's findings. I do so because a witness, the migration agent, Ms Stotz, was disbelieved on her oath. That, of course, was a very serious and grave conclusion. No appeal is taken about that finding. I have already said some things about her questioning. It needs to be added that after the first day's hearing, another affidavit (of 18 May 2007) of Mr Willoughby-Thomas was filed and relied upon at a second day of hearing. This affidavit gave evidence of a search of the electronic memory of the facsimile machine. The affidavit contained hearsay material from a Ms Ruddy as to what the printout from the machine revealed. Based on what that other person (who was not called) had told him, Mr Willoughby-Thomas said that he believed that only one facsimile came from Playfair on 25 January 2007 and that he believed that this was the one page coversheet. 37 None of the case officers was called on this second day either. That is also confirmed by the machine-made notations at the top and the bottom of the document. The evidence provided by Mr Willoughby-Thomas in his second affidavit satisfies me that the Tribunal's records do not disclose that a further facsimile was sent by the applicant's agent to the Tribunal that day and that, at no time prior to the handing down of its decision, did the Tribunal receive the further five pages which the applicant asserts had been sent to it. I also note that it is not the applicant's case that the facsimile was sent more than once. It is not corroborated by contemporary file notes or by a facsimile transmission report from her office. Moreover, her evidence is contradicted by the Tribunal's casenotes, where there is no record of statements relevant and important to these proceedings which the adviser says were made on 25 and 29 January 2007. Further, the Tribunal's letter of 29 January 2007 (CB 234) suggests that the Tribunal had not received any substantive response to its s.424A(1) notice. I only wish to say that I have serious reservations as to the legitimacy of finding in [25], effectively, that Ms Stotz was not telling the truth. Even if one accepts the evidence of Mr Willoughby-Thomas based, as it was, largely on hearsay and the views of another not called as to what the facsimile machine records showed, the receipt of only one page (the cover page) did not conclusively mean the conversation that Ms Stotz deposed to could not have taken place. The cover page contained a statement that it was accompanied by five pages. Someone could have read that (without seeing the five pages) and said that the "fax has arrived with five pages". Not one available witness was called to contradict Ms Stotz. 40 I have not had the benefit of counsel's argument on the above issues. I am not intending any personal criticism of counsel at the hearing, or of the Federal Magistrate. Ms Stotz was, however, a witness, and such a finding may be of significant damage to her personally and professionally. I simply wish to record the reservation that I have as to the legitimacy of the finding made about her. The Federal Magistrate erred in not holding that the decision of the Second Respondent dated 9 February 2007 was vitiated by the jurisdictional error on one or more of the following grounds. He made the assertion that even if one page only had been received, the Tribunal should have called. This was dismissed on the basis that there was no duty to inquire. 43 There was no issue but that the coversheet was received by the Tribunal. The coversheet plainly told the Tribunal that the response existed and that it was intended to be with the coversheet. 44 If the Minister wished to question whether the response existed at the time the facsimile was sent, he could have. Hardly surprisingly, he did not. Ms Stotz's credit was put in issue about the conversation. She was not challenged on the existence of the five pages. 45 The question is whether the Tribunal erred in failing to call the number given on the coversheet to ask where the apparently intended five page response was. 46 In [27] of his reasons, the Federal Magistrate cited two cases in support of his conclusion that there was no duty to inquire: Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at 21-22 [42] - [43] and Re Ruddock; Ex parte S154/2002 (2003) 201 ALR 437 at 451 [58]. The first ( SGLB [2004] HCA 32 ; 207 ALR 12) was a reference to the reasons of Gummow and Hayne JJ (with whom Gleeson CJ agreed). Their Honours in that case said that the power to obtain evidence under s 427 did not import an element of duty, a position made plain by s 426(3). That was a straightforward recognition that no duty to enquire about evidence arises from the terms of s 427 of the Migration Act . This much can be readily accepted. There are ample Full Court decisions to like effect. This may be of particular importance where, as here, the complaint is of a failure by the decision-maker to communicate something to an affected person before a decision is made. It is the potential for a decision to affect rights, interests, or legitimate expectations, that attracts the requirement of procedural fairness. One can describe that as exercising a power. Any step in the administrative process is in one sense the exercise of power. It is more easily and aptly described as the taking of an administrative step within the context of the review process provided for by Part 7 of the Migration Act . Not to take that step or not to exercise that power was, in practical terms, to deny the appellant the invitation that he had apparently taken-up to respond to the letter of 18 January. Given that it was apparent that the response had not been received, through human or machine error, a failure to exercise the power or take the step had the consequence of ensuring that the response, which s 424A , or the actions of the Tribunal, contemplated was not received. 49 The Migration Act , s 424 provides for the Tribunal "getting" information that it considers relevant. Section 424(1) says that if the Tribunal gets such information, it must have regard to it. Section 424A contains the well-known obligation to send a letter giving the applicant particulars of relevant information and inviting the applicant to comment. Section 424B requires the invitation to specify how the comments may be given. Section 424C(2) empowers the Tribunal to make a decision if the comments are not given within time " without taking any further action to obtain the applicant's views on the information. " It is implicit in Division 4 of Part 7 that the Tribunal must read and have regard to any response to an invitation to comment sent pursuant to s 424A. No express provision states as much, but Parliament did not need to. It would undoubtedly be wrong of the Tribunal to say that it may well have received the envelope containing the response, but it was not obliged to open it and read the contents, because it had no obligation to inquire. Such an obligation (together with one to have regard to the contents) inheres within Part 7 and the undertaking of the review process. The Tribunal is conducting a review by reference to the material before it. Here, the material before it was a document which, on its face, clearly stated that a response was provided, but evidently, through some oversight or error, human or machine, it had not been transmitted. 50 The giving of the invitation to comment (whether strictly required under s 424A or not) carries with it an obligation to deal with a communication in response to the invitation in a reasonably business-like way. Parliament does not have legislate for such matters. If it could be seen (as it could be from a plain reading of the coversheet) that a response was intended to be enclosed, but for some reason it was not, and the identity and the phone number of the sender was clear (as it was), not to take the simplest administrative steps to follow up the information was to deny or destroy, after the event, the genuineness and reality of the invitation to comment that had been given. 51 In Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 ; (2003) 128 FCR 553 (referred to by the High Court in SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 at [35] ), the Full Court discussed the content of the obligation in s 425 to invite the applicant to appear. Much of what was said there is relevant to the cognate invitation to comment. Each invitation must be "real and meaningful". The time frame in which this is to be assessed may be open and may depend upon the question posed: compare NAHF v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 140 ; (2003) 128 FCR 359 at 364-5 and SCAR [2003] FCAFC 126 ; 128 FCR 553. 52 It does not seem to me to matter whether a letter was required to be sent by s 424A or not. If s 424A required the letter to be sent (see in particular SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 and the sixth piece of information to be commented upon) a statutory obligation arose under ss 424A , 424B and 424C to give a real and meaningful invitation to comment. If the letter was not required by s 424A , nevertheless the Tribunal thought it was, and sent a letter to the appellant through his advisers requesting comment upon certain matters. Though purportedly sent under s 424A , it may simply have been sent under s 424 , or merely as part of the exercise of executive power. In either case, the Tribunal having stated that it would receive a response was bound to give a real and meaningful opportunity to respond: see for example s 424(1). 53 On either basis, the obligation of the Tribunal to give a real and meaningful invitation to comment carried with it the obligation to take reasonably open and regular administrative procedural steps to permit or facilitate fulfilment of the real and meaningful nature of the invitation, where not to take such steps would undermine or subvert the meaningfulness or the reality of the invitation. That obligation involves such mundane things as opening letters, reading them once opened and taking at least basic simple steps that would be taken in any well-run commercial, professional or governmental office, conformable with the recognition of the importance of the response to the invitation to the rights of the applicant and the review process contained within Part 7 of the Migration Act . This does not rest on some posited duty of inquiry. It is not engaging in steps that require for their enforcement some express statutory power. The letter that was received, on its face, told any person who read it that there was with it, or supposedly with it, a five page document which was a response to the relevant invitation. On the facts found by the Federal Magistrate, the five page document was not enclosed. The response was an important document. It must have been, or should have been, apparent that an error (human or machine) had occurred. Whether or not someone did or did not read the coversheet and appreciate this is not determinative. It is clear that someone read at least the second paragraph. The first paragraph (immediately above the second paragraph) in its terms said (together with the express statement above it that there was a " coversheet + 5 pages ") that the response was forwarded when, on this hypothesis, it was not. Whether or not this letter was given to the Tribunal member or not, the Tribunal had notice, in clear plain English, that the appellant (through his advisers) had attempted (unsuccessfully) to respond to the invitation and that something (by way of human or machine error) had gone wrong. This was plain from the English language used on the coversheet. The fact that a person or persons at the Tribunal may not have so understood the coversheet (if that be the case) does not matter. Notwithstanding the submission of Mr Roberts SC, the coversheet was not ambiguous. The present tense was used. It stated that there were five pages with it. On the findings of the Federal Magistrate, there were not. The Minister cannot hide behind the Tribunal not reading, or not reading carefully enough, such an important communication. To do so is itself to undermine the reality and meaningfulness of the invitation to comment that the Tribunal itself had given. A hint of the approach or administrative mindset that led to no step being taken to ring Playfair about the apparently missing five pages can be seen in Mr Willoughby-Thomas' evidence in cross-examination. This was an important document. It was apparently a coversheet to a response to an invitation to comment. Reading it made clear that what had apparently been intended to be sent had not been received. The obligation to give an invitation to comment, and separately or cumulatively, the giving of an invitation to comment carried with it, as I have said, an obligation of the kind that I have expressed to enable that invitation to be meaningful and real: that is the obligation to take reasonably open and regular administrative procedural steps of at least a simple character to permit or facilitate the fulfilment of the real and meaningful nature of the invitation. That started with the obligation to read the communication. It extended to ringing Playfair at the identified number to tell them the five pages apparently intended to be sent had not come through. 55 It was said that the five pages could have made no difference and so relief should be denied. I cannot agree. The Tribunal member took into account as a factor in disbelieving the appellant the fact that no response had been forthcoming. I am not prepared to usurp the bona fide and open-minded consideration of the appellant's case by the Tribunal. 56 In my view, the inaction of the Tribunal for the reasons I have given, amounted to an undermining of the reality and meaningfulness of the invitation to comment that was given purportedly under s 424A or under s 424 or under the general executive power. As such, it was a jurisdictional error in that it undermined the steps in the conduct of the review undertaken pursuant to Part 7 of the Migration Act , that were required by, or authorised by, the statute or authorised as the conduct of the general executive power under s 61 of the Constitution which had been undertaken by the Tribunal, and, once undertaken, were not to be frustrated by the action or inaction of the Tribunal in circumstances where, as I have said, it was obliged to take basic and simple administrative procedural steps. 57 These conclusions can be fortified by the recognition, so often stated, that the Tribunal is engaged in an inquisitorial process: Re Ruddock; Ex parte S154 201 ALR at 450-451 [57]-[58], 455-6 [81], 457 [86] and [88]; Miah [2001] HCA 22 ; 206 CLR 57 at 69-70 [31] - [32] ; Re Refugee Review Tribunal; ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 at 435 [29] - [31] ; Muin v Refugee Review Tribunal [2002] HCA 30 ; (2002) 190 ALR 601 at 648 [208] ; Minister for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) 205 ALR 487 at 513 [97]; Re Minister for Immigration and Multicultural Affairs; ex parte Epeabaka [2001] HCA 23 ; (2001) 206 CLR 128 at 146 [52] ; Abebe v Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510 at 576 [187] ; NCSC v News Corporation Limited [1984] HCA 29 ; (1984) 156 CLR 296 at 315; Re Refugee Review Tribunal; ex parte Aala [2000] HCA 57 ; (2006) 204 CLR 82 at [75] ; Re Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Applicants S134 [2003] HCA 1 ; (2003) 195 ALR 1 at 8; Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 at 405, [78] ; Appellant S395 of 2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473 at [39] ; VEAL v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 at 24; Re Applicant S v Minister for Immigration and Multicultural Affairs [2004] HCA 25 ; (2003) 217 CLR 387 at 413 [76] ; NAFF v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62 ; (2004) 221 CLR 1 at [22] ; SZAYW v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 49 ; (2006) 229 ALR 423 at [4] ; SZBEL 228 CLR 592 at [40]; SZFDE [2007] HCA 35 at [30] ; Minister of Immigration and Multicultural Affairs v Wang [2003] HCA 11 ; (2003) 215 CLR 518 at 540-41 [71] , 526 [18] and 531 [37]; SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 at [111] ff and [199]; NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77 ; (2005) 223 ALR 171 at [9] , [69] and [165]. 58 This inquisitorial function has become relevant in a number of contexts. Indeed, arguably in the context of its inquisitorial process, the Tribunal had a duty to seek evidence concerning this vital matter. The failure here was to take a simple administrative step of an office or housekeeping nature, the failure to take which could be seen on its face at the time to subvert the observance of the Tribunal of its obligation to give procedural fairness by the giving of the s 424A letter, or by the operation of s 424, or by the general executive power. Division 4 of Part 7 is the statutory formulation of the giving of natural justice: see s 422B. Given the importance of procedural fairness for the principles of jurisdictional error sourced in s 75(v) of the Constitution : see SZFDE [2007] HCA 55 at [32] , any subversion of the process of the Tribunal is a matter of importance: SZFDE [2007] HCA 55 at [32] . 60 The same conclusion is to be reached by the application of the principles that in certain circumstances the decision of a Tribunal or decision-maker will be vitiated if some inquiry is not made. Most recently, Kenny J examined these cases in her Honour's comprehensive judgment in Minister for Immigration and Citizenship v Le [2007] FCA 1318. It can readily accepted, as her Honour said, that there is no general obligation to inquire found in s 424(7), nor is there a general obligation to initiate inquiries or to make an applicant's case for him or her. I refer, without repetition, to the long list of cases referred to by Kenny J in Le [2007] FCA 1318 at [60] . The absence of such a general obligation of inquiry can be accepted, without denying the limited proposition supported by numerous other cases that, in certain exceptional cases, a failure to make some inquiry may ground a finding of jurisdictional error if it was plainly necessary to make some reasonably straightforward inquiry before the making of the relevant decision: Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155 at 169-70. Kenny J discusses this in Le at [60]-[67]. I adopt without repetition her Honour's reasons. The only qualification that I would make to her Honour's reasons is that the rubric of Wednesbury unreasonableness may cover circumstances that amount to jurisdictional error and those that amount to error within jurisdiction. It is unnecessary here to explore such possible differences. Here, the failure to take the steps, which in my view were required in the review process, subverted an opportunity to respond to an invitation contemplated or authorised by the statute as part of the review process and so amounted to jurisdictional error. The appeal be allowed. 2. The first respondent pay the appellant's costs of the appeal. The disposition of the judicial power of the Commonwealth in cases such as these, when a point of difficulty or principle arises, cannot be satisfactorily effected without the support of the profession. It is a public service of significant importance, in particular when executed with the efficiency and skill shown by counsel in this case. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | appeal from a decision of the federal magistrates court where the refugee review tribunal sent a letter to the appellant inviting comment where letter purportedly sent under s 424a of the migration act 1958 (cth) where appellant's adviser attempted to send response to invitation whether failure by tribunal to follow up response amounts to jurisdictional error. migration |
I also dismissed the respondents' motion for judgment. In the conclusion to my reasons I expressed the view (at [166]) that I considered there should be no order as to costs. I indicated that I would consider any written submission to the contrary from the parties. The applicant suggests that costs should be in the proceeding on the basis that it enjoyed some limited success. The respondents disagree and contend no order as to costs more accurately reflects the outcome of the arguments. The very limited relief which the applicant enjoyed was the making of an order that discovery be given on behalf of the respondents on a formal basis. By far the majority of the hearing both in terms of actual hearing time and preparation for the hearing was taken up in the applicant's pursuit of wide ranging discovery which I described as fishing. I have accepted the assurance given by senior counsel for the respondents which was that if formalisation of discovery was all that had been sought, it would have been provided promptly. On the other hand, the respondents also failed on their motion for judgment for that portion of the claim (in respect of which there was no admissions). I do not consider that the formalisation of discovery order warrants any form of costs order in favour of the applicant. It did not require a significant hearing which was devoted to the matters on which the applicant failed in order to obtain that order. Equally, I do not consider that the respondents are entitled to any costs order. I remain of the view that the more appropriate exercise of discretion is that there be no order as to costs because the applicant substantively failed in pursuit of its relief and the pursuit of its relief took up much more time than did the motion for judgment pursued by the respondents. I maintain my view that the appropriate disposition of the matter is that there be no order as to costs. Accordingly, I will order as follows in respect of the motions dealt with in the primary reasons delivered on 20 April 2009: There be no order as to costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | discretionary factors costs |
It would appear that she has not attended for work since October 2004. It is her contention that she is disabled from doing so. It is not necessary for the purpose of this judgment to express any view whether that contention is well founded or not. 2 Her appeal concerns allegations that she was victimised because she made a complaint of disability discrimination. The Federal Magistrate who heard the proceedings at first instance did not accept that victimisation had occurred ( Penhall-Jones v State of NSW (No 2) [2006] FMCA 927). He was critical of the way in which Ms Penhall-Jones conducted her case. His criticism led Ms Penhall-Jones to contend that, in addition to making factual and legal errors, he was apparently biased against her. 3 As will be seen I do not accept that she has made out this complaint or any other ground upon which the appeal can succeed. The disability discrimination complaint was made in January 2004. It is unnecessary to trace its subsequent course although, as will become apparent, a conciliation conference which took place on 28 September 2004 provided the occasion for events of significance to the present appeal. An Order that the Respondent and/or its officers have engaged in victimisation because the Applicant made a complaint under the Disability Discrimination Act , and have breached S 42 of the Disability Discrimination Act . Any other Order the Court thinks fit. The engagement of s 42 arose less directly. The jurisdiction of the Federal Magistrates Court to deal with the application made by Ms Penhall-Jones is to be found in s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) ('the HREOC Act'). That complaint had been made on 25 July 2005. 9 The complaint to which s 46PO refers is one commenced under s 46P. Accordingly the Federal Magistrates Court has power to deal with an application alleging victimisation under the Act if a complaint to that effect is terminated under s 46PH of the HREOC Act. Such proceedings are civil proceedings. They are to be distinguished from proceedings for an offence brought directly under s 42 of the Act (see O'Connor v Ross (No 1) [2002] FMCA 210 at [11] ). Ms Penhall-Jones alleged in the Federal Magistrates Court that she was victimised in various ways for the reason that she had made her earlier complaint of disability discrimination. She said that making the disability discrimination complaint (in January 2004) led to her being subjected to or threatened with detriment. Termination of the later complaint (made on 25 July 2005) alleging victimization gave the Federal Magistrates Court jurisdiction to entertain the proceedings and make the decision from which the present appeal is brought. 12 One of the events which plays a part in Ms Penhall-Jones' allegation of victimization was attendance by her, and representatives of the MOT, at a conciliation conference on 28 September 2004 in relation to her earlier disability discrimination complaint. She alleges that attempts by the representatives of the MOT to settle that complaint led to threats to terminate her employment. 13 Another event of which she complains is a decision, made on 4 November 2004, to cancel a 'return to work program' in which she was engaged. A further impugned decision was the refusal of the MOT to later re-instate the return to work program. Reinstatement of a return to work program is one of the forms of relief she sought before the Federal Magistrate. 14 There were also complaints made about the conduct of the MOT and its legal representatives in other, earlier, proceedings in the Federal Magistrates Court following termination of the disability discrimination complaint. Termination by HREOC of the disability discrimination complaint led to proceedings before the same Federal Magistrate and, during the course of those proceedings, a request was made that Ms Penhall-Jones address certain of her communications through solicitors for the MOT rather than directly to the Director-General of the Department of Transport. She alleges this request was an act of victimization. 15 It is alleged that the decision of the Federal Magistrate is vitiated by the appearance of bias and should be set aside on that basis. Ms Penhall-Jones also argues there are other matters which sustain a conclusion of apparent bias. It is also contended the Federal Magistrate applied the wrong legal standard in the evaluation of her case. The essence of the appeal process is the identification and correction of error. That is because statutory provisions conferring appellate powers, even in the case of an appeal by way of rehearing, are construed on the basis that, unless there is something to indicate otherwise, the power is to be exercised for the correction of error. These cases tend to emphasise that 'the limits under which appellate judges typically operate when compared with trial judges' do not derogate from an obligation to correct error. However, I do not understand there to be any relevant qualification to the principle that error must first be demonstrated (see Fox v Percy at [27]). 18 In the usual case, the necessity to identify error presents an appellant with an important practical threshold. An appellant in most cases (for there will always be the unusual and legitimate exception) must show the appeal court how this threshold is to be passed in order to succeed and may not merely invite a different overall impression from the whole of the material (see Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 ; (2001) 117 FCR 424 and Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd (2005) 220 ALR 211). 19 The position is stricter in the case of appeals against discretionary decisions. In such a case, in order to clear the way for an appeal court to consider an alleged error in outcome and, if necessary, to act on its own view of the material, an appellant must first show error in the process by which the discretionary conclusion was reached (see Coal and Allied at [21]). 20 The judgment of the Federal Magistrate from which the present appeal is brought did not involve the exercise of a discretion. The question in issue was whether Ms Penhall-Jones had made out her claim that she had been victimised. Nevertheless, for the purpose of evaluating whether the claim was established, it was necessary for the Federal Magistrate to make findings of fact on the evidence before him and then to apply relevant legal principles to those findings. Any challenge to findings of fact itself requires a demonstration of error. Where the error is alleged to arise from a misunderstanding of the evidence then the evidence or other circumstance relied upon to falsify or qualify the finding (or findings) under challenge must be identified. 21 I will return in due course to a more detailed analysis of the errors said to have been committed in the judgment of the Federal Magistrate but I observe, at this stage, that virtually no attempt was made to challenge the findings of fact from which the Federal Magistrate's application of legal principles proceeded. The challenges by Ms Penhall-Jones consisted almost entirely of criticisms of the ultimate conclusions reached by the Federal Magistrate and about the nature and content of certain criticisms he made of Ms Penhall-Jones and the way in which she presented her case. The matters raised by Ms Penhall-Jones' case on the appeal generally invited a different value judgment to be made about matters where the Federal Magistrate had a distinct advantage over an appeal court because he had taken the evidence directly. She says that in 1998 she had a period of leave as a result of 'psychological injury due to corporate bullying over the previous 12 months'. Then, after a period of secondment to the Premier's Department, from late 2001 various forms of wrongful treatment are alleged to have occurred resulting in the return of her symptoms of psychological injury. By January 2004 she felt unable to work and she made a complaint of disability discrimination to HREOC. 23 The evidence shows that during 2004 the MOT implemented a return to work program. The program included the provision of counselling services by the Workers Health Centre, an independent service. Funds were provided by the MOT. It appears that consideration of the complaint by HREOC and the implementation of the return to work program proceeded separately. A conciliation conference with respect to the disability discrimination complaint was scheduled before HREOC for 28 September 2004. Ms Penhall-Jones arranged a meeting with her legal advisers for 27 September 2004. As a result she elected not to attend a departmental meeting which fell within her responsibilities when she would normally have been present at work under her temporary arrangements. Her failure to attend led to an acrimonious meeting between Ms Penhall-Jones and her immediate supervisor, Ms Reilly. There had been another strong disagreement between them on a policy issue some days earlier, on 23 September 2004. 24 In his judgment the Federal Magistrate was not prepared to regard what happened at these meetings as victimisation within the meaning of s 42 of the Act. Having regard to the written and oral submissions made by Ms Penhall-Jones on the appeal I did not understand these conclusions to be put in issue. The alleged acts of victimisation which are pressed for the purpose of the present appeal, and which, it is argued, the Federal Magistrate wrongly failed to accept, occurred thereafter, from about the end of September 2004. The proposal included provision for a monetary payment, the resignation of Ms Penhall-Jones from her employment and the execution by both parties of a deed of release. The proposal was, in due course, rejected by Ms Penhall-Jones. She did not resign. She remains, formally at least, in the Public Service on the staff of the MOT. 26 To understand complaints subsequently made it is necessary to set out some parts of the draft deed. Can you advise whether you have briefed Counsel directly or have you delegated this task and if delegated, to whom? Therefore, I have taken the liberty of emailing you directly and would appreciate a return email. The Ministry of Transport has retained Abbott Tout, Lawyers. As mentioned earlier she was involved in a return to work program which had been implemented some time after her cessation of work in January 2004. The return to work program was designed to achieve a progressive return to full time work. She had the assistance of the Workers Health Centre. At the Workers Health Centre it was Mr Ed Zelma (an Occupational Therapist who was the Acting Director of the Workers Health Centre) who had particular responsibility for her case. 32 From material in the appeal books (which summarises various discussions and extracts email correspondence from March to November 2004) it seems that, during October 2004, officers of the MOT came to a view 'that under current arrangements it is difficult to accommodate Margaret into meaningful duties due to a lack of presence in team functioning. Additionally, inability to attend meetings and inability to be flexible. ' It would also appear that on about 21 October 2004 Ms Penhall-Jones again ceased work altogether and was thereafter on stress leave. I think we all agree. But its not because of me --- it is because Bill and Catherine have ganged together and are being stubborn and intractable. ... The meeting for Thursday will be to formalise the end of rehab. I regret that I have not been able to assist you in securing our initial goals together. These two emails suggest an acknowledgement by both Ms Penhall-Jones and Mr Zelma that the return to work program was not meeting its goal of providing an effective transition to the resumption of full-time duties. This organisation is largely acknowledged throughout the Public Sector as one of the most toxic. I don't think this tactic will serve them well, unless they are preparing to pay monetary compensation for the damage they have done to my career. Can you confirm the meeting time on Thursday? I am not in the office at the moment. Can you advise who made this decision? In this particular case the Ministry has supported a graduated return to work program for you. However, as the anticipated outcome that you would have by now returned to full time normal duties or at least making some significant progress towards this outcome has not been achieved, consideration will be given to closing the program in consultation with line management and the Workers Health Centre. Could I suggest an anger management program for senior managers as well? Mr Zelma was agreeable to that but sought confirmation from the MOT. He was advised that the meeting would go ahead. 38 According to evidence before the Federal Magistrate, at the meeting on 4 November 2004, in which Mr Zelma participated by telephone, it was agreed that the return to work program should be terminated, Mr Zelma concurring that it was not meeting its goals. Mr Zelma did not give evidence in the proceedings. However evidence about it was given by three witnesses who were at the meeting. 39 Despite my indication to Ms Penhall-Jones during her oral submissions that the Federal Magistrate's understanding of Mr Zelma's position appeared important to his reasoning, and my invitation to her to indicate if Mr Zelma's position had been misunderstood, she did not direct my attention to any material to that effect. Accordingly, no case was made out on the appeal that the Federal Magistrate was wrong to conclude that termination of the return to work program occurred because it was not meeting its objectives. However, I propose to set out in a little detail the directly relevant evidence which was before the Federal Magistrate in this respect. Between July 2004 and November 2004, I attended the Applicant's return to work program meetings. The decision to terminate the Applicant's return to work program in November 2004 was made in conjunction with the Applicant's external return to work provider and the Applicant's managers, Mr Bill Grant and Ms Catherine Reilly. Also present at the meeting was Mr Ed Zelma, from the Workers Health Centre, Mr Bill Grant, "Acting Manager, Bus Reform" and Ms Catherine Reilly, "Principal Policy Officer, Contracts and Funding". At the meeting, it was unanimously determined that the Applicant's rehabilitation program should be closed, as it had not succeeded in its object of returning the Applicant to work full time. The aim was to get Margaret back at work five days a week, and now she's off work again altogether. In those circumstances I think that it is unlikely that further rehabilitation services will facilitate a successful outcome. On 4 November 2004, the RTWP meeting was held. The Applicant was not present at the meeting. Ms Catherine Reilly ("Ms Reilly"), Ms Lamond, Mr Zelma were present with me at the meeting to consider the future of the Applicant's RTWP. That is, is it likely that this process will result in Margaret returning to her pre injury duties and hours? By June we had got to two days at the Ministry and two days at home. But here we are in October, we have gone backwards, Margaret is on stress leave. We are having to delegate her tasks to other members of the team so I think that the program is clearly not working for her or the Ministry. That cross-examination did not relevantly qualify their affidavit evidence. 44 Ms Catherine Reilly also gave evidence about this issue. She was present at the meeting on 4 November 2004 although, as will be seen, she said did not make any contribution to the discussion. The Federal Magistrate remarked in his judgment upon the conflict between Ms Reilly and Ms Penhall-Jones and expressed a preference for Ms Penhall-Jones' evidence in respect of one particular issue which does not arise for determination on the appeal. There is no reason, however, to doubt Ms Reilly's account of the meeting on 4 November 2004. Her evidence was led from her in cross-examination by Ms Penhall-Jones and is consistent with the other evidence to which I have referred. The progress stopped being made. You were not in the office. You were not returning to work. Things went pear shaped?---Yes, the program was no longer continuing to work as it should have been. I have one last question. The return to work program process which was successful in your case and which had been successful in my case, you're claiming it all went pear shaped. Would you like to explain that?---I have. The return to work program was not working as it should have been working. You were not in the office. You were not producing work that would have been expected of someone who was at work full time. You wanted to know why she felt the RTW failed. She's telling you. I don't know who set up the meeting to discuss the end of the return to work. I was certainly present at it. Elaine Lamond was there. Bill Grant was there. Ed Zelma was on the phone. There was discussion about whether it was --- there was any point in continuing the return to work in its present form. The opinion that was given from Ed was not. I didn't actually say anything in the meeting and that's what I remember. Given that your return to work program had been in place for seven months and you are again absent from work on a full time basis, it was the opinion of Workers Health Centre that any further rehabilitation services would be unlikely to facilitate a successful outcome. In this regard it will be necessary for you to discuss your ongoing working arrangements with your manager. She proposed that she work from home on Mondays and Wednesdays. No agreement was reached between the MOT and Ms Penhall-Jones that she should work from home or that the return to work program would be reinstated. Another letter was sent to Ms Penhall-Jones on 11 February 2005 repeating that the MOT would not agree that Ms Penhall-Jones work from home. By this time Ms Penhall-Jones had initiated proceedings in the Federal Magistrates Court arising from the termination of her disability discrimination complaint before HREOC. The MOT, in its letter of 11 February 2005, took the position that those proceedings sought 'a judicial determination of issues including the basis upon which you should return to work' and advised her that it reserved all its rights. 49 The Federal Magistrate had some reservations about the way in which the cancellation of the return to work program was handled. However he rejected the suggestion that the return to work program was cancelled because of the disability discrimination complaint. He placed particular weight upon the fact that 'Mr Zelma, an independent participant in the process, reluctantly accepted that the return to work programme was not meeting its objectives. ' The Federal Magistrate was better placed than I am to make an evaluation of the reliability of the evidence if a serious challenge was made to it. A clear case of error would need to be established to reverse his conclusions about the reason the return to work program was cancelled and substitute a finding that it was on a ground prohibited by s 42 of the Act. 50 As I said earlier, at the hearing of the appeal I drew Ms Penhall-Jones' attention on a number of occasions to the fact that Mr Zelma's agreement appeared to be a matter of significance in the Federal Magistrate's findings and invited her to identify any material which might suggest that the Federal Magistrate had misunderstood Mr Zelma's position. Ms Penhall-Jones did not refer to any such material. In my view she has failed to make any connection between the decision to cancel the return to work program and a ground which is mentioned in s 42 of the Act. 51 The same may be said of the refusal to reinstate the return to work program. There is no indication from the objective material that this decision had any connection with her disability discrimination complaint. The aspects of the appeal which concern the return to work program must therefore be rejected. On 15 November 2004 she sent to Mr Duffy, the Acting Director General of the MOT, a 'Report of Reprisal and Misconduct by certain senior officers in the NSW Ministry of Transport'. She claimed for this document the protections available under the Protected Disclosures Act 1994 (NSW). That Act protects disclosures made by a public official (which includes a person, like Ms Penhall-Jones, employed in the Public Service) to 'another officer of the public authority ... to which the public official belongs' (see s 8(1)(c)(i)). A disclosure in these circumstances is protected only if it 'shows or tends to show corrupt conduct, maladministration or serious or substantial waste of public money by the authority or any of its officers ...' (s 14). A 'principal officer' may decline to investigate matters raised by a disclosure if of the opinion that the disclosure was made frivolously or vexatiously, in which case the disclosure is not protected (s 16). 53 It is not necessary for me to express any firm view whether the 'report' attracted the protections of the Protected Disclosures Act 1994 (NSW) (Protected Disclosures Act) although, having regard to its content, I very much doubt that it could possibly do so. In any event, it was this 'report' which provoked a response by Mr Duffy upon which Ms Penhall-Jones placed great weight as evidence of victimization. It is therefore necessary to set out its contents in some detail. On 28 September there was a Conciliation Meeting at the offices of the Human Rights and Equal Opportunities Commission. The Ministry would pay compensation for breaking the employment contract. This was the sole reason for the offer of a monetary settlement, which was the Ministry's initiative. It changes the nature of the offer of monetary settlement from one of compensation to a bribe. This offer is essentially a bribe asking me to ignore (in the Ministry's words) "misconduct, including criminal misconduct". You should be asking for their immediate resignation. At the very least, they should be immediately suspended without pay, while you seek their explanation for their breaches of the Protected Disclosures Act , S 20 and the Public Sector Employment and Management Act , S 43. I earlier extracted the relevant portions of the deed. Clauses 3, 5 and 10, which are the only provisions (whether considered individually or in combination) to which the term used by Ms Penhall-Jones in paragraph 9 - 'illegal "gagging clause"' - could possibly refer, seem standard enough. The foundation upon which her accusation depends is the recital that she had made 'allegations ... of misconduct (including criminal misconduct) of fellow employees and officers of the Ministry' (Recital D(b)). The further recitals record that those and other allegations are denied and that the parties have agreed to finalise all matters (Recitals E and F). None of the operative clauses make any reference in terms, to the suppression of particular allegations. The proposal was a conventional one for a general release by Ms Penhall-Jones in return for a monetary settlement, accompanied by mutual non-disparagement provisions. It depended entirely upon acceptance by Ms Penhall-Jones. 55 The deed was not accepted. Nor were amendments suggested. The offer made to Ms Penhall-Jones was rejected. I am not able, any more than was the Federal Magistrate, to see in the proposal conveyed by the offer a reasonable foundation for the accusations made by Ms Penhall-Jones in her missive of 15 November 2004. The accusations she made were serious ones. They charged misconduct on the part of a number of people and that the Acting Director General might be, or be prepared to be, a party to a 'cover-up'. The rather high-handed demands with which this communication finishes were out of proportion to Ms Penhall-Jones' circumstances. It is against this background that Mr Duffy's response several days later must be judged. In particular, it is against this background that it must be assessed whether the contents of his reply amounted to a threat to subject Ms Penhall-Jones to a detriment for one of the grounds set out in s 42 of the Act. All these matters have been denied by the Ministry for itself and its officers and employees. Such matters once asserted by you must be proved by you. Indeed such is the case with your current Human Rights and Equal Opportunity Commission claim, which as you know is being defended. That is conduct, by an employee, of that kind is completely contrary to the duties of fidelity, trust and good faith owed by an employee to an employer. The Deed does not seek to, and cannot "contract out" of statutory obligations for example: workers compensation; disclosures under the Protected Disclosure Act 1994 (NSW); or the like. Accordingly the Ministry seeks to maintain confidentiality but it does not seek to restrict your statutory rights. If you accept the offer, can you please notify us of any changes you, or your legal representative, propose to the Deed of Release. I shall set it out because Ms Penhall-Jones alleges that it also is evidence of victimization. Whilst the settlement offer involves a release (and the Ministry would agree to mutual releases) the settlement was not, and does not, inhibit your other statutory rights (apart from those raised under the Disability Discrimination Act 1992 (Cth)). In the meanwhile your conduct with regard to your supervising managers and staff of the Employee Relations Unit continues to be unsatisfactory and there are unresolved performance issues. Indeed, in reference to ICAC it would be inappropriate not to provide ICAC with all relevant correspondence and not be selective. It seems to me to be a straightforward and formal record of the fact that the offer made to Ms Penhall-Jones was rejected and that conciliation of her complaint of disability discrimination was at an end. I can see no error in the Federal Magistrate's conclusion that it did not constitute an act of victimisation. 60 In the proceedings before the Federal Magistrate Ms Penhall-Jones relied primarily upon the letter of 18 November 2004 as evidence of victimisation. She alleged that it threatened to terminate her employment. The Federal Magistrate thought that she was 'probably correct'. He also accepted that 'it cannot be said that Ms Penhall Jones' complaint of unlawful discrimination formed no part of the consideration that led to the threat made by Mr Duffy. However, in my view, it was an incidental part. That is because the threat was a consequence not of the fact of the complaint of unlawful discrimination made by Ms Penhall-Jones, or her participation in the conciliation conference on 28 September 2004. Rather, the threat was a consequence of the intemperate and continuing allegations by Ms Penhall-Jones which Mr Duffy, on advice, genuinely viewed as unfounded, false and vexatious, to the extent of probably constituting a breach of the duty of trust and confidence necessary for the continuation of the employment relationship. In my view these contentions misconceive the true legal position but it is not necessary to discuss that matter further because the question at issue does not involve consideration of whether termination of Ms Penhall-Jones' employment, had that occurred for breach of the suggested duty, would have been lawful or unlawful. Her employment was not terminated. 63 The Federal Magistrate found that the parties agreed that Mr Duffy's letter of 18 November 2004 'speaks for itself'. I find it hard to see the letter as a 'threat' notwithstanding the view expressed by the Federal Magistrate. Some indication of the seriousness with which Ms Penhall-Jones' accusations were viewed and, in particular, that they were regarded as inappropriate was not only natural but necessary if, in response to a continuation of allegations of that kind, the MOT wished to take action as a result. If anything, that was more desirable than in most cases because Ms Penhall-Jones had purported to clothe her accusations with the protections of the Protected Disclosures Act . A failure to indicate the seriousness with which the allegations were viewed would require explanation if disciplinary action followed. A lack of candor and a failure to provide an unvarnished statement of the implications for Ms Penhall-Jones' employment would not be justified simply by a desire to avoid what might later be construed as threatening behaviour. All warnings, which are often an integral and necessary part of fair treatment and proper notice, contain an element of explicit or implicit menace by their very nature. 64 As the Federal Magistrate in my view correctly observed, the connection which Ms Penhall-Jones needed to make, if she was to raise a case for consideration, was with the fact of her complaint of disability discrimination or her participation in the conciliation conference. She had no licence to make and disseminate allegations reflecting upon the conduct and character of others simply as she wished and without regard to the normal restraints. I think, at least in the present case, fair warning did not constitute a threat of a detriment on a ground set out in s 42 of the Act. 65 The highest point to which her case can rise, upon the Federal Magistrate's view of Mr Duffy's letter (although not my own), is the suggestion that the Federal Magistrate's conclusion, that her complaint of disability discrimination formed 'part of the consideration that led to the threat made by Mr Duffy', was sufficient to make out a case of victimisation under s 42. 66 However, in my view this observation by the Federal Magistrate was no more than an acknowledgement of the circumstances in which Mr Duffy's letter of 18 November 2004 came to be written. Those circumstances were first, that Ms Penhall-Jones had made a complaint to HREOC which had led to the conciliation conference which occurred on 28 September 2004. Secondly, the proposal arising from the conciliation conference led to her 'report' of 15 November 2004. Thirdly, receipt of that 'report' led to Mr Duffy's response of 18 November 2004. There was therefore a factual and temporal connection between the conciliation conference held in relation to her complaint and his letter. That is not to say, however, that there was a causal connection between the two events or with the complaint itself. The Federal Magistrate makes clear findings that any causal relationship with the letter was confined to the 'report' of 15 November 2004. 67 As Mr Duffy's letter of 18 November 2004 was agreed by the parties to speak for itself, I have assessed it for myself by reference to the chain of events. It seems to me also to respond exclusively to Ms Penhall-Jones' communication of 15 November 2004. It was a clear warning to her that the allegations she had made were regarded as unacceptable. It did not lead to any apparent alteration in her employment circumstances. She rejected the offer which had been made. That rejection was accepted. In my view no error has been shown in the Federal Magistrate's conclusion that this letter did not constitute an act of victimisation under s 42. The case for Ms Penhall-Jones relies upon s 42 of the Act which I set out earlier. In order to succeed Ms Penhall-Jones must establish not only that someone subjected, or threatened to subject, her to a detriment but also that they did so 'on the ground' that one of the conditions set out in s 42(2)(a) to (g) was satisfied. Section 10 does not address the assessment of grounds or reasons which form part of an act of victimization, but only acts of discrimination in an earlier part of the Act in which s 10 appears. Section 10, therefore, does not establish, in favour of Ms Penhall-Jones' case, any proposition that existence of one of the conditions for the engagement of s 42 might be an insubstantial reason. There has also been debate about the proper approach to be taken if, as in many cases, an act is fairly attributable to more than one reason. 71 Some legislation stipulates that discrimination will occur 'on the ground of' some identified criterion if it occurs 'by reason of' some expanded list of circumstances. Making due allowance for the fact that this statutory technique is not used in relation to s 42 of the Act, nevertheless the cases which discuss these statutory tests provide a useful starting point. 72 In Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 46 FCR 301 Lockhart J analysed such requirements in detail. He concluded that a relationship of cause and effect was involved in the statutory test. He also concluded that the test was not wholly objective but purpose and motive may also be relevant. 74 This approach has been applied in later cases (see Commonwealth of Australia v Human Rights and Equal Opportunity Commission (1993) 46 FCR 191 per Lockhart J at 202-204; Commonwealth v Human Rights and Equal Opportunity Commission (1997) 77 FCR 371 per Sackville J at 390 and 392; Commonwealth of Australia v Humphries (1998) 86 FCR 324. 75 More recently the issue was discussed again by a Full Court in Forbes v Australian Federal Police (Commonwealth of Australia) [2004] FCAFC 95 ( Forbes ). There was analysis of the judgment of the High Court in Purvis v New South Wales [2003] HCA 62 ; (2003) 202 ALR 133. Gummow, Hayne and Heydon JJ thought that motive was at least relevant. Gleeson CJ thought that motive was relevant and, perhaps, could be determinative. McHugh and Kirby JJ thought motive was not relevant. All agreed, however, that it is necessary to ask why the alleged discriminator took the action against the alleged victim. Ms Penhall-Jones' case rested entirely on inferences to be drawn from the surrounding facts. Moreover, so far as she relied upon surrounding facts and circumstances it was necessary for her to show not only some connection between an alleged act of victimization and her disability discrimination complaint but that the connection had the requisite materiality. She needed to show it was part of the reason why the act in question occurred. 77 Before the Federal Magistrate in the present case the respondent advanced a proposition, relying upon a decision of the Equal Opportunity Tribunal of South Australia in Morrison-Liddy v Director, Department of Technical & Further Education (1989) EOC 92-246 ( Morrison-Liddy) that a ground (or grounds) in s 42 must be 'the "... substantial and operative factor "'. This submission was faithfully recorded by the Federal Magistrate when he set out the respondent's submissions but there is no indication that he applied it as a correct statement of the law. It was not a correct statement of the law and it did not reflect the principle applied in Morrison-Liddy . Ltd. Employees' Canteen Society Inc. (1975) 25 F.L.R. 415 at pp. 424-425; Bowling v General Motors-Holden Pty Ltd (supra) at p. 200), and the High Court (General Motors-Holden Pty. Ltd. v. Bowling (1977) 51 A.L.J.R. 235 at p. 241 per Mason J with Gibbs, Stephen and Jacobs JJ. in agreement) has been that the employer need only prove that the status, position or activity of the employee was not a "substantial and operative factor" influencing the behaviour of the employer complained of. In the case of sec. 5 of the Conciliation and Arbitration Act , the employer (because of sec. 5(4)) must prove that the motives for taking the action complained of did not include to any "substantial or operative factor" any of the concerns rendered unlawful by sec. 5. 86, despite its differences from sec. 5 of the Conciliation and Arbitration Act. It does not appear appropriate to require a complainant to prove on the balance of probabilities that he or she was treated unfavourably solely because of his or her complaint of sexual harassment (or other unlawful action). The "substantial or operative factor" test appears to be an appropriate one to apply in this situation. It is our view that the complainant must prove, on the balance of probabilities, that the respondent treated her unfavourably, and that one of the prescribed conditions set out in sec. 86(2) (in this case, sec. 86(2)(c)) was a "substantial and operative factor" for so doing. That motive does not have to be the sole factor: but it does have to be a substantial operative factor . 80 That approach is consistent with the principle approved by the High Court in General Motors-Holden's Pty Ltd v Bowling (1976) 51 ALJR 235 at 241. In that case (which concerned s 5 of the Conciliation and Arbitration Act 1994 (Cth)) the statutory formula in question was 'by reason of the circumstance that'. The Industrial Court has thereby rejected, rightly in my opinion, the notion that sub-s.(1) is speaking of the sole or predominant reason actuating the employer. 82 This construction is accordingly well established at the highest level of authority. Counsel for the respondent on the present appeal made no suggestion that it should not be followed or that any form of sole purpose or sole ground test should be applied. They indicated that they had only been able to find one authority which dealt directly with the proper construction of s 42 of the Act - a judgment of Baumann FM in Damiano v Wilkinson [2004] FMCA 891. For victimization to be established, one of the grounds referred to in s.42(2) of the DDA must be a " substantial and operative " factor for the action taken (see Bailey v ANU (1995) EOC 92-744). It concerned provisions of the Sex Discrimination Act 1984 (Cth) (the Sex Discrimination Act ) including ss 8 and 94 which for present purposes are analogous to ss 10 and 42 of the Act. I note that the view was taken that s 8 of the Sex Discrimination Act did not apply to the operation of s 94 of that Act. I have already indicated that I take the same view in the present case that s 10 does not apply to the operation of s 42 of the Act. 84 Reference was made in Bailey to Morrison-Liddy . Reference was made also to O'Callaghan v Loder [1983] 3 NSWLR 89 at 95 where Mathews DCJ rejected the argument that the phrase 'on the ground' required that the particular factor be the only motivating factor. A similar approach was taken in Waterhouse v Bell (1991) 25 NSWLR 99 at 106. Much more recently Cowdroy J has applied the same approach in Obieta v New South Wales Department of Education and Training [2007] FCA 86 at [240] (referring to Damiano and Bailey) . 85 Accordingly the authorities are unified in their approach that the ground or reason relied upon to establish breach of the relevant legal obligation need not be the sole factor but it must be a substantial and operative factor. At least one circumstance from the list in s 42(2) of the Act must be a reason for the alleged detriment or threatened detriment. It must afford a rational explanation, at least in part, 'why' an action was taken. The connection cannot be made by a mere temporal conjunction of events, by an incidental but non-causal relationship or by speculation. The establishment of the suggested ground is as much a matter for proper proof as any other factual circumstance. The Federal Magistrate obviously concluded that no ground in s 42(2) of the Act was shown to be a substantial or operative factor for Mr Duffy's letter of 18 November 2004. I see no error in this conclusion. 86 In any event, as I have already said, I do not regard the letter as a threat and I am unable to identify any relevant detriment upon which s 42 of the Act could fasten to Ms Penhall-Jones' advantage. In order to understand the matters to which the letter from Abbott Tout responded it is necessary to set out Ms Penhall-Jones' letter dated 5 May 2005 to which it responded. It will be seen that her letter complained about the cancellation of the return to work program. It alleged a breach of the MOT's legal obligations. In my capacity as a person assisting the ICAC and potential witness, I was required to provide names of persons implementing reprisals or bullying. Ms Lamond's name topped the list of names I was required to provide to the ICAC, Ms Reilly was prominently mentioned as engaging in bullying and Mr Duffy as unintentionally reprising through accepting wrong policy advice. The ICAC Commissioner has written to me specifically stating that this finding is not a finding for the Ministry. Please note Government protocol prevents the Ministry portraying it as such, or claiming it is "exonerated". You can not escape the perception that this is a deliberate reprisal against myself for not accepting mismanagement in your organisation. I would appreciate your response as soon as possible but in any case by 13 May, 2005. That it,[sic] the Director General has been advised by us to conduct the litigation in the proceedings commenced by you and not by correspondence. Our instructions are to request that you forward all future correspondence relating to your employment to us (attention: Bryan Belling/Seamus Burke). She alleges that the request to forward future correspondence to that firm constitutes victimization. I do not think there is any substance in such a contention. In any event Ms Penhall-Jones immediately rejected the suggestion. The letter is self-explanatory. For you to hire lawyers to further attempt to cover these issues up only compounds the mismanagement. The only appropriate thing for you to do is to comply with my doctor's advice and re-instate the Return to Work program. This is particularly so when you have rejected my offer, that you appoint a human resources specialist to assist me finding another position and comply with the law --- an option which would have cost far less than Abbott Tout's fees. 91 The Federal Magistrate rejected the suggestion that the letter from Abbott Tout was victimization. I can see no error in that conclusion. There is no suggestion that anything said or done by the Federal Magistrate in the conduct of the proceeding gives support to the contention. The argument turns entirely upon the terms in which the Federal Magistrate stated his reasons for judgment. The foundation for the contention is that the Federal Magistrate used, at times, strong (and Ms Penhall-Jones suggests unjudicial) language to indicate his disapproval of or rejection of her claims. The most cogent example of her complaints appears at [115] of the Federal Magistrate's judgment. The extravagance of her claims has increased since she parted company with the three legal firms which had represented her at an earlier stage in these proceedings. Unfortunately, the hyperbole in which Ms Penhall-Jones has indulged is not restricted to these proceedings (footnote) . Unfortunately, the extravagant formulation and presentation of claims is a relatively common feature in proceedings involving self-represented litigants. The Court must look beyond that. Beneath the hyperbole, the hubris and the extravagant (and at times embarrassing) language indulged in by Ms Penhall-Jones in the presentation of her case there is an arguable claim of victimisation that must be considered. The proceedings in question were unrelated to the proceedings before the Federal Magistrate and involved Ms Penhall-Jones' response to proceedings for a debt arising from student loans made to her for the purpose of undertaking a course at a teaching institute in Switzerland. I do not know why reference was made to those proceedings. It was not apparently necessary to do so. However, I agree with counsel for the respondent who urged upon me that the central thrust of [115] of the Federal Magistrate's judgment is contained in the final two sentences. Contrary to the suggestion that the Federal Magistrate appeared unwilling to treat her case on its merits it seems to me that he was at pains to indicate that he would do so, notwithstanding his view that she had presented her case extravagantly. 94 There is no doubt that the language that he used was at times strong. Apart from the terms of [115], which I have already set out, he said at [129] that to characterise the offer made in the conciliation conference as a 'bribe' was 'ridiculous', at [142], of the letter from Abbott Tout dated 12 May 2005, that it was 'nonsense' to characterise it as an act of victimisation and that an offer made to Ms Penhall-Jones at some stage after 11 July 2005 to undertake not to victimise her could not 'rationally' be characterised as being an act of further victimisation. He also said, less forcefully, at [135] and [136] that her document of 15 November 2005 was 'intemperate'. 95 I take the use of these terms to indicate a firmly held view on the part of the Federal Magistrate that aspects of Ms Penhall-Jones' claims were without substance and, probably, that it was an error of judgment for her to have advanced them. However, I do not think it can be concluded, in accordance with the legal tests for the identification of apparent bias, that they indicate either a predisposition against Ms Penhall-Jones' case or a lack of preparedness to deal with it in a balanced way. Counsel for the respondent argued to some effect that it was readily apparent from the judgment of the Federal Magistrate that important and controversial questions in the case had been decided by the Federal Magistrate in favour of Ms Penhall-Jones. I accept that is so. 96 Despite Ms Penhall-Jones' sense of hurt at the terms with which her arguments were rejected, the decision of the Federal Magistrate bears on its face every appearance of attempting to deal with the issues in a way that was fair to Ms Penhall-Jones. He did not refrain from criticism of officers and witnesses of the respondent and the respondent itself when dealing with the matters that lay at the heart of Ms Penhall-Jones' complaints. It was notwithstanding such criticisms, and clearly taking them into account, that Ms Penhall-Jones' case was found to be lacking in substance. 97 The main areas in which Ms Penhall-Jones failed to persuade the Federal Magistrate are those with which I have dealt already. I do not think that there is any basis to suggest that the Federal Magistrate approached these issues with anything other than an open mind or that the terms of his judgment indicate a lack of preparedness to deal with Ms Penhall-Jones' case fairly. 99 Ms Penhall-Jones' final submissions were filed on 12 May 2006 (104 pages), the respondent's on 30 May 2006 (16 pages) and Ms Penhall-Jones' submissions in reply on 13 July 2006 (58 pages). The respondent's submissions were signed by Mr Seamus Burke, a partner of Abbott Tout. Throughout her submissions in reply Ms Penhall-Jones referred to the submissions for the respondent as 'Mr Burke's submissions'. 100 One issue which arose for consideration before the Federal Magistrate (although not on the appeal) was the view to be taken about a file note made by Ms Reilly. Ms Penhall-Jones had alleged that the file note was a fabrication. In her written submissions before the Federal Magistrate Ms Penhall-Jones made many serious allegations against Ms Reilly, including the commission of criminal offences (false swearing, perjury) and contempt of court. The respondent submitted that Ms Reilly's evidence should, in general, be accepted. The respondent's submissions are also in some other respects described as false, misleading and as misrepresenting matters. 103 Two paragraphs in Ms Penhall-Jones' submissions in reply are specifically mentioned in a later rejoinder so I will set those paragraphs out in full. She was evasive about the false "file note" until the point was pressed, when she was forced to confess to having back-dated the document. Then, Catherine Reilly was offhand --- even flippant --- about the fact that she had constructed this false piece of evidence. She showed no contrition for the waste of Court time or potential damage to myself. She did not even offer so much as an apology. She did not seem to be aware that what she had done was a serious offence. She apparently assumed the Court would support and excuse her, as her management had done, at taxpayers' expense, by allowing Abbott Tout to construct an explanation of these events. It would be an error of law to regard Ms Reilly as anything other than unreliable witness. Mr Burke's conduct in attempting to convince the Court otherwise, it is submitted, goes beyond the proper defence of his client's interests . The Applicant has sought to impugn the integrity of the Respondent's legal representatives, Abbott Tout Lawyers and Mr Seamus Burke ( Mr Burke ), a partner of Abbott Tout Lawyers, in the "Applicant's Response to the Respondent's Submissions" filed on 13 July 2006 (the Response ). The Respondent asserts that at all relevant times its legal representatives, including Abbott Tout Lawyers and Mr Burke, acted lawfully and ethically and on the basis of instructions properly given by the Respondent. The Respondent submits that the Applicant's actions in personally targeting Mr Burke in the Response is consistent with the Applicant's reaction as demonstrated by the evidence to those tasked with addressing with the Applicant, matters which the Applicant finds disagreeable. The evidence shows the Applicant's typical reaction includes the Applicant engaging in aggressive rejection of the matters raised, and impugning the person, including the motives of the person, who addresses such matters with the Applicant. The Court, we respectfully submit, has at all times maintained proper control of the proceedings and has had no occasion to criticise the Respondent's legal representatives or suggest that their behaviour was immoderate or otherwise required modification. The Respondent further submits that nothing in the submissions is other than a robust advancement of the Respondent's case. Federal Magistrate Driver has asked me to advise the parties that, while he understands why the respondent's latest submissions have been presented, he regards submissions as having closed with your submissions in reply, and he will not take into account the further submissions received from the respondent in his judgment. The appropriate place to express these views would have been if the Appellant had made a complaint to the relevant authorities about the legal practitioners --- which the Appellant have not done. A clear indication was given that the further submission would not be taken into account. There is no basis to suppose that in fact it was. The Federal Magistrate was clearly correct to put these further submissions to one side. Ms Penhall-Jones' criticism, express or implied, of the respondent's lawyers was a distraction. The submissions filed on 20 June 2006 were simply a protestation of the innocence of the respondents' lawyers. They did not deal with the substance of the matters for decision. 110 Nothing, in my view, that is revealed by the chain of events or the letter to which Ms Penhall-Jones has referred, supports Ms Penhall-Jones' argument that the Federal Magistrate was apparently biased against her. In considering the allegations I require a high degree of satisfaction that victimisation is established. An allegation of victimisation is an extremely serious matter which may have grave consequences for a respondent. Such allegations must be proved to the Briginshaw standard. Ms Penhall-Jones, however, argued that his approach disclosed an error of law and a failure to recognise that it was only necessary for her to prove her case on the balance of probabilities. In a related submission she argued that an equally heavy burden fell upon a respondent to make out its own case. She referred me to the decisions of the High Court in Rejfek v McElroy [1965] HCA 46 ; (1965) 112 CLR 517 ( 'Rejfek' ) and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66 ; (1992) 67 ALJR 170 ( 'Neat Holdings' ) in support of her arguments. 113 It may be accepted that the decision of the High Court in Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 ( 'Briginshaw' ) did not establish that there was some intermediate standard between 'the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability' (see at 363). ' (see at 519) . The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words; it is a matter of critical substance. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. That is a matter which may vary according to the gravity of the accusations or contentions to be evaluated. Although the balance of probabilities remains the civil standard of proof, what may be required to satisfy that standard of proof in a given case, and satisfy it to the 'reasonable satisfaction' of the court, is not fixed. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. 122 Despite the summary paraphrase of the principle by the Federal Magistrate it does not appear to me that he misunderstood or misapplied the relevant principles. Furthermore, there is no indication that, on any of the issues where Ms Penhall-Jones' contentions were rejected, the application of some less stringent requirement for adequate satisfaction would have made a difference even if the Federal Magistrate had misunderstood the correct legal position, which I do not accept is what happened. In short, no error has been established however the matter is examined. Accordingly, so the argument went, the respondent in the present appeal had borne a heavy onus before the Federal Magistrate which it had failed to discharge, with the result that Ms Penhall-Jones should have succeeded at first instance. The line of argument is not sustainable. The passage relied upon is taken from Ross v Ross (1930) AC 1 at 25. The 'respondent' referred to by Lord Thankerton was a petitioning wife who had succeeded in establishing adultery at first instance. The petitioning wife was the respondent in appeal proceedings before the Privy Council where Lord Thankerton, Lord Buckmaster and Lord Atkin concluded her allegations had not been proved. Lord Atkins also said (at 23): 'Such a charge in such circumstances ought to be fully proved' . The sentence relied upon by Ms Penhall-Jones gives no support to the proposition for which she contends. 125 There is, accordingly, no error arising from the reference to Briginshaw . The respondent has sought its costs. Clear notice to that effect was given in the concluding paragraph of the respondent's written submissions filed before the hearing of the appeal. No response, reservation or submission on this issue was made by Ms Penhall-Jones either in writing or orally. I can at present see no reason why the respondent should not have its costs of the appeal. If Ms Penhall-Jones wishes to make submissions on the question of costs she is to do so within 14 days of this judgment, failing which she is to pay the respondent's costs, to be taxed if not agreed. The respondent may make a written submission, should it become necessary, within a further 14 days. It will not be necessary to conduct a further oral hearing. I will formally reserve the question of costs for the time being. | principles to be applied necessity to show error use of strong language in dealing with claims not evidence of apparent bias reference to briginshaw standard no third or intermediate standard of proof requirement of cogent proof for satisfaction or reasonable satisfaction having regard to the gravity of an issue on the ground of substantial or operative reason on the ground of appeal natural justice standard of proof victimisation words and phrases |
An "Infomercial", according to the respondent, is an advertising film which is generally shown on television and promotes a product in an informative and objective style. Those tax deductions were disallowed by the applicant. 7 On 3 August 2001 the respondent commenced review proceedings in the AAT in respect of each of the applicant's decisions to disallow the respondent's objections to the assessments issued on 23 October 2000. In February 2005 the respondent withdrew the proceedings. The respondent says that he did so because he did not have the assistance of the promoters of the Infomercial Schemes including Mr Peter Leslie Ambrosy and that without his assistance it was not possible for him to present his case in the AAT. Pursuant to s 42(A)1B of the Administrative Appeals Tribunal Act 1975 , the affect of the withdrawal was that the AAT proceedings were considered to have been dismissed. 8 In Australian Securities & Investments Commission v Infomercial Management Group Pty Ltd [2002] VSC 262 at [58] the Supreme Court of Victoria held that certain Infomercial schemes were a fraud on the investors, if not on the Australian Taxation Office. These schemes, so claims the respondent, were the ones in which he had invested. 9 Importantly, other than in relation to a very small sum comprised in the 1998 assessment, none of the November 2000 assessments concerned the respondent's investments in the Infomercial Schemes. The assessment for 1998 for $2,619580.49 was subject to objections by the respondent. These objections failed as did a subsequent review before the Administrative Appeals Tribunal (AAT). In February 2005 an appeal to this Court from the decision of the AAT was dismissed by consent. The November 2000 assessments for 1995 and 1996 have never been the subject of an application for review or legal challenge. 10 On 15 June 2005 a summary judgment was entered in the Supreme Court proceedings against the respondent for the sum of $38,084,522.24 including interest. The respondent did not consent to the judgment but did not oppose it. The amount of the judgment attributable to the assessments made on 23 November 2000 was $4,778,969.82 including interest charges. The amount of $243,360.31 contained in the amended assessment issued on 23 November 2000 in respect of the 1995 financial year was not included in the judgment sum because it had by then been paid. However interest on this sum was claimed in the writ. 11 On 17 March 2006 the Deputy Commissioner issued a bankruptcy notice which was duly served on the respondent requiring payment, within 21 days after service, in the amount of $38,051,066.24. The amount demanded comprised the sum of the judgment less an amount of $33,456 described in the bankruptcy notice as "payments made and/or credits allowed since date of judgments or orders". 12 On 23 August 2006 the respondent filed a Notice of Appeal in the Supreme Court (CACV 107 of 2006) out of time, to set aside the summary judgment on the basis that he was defrauded by the promoters of a tax avoidance scheme. In February 2007 a single judge dismissed the respondent's application for an extension of time to appeal. In February 2007 the respondent filed an application for review by the Court of Appeal, which was ultimately dismissed. 13 The respondent also failed in proceedings in this Court by which he had sought to set aside the Bankruptcy Notice. This culminated in his appeal to the Full Court (WAD 361 of 2006) being dismissed on 24 December 2007: Cumins v Deputy Commissioner of Taxation [2007] FCAFC 207. 14 In November 2007 the respondent applied to the AAT to reinstate the proceedings which had been dismissed in 2005. 15 On 29 January 2008 the District Registrar made orders that the respondent be permitted to use all documents filed in the AAT proceedings. Orders were also made that the applicant give discovery of any document recording or relating to any record of any kind dealing with any Running Balance Account as defined by s 8AAZA of the Taxation Administration Act 1953 (Cth) established by the applicant in relation to the respondent since 1 July 2000 as well as any record of any kind dealing with the receipt and application of payments made on behalf of the respondent to the applicant since 1 July 2004. Discovery in accordance with those orders was given by a list of documents filed on 6 February 2008. It comprised 19 volumes of documents. In other words the respondent seeks to go behind the Supreme Court summary judgment. 18 The respondent filed an affidavit sworn on 15 March 2007 in support of his opposition to the petition. He has filed further affidavits sworn by him on 6 December 2007, 21 January 2008 and 13 February 2008. 19 The applicant submits that it would be oppressive to be required to discover these documents. Some of the documents in the applicant's possession, custody or control pertaining to the respondent since 1995 and the applicant's investigations into the Infomercial Project between 1995 and 2003 are contained in two six-foot high double-doored cabinets and approximately fifty lever arch files. I verily believe that the time and cost of discovery in the terms sought by the respondent would grossly outweigh the benefit, if any, obtained and would only serve to further delay the determination of the applicant's petition for bankruptcy. This responds to the respondent's submissions set out at para 20(a) above. The matter of garnishee payments had been the subject of a prior affidavit of Nola Kathleen Rice, an officer employed within the Australian Taxation Office, sworn 28 August 2006 in response to an application by the respondent to set aside the bankruptcy notice in which at [19] she sets out the garnishee payments on behalf of the respondent received by the applicant. In his affidavit sworn 5 September 2006 in that same action the respondent [3] responds by annexing the notices of assessment but otherwise taking no issue with Ms Rice's summary of payments, including in particular that any payments made by the respondent have been omitted. The garnishee payments are further explained in the affidavit of Yen-Lin Faith Chong sworn 19 February 2008. The matter raised in written submissions set out at para 20(c) above was not explained and it is difficult to discern its relevance to any matter at issue in the Bankruptcy proceeding. 22 No submissions were made as to why all of the applicant's documents in respect to its investigations into the Infomercial Schemes between 1995 and 2003 should be discovered other than to the effect that they must be relevant to the respondent. I do not regard that as satisfactory. No attempt was made by counsel for the respondent to articulate an issue, or answer, or a possible answer to the Bankruptcy petition to which any of these documents would be relevant. I do not regard what the respondent deposed to at paras [29]-[30] in his affidavit of 23 August 2006, in relation to his Notice of Appeal in the Supreme Court, as support for the orders sought. These statements of the respondent's belief are conjectural and argumentative. They were not the subject of specific submissions by counsel. 23 Likewise, no attempt was made to justify the need for discovery of all documents in the applicant's possession, custody or control relating to the respondent since 1995. 24 At a further hearing on 10 March 2008, it was submitted by the respondent that the summary judgment figure had been overstated by $243,360.31. This is the Amended Tax Assessment figure issued on 23 November 2000 for the year ended 30 June 1995 and set out at para [17.1] of Ms Chong's affidavit sworn 29 January 2008. 25 It is common ground that this amount has already been paid. 26 The evidence of Ms Chong in her affidavit of 29 January 2008 which was before the Court at the first hearing is to the effect that the amount of $243,360.31 was not included in the summary judgment amount: [68]. That figure is not amongst those which comprise the debt of $38,032,100.01 claimed in the creditor's petition. 27 The document which the respondent relies upon in his attempt to controvert this fact is the Notice of Amended Assessment for the year ended 30 June 2005 which is at p 82 of the affidavit of Ms Chong of 29 January 2008. It contains the figure of $243,360.31. It was however paid after the Assessment was issued and before Summary Judgment was entered. I do not accept that there was any such overstatement in the Summary Judgment amount. 28 On 21 February 2008 the respondent's solicitors wrote to the applicant's solicitor enclosing a copy of a letter sent by the ATO to the respondent dated 15 November 2000 together with a number of attached schedules. 29 The respondent submits that Ms Chong's statement in her supplementary affidavit [3] that she had not previously seen the letter from the ATO to the respondent dated 15 November 2000 together with enclosed schedules justified the respondent's concerns about the adequacy of the applicant's discovery. 30 The letter concerned set out how income tax returns for the respondent and the Cumins Family Trust for the financial years 1995 and 1998 would be amended in accordance with the position papers previously sent and the attached schedules. One of the attached schedules, which was for the year ended 30 June 1998, disclosed an adjustment figure of $9,375 for "Interest re monies borrowed re: Infomercials". 31 It was not said why the fact that Ms Chong had not seen the letter and its attachments before gave cause for concern as the adequacy of the applicant's discovery. In the circumstances, it does not provide any cogent reason for ordering the further discovery sought by the respondent. 32 I am not persuaded that it is necessary to discover these documents: Federal Court Rules O 15 r 15. Further it would, in my opinion, be oppressive in the circumstances identified in the affidavit of Ms Chong sworn on 29 January 2008 to order discovery as sought in paragraphs 1(a) and (b) of the motion. 33 The motion will be dismissed with costs. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | discovery applicant already provided significant discovery failure by respondent to articulate need for discovery of further documents whether it would be oppressive to grant discovery. practice and procedure |
Eight candidates were nominated for election in the Electoral Division of McEwen in Victoria. The petitioner was one of those candidates. He had been endorsed by the Australian Labor Party. The first respondent was another candidate. She was the candidate endorsed by the Liberal Party of Australia. The writ for the election was returned on 21 December 2007. The certificate attached to the writ certified that the first respondent was the candidate who had been elected for the Division of McEwen. 2 By petition dated 25 January 2008, which was filed in the Melbourne Registry of the High Court of Australia, the petitioner sought orders declaring that the first respondent had not been duly elected and that he had been duly elected. 3 On 13 February 2008 the petitioner filed and served a summons for directions on the first respondent and the Australian Electoral Commission ("the Commission"). By paragraph three of the summons an order was sought that the Commission "provide each of the other parties with a clear copy of the reserved ballot-papers. " The reserved ballot-papers were the ballot-papers of electors in the Division of McEwen that were reserved for the decision of the Australian Electoral Officer for Victoria in accordance with s 281 of the Commonwealth Electoral Act 1918 (Cth) ("the Act "). 4 The summons came on for hearing before Crennan J on 21 February 2008. The Commission opposed the making of the order sought by the petitioner on the ground that such an order would involve a breach of s 360(1)(iii) of the Act . Her Honour referred the matter for trial in this Court and made directions for the filing and service of written submissions on the question of whether the order sought by the petitioner should be made. The written submissions were filed and served in accordance with her Honour's direction. 5 On 28 March 2008 the proceeding came on before me for first directions. The petitioner pressed his application for an order requiring the Commission to produce copies of the reserved ballot-papers. The application was opposed by the first respondent and the Commission. I heard further oral argument on the point and reserved my decision. At the same hearing I made orders that the parties file and serve written submissions on the principles which the Court should apply in dealing with the petition and the manner in which the inquiry should be conducted. The parties indicated that it would be of assistance to them in preparing the "process" submissions to know whether the proposed order would be made. I have come to the view that it should not be made. 6 Before turning to the relevant legislative provisions something should be said about the circumstances in which the application for the order comes to be made. In the weeks following the poll on 24 November 2007 the votes of the electors for McEwen were counted. The preferential system of voting prescribed by the Act required that candidates be eliminated progressively from the count. Following the allocation of preferences the petitioner and the first respondent were the two candidates with the highest number of votes. After the final distribution of preferences the petitioner had 48,416, the first respondent had 48,410 and there were 3,823 informal votes. On 11 December 2007 the Australian Electoral Officer for Victoria, Mr Daryl Wight, directed the Divisional Returning Officer for the Division of McEwen to conduct a recount of the ballot-papers. That recount was undertaken at the Divisional Counting Centre between 12 and 14 December 2007. The recount occurred in the presence of scrutineers appointed by the petitioner and the first respondent. If a scrutineer challenged the formality of a ballot-paper the Divisional Returning Officer made a decision as to whether to admit or reject the ballot-paper from the count. If a scrutineer disagreed with a decision of the Divisional Returning Officer the ballot-paper was reserved for the decision of the Australian Electoral Officer for Victoria. In all 643 ballot-papers were reserved for his decision. On 14 and 17 December 2007 the Australian Electoral Officer for Victoria examined each of the reserved ballot-papers in the presence of scrutineers. In each case he decided whether the ballot-paper should be allowed and admitted in the count or disallowed and rejected. He annotated the back of the ballot-papers accordingly. The ballot-papers were then returned to the Divisional Counting Centre. Those that had been ruled admitted were counted; those that were ruled rejected were not counted. When these ballot-papers and a number of counting errors were brought into account the result of the recount was that the first respondent had 48,265 votes, the petitioner had 48,253 and there were 4,116 informal votes. The first respondent was declared to be the successful candidate. 7 At no stage during this process were copies made of any of the ballot-papers. The petitioner asserts that about 40 of the 643 reserved ballot-papers were wrongly ruled by the Australian Electoral Officer to be informal and were excluded from the count. In each case the Australian Electoral Officer's decision turned on the manner in which the voter had marked his or her ballot-paper. The instructions contained on the paper required the voter to place a number in each of the eight squares adjacent to the name of a candidate. The Australian Electoral Officer had to determine whether notations placed on the ballot-papers by voters were "numbers" or something else. The petition provides details, no doubt supplied by scrutineers, as to each of the disputed annotations and why it is contended that they were or should be understood as being numbers. The petitioner seeks copies of the ballot-papers in order to develop submissions that the Australian Electoral Officer erred in making each of his disputed rulings. It is contended that without such copies or access to the original ballot-papers counsel and solicitors for all parties, none of whom have seen any of the ballot-papers, would labour under a disability in making submissions in support of or opposition to the petition. In that case an unsuccessful candidate for election to the House of Representatives disputed the validity of the successful candidate's election. He did so on the basis that there had been duplicate voting and that other improper practices had been engaged in. He sought an order that he be entitled to inspect and take extracts from the electoral rolls. Those rolls were in the possession of the Chief Electoral Officer, who was not a party to the proceeding. In the absence of a provision such as s 360(1)(iii) , the petitioner relied on the general provisions in the High Court Rules relating to discovery. Barton ACJ held that discovery could not be ordered against a person who was not a party to the proceeding. It may be that such a power is highly necessary, and that the ends of justice are frustrated by its absence. It seems strange that in a proceeding which involves the question of the proper conduct of an election, when information is sought which exist only in the rolls and other documents in the custody of public officers, a petitioner is not entitled to the discovery that is here sought. But the remedy is in the hands of the legislature, not those of the Court. The second reading speech of the Attorney-General records that the purpose of the amendment was to give the Court the power which Barton ACJ had held in Hedges was lacking: House of Representatives, Debates , Session 1922, Vol C, p 2268. No explanation was given for including the words in parenthesis. Section 189 was renumbered in 1984 as s 360 (see s 5 Commonwealth Electoral Legislation Amendment Act 1984 ). Paragraph (iia) became paragraph (iii) of subsection (1). 11 The 1922 Amending Act also added a new s 189A to the Act: see s 24. This new section provided for a Court of Disputed Returns to determine whether a postal or absentee ballot-paper had been marked by a person who was not entitled to vote at the election and, if so, to reject the ballot-paper. In order for this to happen it was necessary that the Court be able to determine which particular ballot-paper had been completed by the person concerned. This could be done because of the scrutiny procedure in relation to absentee voting and postal voting that was imposed by the regulations made under the Act. 12 An elector was permitted to vote as an absent voter at any polling place within the State for which the elector was enrolled, subject to the arrangements at the polling place (see Reg 46 Electoral and Referendum Regulations 1919 as amended by Statutory Rules 1919, Nos 229, 260, 262 and 276 ("the 1919 Regulations ")), if the elector answered certain questions to the satisfaction of the Presiding Officer (see Regs 48 and 49 of the 1919 Regulations and s 115 Commonwealth Electoral Act 1918 ) and the elector made a declaration in a prescribed form (see Reg 49 the 1919 Regulations ; Form 26). 13 Regulation 49 of the 1919 Regulations provided that "[t]he declaration may be printed on an envelope addressed to the Divisional Returning Officer for the Division for which the elector declares that he is enrolled. " The form of the declaration set out in Form 26 required the elector to state his or her full name, address, occupation and the Subdivision of the Electoral Division in which the elector was enrolled to vote (see Form 26, 1919 Regulations ). The Presiding Officer was required to attest to the elector's signature (see Form 26, 1919 Regulations ). The Presiding Officer then handed the elector a ballot-paper headed 'Absent Vote' and the elector was permitted to retire in private to mark his or her ballot-paper (see Form 26, 1919 Regulations ). Once the elector had voted, the elector handed his or her folded ballot-paper to the Presiding Officer who enclosed the ballot-paper in the envelope bearing the declaration and deposited it in the ballot-box (see Form 26, 1919 Regulations ). The Presiding Officer was required to record the name of each elector who had voted at the officer's polling booth as an absent voter and forward a ballot-box containing the absent voters' ballot-papers to the Assistant Returning Officer (see Regs 55 and 56, 1919 Regulations ). The Assistant Returning Officer then placed the envelopes addressed to each Divisional Returning Officer together in a parcel and forwarded the relevant parcel to each Divisional Returning Officer (see Reg 56, 1919 Regulations ). Upon receiving the parcel of absentee ballot-papers, the Divisional Returning Officer was required to review the declarations on the unopened envelopes and accept the absentee ballot-papers for further scrutiny if the electors were entitled to vote in the officer's division or otherwise reject the absentee ballot-papers (see Reg 59(1), 1919 Regulations ). The Divisional Returning Officer was required to number each envelope which contained an absentee ballot-paper consecutively from one upwards and take the ballot-papers out of the envelopes and place a number on the ballot-paper which corresponded with that placed on the envelope (see Regs 59(1)(e) and s 59(1)(f), 1919 Regulations ). It thus became possible to determine how a particular elector had voted. 14 An elector who wished to vote by post was required to apply for a postal vote certificate and a postal ballot-paper (see Reg 40(1), 1919 Regulations ). The form of the postal vote certificate was set out in Form 23. Regulation 41(2) provided that "[t]he form may be printed on an envelope, addressed to the Divisional Returning Officer for the Division for which the elector named in the certificate declares that he is enrolled. " As was the case with the declaration for absent voters, the postal vote certificate specified the voter's name, address and the Electoral Division in which the voter was entitled to vote. 15 Regulation 68 of the 1919 Regulations provided that the scrutiny of postal ballot-papers was to be conducted as provided for in Part XII of the Commonwealth Electoral Act 1918 and, insofar as that Act did not make provision, as nearly as practicable in the same manner as provided by the Regulations which governed to the scrutiny of absent voters' ballot-papers. The result was that, as with absent voters, it became possible to ascertain how each postal voter had cast his or her vote. 16 There was no system in place by which it was possible to identify who had recorded any ordinary vote at any polling booth (see Senate, Debates , Session 1922, Vol C, p 2595 and House of Representatives, Debates , Vol 46 HR, p 1431). 17 Section 189A was repealed in 1965: see Commonwealth Electoral Act 1965 (Cth), s 18. The Second Reading speech of the Minister for the Interior explained that the reason for the repeal was that there was "no justification for a provision which enables a Court of Disputed Returns to identify the ballot-paper of a postal, absent or section voter": House of Representative, Debates , Vol 46 HR, p 1431. Consequential amendments were made to the Electoral Regulations to remove the practice of numbering the absent ballot-papers and the corresponding declarations and postal ballot-papers and the corresponding postal certificates: see Reg 12 Electoral and Referendum Regulations 1966 . 18 At the time that the 1922 amendments were made there was, in the Act, a provision in substantially the same terms as the present s 281(3). That section was s 164B which had been inserted in 1911: see Commonwealth Electoral Act 1911 (Cth), s 29. Section 140 was, in turn, renumbered as s 281 in 1984 (see s 5 Commonwealth Electoral Legislation Amendment Act 1984 ) . It is accepted that it may assist the conduct of the inquiry were the parties and their legal advisors to have access to the reserved ballot-papers or copies of them. There were, however, differing views as to the value of the assistance which might be anticipated. This was because of the expectation that the Court would be called on to decipher and interpret markings on each disputed ballot-paper. It was also accepted that s 360 did not provide for an exhaustive list of the Court's powers in dealing with a petition. 20 Section 360(1)(iii) plainly empowers the Court to grant leave to a party to inspect rolls and other documents used in the election process and to take extracts from those documents. The taking of extracts was, in 1922, no doubt understood to involve copying by hand the contents of discovered documents. There is no reason in the age of the copying machine why extraction should not occur by means of mechanical copying. An exception is made in the case of ballot-papers. The construction issue which arises is whether this provision amounts to a legislative proscription which prevents the Court from making the order sought even if there exist general powers under the Act and Rules which would otherwise empower the Court to order that copies of the ballot-papers be provided to the parties. This means, so the Commission submits, that "the Court is expressly prevented from granting a party leave to inspect the ballot-papers ..." If this is correct then it follows, so it was submitted, that provisions of the Act, the Regulations or Rules of Court which might otherwise be construed as supporting the making of such an order must give way to the proscription contained in s 360(1)(iii). 23 The petitioner contends that the Court's power to make the order sought is to be found in s 281(3) of the Act. That subsection expressly empowers the Court to consider reserved ballot-papers and, it is said, it is implicit that the Court can require a party to the proceeding to make copies of those ballot-papers available to the other parties. The power conferred by s 281(3), it was submitted, is a free standing source of power which is not subject to the restriction contained in s 360(1)(iii). The petitioner stressed that the forerunner of s 281(3) was included in the Act well before the precursor of s 360(1)(iii) was incorporated. The petitioner submitted that, prior to 1922 (when the forerunner of s 360(i)(iii) was inserted into the Act), there could have been no objection to the Court ordering discovery of ballot-papers to a party to a proceeding before the Court of Disputed Returns. It was submitted that the petitioner in Hedges was unsuccessful only because the Chief Electoral Officer, against whom discovery orders were sought, was not a party to the proceeding. 24 Although the petitioner's argument has a natural attraction to those accustomed to the conduct of litigation according to rules of civil procedure, I am persuaded that I should accept the Commission's submissions. Although the forerunner of s 360(1)(iii) was added to the Act in which the forerunner of s 281(3) already appeared, it was enacted to provide the Court with power which it was found not to have in a case in which the person against whom discovery was sought was not a party. True it is that the lack of power to order that access be provided to documents was found in a case in which those in whose custody the documents were held were not parties to the proceeding. The remedial legislation, however, had application whether or not the Australian Electoral Commission had been joined as a party. The restrictions imposed by the words in parenthesis were made applicable whenever a party (including a petitioner) sought access to relevant documents. 25 I am unable to accept that s 281(3) provides an independent source of power which enables the Court to require the electoral authorities to provide parties with copies of disputed ballot-papers. It confers no express power on the Court to do so. 26 All parties sought to support their construction arguments by reference to what was once known as the "mischief rule" but which is now generally referred to as the "purposive approach". This approach involves identifying the "mischief" which a particular legislative provision was designed to remedy and then adopting a construction of the remedial provision which would achieve the desired outcome. This rule or approach was only of use where an ambiguity or inconsistency was identified in the statutory language: see Mills v Meeking [1990] HCA 6 ; (1990) 169 CLR 214 at 235 (per Dawson J). This position has been modified by statute. Section 15AA of the Acts Interpretation Act 1901 (Cth) requires that, in interpreting Commonwealth Acts, Courts must prefer "a construction that would promote the purpose or object underlying the Act" to one which would not do so. The purposive approach is thus to be adopted even in the absence of discerned ambiguity. The current approach to the construction of Commonwealth statutes was summarised in the oft quoted passage from the joint judgment of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Limited v Bankstown Football Club Limited [1997] HCA 2 ; (1997) 187 CLR 384 at 408. 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. 27 The ability of a Court to construe legislation in the manner prescribed by s 15AA is, of course, dependent on its ability to identify the particular mischief or the statutory purpose lying behind the statutory language. 28 In the present case the parties had resort to judicial pronouncements, legislative history and Second Reading speeches in order to identify the purpose which s 360(1)(iii) was intended to serve. The petitioner seeks to identify the mischief to which s 360(1)(iii) is directed as being the absence of a power in the Court of Disputed Returns to require a non-party to discover documents which are relevant to issues raised by a petition. This submission is said to be supported by the statement in the Attorney-General's Second Reading speech in 1922 which suggests that the paragraph was inserted in the Act in order to overcome the procedural difficulty identified by Barton ACJ in Hedges . Section 360(1)(iii) does not, however, simply provide for normal discovery rules to apply to cases before Courts of Disputed Returns. It contains a series of restrictions: leave to inspect and take extracts must first be obtained from the Court; the inspection must take place in the presence of a prescribed officer; and the making of any extract must also occur in the presence of a such an officer. There is, in addition, the limitation which is central to the present debate, namely, that leave to inspect and take extracts from ballot-papers may not be given. 29 Nowhere in the secondary materials, to which I was referred, is there any express explanation of the reason for the imposition of this or any of the other limitations on the Court's power. The Commission advanced the suggestion that the proscription in relation to ballot-papers was necessary in order to protect the secrecy of the ballot. If parties had access to the numbered ballot-papers they might be able to discover how a particular elector had cast his or her vote. This is a plausible suggestion. Unfortunately there is nothing in the Attorney-General's speech in 1922 to support it. Nor is there any explanation, in the Minister for the Interior's 1965 Second Reading speech, of why it was necessary to retain the limitation in s 360(1)(iii) when the repeal of s 189A was justified as a measure to protect such secrecy. The Commission speculates that s 360(1)(iii) might have been left unaltered in order to preserve secrecy in circumstances in which a voter, contrary to instructions published in polling places, wrote something on a ballot-paper which might serve to identify him or her. Any such annotation would render the ballot informal: see s 268(1)(d) of the Act. It is, however, unlikely that the words in parenthesis in s 360(1)(iii) were retained to protect the secrecy of the ballots cast by persons who were perfectly happy to associate their names with their voting intentions. 30 The petitioner, for his part, proffers an alternative explanation which is that, in the absence of the restriction on a party's access to ballot-papers, a party could seek access to every ballot-paper thereby undermining the policy reflected in s 281(3), that, in the normal case, the attention of a Court of Disputed Returns should be confined to reserved ballot-papers. No support for this theory is to be found in the secondary materials. Moreover, the restriction is not necessary in order to prevent a party having access to all the ballot-papers cast in a particular election. Were application to be made by a party for access to all papers, the Court could refuse leave if it were persuaded that any enquiry should be confined to the reserved ballot-papers. 31 In the absence of any clear identification of the legislative purpose intended to be served by the words appearing in parenthesis in s 360(1)(iii), the case would seem to be one in which it is necessary to focus on, and give effect to, the literal words chosen by the legislature. A "purposive" approach founders in the shallows of a multitude of obscure, uncertain and even apparently conflicting purposes. A Court should not speculate about the legislature's intention. A party to a petition who wishes to obtain access to relevant documents in the possession of the electoral authorities may apply to the Court of Disputed Returns for leave to inspect and take extracts from those documents. The Court may, in its discretion, grant that leave in respect of all or any relevant documents other than ballot-papers. The maxim expressum facit cessare tacitum , to which Gavan Duffy CJ and Dixon J gave effect in the Anthony Hordern case, applies. The power to grant access to documents is provided, subject to the relevant limitation, by s 360(1)(iii). Reliance on other, more general provisions in the Act or subordinate legislation which might otherwise support a discovery order is excluded by the more specific grant of power and the restrictions imposed on its exercise. 32 The petitioner sought to support his application by reference to some further matters. The first was that there is not presently and there may never have been a prescribed officer for the purposes of s 360(1)(iii). Unless and until the necessary regulation is introduced any grant of leave under the paragraph would be futile. This is not, however, a reason for concluding that s 360(1)(iii) can be ignored or that s 281(3) can be found to confer power on the Court to make the orders sought. The meaning accorded to a provision in an Act cannot be made dependent on whether or not the executive has chosen to exercise a power to make regulations which the legislature has conferred in order to facilitate the carrying into effect of an Act. 33 The next argument raised by the petitioner focuses attention on the requirement in s 360(1) that the Court sit "as an open Court" and on the "open justice principle" which is a fundamental pillar of the rule of law. Attention was directed to the well known statements of Lord Atkinson in Scott v Scott [1913] AC 417 at 463 and Kirby P in John Fairfax Group v Local Court (NSW) (1991) 26 NSWLR 131 at 143. It was contended that it would be inconsistent with the "open Court" requirement and the "open justice" principle were the Court to rule on the formality of disputed ballot-papers without the parties being able to see those ballot-papers, or to make submissions in relation to them. This, it is said, would be the consequence of a refusal to make the orders sought. In this context the petitioner drew attention to the judgment of Isaacs J, sitting as a Court of Disputed Returns, in Kean v Kerby [1920] HCA 35 ; (1920) 27 CLR 449 and pointed to passages of his Honour's judgment which, it was submitted, suggested that counsel had had access to ballot-papers in order to assist the Court. 34 The importance of justice being administered openly cannot be underestimated. Exceptional circumstances will be required before the public will be excluded from a Court whilst a hearing is in progress or before reporting restrictions are imposed. There is no suggestion of that occurring on the hearing of the petition. At worst for the petitioner he, and his legal advisors, will participate in the hearing without having access to the ballot-papers or copies of them. They will, nonetheless, be free to address the Court on the principles which it should apply when determining whether a ballot-paper is to be treated as formal or informal. They may also be able to provide more informed assistance to the Court by other means such as responding to carefully framed questions which may expose the nature of the notation which caused the ballot-paper to be reserved. It is not uncommon for counsel to labour under the difficulty of not having access to evidence or other material which is available to another party or the Court. Cases arising under freedom of information and national security legislation provide well known examples of the phenomenon. No abrogation of the "open justice" principle occurs in such cases; what is involved is adherence to modified procedural requirements imposed by statute which constrain the operation of some aspects of the normal rules which apply to discovery in the course of civil litigation. 35 It ought not to be assumed, in any event, that a refusal of the petitioner's application will mean that he and/or his legal advisors will not have access to some or all of the reserved ballot-papers in the course of the hearing. It may well be that this can be achieved, consistently with the Act, by other means. During argument I invited the parties to consider and make submissions on whether other procedures might be available which will enable counsel to make informed submissions on whether particular ballot-papers are to be treated as being formal or informal. In that regard it is to be borne in mind that s 360(1)(iii) only constrains the Court from granting leave to a party to inspect ballot-papers which are in the custody of electoral authorities. 36 Kean v Kerby was decided in 1920. The decision in Hedges had, seven years earlier, established that access to electoral documents could not be obtained by means of an order for discovery directed to electoral officers who were not party to the proceeding. This did not mean that a petitioner could not obtain access to the ballot-papers by other means. In Hedges , Barton ACJ was at pains to stress (at 334) that the application before him was not directed to securing the attendance of an electoral official to produce documents, thereby suggesting that the petitioner might have been successful had he sought the issue of a subpoena duces tecum . No doubt conscious of the ruling in Hedges , both the petitioner and the respondent, in Kean v Kerby, obtained subpoenas directed to the Divisional Returning Officer for the relevant electoral division. The petitioner's subpoena required the production to the Court of "the parcels of ballot papers containing thirty five ballot papers reserved for the decision of the Commonwealth Electoral Officer for the State of Victoria and the ballot papers examined, counted and dealt with by [the Returning Officer] under section 135 subsection 3 of the Commonwealth Electoral Act 1918-1919 . " The respondent's subpoena required the production of the official roll of electors for the division and all documents relating to postal and absentee voting by certain named electors. 37 The ballot-papers were produced to the Court by the Electoral Officer. It is clear from his judgment that Isaacs J examined each of the disputed ballot-papers. What is not apparent from the judgment is whether the parties and/or their legal advisors were given access to the ballot-papers in the course of the hearing. I can find nothing in Isaacs J's judgment which expressly or by necessary implication suggests that such access was given. No transcript of the hearing was taken. There is, however, a contemporaneous newspaper report of what occurred. Robert H Lawson, chief electoral officer for Victoria, identified the packet. ... After Mr Justice Isaacs had obtained an assurance that the ballot papers bore no identifying marks, and that the secrecy of the ballot would not be affected, he consented to the packet being opened. It contained 35 ballot papers which were inspected by counsel and solicitors for both parties during the luncheon adjournment. It was not, therefore, necessary for Isaacs J to consider whether he was prevented by such a provision from directing that the ballot-papers be made available to counsel. Had it been necessary he may have been persuaded that he was not so constrained because he would have been granting leave to counsel to inspect documents which were in the custody of the Court rather than the Commonwealth Electoral Officer and that access was being provided during the course of a hearing under the Court's supervision for the limited purpose of providing assistance to the Court. 39 The petitioner made the further submissions that the Court was bound to accord the parties natural justice, that a failure to make the order sought would cause the petitioner to be denied natural justice and that the restriction on leave being granted to inspect ballot-papers, contained in s 360(1)(iii), did not, expressly or by necessary implication, modify the requirements of procedural fairness: see Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 584. 40 There can be no doubt that a Court of Disputed Returns must accord procedural fairness to parties appearing before it: cf Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 584; Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 at 598. The petitioner's submissions assume that procedural fairness would, in the present case, require that the petitioner and his legal advisors should have access to the ballot-papers and that this will not happen unless the order sought is made. What procedural fairness requires in a particular case will depend on a range of considerations including the nature of the inquiry, the governing rules and the significance of the interest affected: see Russell v Duke of Norfolk [1949] 1 All ER 109 at 118 and, generally, Dyer, "Determining the Content of Procedural Fairness" (1993) 19 Monash Law Review 165. This aspect of the petitioner's case was not developed in any detail. Were that to happen at a later stage of the Court's inquiry careful attention would need to be directed to the language of s 360(1)(iii) and to the nature of the Court's statutory function. As presently advised I am not persuaded that procedural fairness would necessarily be denied at the hearing of the petition were the petitioner and his legal advisors not able to examine individual ballot-papers. I am, nonetheless, prepared, for present purposes, to assume that provision of access to some or all of the ballot-papers might be necessary in order to satisfy procedural fairness requirements. For reasons already given, however, it should not be assumed that such access will be denied in the event that the petitioner's application is refused. Other means of facilitating access may be available even if s 360(1)(iii) bears the construction which I have accorded it. It is, therefore, not inevitable that a failure to accede to the petitioner's application will lead to a denial of natural justice. In any event, as I have held, the clear words of s 360(1)(iii) are sufficient to displace common law procedural requirements. The application should be refused. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | court of disputed returns parliamentary election (cth) house of representatives whether court has power to grant parties to a petition pre-trial access to ballot-papers consideration of s 360(1)(iii) commonwealth electoral act 1918 constitutional law |
The second applicant is the holder of permits issued by the respondent which permit it to carry on business as a wholesale potato merchant in Western Australia. The respondent is a statutory corporation created by the Marketing of Potatoes Act 1946 (WA) (MOP Act). The MOP Act provides for the establishment of a marketing scheme for commercially grown potatoes in Western Australia. One of the functions of the respondent is to regulate the production and marketing of ware or commercial potatoes (potatoes) in Western Australia. The powers given to the respondent include the power to register persons as authorised to carry on business as commercial producers of potatoes, to licence the areas of land to be used in the conduct of such business, to regulate domestic market entitlements and marketing pools, and to issue permits to persons to act as wholesale potato merchants. 2 Section 22(1) of the MOP Act makes it an offence for a commercial grower of potatoes to sell or deliver potatoes to anyone other than the respondent or its agent, and s 22(2) makes it an offence for any person other than the respondent or its agent to purchase or take delivery of potatoes from a grower not authorised by the respondent. The respondent has, pursuant to its powers under the MOP Act, appointed inspectors to enforce compliance with the MOP Act. The MOP Act gives inspectors extensive powers of search and seizure. 3 The applicants and the respondent have in the recent past had a turbulent relationship. There have been a number of instances where the respondent has refused applications made by the first applicant for area licences and domestic market entitlements. In 2004, the Minister for Agriculture, Forestry and Fisheries, directed the respondent to reverse its latest refusal of the applications. 4 Further, the respondent has since 2003 alleged on several occasions that the first applicant has grown potatoes in excess of his domestic market entitlement, or without an area licence. The respondent has threatened to prosecute the first applicant in relation to the alleged over-planting and has sought to invoke the provisions of s 22(7) of the MOP Act to impound the allegedly over-planted potatoes. There have been further occasions when the inspectors of the respondent have invoked their powers to seek to inspect the business records of the first applicant. 5 On 21 January 2006, the applicants commenced an originating application in this Court. By their amended statement of claim, the applicants claim a declaration that certain provisions of the MOP Act and Regulations are by reason of s 109 of the Constitution , and their inconsistency with s 46 of the Trade Practices Act 1974 (Cth) (TPA), invalid. Further, or alternatively, the applicants claim a declaration that the respondent has, by having engaged in certain pleaded conduct, contravened s 46 of the TPA. There is an additional claim for a declaration that certain provisions of the MOP Act and Regulations are invalid because they contravene s 92 of the Constitution . 6 By a letter dated 21 February 2006, the respondent issued a notice to the first applicant calling upon him to show cause why his registration to act as a commercial producer of potatoes should not be cancelled. On the same day the respondent also issued a notice to the second applicant calling upon it to show cause why its permits to act as a wholesale potato merchant should not be cancelled. Further, the respondent applied for an injunction restraining each of the applicants from acting in breach of s 22 of the MOP Act. Undertakings were given by each of the applicants. This claim now comprises the respondent's cross-claim in this proceeding. 7 The parties have given discovery. However, the applicants claim that the discovery which has been given by the respondent is inadequate and by this application they seek orders that the respondent give discovery of documents in a number of nominated categories. Mr Dawson deposed that the respondent has not conducted a search of those categories because of the burden thereby imposed. The respondent, he said, had 11 full-time employees, and he believed that there were in the order of 100,000 documents that would need to be searched in relation to several of the categories identified. Mr Dawson went on to say that given the number of employees that the respondent has and the volume of documents to be searched, it would be necessary to engage external assistance to carry out this task. Accordingly, said Mr Dawson, he believed a search for those documents would be "very onerous, time consuming and expensive". The documents referred to in category [12(f)] and category [12(g)] relate to its claim that the impugned sections of the MOP Act are invalid as being inconsistent with s 92 of the Constitution . 14 The respondent contends that the resolution of the case as pleaded does not require discovery of the categories of documents sought by the applicants. Further, it is said that, even if the documents were otherwise discoverable, in the exercise of the Court's discretion, discovery should not be ordered because the utility to the applicants of obtaining discovery of the documents, is outweighed by the burden that would be caused to the respondent in making such further discovery. This will, in turn, so the applicants say, assist in supporting an inference that the respondent engaged in the impugned conduct for the proscribed purpose. 19 The respondent says that the real contest between the parties is concerned with whether the TPA has any application to the marketing scheme established under the MOP Act, whether the pleaded markets comprise markets in the relevant sense, and whether the applicants are precluded from competing with the respondent by reason of the operation of ss 22, 23 and 24 of the MOP Act, rather than by any conduct on the part of the respondent. Further, the respondent contends that it has made admissions in its defence that it engages in conduct to enforce the MOP Act and that the question of the subjective purpose with which the respondent has engaged in the impugned conduct does not arise on the pleadings. In addition, it is said that the pleading made no reference to any discrimination by the respondent between the applicants and other growers and merchants. Accordingly, says the respondent, discovery of the disputed category of documents is not necessary for the resolution of the dispute, and if it is, when weighed against the burden to the respondent of complying with such an order, the discretion to order discovery should not be exercised. 20 It is necessary to examine the pleadings to discern what is in issue between the parties. In this regard, I will only examine the pleas made in paras 6, 7, 8, 8A and para 9 of the statement of claim in relation to the purchase market, because the plea is mutatis mutandis repeated in paras 12, 13 and 13A in respect of the supply market. 21 The applicants plead in para 6 of the statement of claim that the respondent has a substantial degree of market power in the purchase market (as identified in the pleading) because it has, and exercises, a number of powers pleaded at paras 6.1 to 6.8 of the statement of claim. These powers include an alleged power arising under s 22 of the MOP Act, as well as the power to restrict the number of commercial growers, limit the number of potatoes grown and sold to the respondent, issue permits to persons to buy or sell potatoes, set or influence the price at which it buys potatoes, and to prosecute persons for breaches of s 22(1) and s 22(2) of the MOP Act and Regulations. 22 The applicants have, in answer 3 of their reply to the respondent's request, provided particulars of the conduct which they say comprises the exercise by the respondent of its power under s 22 of the MOP Act. The conduct particularised includes making demands, prosecuting and threatening to prosecute commercial producers and suppliers of potatoes for breaching s 22, issuing infringement notices, seizing or threatening to seize potatoes, cancelling or threatening to cancel registrations, refusing to approve applications for registration, permits and licences, making compliance with s 22 a condition of permits, licences and registrations, requiring commercial producers of potatoes to dump or plough into the ground potatoes which are in excess of a grower's domestic market entitlement or for which the grower did not have a licence to grow. 23 The applicants then plead in para 7 of the statement of claim that the respondent uses its substantial market power identified in para 6, to impose limits on the number and identity of commercial potato growers and on the amount of commercial potatoes the growers, including the first applicant, are permitted to grow, and to require that all the growers, including the first applicant, sell the potatoes to the respondent at a price fixed on the recommendation of the respondent; and further, other than in respect of potatoes exported from Western Australia, that they sell the potatoes exclusively to potato merchants, including the second applicant. 24 In para 8 of the statement of claim, the applicants plead that the second applicant wishes to compete with the respondent in the purchase market but upon the first applicant attempting to make ad hoc wholesale sales of potatoes to the second applicant and other persons, the respondent threatened to prosecute the applicants for breach of s 22 of the MOP Act and sought to seize potatoes from the first applicant. 25 The applicants plead in para 8A of the statement of claim, the respondent has engaged in the conduct pleaded at para 7 and para 8 of the statement of claim, for the purpose of preventing the second applicant from entering the purchase market or preventing the second applicant engaging in competitive conduct in the purchase market. The respondent has the functions pleaded in paragraph 3.3 above. The respondent has the powers pleaded in paragraphs 6.1-6.7 above. 28 It can be seen that the applicants rely upon the conduct pleaded in paras 6, 7 and 8 of the statement of claim in support of their claim that the respondent uses its substantial market power, and in para 8A the applicants plead that the respondent engages in that conduct for the purpose of preventing the second applicant from entering the purchase market or preventing the second applicant engaging in competitive conduct in that market. 29 Paragraph 9 of the defence pleads in response to para 6 of the statement of claim. Firstly, the respondent denies the allegation that it has a substantial degree of market power because, says the respondent, by the operation of ss 22, 23 and 24 of the MOP Act there is no market as pleaded and, therefore, there is no market power to be exercised. 30 The respondent then addresses the applicants' allegation that by reason of the existence and exercise of what the applicants characterise as statutory powers, the respondent has a substantial degree of market power. I have found it a little difficult to discern precisely what is admitted by the respondent in its defence and I hope I do not do the respondent a disservice in the summary which follows. In para 9 of the defence, the respondent has, in general, admitted the existence of the statutory provisions referred to by the applicants in para 6 of the statement of claim, but pleaded its version of the content of the statutory provisions. Also in para 9.4(b) of its defence, the respondent has, perhaps unusually, pleaded to particulars provided by the applicants in answer 3 of its particulars referred to at [22] above, admitting that it engages in that conduct, but denying that it thereby has market power in the market as pleaded in the statement of claim. Otherwise, it appears that insofar as the applicants have characterised the relevant statutory provisions as giving the respondent powers which it exercises, the respondent, in para 9 of the defence, has denied that it exercises those powers. The respondent goes on to say that it does not by reason of the statutory provisions, have a substantial degree of, or market power in the purchase market as pleaded. 31 It is apparent from para 9 of the defence, and other pleas in the defence, that the parties take a different view of the characterisation of s 22(1) and s 22(2) of the MOP Act. As already mentioned, in para 6 of the statement of claim, the applicants plead that these two subsections comprise powers exercisable by the respondent. However, in para 9.4 of the defence, the respondent while admitting the content of s 22(1) of the MOP Act, says "that the operation of s 22(1) of the MOP Act does not involve the exercise of any power by the respondent". 32 Paragraph 10 of the defence responds to para 7 of the statement of claim. The respondent denies para 7 of the statement of claim. There is no formal admission in para 10 of the defence that the respondent exercises a power to grant licences, permits and authorisations, which limit the number and identity of commercial potato growers, but the respondent says that any power exercised to that effect does not involve the use of any market power in the market pleaded in the statement of claim or in the potential market. This paragraph of the defence also contains a plea that the requirement on the first applicant and other growers to deliver potatoes to the respondent is imposed by s 22 of the MOP Act, and not by any conduct of the respondent. The applicants in their reply have joined issue with the respondent in respect of this plea. 33 The respondent has pleaded to para 8 of the statement of claim in para 11 of the defence. Paragraph 11 of the defence appears to comprise a denial of the allegations in para 8 and the pleading by the respondent of its version of the relevant facts and circumstances and legal consequences flowing from those facts and circumstances. Certainly, from the denial in para 11.5 of the defence, it appears that the respondent has put in issue the allegation that the second applicant wishes to compete with the respondent and the circumstances in which the threats were made by the respondent to prosecute the applicants for a breach of s 22 of the MOP Act. 34 As previously mentioned, the applicants plead in para 8A of the statement of claim that the respondent was required by the MOP Act to engage in, and has engaged in the impugned conduct for the purpose of preventing the second applicant from entering the purchase market or preventing the second applicant from engaging in competitive conduct in that market. In para 12.4 of the defence, the respondent denies that it "has formed and acted for the purpose" alleged in para 8A of the statement of claim. It also denies that it was required by the MOP Act to engage in the impugned conduct, or that the MOP Act required it to act for the purpose alleged. The respondent then goes on to say that the incapacity of the second applicant to purchase potatoes from commercial potato growers is a result of the operation of s 22 of the MOP Act "and not any conduct of the respondent". In their reply the applicants join issue with the facts and matters pleaded in para 12 of the defence. 35 In para 13 of the defence, the respondent denies that it has engaged in the impugned conduct, or, by that conduct, prevented the applicants from entering the purchase market or engaging in competitive conduct with the respondent in that market. 36 In my view, the pleading of the defence puts in issue whether the respondent, in acting pursuant to powers given to it under the MOP Act, has engaged in conduct for the purpose of preventing the applicants from entering the purchase and supply markets, or engaging in competitive conduct with the respondent in those markets, whether that conduct has prevented the applicants from entering, or competing with the respondent in, the pleaded markets, and whether that conduct constitutes the use by the respondent of a substantial degree of market power. 37 I do not accept the respondent's submission that the admissions in para 9.4(d) of the defence, and the manner of the particularisation of "purpose" by the applicants mean that there are no factual matters in issue on the pleadings between the parties. 38 As to the admissions, it is the case that the respondent has admitted in para 9.4(d) that it engages in conduct to enforce the MOP Act. However, two of the applicants' central allegations are, firstly, that that conduct, as directed against the applicants specifically, as well as the exercise by the respondent of the other specified powers, has prevented the applicants from entering the markets pleaded, or from engaging in competitive conduct with the respondent; and, secondly, that that conduct was engaged in for the proscribed purpose. Each of these allegations is denied. The admission in para 9.4(d) of the defence does not address those allegations, which relate to the respondent's conduct insofar as it affects and is directed towards the applicants specifically. The admission in para 9.4(d) is only in respect of the respondent's conduct in general. 39 Further, in my view, the pleadings do raise the issue of the subjective purpose for which the respondent acted in engaging in the impugned conduct in respect of the applicants. The plea by the respondent in its defence is that it did not "form and act for" the proscribed purpose. The joinder of issue by the applicants with this plea is sufficient to put in issue the question of the actual purpose for which the respondent acted in preventing the applicants from entering into, or competing with the respondent in the pleaded markets. The use of the word "form" in this context suggests engaging in an actual mental process. 40 The documents in the categories identified in [12(a)] to [12(e)] above, all relate to the conduct particularised in answer 3 (at [22] above) as conduct comprising the exercise by the respondent of its power under s 22 of the MOP Act. I accept the submission of the applicants that the way the respondent has dealt with the applicants, who on the pleading wish to compete with the respondent, as compared to other growers in relation to the matters particularised in answer 3, can be relevant to the question of whether the respondent takes advantage of the alleged substantial market power, and also whether the respondent exercises its powers for the purpose of preventing the applicants from entering the pleaded markets and competing with the respondent. 41 In my view, in order to prove that the respondent had the proscribed purpose, it would be open to the applicants at the trial to lead evidence that the respondent dealt with the applicants less favourably than those growers and potato merchants who did not have a desire to compete with the respondent; as the basis for an inference that its purpose in doing so was to prevent the applicants, potential competitors, from entering the markets or competing with the respondent. It is not necessary to plead evidence. In my view, therefore, the documents in those categories are relevant to matters in issue and, subject to the question of the burden on the respondent in making discovery, would be discoverable. 42 As to the documents which relate to the setting of the price, in my view, those documents do not have the same relevance to the issue of the proscribed purpose as the documents referred to in [12(a)] to [12(e)] above. The respondent has already given discovery which deals with the question of the price at which potatoes are bought and sold. The applicants have not, in my view, demonstrated that further discovery is needed in respect of this category. 43 I now deal with the applicants' claims for discovery of the documents in categories referred to in [12(f)] and [12(g)] above. It is said that these categories are relevant to the applicants' case that these nominated sections of the MOP Act are invalid on the grounds that they contravene s 92 of the Constitution . 44 The applicants say that at trial they wish to make an alternative argument to the case that the MOP Act and Regulations are on their face discriminatory against interstate trade and protectionist of intrastate trade. This alternative argument is that the practical operation of the MOP Act and Regulations is discriminatory in a protectionist sense. The practical operation, say the applicants, of the MOP Act and Regulations is also relevant to the issue of whether the MOP Act and Regulations are "appropriate and adapted" to the fulfilment of a legitimate object, and, whether, therefore, the burden imposed on interstate trade is incidental and not disproportionate to the achievement of the legitimate object. The documents, say the applicants, are relevant to the practical operation of the Act and Regulations. 45 The respondent submitted that on the pleadings as they stand, there is no pleaded case which puts in issue the practical operation of the MOP Act and Regulations. Further, the respondent says that in the event that the statement of claim made allegations as to the specific facts and circumstances going to the practical operation of the Act, it may well be that the respondent would make admissions which would preclude the need for discovery. 46 The submission of the respondent is to be accepted. In my view, on the pleadings as they currently stand, the documents referred to in categories [12(f)] and [12(g)] above, do not relate to a matter in issue between the parties. Mr Dawson was appointed to his current position of Chief Executive Officer of the respondent on 1 December 2005. 48 Mr Dawson deposes that he requested employees to undertake investigations as to the number of documents held by the respondent which may fall within each of the categories of documents of which discovery is sought by the applicants. 49 Mr Dawson said that the documents held by the respondent comprised grower files, board documents, sub-committee documents, electronic documents and other documents. Mr Dawson deposed that there were approximately 430 grower files and each file contained approximately 100 multi-paged documents and there were, therefore, approximately 43,000 documents contained in the grower files. Further, he said that since January 2003, the respondent had held 47 board meetings and that there were approximately 50 board documents for each meeting. Further, since January 2003 the respondent had held approximately 20 sub-committee meetings which had been minuted. There were approximately 60 pages of documents comprising the minutes of these meetings. The respondent also had a large computer system containing a number of electronic files or documents which he referred to as the "electronic documents". By reference to the gigabytes used, he estimated that a printout of the computer files could produce in excess of 200,000 pages. The "other documents" comprised the files of management operations and executive staff of the respondent. Mr Dawson estimated that the hard copies of these files comprised over 20,000 multi-paged documents. In his affidavit, Mr Dawson referred to the documents identified in this paragraph, collectively as "all documents". 50 Mr Dawson also said that insofar as the applicants were seeking discovery of "internal correspondence", there were 12 employees in the respondent's office and that communication is predominantly verbal and there was only limited internal correspondence created. 51 Mr Dawson said that he requested six of the respondent's 12 employees to undertake investigations into the number of documents held by the respondent which may fall into each of the categories of documents in respect of which the applicants sought discovery. 52 As to documents referred to in category [12(a)], Mr Dawson said that on the basis of his knowledge and information obtained from other employees, there have been "very few occasions" on which applications for area licences, transfers of area licences, lease and/or licence of area licences, domestic market entitlements or transfers of domestic market entitlements, have been refused. However, even though it was expected that there would only be a few documents, the files of the respondent were not arranged by reference to refused applications. Accordingly, said Mr Dawson, "all documents" would need to be reviewed. 53 As to the documents referred to in category [12(b)], Mr Dawson said that he had been informed that there is only one document making reference to the threatened cancellation of the applicants' registration and permits in February 2006, which is the letter referred to in [6] above. However, he went on to say that "in order to confirm this, all documents would need to be reviewed". 54 As to the documents referred to in category [12(c)], Mr Dawson said that "there would not have been many documents created in this category since January 2003". However, he said that, in order to find those documents, "all documents" would need to be reviewed. 55 In relation to the documents referred to in category [12(d)], Mr Dawson said that he had been informed that since 1998 there have been "a number of documents relating to the applicants which may fall into this category". It would be necessary to search "all documents". 56 As to the documents referred to in category [12(e)], Mr Dawson said that to respond to that request, "all documents" would need to be reviewed. 57 Mr Dawson said that he estimated that it "could take a person a number of weeks to properly conduct a search" of "all documents". 58 I am not satisfied that, on the affidavit evidence of Mr Dawson, the giving of discovery of the categories of documents which I have found relate to matters in issue, would be so burdensome to the respondent that an order for discovery of those documents should be refused. 59 Firstly, the evidence of Mr Dawson demonstrates that he appears to have misapprehended the nature of the search which needs to be carried out under the Rules, namely, a reasonable search. This is demonstrated particularly by his statement that in order to conduct a search in respect of the documents relating to the respondent's threats in February 2006 to cancel the first and second applicants registration and permits respectively, it would be necessary to review "all documents" to confirm that there was only one document which related to this category. No explanation is given in Mr Dawson's affidavit as to why it would be necessary to review documents going back to 2003, or the files of unrelated growers, in order to confirm whether documents exist in relation to an event which occurred in February 2006 and did not affect other growers. 60 Secondly, Mr Dawson's affidavit does not disclose the internal processes adopted by the respondent when making a decision to refuse an application for an area licence or any of the other licences referred to in category [12(a)]. Nor does it disclose the processes adopted by the respondent in response to the circumstances described in [12(c)]; nor in relation to deciding on the appropriate response to breaches or suspected or reported breaches of s 22 of the MOP Act. Further, it is apparent from the correspondence exhibited to the affidavit of Ms Back, sworn 7 November 2006, in support of the applicants' notice of motion, that in 2003 Mr Larry Hegarty, the Compliance Officer and Mr Brian Dickson, the Operations Manager of the respondent were each involved in communicating to the applicants the licence and compliance related decisions of the respondent of the kind referred to in [12] above. However, there is no evidence from Mr Dawson of having had, or attempting to have, specific discussions with Mr Hegarty or Mr Dickson as to the likely whereabouts of relevant documents within the respondent's filing system with a view to avoiding the need to search all the documents; or if such discussions did take place, why neither Mr Hegarty nor Mr Dickson was unable to assist Mr Dawson in identifying measures to narrow the scope of the search. On Mr Dawson's evidence, Mr Hegarty is a current employee of the respondent. In my view, inquiries of this nature would be made by a party conducting a reasonable search of the documents in its custody or possession. In the absence of evidence of such inquiries having been made, I am unable to conclude that a reasonable search for the documents in categories [12(a)] to [12(e)] above, would of necessity require a search of all the respondent's documents, and would result in so burdensome a task for the respondent that it outweighs the forensic utility to the applicants in discovery being given of the relevant documents. 61 Accordingly, I will order that the respondent provide discovery of the documents in the categories referred to in [12(a)] to [12(e)] above. I will hear the parties as to the precise terms of the order and as to the question of 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 Siopis. | whether the giving of discovery would be burdensome whether discovery of specific categories of documents should be ordered practice and procedure |
The respondent (Mr Snelgrove) was the petitioning creditor in the Federal Magistrates Court. 2 The first order referred to in the preceding paragraph was an interlocutory order. The second order, the sequestration order, was a final order. By his amended notice of appeal filed on 4 July 2007, Mr Roskell gave notice that he appealed from "the whole of the judgment of Federal Magistrate Driver given on 16 April 2007 at Sydney". I treat the appeal as being from the sequestration order. As will appear, the appeal turns on whether his Honour was entitled to make the interlocutory order. That is to say, the sequestration order cannot be supported if the extension of time granted by the first order cannot be supported. Therefore, nothing turns on the fact that there is no right of appeal from the interlocutory order itself. (5) The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order. No order was made under subs (5) other than the one that was made on 16 April 2007, long after the period of 12 months referred to in subpara 52(4)(a) had expired. 5 I discuss below the question whether the period of 12 months commencing on 26 April 2005 referred to in subpara (4)(a) and subs (5) expired on 25 April 2006 or 26 April 2006 and its significance in the circumstances of the present case. 6 Whether the period not exceeding 24 months referred to in subs (5) is properly to be regarded as having expired on 25 or 26 April 2007, his Honour's order that the period at the expiration of which the petition was to lapse should be the period commencing on 26 April 2005 and expiring on 25 April 2007 did not exceed that period of 24 months. He did so on the basis that it had been due to an accidental slip or omission at a hearing before him on 11 April 2006 (within the period of 12 months commencing on 26 April 2005), that he had not at that hearing made an order under s 52(5) extending the life of the petition. He obtained a judgment against Mr Roskell in the Local Court on 22 June 2000 for costs. 10 On 20 December 2004, Mr Snelgrove procured the issue of a bankruptcy notice directed to Mr Roskell. The bankruptcy notice demanded payment of the amount of the judgment and interest. 11 As noted earlier, on 26 April 2005 Mr Snelgrove presented the creditor's petition against Mr Roskell in the Federal Magistrates Court. 12 On 28 July 2005, Mr Roskell filed a notice of intention to oppose the petition. His grounds of opposition went to the existence of the underlying debt. 13 The creditor's petition was heard by Driver FM on 12 August 2005. As has been the case throughout, Mr Roskell appeared in person, that is to say, unrepresented. His Honour raised a question as to the validity of the bankruptcy notice in view of the erroneous attribution in it of the source of the alleged liability of Mr Roskell to pay interest. Apparently it was understood that this question might be resolved by the then awaited decision of the High Court in Adams v Lambert (the case was decided on 4 April 2006 and is reported at [2006] HCA 10 ; (2006) 228 CLR 409). 14 According to an affidavit of Rachel Therese Menassa, a solicitor employed by Curwoods Lawyers (the solicitors for Mr Snelgrove), the proceeding came before his Honour on 14 March 2006. On the preceding day, 13 March 2006, Ms Menassa discussed with Mr DeBuse of counsel, the desirability of Mr Snelgrove's seeking an order extending the life of the petition which was due to expire the following month, April 2006. Mr DeBuse agreed that an extension should be sought. Unfortunately, however, Ms Menassa, who appeared for Mr Snelgrove before Driver FM on 14 March 2006, overlooked seeking the extension. As it transpired, however, the proceeding was stood over for directions to 11 April 2006, a date still within the 12 month period. 15 As mentioned previously, the High Court's judgment in Adams v Lambert was delivered on 4 April 2006. The High Court held that the erroneous attribution of the statutory liability for interest in the bankruptcy notice in that case was a formal defect or irregularity within the meaning of s 306(1) of the Act. 16 According to Ms Menassa's affidavit, she was "instructed" to apply for an extension of the life of the petition on 11 April 2006. On that date she again appeared for Mr Snelgrove before his Honour. Ms Menassa's affidavit records that she again forgot to apply for the extension. The applicant is to file and serve on the respondent updated affidavits of search and debt no later than 26 April 2006. Parties are to file and serve any further submissions no later than 26 April 2006, concerning the validity of the bankruptcy notice relied upon, taking into account the decision of Adams v Lambert ..., and the question raised at the trial of the matter on 12 August 2005, whether the bankruptcy notice was confusing having annexed to it a certificate stating that no interest was payable. If the date lay outside the period, it would be clear from the terms of the orders alone that his Honour must have intended that the petition remain on foot beyond the expiration of that period. 18 On 6 June 2006, Driver FM delivered judgment (see Snelgrove v Roskell [2006] FMCA 503). The cover sheet of his Honour's Reasons for Judgment shows a hearing date of 12 August 2005 and a date of last submission of 26 April 2006. His Honour dismissed the petition and declared that the bankruptcy notice was invalid. 19 His Honour noted (at [5]) that at the hearing on 12 August 2005, he had satisfied himself that Mr Roskell's objections to the creditor's petition had no substance. No doubt the reference was to the grounds of opposition (see [12] above). The basis on which his Honour decided against Mr Snelgrove concerned the claim for interest. His Honour noted (at [7]) that following the delivery of judgment in Adams v Lambert (on 4 April 2006), he had called (on 11 April 2006) for written submissions by 26 April 2006 on the question of the validity of the bankruptcy notice in the light of that decision and of another issue raised by his Honour. His Honour also said: "I otherwise reserved judgment". In fact, his Honour's orders of 11 April 2006 (set out at [16] above) did not refer to the reserving of judgment. It is clear, however, that his Honour did in fact reserve judgment. He did not deliver judgment on 11 April 2006 and the order for submissions showed that judgment was yet to be given. His Honour noted that updated affidavits of search and debt together with Mr Snelgrove's submissions had been filed on 26 April 2006. On 15 February 2007, Jacobson J allowed the appeal, set aside his Honour's orders and remitted the matter to the Federal Magistrates Court to be determined in accordance with Jacobson J's reasons for judgment (see Snelgrove v Roskell [2007] FCA 122). 21 Jacobson J held that upon the proper construction of the bankruptcy notice, the claim for interest was only for post-judgment interest. His Honour rejected the grounds on which Driver FM had dismissed the creditor's petition. 22 Mr Roskell sought to reargue grounds of opposition that had been raised in the Federal Magistrates Court. He had not, however, filed a notice of contention. Mr Roskell argued, for example, that he was not personally liable for the costs, or, at the very least, that that the amount was overstated. 23 Mr Roskell also submitted before Jacobson J that "a copy of the record of judgement [sic]" was not attached to the bankruptcy notice. His Honour granted leave to Mr Roskell, nunc pro tunc , to raise this submission without the need to file a notice of contention. 24 On the issues of non-liability for the debt and non-attachment of a copy of the record of the judgment debt to the bankruptcy notice, Jacobson J decided unfavourably to Mr Roskell, who did not appeal against his Honour's judgment. 25 Jacobson J raised a new point. This was that no consideration seemed to have been given by Driver FM to the question of the lapsing of the petition. After referring to certain authorities concerning the availability of the slip rule to cure the position, Jacobson J noted that the lapsing issue had not been argued before him. He considered that in these circumstances it was appropriate for him to remit the matter to the Federal Magistrates Court, for that Court to determine whether it had power to make a sequestration order and, if so, whether such an order ought to be made. 26 In the result, Jacobson J made the orders referred to at [20] above. Even if it were open to me the most that could be said is that Mr Roskell has a claim against Mr Snelgrove for approximately $5,000 being moneys paid by R&G Deli to Mr Snelgrove and not properly acquitted. That is a wholly insufficient reason to refrain from making a sequestration order and I reject it to the extent that it was advanced pursuant to s 52(2)(b) of the Bankruptcy Act . He accepted her evidence. The learned Federal Magistrate referred to Griffiths v Boral Resources (Qld) Pty Limited [2006] FCAFC 149 ; (2006) 154 FCR 554 in which a Full Court of this Court, while expressing some concern over the course of decision in this Court allowing the invocation of the slip rule retrospectively to extend the life of a bankruptcy petition, was unwilling to disturb that course of decision. 29 Driver FM considered that if the power to extend the life of the petition was available to him, it should be exercised. He referred to his orders of 11 April 2006 that Mr Snelgrove was to file and serve updated affidavits of search and debt no later than 26 April 2006 and that both parties were to file and serve further submissions no later than 26 April 2006. It would have made no sense at all to make the orders in those terms if the creditor's petition was not to be extended . Prima facie, the petitioning creditor has a good case for applying the slip rule on the basis that if the issue had been adverted to at the time either the petition would have been extended or different procedural orders would have been made. Since the only other date in contention was 25 April 2006, his Honour's understanding must have been that the petition lapsed on that date and his Honour's reference to 25 April in the passage at [17] of his reasons set out at [31] below makes it clear that this was so (see the discussion of the present question at [43] below). 30 In relation to the question whether the Federal Magistrates Court had had the requisite power to apply the slip rule, Driver FM considered that O 35 r 7(3) of the FC Rules applied in the Federal Magistrates Court as if it were a rule of that Court pursuant to Schedule 3 to the Federal Magistrates Court Rules 2001 (Cth) (FMC Rules). Driver FM gave as a "second reason" why the Federal Magistrates Court had the requisite power, the fact that that Court shared coextensive jurisdiction with this Court in bankruptcy. His Honour also referred to s 43 of the Federal Magistrates Act 1999 (Cth). 31 Having concluded that O 35 r 7(3) of the FC Rules was available to him, Driver FM noted that Mr Roskell submitted that he would have resisted an extension of the life of the petition if application for it had been made before the expiration of the 12 month period. His Honour had no doubt that Mr Roskell would have done so, but said that the petition would nonetheless have been extended and that the matter would have proceeded in accordance with his other orders or that different procedural orders would have been made. ... Having decided that I should await the decision of the High Court and then having decided that I should receive written submissions on the significance of the High Court's judgment within the period specified in the order, I am certain that if I had adverted to the issue at the time I would have extended the life of the petition on 11 April 2006. The issue did not occur to me at the time. Although the then solicitor for the petitioning creditor had been instructed to raise it, she neglected to do so. The issue can and now should be dealt with prior to the final expiry of the creditor's petition on 25 April this year. I therefore order pursuant to order 35 rule 7(3) of the Federal Court Rules and s.52(5) of the Bankruptcy Act that the petition filed on 26 April 2005 be extended until 25 April 2007. On the hearing of the appeal, Mr Roskell did not address those grounds. Rather, he addressed the underlying merits, although not by reference specifically to his grounds of appeal. 34 As noted earlier, Mr Roskell did not appeal against the judgment of Jacobson J. It is not open to me to revisit matters which, on a fair reading of their Honours' reasons, were decided against him in the earlier judgment of Driver FM and of Jacobson J. 35 Pursuant to a reference made under O 80 of the FC Rules, Mr David Ash of counsel has assisted by making written submissions on behalf of Mr Roskell. I gratefully acknowledge the considerable assistance Mr Ash has given to the Court. Was O 35 r 7(3) of the Rules available to Driver FM? If, "yes" to 1, was there an accidental slip or omission for the purposes of O 35 r 7(3)? 3. If "yes" to 1 and 2, did O 35 r 7(3) enable Driver FM to extend the life of the creditor's petition by an order made on 16 April 2007 with retrospective effect? 4. If "yes" to 1, 2 and 3, was it open to Driver FM to make the particular order that he made extending the life of the petition to 25 April 2007? Was O 35 r 7(3) of the Rules available to Driver FM? Counsel has referred to the following authorities in support of his submission: Lawrie v Lees (1881) 7 App Cas 19 at 34-35 per Lord Penzance; Hatton v Harris [1892] AC 547 at 563 per Lord Macnaghten; Connelly v Director of Public Prosecutions [1964] AC 1254 at 1301 per Lord Morris of Borth-y-Gest. As Mr Ash has observed, it may be preferable to refer to such a power in the case of a court such as the Federal Magistrates Court which is a statutory court that does not have the "inherent" powers of a superior court, as "implied" powers: see Grassby v the Queen (1989) 168 CLR 1 at 17 per Dawson J; John Fairfax Group Pty Ltd (Receivers and Managers appointed) v Local Court of New South Wales (1991) 26 NSWLR 131 at 160-161 per Mahoney JA. In my view, however, O 35 r 7(3) was available to his Honour. 39 At the relevant time, the rules governing bankruptcy proceedings in the Federal Magistrates Court were contained in the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) (the FMC Bankruptcy Rules). (Chapter 4 of the FMC Rules, which had previously governed bankruptcy proceedings in the Federal Magistrates Court, were repealed on 6 February 2006, the date on which the FMC Bankruptcy Rules commenced. ) Para 1.03(2) of the FMC Bankruptcy Rules provided, relevantly, that the FMC Rules applied, so far as they were relevant and not inconsistent with the FMC Bankruptcy Rules, to a proceeding to which the Bankruptcy Act applied. The proceeding before Driver FM was, of course, such a proceeding. 40 Within Ch 1 of the FMC Rules, subr (2) of r 1.05 provided, relevantly, that if in a particular case the rules of the Federal Magistrates Court were insufficient, the Federal Magistrates Court might apply the FC Rules in whole or in part. More specifically, however, subrule (3) of r 1.05 provided, relevantly, that without limiting subrule (2), the provisions of the FC Rules set out in Part 2 of Schedule 3 to the FMC Rules applied, with necessary changes, to general federal law proceedings. The expression "general federal law proceeding" was defined in the Dictionary of the FMC Rules as meaning a proceeding other than a family law or child support proceeding. The bankruptcy proceeding that was before his Honour was a general federal law proceeding. 41 Part 2 of Schedule 3 listed various FC Rules including "Order 35". (I note that on 27 June 2007, pursuant to the Federal Magistrates Court Amendment Rules 2007 (No. 1) (Cth), the reference to "Order 35" in Part 2 of Schedule 3 was replaced with "Order 35 (except rule 7)". ) Accordingly, at the relevant time, the provision in O 35 r 7(3) of the FC Rules applied to the proceeding that was before his Honour. Question 1 is answered "yes". 2. If, "yes" to 1, was there an accidental slip or omission for the purposes of O 35 r 7(3)? The reasons which I will now give are also my reasons for answering all three questions in that way. 43 Ordinarily, the law takes no account of parts of a day, and the expression "commencing on" must mean commencing on either the first or the last moment of the day in question. In my opinion, the expression "commencing on" in s 52(4)(a) of the Bankruptcy Act means "commencing at the first moment on", and the period of 12 months commencing on the date of presentation of the petition in the present case, 26 April 2005, expired on 25 April 2006 at midnight between 25 and 26 April 2006: see Ex parte Toohey's Ltd; Re Butler (1934) 34 SR (NSW) 277 at 285; Forster v Jododex Australia Pty Ltd [1972] HCA 61 ; (1972) 127 CLR 421 at 453 per Mason J, with whom McTiernan J agreed; Darwin Broadcasters Pty Ltd v Australian Broadcasting Tribunal (1990) 21 FCR 524 at 526-527. Expressions referring to a certain period "from" or "before" or of the kind "within [a certain period] of" are different. In those cases, the starting day is excluded in the computation: see, for example, Re Butler; Ex parte Toohey's Ltd (1934) 34 SR (NSW) 277 ; Re Gray; Ex parte Deputy Commissioner of Taxation [1993] FCA 277 ; (1993) 115 ALR 638 ; and see s 36(1) of the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act ). 44 Mr Ash makes an interesting submission founded on s 36(2) of the Acts Interpretation Act . Those days are referred to in that Act as "bank holidays". The Fourth Schedule mentions, inter alia, "The twenty-fifth day of April (Anzac Day)". Counsel's argument is that 25 April 2006 was the last day of the period of 12 months allowed by s 52(5) "for the doing of anything" within s 36(2) of the Acts Interpretation Act , namely, for the making of an order substituting a different lapsing period for the period of 12 months referred to in s 52(4)(a) of the Bankruptcy Act . 45 Mr Ash accepts that the effect of s 52(4)(a) in isolation was that the creditor's petition in the present case lapsed at midnight between 25 and 26 April 2006, but submits that by virtue of s 52(4)(a) being expressed to be subject to s 52(4)(b) , it was open to Mr Snelgrove to apply for, and for the Court to make, an order on 26 April 2006 extending the life of the petition. 46 Consistently with his submission, Mr Ash suggests that Driver FM's statement (set out at [29] above) that the steps required of the parties were to be taken up to a date beyond the 12 month period was both correct and incorrect. The period of 12 months commencing on 26 April 2005 did expire at midnight between 25 and 26 April 2006 and by reason of s 52(4)(a) of the Bankruptcy Act the petition lapsed at that moment, but the lapsing was, counsel submits, subject to para (b) of s 52(4) of the Bankruptcy Act and therefore to the possibility that the Court might make an order on 26 April 2006 extending the period at the expiration of which the petition would lapse. 47 I accept Mr Ash's submission that "the period of twelve months commencing on the date of presentation of the petition" was a "period...allowed by an Act for the doing of anything" within s 36(2) of the Acts Interpretation Act because it was a period allowed by the Bankruptcy Act for the making of an order by the Court under s 52(5) of that Act. Accordingly, even though the petition lapsed at midnight between 25 and 26 April 2006, it remained possible for the Court on 26 April 2006 to make an order under s 52(5) extending the period at the expiration of which the petition would lapse. 48 It is now necessary for me to return to consider the facts in the light of this position. 49 When the proceeding was before Driver FM on 12 August 2005, counsel for Mr Snelgrove sought an adjournment to await the outcome of the High Court's decision in Adams v Lambert . The creditor's petition, I think, is valid until the end of the year...You want to come back in time to extend the life of the decision [sic --- petition] if you need to. (The reference to the end of the year is mysterious but can be put to one side. 51 I set out at [16] above the orders that were made on 11 April 2006. I set out at [29] and [31] above what Driver FM said in his reasons for judgment of 16 April 2007 concerning what he would have done on 11 April 2006 if Ms Menassa had then applied for an order under s 52(5) of the Bankruptcy Act . 52 It is true that in light of the fact that it remained open to Mr Snelgrove to apply for, and to the Federal Magistrates Court to make, an order on 26 April 2006 extending the life of the petition, it was not an exhaustive statement of the position to say, as his Honour said, that the steps his orders required of the parties were to be taken up to a date after the 12 month period elapsed. A comprehensive statement would have added that if an application were made on 26 April 2006 for an extension and if the extension were granted, it would then be seen that the steps his orders required were to be taken within, rather than outside, the lapsing period. 53 I must, however, assess the position realistically. The incontrovertible fact is that the petition was still due to lapse at midnight between 25 and 26 April 2006 and this fact was overlooked. It is perfectly clear that if Driver FM had appreciated on 11 April 2006 the true position, he would certainly have made an order extending the life of the petition under s 52(5). Absent such an order, his Honour's orders of 11 April 2006 did permit the filing and service of affidavits and submissions after the expiration of the lapsing period. It is fanciful to think that his Honour would have let matters rest on the basis that the parties had until 26 April 2006 to file and serve documents and yet that he would have to deliver judgment by midnight between 25 and 26 April 2006, unless of course Mr Snelgrove remembered to apply to his Honour on or before 26 April 2006 for an order extending the life of the petition. He emphasises the word "in". I set out the two orders made on 11 April 2006 at [16] above. In my opinion there was "an error arising in ...[those orders] from an accidental slip or omission" [my emphasis]. The error in the orders arose from the omission of an order under s 52(5) that would enable the two orders made to have their full intended effect and his Honour to deliver judgment before the petition lapsed. 56 The approach that the Court has taken in similar circumstances is the subject of a consistent line of authority: see Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 ; Re Howell; Ex parte Commissioner of Taxation (1996) 70 FCR 261 ; Komesaroff v Law Institute of Victoria [1997] FCA 965 ; Re Langridge; Ex parte Bennett , Carroll & Gibbons [1998] FCA 879 ; Matthews v Collett [2000] FCA 224 ; Bankstown Grammar School Ltd v Park [2000] FCA 1205 ; Griffiths v Boral Resources (Qld) Pty Ltd (2006) FCR 554. In the present case, there is clear evidence that Ms Menassa intended to apply on 11 April 2006 for an order under s 52(5) of the Bankruptcy Act but forgot to do so and a clear statement by Driver FM in his Honour's reasons for judgment that he would have made such an order if he had appreciated that the creditor's petition was to lapse on 25 April 2006. 57 In the circumstances, I think that there was an error (of omission) in his Honour's orders arising from an accidental slip or omission for the purposes of O 35 r 7(3). 3. If "yes" to 1 and 2, did O 35 r 7(3) enable Driver FM to extend the life of the creditor's petition by an order made on 16 April 2007 with retrospective effect? The cases cited at [56] above provide authority for the making of an order under O 35 r 7(3) of the FC Rules and s 52(5) of the Bankruptcy Act operating nunc pro tunc . 4. If "yes" to 1, 2, 3 and 4, was it open to Driver FM to make the particular order that he made extending the life of the petition to 25 April 2007? I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | ss 52(4) and (5) of bankruptcy act 1966 (cth) provision for lapsing of creditor's petition at expiration of period of 12 months commencing on date of presentation of petition or other period fixed by court order made within that period solicitor for petitioning creditor and federal magistrate overlooking fact that petition about to lapse when directions made for filing and serving of further affidavits and submissions by a date later than date when petition would lapse federal magistrate subsequently (after expiry of 12 months) made order under s 52(5) extending period with retrospective effect whether federal magistrate had power to make that order effect of last day of 12 month period being a bank holiday calculation of period of 12 months "commencing on" date of presentation of petition. bankruptcy |
In this proceeding, she invokes the court's jurisdiction under ss 163, 164, 164A and 322 of the Schedule and s 39B(1A)(c) of the Judiciary Act 1903 (Cth). The applicant has commenced the proceeding by filing an application in the general form prescribed by O 4 r 1 of the Federal Court Rules . The first respondent, Jeff Jackson, however, claims that the proceeding is incompetent --- at least to the extent that it relies on ss 163 , 164 and 164A of the Schedule --- because it should have been commenced by rule to show cause under Division 3 of O 48 of the Rules. In taking this position, he has the support of the second respondent. Section 163 of the Schedule permits a member of an organisation to apply to the court for an order declaring the whole or any part of a rule of the organisation to be in contravention of s 142 of the Schedule, or for an order that the rules of the organisation contravene s 142 in a particular respect. Section 142 of the Schedule is the provision which sets out certain broad requirements as to the content of the rules of an organisation. Section 164 permits a member of an organisation to apply to the court for an order giving directions for the performance or observance of the rules of an organisation by a person who is under an obligation to perform or observe those rules. Section 164A permits a member of an organisation to apply to the court for an order directing one or more persons to do specified things that will, in the opinion of the court, as far as is reasonably practicable, place the organisation in a position which it would have occupied if a breach of the organisation's rules had not occurred. Section 324 of the Schedule is concerned with the granting of financial assistance by the Commonwealth. It permits the responsible Minister to authorise payment by the Commonwealth of financial assistance in relation to the whole or part of the "relevant costs" of a person entitled to apply under subs (2) thereof, subject to the Minister being satisfied of certain things. Order 48 of the Federal Court Rules regulates certain aspects of the procedure to be followed in some cases under the WR Act. Division 3 is headed "RULES TO SHOW CAUSE". Rule 7 of the order sets out the requirements of an application for a rule to show cause. Rule 8 sets out the form of a rule to show cause. Rule 9 requires the filing of a rule to show cause, once one is granted. (2) However, this Division does not apply unless the granting of a rule to show cause is necessary, under paragraph 324 (2) (a) or (q) of the RAO Schedule, for the Minister to authorise payment of financial assistance to an applicant for an order under section 163, 164 or 164A, or subsection 167 (2) of the RAO Schedule. They say, in effect, that no proceeding which invokes the court's jurisdiction under ss 163, 164 or 164A may be commenced save by rule to show cause under Division 3 of O 48. The applicant rejects the respondents' construction of Division 3. She says that a rule to show cause may well be a necessary precondition to an entitlement to apply for financial assistance under s 324 of the Schedule, but it is not a mandated procedure for the commencement of a proceeding which relies on ss 163, 164 or 164A. She relies upon the absence of any provision in Division 3 which requires such a proceeding to be commenced by rule to show cause. For her own part in the present proceeding, she does not propose to apply for financial assistance, and has chosen to commence the proceeding by application in the general form prescribed by O 4 r 1. Both the applicant and the respondents have made extensive reference to the history of the provisions which now find expression in ss 163, 164, 164A and 324 of the Schedule, and in O 48 r 6 of the Federal Court Rules . According to the respondents, that history explains why r 6 is to be construed as setting up a mandatory requirement that a proceeding under s 163 , 164 or 164A be commenced by rule to show cause, notwithstanding that no such requirement appears explicitly stated in the terms of that rule. According to the applicant, the history demonstrates why r 6 should not be construed any more widely than its express terms permit and why, in particular, there is no implied requirement as to procedure of the kind proposed by the respondents. In their rehearsal of the relevant history, the parties did not take me further back than the Conciliation and Arbitration Regulations , as they existed in 1956. Although there was then no equivalent to the present s 164A of the Schedule, provisions equivalent to the present ss 163 and 164 were to be found in ss 140 and 141 of the Conciliation and Arbitration Act 1904 (Cth) ("the C & A Act"). ) of section 109, under section 140 or 141, under sub-section (1. ) of section 143 or under section 150 of the Act shall be by rule in accordance with Form 15 calling upon the person or organization concerned to show cause why the order should not be made. Section 143 empowered that court to cancel the registration of an organisation under the C & A Act. Section 150 empowered that court, on the application of an organisation, to order that a person cease to be a member of the organisation. ) A member of an organization who proposes to take proceedings under section 140 or 141 of the Act may apply to the Registrar for the grant of financial assistance under this regulation. (2. ) If it appears to the Registrar that there are reasonable grounds for taking the proceedings and that the proceedings are proposed to be taken in good faith, the Registrar may direct that financial assistance shall be given by the Commonwealth to the member in respect of the costs of those proceedings and such amount or amounts as the Registrar from time to time determines shall be paid to or on behalf of the member accordingly. (3. ) Nothing in this regulation authorizes a payment in respect of fees to more than one counsel appearing for the applicant. The position in 1956 was, therefore, as follows. Commencement of a proceeding under ss 140 or 141 of the C & A Act had to be by rule to show cause. An applicant in such a proceeding might apply for financial assistance to the Industrial Registrar, who might direct that the assistance be given if he or she took the view that there were reasonable grounds for the proceeding, and that the proceeding was proposed to be taken in good faith. That position continued to obtain until 1972. (2. ) Subject to the succeeding sub-regulations of this regulation, where a rule has been granted in proceedings by the Court or a Judge calling upon a person or organization to show cause why an order should not be made under section 140 or 141 of the Act in relation to that person or organization, the applicant in the proceedings may apply to the Attorney-General for financial assistance by the Commonwealth in respect of the costs or expenses that the applicant has paid, has become liable to pay or may become liable to pay in connexion with the proceedings. (3. (4. ) The Attorney-General may refuse an application under sub-regulation (2. Against that background, the new reg 138 conditioned the ability of an applicant to apply for financial assistance upon such a rule having been granted by the court. If that condition were satisfied, and if an application were made, it was for the Attorney-General (rather than the Industrial Registrar) to decide whether assistance should be provided in accordance with the criteria referred to in the Regulations. Regulation 138 as introduced in April 1972 had a short life. It was repealed in June 1972. However, substantially identical provisions were introduced into the C & A Act itself at the same time, in the form of a new s 141A. It would be repetitive to set out the provisions of that section. The first Rules of the Federal Court were made in 1979. Order 4 dealt with the subject "commencement of proceedings". Rule 15 of O 4 dealt with the subject of proceedings under ss 140 and 141 of the C & A Act. (2) A proceeding under section 140 of section 141 of the Conciliation and Arbitration Act 1904 shall be by rule in accordance with Form 6 calling upon the person or organization concerned to show cause why the order should not be made. The requirements of such an affidavit were specified. Upon grant of the rule, the applicant was required to file the rule and the supporting affidavit with the Registrar of the court. At this time, reg 70 of the regulations made under the C & A Act remained in force. In May 1981, most of the provisions of the regulations made under the C & A Act relating to proceedings in the Commonwealth Industrial Court, including reg 70, were repealed. In 1988 (but operative from 1 March 1989), the C & A Act was repealed and replaced by the Industrial Relations Act 1988 (Cth) ("the IR Act"). What had been ss 140 and 141 of the C & A Act were substantially re-enacted as ss 208 and 209 of the IR Act. In s 342(2), par (a) reflected the terms of the previous s 141A, par (b) reflected those of s 141B, par (d) reflected those of s 168(1), par (e) reflected those of s 168(2), par (f) reflected those of s 168(3), par (g) reflected those of s 132H(1), par (h) reflected those of s 132H(2), par (j) reflected those of s 132H(3), par (k) reflected those of s 132J and pars (m), (n) and (o) reflected the combined operation of ss 158U and 168. Paragraph (c) was new in 1988, as were pars (p) and (q) (the latter of which was introduced on the recommendation of the Committee of Review into Australian Industrial Relations Law and Systems: see its Report , April 1985, par 9.166). To reflect the repeal of the C & A Act and the enactment of the IR Act, the Federal Court Rules were amended in 1989. The reference to s 141A of the C & A Act was omitted from O 4 r 15(1), and replaced by a reference to s 342(2)(a) of the IR Act. References in O 4 r 15 to ss 140 and 141 of the C & A Act were replaced by references to ss 208 and 209, respectively, of the IR Act. A new r 16 was introduced into O 4 making like provision in the case of proceedings under s 261 of the IR Act, which were, as I have said, picked up by par (q) of s 342(2). The Industrial Relations Court of Australia was established in 1994. In October of that year, the Judges of that court made Rules of Court, which included provisions in the same terms as the then existing rr 15 and 16 of O 4 of the Federal Court Rules . (2) A proceeding under sections 208 or 209 of the Act must be by rule, in accordance with Form 6, calling upon the person or organisation concerned to show cause why the order should not be made. In 1996, the IR Act was substantially amended, and renamed the WR Act. Jurisdiction under the WR Act was removed from the Industrial Relations Court of Australia, and vested in the Federal Court. Amendments to the Federal Court Rules to reflect that circumstance were made in August 1997. However, rather than re-make rules in the terms of the previous rr 15 and 16 of O 4, the Judges of the court introduced a new O 48, which applied to proceedings under the WR Act. Division 1 of that Order contained general provisions, Division 2 dealt with proceedings in relation to unlawful terminations of employment, Division 3 dealt with "Rules to Show Cause" and Division 4 dealt with the subjects of inquiries and ballots in relation to registered organisations. It is Division 3 with which I am presently concerned. Save for changes to numbering to reflect the formal reorganisation of the provisions of the WR Act which governed the conduct and operation of registered organisations, the provisions of Division 3 of O 48 have remained unchanged since, and are those under which the present question must be decided. The summary which I have provided in pars 5 and 6 above sufficiently states the position as it was introduced in 1997. All of the provisions to which I have referred --- whether it be reg 70 of the Regulations made under the C & A Act or relevant rules of court --- down to 1997 required a proceeding under the provisions which are now ss 163 and 164 of the Schedule to be commenced by rule to show cause. Most recently, O 4 r 15(2) of the Rules of the Industrial Relations Court provided that a proceeding under what were then ss 208 and 209 of the IR Act "must be by rule ... calling upon the person or organisation concerned to show cause why the order should not be made". The clear mandatory terms of that provision found no expression in Division 3 of O 48 of the Federal Court Rules as introduced in 1997, and find no expression in that Division in its present terms. Thus the applicant submits that what once was mandatory is no longer so. She submits that Division 3 prescribes the procedure to be followed in any case in which an applicant does commence his or her proceeding by rule to show cause, but sets up no requirement that every proceeding under s 163 , 164 or 164A of the Schedule must be so commenced. The respondents' argument is somewhat more elaborate. They point out that the existence of a rule to show cause has, since 1972, been a precondition to an applicant's entitlement to apply for financial assistance. In this context, the precondition acted as a kind of "filter" which would ensure that unmeritorious cases did not attract such an entitlement. The respondents point out that, since the introduction of s 141B, respondents (and other non-applicants) were, in certain circumstances, also entitled to apply for financial assistance. However, necessarily, that entitlement was conditioned upon a proceeding under one or other of the relevant sections already having been commenced. Although not the subject of the legislation as such, the legislature must be taken to have known that, at all times until 1997, proceedings of the relevant kind might be commenced only by rule to show cause. Thus in the case of respondents and others, no less than in the case of applicants, the Commonwealth was never exposed to the financial hazard of being obliged to fund unmeritorious cases, because in every instance a rule to show cause would necessarily have been granted before the entitlement to apply for assistance arose. The respondents say that the new form of terminology introduced under s 342 of the IR Act in 1988 was by way of more convenient drafting in a context in which there were, potentially at least, many different statutory settings in which financial assistance might be sought. Their argument focuses upon the history of the provisions which are presently relevant, and they point to the fact that par (a) of s 342(2) of the IR Act continued to make it a requirement of an entitlement to apply for financial assistance that a rule to show cause had first been granted. As I have said, according to the respondents, the legislature enacted that provision against the knowledge, which it must be presumed to have had, that O 4 r 15 of the Rules of the Federal Court then required a proceeding of the relevant kind to be commenced by Rule. The respondents submit that it could not have been the intention of the Judges of the Federal Court in 1997 to effect such a fundamental change in the rules governing parties' entitlement to apply for financial assistance as proposed by the applicant. They recognise that the applicant's argument does not rise as high as proposing that an applicant may apply for financial assistance in the absence of a rule to show cause, but they say that that argument necessarily involves the consequence that, in a case in which an applicant chooses not to proceed by way of rule, the respondents to such a proceeding (of which there may be a great many) would all be entitled to apply for financial assistance under what is now s 324(2)(b) of the Schedule without there ever having been a "filter" of the applicant's claims. Thus, in the submission of the respondents, if the applicant is correct, the Commonwealth would be exposed to the prospect of funding respondents and other non-applicants in proceedings which might be quite unmeritorious, and should never have been commenced. According to the respondents, the Judges of the court in 1997 could not have intended such a consequence. Looking only at the terms of Division 3 of O 48, I consider that the applicant has the better of the argument in the present case. No requirement that all proceedings invoking ss 163, 164 or 164A appears in terms. Is such a requirement implicit? I do not think so. Rule 6 recognises that, under pars (a) and (q) of s 324(2) of the Schedule, an applicant may not apply for financial assistance without first having obtained a rule to show cause. Thus it was necessary for the Rules to contain a procedure by which such a rule could be obtained. This was, and is, the purpose of Division 3 of O 48. Put differently, if a purposive construction is to be applied to O 48 r 6, one would conclude that the purpose of the provisions was met by giving the applicant a means by which he or she could satisfy the precondition for entitlement to apply for financial assistance. No perception of purpose would require r 6 to be construed as though it mandated the rule to show cause procedure for all applications invoking ss 163, 164 or 164A. I consider, with respect to the respondents, that their reliance on the history of the relevant provisions ultimately begs the question. It is true that for many years no party to a proceeding under the relevant provisions was entitled to apply for financial assistance unless the applicant had commenced the proceeding by rule to show case. But that was never a requirement of an entitlement to apply in terms (save in the case of the applicant himself or herself). It was the consequence of the existence of such provisions as reg 70 and O 4 r 15(2). Now that those provisions do not exist, it is no longer a consequence. I have difficulty with the proposition that I should impress upon O 48 r 6 what I consider to be an unnatural construction for no better reason than to continue a regime with respect to finance assistance which was the consequence of a repealed sub-rule. I do not think it is at all self-evident that the Judges of the court in 1997 must have had no intention to change what had been the mandatory requirement for the commencement of a proceeding of the relevant kind since 1972. Rather than take what might have been thought to be the obvious step, if continuity were intended, of re-making rr 15 and 16 of O 4 in the form which they then took in the Rules of the Industrial Relations Court, the Judges of this court introduced a new order, thereby evincing an intention to deal with proceedings under the WR Act in a conspicuously different way. I consider it to be at least as probable that their Honours reviewed the purpose of the rule to show cause procedure, and formed the view that its only practical utility was to assist an intended applicant to obtain financial assistance. It is not, in my view, in the least improbable that their Honours took the view that only in those limited circumstances should a departure from what would otherwise be the general requirements of O 4 r 1 be permitted. The respondents drew my attention to the judgment of Marshall J in Hansch v Transport Workers' Union of Australia [2000] FCA 473. There, his Honour held that an election inquiry had not been validly instituted in the absence of an order by the court under what was then s 219(b) of the WR Act. His Honour followed Australian Electoral Commission v Hickson (1997) 76 IR 399. The provisions which then regulated the institution of an election inquiry, however, are not analogous to those now regulating the commencement of proceedings under ss 163, 164 and 164A of the Schedule. The Schedule itself (save for the terms of s 324) is unconcerned with the means by which such proceedings are commenced. Similarly, no application can be made under ss 208 or 209 of the Act in the absence of the granting by the Court of a rule to show cause. The effect of Hickson for current purposes is that the application in the instant proceeding did not result in the institution of an inquiry but can only be considered as an application made under ss 258 and 259 of the Act. Hansch was not concerned with proceedings under those sections, and it does not appear that his Honour's attention was drawn to the difference between the original terms of O 4 r 15 of the Federal Court Rules (and of the Industrial Relations Court Rules) and the terms of Division 3 of O 48 introduced in 1997. I consider that difference to be quite fundamental in the circumstances of the present case, and to be fatal to the respondents' argument. For the above reasons, I reject the respondents' objection to the competency of the present proceeding. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. | commencement of proceedings in court whether required to be by rule to show cause whether such a requirement to be implied in absence of express terms whether consequences of alternative construction supported implication. practice and procedure |
The notice of motion sought an abridgement of time and orders for service of the Application, Statement of Claim and affidavit evidence with a view to the matter coming again before the Court today so that interlocutory relief might be sought. 2 The Statement of Claim, which I gave leave to file yesterday, pleads that the applicant is a company incorporated under the laws of Japan and is engaged in the business of promoting, distributing and selling in Australia certain goods bearing the brand name 'Hello Kitty'. The first respondent is an Australian corporation engaged in the business of wholesaling children's wear. The second respondent is a director of the first respondent. The third respondent is also a director of the first respondent. The second and third respondents are said to be persons jointly responsible for the management and day to day operations of the first respondent. 3 The applicant is the registered owner of trade marks which include the brand names 'Hello Kitty' and 'Sanrio'. The Statement of Claim pleads that since about 1980 the applicant has conducted business in Australia by promoting, distributing, offering for sale and selling through its authorised re-sellers in Australia a wide range of clothing and consumer goods under the brand name 'Hello Kitty'. It is pleaded that on or before 3 January 2008 the first respondent imported into Australia 4056 pairs of pyjamas bearing the words 'Hello Kitty', a device mark identified as the 'Hello Kitty' cat logo, and a label reading 'Sanrio Licence'. 4 Those goods were seized by the Australian Customs Service on 30 January 2008. The applicant's solicitors were notified by the Australian Customs Service on 1 February 2008 that the goods had been seized. Under s 137 of the Trade Marks Act 1995 (Cth) ('the Trade Marks Act ') the initial 10-day period of seizure was due to expire on 15 February 2008. In an affidavit sworn and filed on 10 March 2008, Mr Blair Mark Beven deposed that he was a solicitor in the employ of the solicitors for the applicant, Griffith Hack Lawyers. Mr Beven said that on 13 February 2008 he sent a letter of demand to the first respondent which requested forfeiture of the imported goods and an undertaking. The applicant then sought and was granted a further extension to 29 February 2008. 5 According to Mr Beven's affidavit he had a conversation by telephone on 26 February 2008 with the second respondent during which the second respondent agreed to sign the undertakings sought and the notice of forfeiture. Mr Beven deposes to a subsequent conversation on 29 February 2008 with a solicitor who said he was representing the first respondent. On that day, 29 February 2008, a letter was sent by Lim Whalen and Company, Lawyers, to the solicitors for the applicant. That letter contended that the marks in question had been applied with the consent of the registered owner in the overseas country from which the goods were imported. Those proceedings, as I have said, were commenced yesterday. 7 For the purpose of the present application for interlocutory relief the applicant also relies upon an affidavit, sworn on 10 March 2008 and filed in Court today, by Atsuhiko Koizumi, the manager of the legal department of Sanrio Company Limited. Mr Koizumi deposed to arrangements in place to ensure the quality and suitability of products manufactured under licence for Sanrio. He referred to the necessity to comply with safety standards and regulations relating to products which are intended for use by children, including clothing, and expressed concern that if the imported goods are regarded as legitimate Sanrio products but do not meet Sanrio's quality control standards or relevant safety standards, there is a real likelihood of the Sanrio brand and Sanrio's reputation suffering significant damage. 8 I was informed in the proceedings today that efforts to serve the respondents had, to an extent, been frustrated by the fact that yesterday was a public holiday in Melbourne, where the respondents are located. Nevertheless, affidavit evidence was provided in an affidavit sworn by John Dominic Lee filed in Court today that he had a conversation with Mr Lim of Lim Whalen and Co, wherein Mr Lim accepted that the Application, Statement of Claim and earlier affidavits had been received by that firm. There is no evidence before me that Lim Whalen and Co had instructions to accept service, and service must therefore be regarded as not established at this stage. That will have a bearing upon the length of any interlocutory relief which should be afforded to the applicant at the present stage of the proceedings. 9 The evidence before me also discloses that although the period specified by s 137 of the Trade Marks Act expired on 29 February 2008, enquiries of the Australian Customs Service established that the goods are still under the control of that service and are to be collected by or on behalf of the first respondent tomorrow, 12 March 2008. In those circumstances, the applicant has a continuing and real interest in restraining the respondents from taking possession of the imported pyjamas. The test to be applied is well known. The applicants must show that they have a prima facie case for relief and that the balance of convenience suggests that relief should be granted. Those are matters which should receive attention when the respondents have had an opportunity to be heard. However, I am satisfied that the evidence discloses a sufficient prima facie case of trade mark infringement, passing off and breach of s 52 of the Trade Practices Act 1974 (Cth) to afford the applicant some temporary interlocutory relief to ensure that the imported goods do not pass out of Customs control for the time being. 11 I am satisfied that the balance of convenience favours the preservation of the status quo, at least for a limited period. In the circumstances, I propose to grant interlocutory relief until Monday, 17 March 2008. That will provide an opportunity for the proceedings to be brought before the docket judge so that further consideration can be given to the need for some form of extended interlocutory relief, if that is then sought. The applicant has through counsel indicated that the usual undertaking as to damages will be given. Upon the applicant giving the usual undertaking as to damages, the first respondent, whether by itself, its servants, agents or otherwise, is restrained until further order from collecting the goods referred to in paragraph 14 in the Statement of Claim. 2. Costs of the proceedings to date are reserved. 3. The matter is adjourned to 9:30am on Monday 17 March 2008 before Rares, J. The applicant notify the Chief Executive Officer of the Australian Customs Service of Order 1 and provide a copy of that Order as entered by 6:00pm today, 11 March 2008. | goods seized and held by customs urgent interlocutory injunction sought to prevent release of goods injunction granted intellectual property |
2 The applicant, AXA Asia Pacific Holdings Limited (AXA), is the representative member of a GST group of entities (Group) that has been approved as a GST group by the respondent, the Commissioner of Taxation (Commissioner --- I will sometimes refer to ATO) under s 48-5 of the Act for the purposes of Div 48 of that Act. 3 At the time relevant to the present proceeding (February 2002), the Group apparently comprised 40 members, including AXA itself, although I note that as at the date of approval of the Group by the Commissioner (5 October 2000), the Group had comprised 63 companies. Other members of the Group to which I will refer are The National Mutual Life Association of Australasia Limited (NMLA), National Mutual Assets Management Limited (NMAM), and National Mutual Funds Management Limited (NMFM). 4 The present proceeding is brought by AXA as representative member of the Group, but it is the business activity of NMLA with which the proceeding is concerned. I will therefore refer, as the parties did, to NMLA. Lewis Andrew Culliver, AXA's Taxation Manager, explained the nature of the life insurance market generally. 6 NMLA's retail activities comprise both life insurance and non-life insurance business. In accordance with the Life Insurance Act 1995 (Cth), the life insurance business was conducted within one or more separate statutory funds. The investments of any of those funds may be used only to meet the liabilities and expenses incurred for the purposes of the business of that fund, to make investments in a way that is likely to further the business of that fund, or for the purposes of distribution when certain solvency and capital adequacy requirements are met: see ss 38 and 43 of the Life Insurance Act 1995 . There was evidence of the composition of the respective statutory funds and of the categories of assets within each. One of those categories is "'unit trusts'", being investments by NMLA through a holding of units in a unit trust which usually invests in real property or shares". 7 Affidavit evidence describes in detail the steps that are taken to ensure that NMLA's investments are appropriate to meet its insurance risks and to provide a profit. Similarly, it is the representative member, not any other group member, who is entitled to a benefit of any input tax credit (s 48 - 45 ). The concept of an input tax credit, which is central to the present case, is discussed below. It is the representative member, not any other group member, who is required to furnish GST returns to the Commissioner (s 48 - 60 ). For some purposes a GST group is treated as a single entity, and one of those purposes is the working out of the amount of any income tax credits to which the representative member is entitled (s 48 - 55 ). 9 In its role as representative member, AXA furnished to the Commissioner a Business Activities Statement (BAS) in respect of the month 1 February 2002 to 28 February 2002. 10 On 23 March 2006, the ATO notified AXA that it had reviewed some of the information reported in the BAS for February 2002 and made an assessment of the net amount for that period, which was a different amount from that claimed by AXA in its BAS. 11 On 22 May 2006, AXA gave a notice of its objection to the ATO's assessment. The Commissioner did not make a decision on the objection within the period of 60 days of the day of lodgement of the notice. By an undated letter, AXA, pursuant to s 14ZYA of the Taxation Administration Act 1953 (Cth) (TA Act), required the Commissioner to make an objection decision. The Commissioner did not make an objection decision within the period of 60 days from being given that letter, and by the operation of s s14ZY(3) the Commissioner was taken to have made a decision under s 14ZY(1) to disallow the taxation objection. 12 Against that deemed decision, AXA exercised its right of appeal to this Court under Div 5 of Pt IVC of the TA Act by filing on 11 December 2006 the application that commenced this proceeding. 13 In para 9 of his amended appeal statement, the Commissioner accepts that by reason of the operation of the former s 35 of the TA Act, the amount of indirect tax the subject of the assessment ceased to be payable at the end of four years after the time when it became payable. Accordingly, the Commissioner accepts that for this reason his assessment was excessive and will need to be amended once the issues calling for decision in the case have been determined. Their changing of positions has made what was already a factually complex contest all the more difficult in terms of judgment writing. Earlier drafts of the reasons have had to be abandoned or substantially amended as I discovered in the transcript successive changes of position of the parties. 15 The issue raised by AXA's appeal is whether NMLA acquired certain things for a "creditable purpose" (s 11-5) and is therefore entitled under Div 11 of the Act to "input tax credits" in respect of those things (s 11-20). This question, in turn, raises the question whether NMLA is denied input tax credits by reason of the fact that the acquisitions related to the making of supplies that "would be input taxed" (s 11-15). The source and significance of these expressions will be discussed below. 16 The "things" acquired by NMLA with which the proceeding is concerned have been variously referred to, somewhat loosely, as "general management expenses", "general administrative expenses" and "overheads". I say "somewhat loosely" because an "expense" or "overhead" is not a thing acquired. For convenience, however, I will conform to the parties' usage. I describe the general management expenses (GME) in more detail at [63]ff below. AXA claims that they are incapable of being allocated directly to distinct identifiable supplies, although no evidence was specifically directed to showing this. The particular question posed, therefore, concerns the extent to which the GME of NMLA in February 2002 related to the making of supplies that would be input taxed. GST is payable only on a supply or importation to the extent that it is made on or after 1 July 2000: s 7(1) of the A New Tax System (Goods and Services Tax Transition) Act 1999 (Cth). The application of the provisions of that Act to the facts of the present case was not disputed. 18 Chapter 2 (Divs 5-37) is headed "The basic rules"; Ch 3 (Divs 37-42) "The exemptions"; Ch 4 (Divs 45-171) "The special rules"; Ch 5 (Div 177) "Miscellaneous"; and Ch 6 (Div 184-195) "Interpreting this Act". Included in Ch 6 is the Act's Dictionary which is found in Div 195 constituted by s 195- 1 . 19 Section 182- 1 (headed "What forms part of this Act") is within Part 6 - 1 (headed "Rules for Interpreting this Act"). However, if a term is not identified by an asterisk, disregard that fact in deciding whether or not to apply to that term a definition or other interpretation division. In these reasons, I omit asterisks from quoted provisions of the Act. 20 Where a provision of the Act uses the expression "you", it applies to entities generally unless its application is expressly limited: s 195- 1 . 21 GST is payable on "taxable supplies" and "taxable importations", while entitlements to "input tax credits" arise on "creditable acquisitions" and "creditable importations": s 7 - 1 . Taxable importations and creditable importations are not of present relevance, and I will therefore refer only to taxable supplies and creditable acquisitions. 22 Amounts of GST and amounts of input tax credits are set off against each other to produce a "net amount for a tax period" which may be altered to take account of "adjustments": s 7 - 5 . 23 Every entity that is registered or required to be registered has tax periods applying to it: s 7 - 10 . Registration is provided for in Pt 2 - 5 and tax periods are provided for in Pt 2 - 6 . Relevantly, NMLA, NMFM and NMAM are registered. 24 The net amount for a tax period is the amount that the entity must pay to the Commonwealth or the Commonwealth must refund to the entity in respect of the period: s 7 - 15 . If the GST payable exceeds the entitlement to input tax credits, the entity will owe the Commonwealth money. If the entitlement to input tax credits exceeds the GST payable, the Commonwealth must make a refund to the entity in respect of the period. The matter of "Returns, payments and refunds" is dealt with in Pt 2 - 7 . 25 Part 2 - 2 is headed "Supplies and acquisitions". It comprises two Divisions: Div 9 which is headed "Taxable supplies" and Div 11 which is headed "Creditable acquisitions". However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. The proviso at the end of the section may be seen to refer to two classes of supplies that are "exempt" from being taxable supplies. 26 Some of the terms used in s 9 - 5 are defined. Section 9 - 10 defines "supply" widely to be any form of supply whatsoever and to include, inter alia, a supply of goods, a supply of services, a creation, grant, transfer, assignment or surrender of any right, and a "financial supply". The expression "financial supply", which is important for the purpose of the concept of an input taxed supply (see below) and for the present case, is defined in s 195- 1 to have the meaning given by the regulations made for the purposes of s 40- 5 (2). I discuss those regulations at [42]ff below. Section 9 - 10 (4) provides that a supply does not include a supply of "money" unless the money is provided as "consideration" for a supply that is also a supply of money. 27 Section 195- 1 defines "consideration" for a supply or acquisition to mean any consideration within the meaning given by s 9 - 15 in connection with the supply or acquisition. 29 Section 9 -20(2) provides that an "enterprise" does not include certain activities or series of activities, such as, for example and in general terms, those done by a person as an employee, as a private recreational pursuit or hobby, or by an individual without a reasonable expectation of profit or gain. Section 195- 1 defines "carrying on" an enterprise to include doing anything in the course of the commencement or termination of the enterprise. 30 Section 9 -30(1) tells us which supplies are "GST-free" and s 9 -30(2) tells us which supplies are "input taxed". A supply is "GST-free" if it is, relevantly, GST-free under Div 38. Of importance in the present case is the category of supply provided for in Subdiv 38-E which is headed "Exports and other supplies for consumption outside Australia". I was not required to consider precisely how Subdiv 38-E was said to apply. It suffices to say that it seems to be common ground that in the case of at least some of the overseas investments made by unit trusts in which NMLA invested, if NMLA had made those overseas investments directly rather than "through" the unit trusts there would have been GST-free supplies which would not have blocked NMLA's entitlement to input tax credits in respect of the GME related to those investments. 31 A supply is input taxed if it is, relevantly, input taxed under Div 40. Examples of input taxed supplies are financial supplies (Subdiv 40-A), residential rent (Subdiv 40-B) and residential premises (Subdiv 40-C). Financial supplies are the particular class of input taxed supplies the focus of the present proceeding. It will be recalled that GST-free supplies and input taxed supplies are not taxable supplies by reason of the proviso to s 9 - 5 (see [25] above). 32 Section 9 -30(3)(a) provides that to the extent that a supply would, apart from that subsection, be both GST-free and input taxed, the supply is GST-free and not input taxed, unless the provision under which it is input taxed requires the supplier to have chosen for its supplies of that kind to be input taxed. 33 Subdivision 9-B within Pt 2 - 2 makes the maker of a taxable supply liable to pay the GST payable on it: s 9 -40. 34 At the heart of the present case is Div 11 which is headed "Creditable acquisitions". It will be recalled that for the purpose of working out of the amount of any income tax credits to which a representative member is entitled, a GST group is to be treated as a single entity: s 48-55 referred to at [8] above. Section 11 - 10 gives the meaning of "acquisition" and provides that an "acquisition" is any form of acquisition whatsoever and includes an acquisition of something the supply of which is a financial supply. 36 It is para (a) of s 11 - 5 which is controversial in the present case: did NMLA acquire the things for which it paid the GME and on which it paid GST at least partly for a creditable purpose? (3) An acquisition is not treated, for the purposes of paragraph (2)(a), as relating to making supplies that would be input taxed to the extent that the supply is made through an enterprise, or a part of an enterprise, that you carry on outside Australia. It is not disputed that NMLA acquired the things for which it paid its GME in carrying on its enterprise. 38 Section 11 - 15 (1) is very broad. It is not necessary that there be an actual "on-supply" by the acquirer. However, subs (2)(a) of s 11 - 15 is a "blocking" provision. Even if an entity acquires a thing in carrying on its enterprise, it does not acquire it for a creditable purpose to the extent that, relevantly, the acquisition relates to making supplies that would be input taxed. 39 Section 11 -20 provides that an entity is entitled to an input tax credit for any creditable acquisition that it makes. Section 11 - 25 provides that the amount of the input tax credit is an amount equal to the GST payable on the supply of the thing acquired, although the amount is reduced if the acquisition is only partly creditable. The formula requires the application of a percentage, namely, the extent to which the creditable acquisition is for a creditable purpose expressed as a percentage of the total purpose of the acquisition. That percentage must be applied to the "full input tax credit", being the amount of the input tax credit to which the acquisition would give rise if the acquisition had been made solely for a creditable purpose. 41 As noted at [31] above, Div 40 deals with input taxed supplies. Section 40- 5 (1) within Div 40 provides that a "financial supply" is input taxed, and s 40- 5 (2) provides that "financial supply" has the meaning given by the regulations. Section 195- 1 similarly defines the expression "financial supply" to have that meaning. 42 The Regulations are A New Tax System (Goods and Services Tax) Regulations 1999 (Cth). Division 40 of the Regulations is headed "Input taxed supplies". (2) The entity that acquires that interest is also the financial supply provider of the interest. 45 The table in reg 40-5.09(3) contains eleven items. Items numbered 4, 5, 6 and 10 are of present relevance. 46 The items in the table in reg 40-5.09 are elaborated upon in reg 40-5.11 and Schedule 7 to the Regulations. Regulation 40 -5.11 provides that something mentioned in a Part of Schedule 7 that relates to a financial supply mentioned in an item in the table in reg 40-5.09, is an example of the financial supply mentioned in that item. Schedule 7 is headed "Examples of financial supply". It contains nine Parts numbered 1 to 9. They deal respectively with Items 1, 2, 3, 6, 7, 8, 9, 10 and 11 in the table in reg 40-5.09. I discuss each of these is turn. However, the article is useful in explaining in general terms some of the concepts in the legislation. Supplier 1 supplies (sells) to supplier 2 for $100 before GST on which GST of $10 at a 10 per cent rate is charged. Assuming that the original supplier does not purchase inputs on which GST has been paid (which, even allowing that employee labour is untaxed, is more than a little improbable in the real world), there are no GST credits on the inputs used to make this supply, and so supplier 1 remits its net tax liability of $10. Supplier 2 then sells for $200 before GST and pays GST of $20 on the sale. Because supplier 2 purchased from supplier 1 and paid $110, including $10 GST for these inputs, there is a credit of $10 allowed against the output tax liability, which leaves a net tax payable by supplier 2 of $10. Similarly, for supplier 3 selling at $300, the GST on the sale is $30 and there is a GST credit of $20 relating to the purchase of inputs from supplier 2. When supplier 3 sells to a consumer, the price of $330 will include $30 of GST but the consumer is unable to claim tax credits and effectively bears the $30 GST out of the total purchase price of $330. As with any tax, however, there are many complications. The difference between these two concepts is fundamental. They share the feature that no output tax is charged on making these supplies. They differ, however, in regard to the entitlement to claim credits for input tax. Input tax can be recovered for GST-free supplies, but not for input taxed supplies. The effect of input taxation is that a business purchaser is treated as if it is a consumer of the goods and services it acquires. The rationale for treating different supplies as taxable, input taxed and GST-free depends on the interplay of various policy and administrative arguments. 51 It will be recalled that the present proceeding is concerned with a particular class of input taxed supplies, namely, financial supplies. Financial supplies have been treated as input taxed because it has been found to be administratively difficult to subject them to a valued added tax, such as GST, because of the difficulty in identifying and measuring any value added. As supplier 2 gets no credit for the tax paid by supplier 1, the sale price increases by $10. If the mark-up is based on costs there is mark-up on tax, as well as tax on tax. On the other hand, taxable supplies and GST-free supplies do not "block" entitlement to input tax credits (cf s 11 - 15 set out at [37] above). In that case, HP Mercantile Pty Ltd (the Trustee) was the trustee of The Recoveries Trust (the Trust). As trustee, the Trustee carried on an "enterprise". A question arose whether the Trustee should acquire a series of debts at a price which apparently was less than their face value. The Trustee paid for professional advice as to whether it should do so (due diligence services). Later, after it had acquired the debts, it paid for professional services connected with the recovery of them (debt collection services). The Trustee paid GST that was included in the amounts that it paid for both of the services mentioned, and claimed input tax credits in respect of that GST. 55 The Commissioner denied the full input credits claimed by the Trustee. The Administrative Appeals Tribunal was of the view that the Commissioner's assessments were correct so far as they disallowed the full input tax credits for the amounts paid in connection with the debt collection services. 56 The Trustee appealed to the Full Court from the Tribunal's decision so far as it related to the disallowance of the full input tax credits for the debt collection services. 57 By reason of reg 40-5.09 (see [43]-[45] above), the acquisition of the debts by the Trustee was a financial supply and therefore input taxed. However, the Trustee submitted that its acquisition of the debt collection services did not relate to making a supply that " would be input taxed" (my emphasis) within s 11 - 15 (2)(a), because the supply in question, the acquisition of the debts, had already taken place. The Full Court disagreed, holding that the words "would be input taxed" in s 11 - 15 (2)(a) did not require futurity. 58 In the course of his Honour's discussion of the statutory scheme and the relevant provisions of the Act, Hill J noted that the Australian GST is a value added tax, the genus of which is that there is ordinarily no cascading of tax and the tax payable by each supplier in a chain is only upon the value added by that supplier (at [13]). The most important example is said to be financial transactions of financial institutions such as, but not confined to, banks, because they constantly borrow and lend and turn over money in a way that amounts, such as interest charged, will not represent the real value added by the financial institutions. Indeed, as the explanatory memorandum distributed with the Bill which, as amended, later became the GST Act (the EM) says in Chapter 1 at [5.140]: "there is no readily agreed identifiable value for supplies consumed by customers of financial services". In such a case, it is the margin or imputed margin that is the real economic subject of the supply. There are other examples where this may be the case, one of which is the leasing of, or other dealings with, residential property (not being new residential property). [17] By way of what may be seen as a compromise for the difficulties of applying the normal system of value added taxation to financial supplies and other difficult cases, value added taxation design has created a form of supply which is referred to in Australia as an input taxed supply but which, in international value added tax parlance, is referred to as an "exempt supply". An input taxed or exempt supply (and financial supplies made by financial institutions will be the main example) will not, generally speaking, attract output tax, but the entity which makes financial supplies will, likewise, not obtain an input tax credit for the tax payable on acquisitions it makes in the course of its enterprise of making input taxed supplies. His Honour noted that in both the GST provision and the income tax provisions it is necessary first to satisfy a positive test, and that apportionment is called for where the positive test is only partly satisfied. In both cases also there are negative tests which exclude the allowance of a credit in the GST context or the allowance of a deduction in the income tax context. 60 His Honour discussed at length (at [34]ff) the relationship required by s 11 -15(2)(a) between the acquisition and the making of the supplies that would be input taxed. The parties before the Full Court appeared to accept that the relationship had to be "real" and "substantial" and not "trivial" (at [35]). 61 Since the relationship between both the due diligence services and the debt collection services on the one hand and the purchase of the debts on the other was direct, there was no question of an indirect relationship as there is in the present case. The connection or association signified by the words may be direct or indirect, substantial or real. It must be relevant and usually a remote connection would not suffice. The sufficiency of the connection or association will be a matter for judgment which will depend, among other things, upon the subject matter of the enquiry, the legislative history, and the facts of the case. Put simply, the degree of relationship implied by the necessity to find a relationship will depend upon the context in which the words are found. So much appears from the various cases referred to by the Tribunal when discussing the meaning of these words: ... [36] That the relationship contemplated here might be indirect follows, probably from s 11 -15(5), which provides that an acquisition will not be treated as relating to supplies that are input taxed where the acquisition relates to making a financial supply which consists of a borrowing and the borrowing relates to the taxpayer making supplies that are not input taxed. Hence, input tax credits will not be disallowed if the acquisition which gives rise to them relates to the taxpayer making a borrowing but the borrowing is used by the taxpayer in making taxable or GST free supplies. In other words, s 11 -15(5) would appear to contemplate that an acquisition having an indirect connection with a financial supply would otherwise [fall] within s 11 -15(2)(a). [37] It follows, perhaps more clearly, as well from the requirement of apportionment to be found in the words "to the extent that" which indicate that an acquisition may relate to the making of supplies that are input taxed as well as supplies that are taxable, as would be the case with undifferentiated general overhead outgoings of an entity making both input taxed and taxable supplies (cf, Ronpibon Tin NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 at 55-6). [38] It might be said, as indeed it is by the Trustee, that where the legislature intended to refer to an indirect connection in the GST Act, it did so. This can be seen for example in ss 60-20(1) and (2)(a) as well as s 38-190(2A). With respect, the mere fact that a particular subsection refers to relationships that are direct or indirect does not necessarily reveal that uses of the word "relation" in other subsections will be restricted to direct relationships. Whether that is the case will depend upon context: Clyne v Deputy Commissioner of Taxation [1981] HCA 40 ; (1981) 150 CLR 1 at 10, 15. This requires the Court to identify that purpose, both by reference to the language of the statute itself and also any extrinsic material which the Court is authorised to take into account. [45] The language of the GST Act, as seen in the context of value added taxation generally, makes it clear that the legislative scheme is that a taxpayer will be entitled to an input tax credit where it is necessary that a credit be given to ensure that output tax payable by the taxpayer is not imposed upon an amount which already includes tax payable at some early stage in the commercial cycle. Where possible, GST is not to be found embedded in the price or consideration on which output tax is calculated when taxable supplies are made. However, in the case of a taxpayer which makes input taxed supplies, while that taxpayer will not be liable to output tax on the supplies it makes which satisfy the description of input taxed supplies, that taxpayer will be denied an input tax credit for the tax payable on acquisitions it makes where the necessary relationship exists. [46] The language of s 11-15 would suggest that it was not intended that there be a tracing between the subject matter of an acquisition and an actual supply. Such a tracing would be necessary were the language of s 11-15(2)(a) to operate to disallow a credit where there was a relationship between the acquisition and an actual supply which was input taxed. That no doubt explains why the relationship which negates the input tax credit was expressed as being between the acquisition and the making of input taxed supplies, rather than between the acquisition and actual input taxed supplies. However, while it is true that the GST Act does not mandate a system of tracing acquisitions to actual supplies, it does not follow that an entity which has embarked upon an enterprise which consists of the making of input taxed supplies, but in fact makes no supplies, will be entitled to obtain input tax credits. Whether it is will depend upon whether the acquisitions are related to supplies which, if made, would be input taxed. If the acquisitions do not, then a credit will be available. ... [49] The policy, as expressed by the Trustee, assumes that the system of input taxed supplies is one where inputs will always be able to be traced to particular outputs. As already noted, many acquisitions may involve generalised overhead expenses which relate to different facets of an enterprise. These acquisitions will not directly relate to particular supplies, yet the enterprise will take them into account in pricing outputs. So too, the fact that particular acquisitions may post date supplies, although be related to them, merely requires that outputs of the enterprise will be priced so as to take into account the costs of these acquisitions, at least in a continuing business. [50] If it be necessary here to state a general policy for the application of the GST to enterprises making input taxed supplies, it would be that, to the extent that an entity carries on an enterprise that consists of making input taxed supplies, it will bear the GST on acquisitions without an input tax credit so that its pricing of outputs, if any are made, will take into account, commercially, all GST it will be required to bear on its inputs. [51] This must particularly be the case where the financial supply that the enterprise makes consists of an acquisition supply --- that is to say, the receipt of a loan, or, as here, the acquisition of debts. Some of the expenses were identifiable as relating directly to (1) input taxed supplies; (2) taxable supplies; (3) GST-free supplies; and (4) supplies outside the scope of GST. An example of directly attributable expenses is commissions paid to independent sales agents in connection with the promotion and sale of NMLA's products. 64 As previously mentioned, the appeal does not relate to the manner in which, for GST purposes, NMLA's directly attributable expenses have been allocated, but rather to the manner in which its GME have been allocated. According to Mr Culliver, these included staff salaries, staff on-costs, travel and accommodation, training and recruitment, rent, other occupancy costs, telephone, postage, advertising and audit fees, and cannot be directly attributed to particular activities of NMLA. Obviously, AXA's claim to be entitled to input tax credits in the present proceeding concerns only GME paid in respect of GST bearing supplies to NMLA. AXA's claim to those input tax credits in respect of directly attributable acquisitions are not in issue in the present proceeding. 66 The dispute between AXA and the Commissioner concerns (1) whether various supplies made by NMLA were input taxed supplies; (2) the extent to which the GME were related to those supplies; and (3) the proper methodology according to which the "relatedness" between the acquisitions and supplies is to be established. 67 It is not disputed that the various forms of life insurance product issued by NMLA fall within each of Items 4, 5 and 6 in the table contained in reg 40-5.09(3), and are therefore input taxed supplies by NMLA that block entitlement to input tax credits in respect of any GME related to the supply of those products. 68 The dispute largely concerns NMLA's investment in unit trusts of which NMAM and NMFM were the trustees. Those trustees, incorporated in Australia like NMLA, invested the trust funds wholly or substantially overseas. As mentioned at [30] above, it appears to have been accepted that the investment of funds overseas was a GST-free supply by the relevant trustee. It will be recalled that GST-free supplies do not block entitlement to input tax credits. 69 The Commissioner contends that by acquiring units in the unit trusts, NMLA made an input taxed supply, in particular, a financial supply (being an "acquisition supply") that falls within Item 10(d) in the table contained in reg 40-5.09(3) (see [45]-[46] above). The acquisition of the units therefore, according to the Commissioner, blocked any entitlement to input tax credits in respect of GME to the extent that the GME were related to the acquisition of those units. 70 For various reasons, AXA disputes that the acquisition of the units in the unit trusts were input taxed supplies. It also contends that even if they were, they did not block all entitlement to input tax credits. I elaborate on AXA's submissions below. 71 Initially the Commissioner's understanding was that NMLA's investments were made exclusively through the acquisition of units in the unit trusts. AXA asserted, however, that NMLA made some of its investments directly and without the interposition of a unit trust, and that these gave rise to supplies that were not input taxed (and therefore not input credit blocking). On the final day of the hearing the Commissioner accepted that it did appear on the evidence that NMLA made some of its investments directly. 73 While the Commissioner ultimately accepted that some supplies made by NMLA were not input taxed, and that therefore an apportionment must be made, he submits that none of the apportionment methodologies submitted by AXA are appropriate. Senior counsel for the Commissioner said that it would be necessary for the parties to approach the question of an appropriate apportionment methodology de novo in the light of my reasons on the various questions of law addressed below. I agree. 74 The parties asked that at this stage I simply publish reasons on certain legal issues and allow them the opportunity of exploring the implications of my conclusions in terms of quantification. For this reason, I have chosen not to recount the facts relating to the successive apportionment methodologies used or proposed by AXA. 75 It seems appropriate, however, to indicate that in a case of apportionment of GME under s 11-30, ideally the evidence would specify the nature and use made of the things acquired in some detail, the attempts made to relate them directly to supplies, and the reason why the particular methodology and proxies proposed are most likely to approximate the relatedness between acquisition of the things and the use made of them. AXA disagrees and relies on a much higher figure. 77 According to the Commissioner, NMLA was required to prepare its financial statements in accordance with the relevant standards: Actuarial Standard 1.02 entitled "Valuation Standard" and Accounting Standard AASB 1038 entitled "Life Insurance Business". The Valuation Standard required, relevantly, that NMLA apportion its expenses into defined categories of Acquisition Expenses, Maintenance Expenses and Investment Management Expenses. The Valuation Standard stated that for those expenses that could not be directly allocated to particular expense categories, processes of apportionment may be called for. 80 AXA has led evidence to the effect that the figure of $33 million was limited to the charges paid to the investment manager, NMFM, and that 90% to 100% of that sum was passed on to Alliance Capital Management Pty Ltd, an unrelated company external to the Group which provided investment management services. AXA claims that its GME relating to supplies that were not input taxed included many expenses not comprised within the $33 million. 81 In my view, the question of AXA's entitlement to input tax credits for the purposes of the Act is not necessarily limited by NMLA's published financial statements, although they are evidence of an admission by NMLA. Whether particular GME are "related to" particular input taxed supplies must be determined not by one piece of evidence or evidence of one particular kind but by reference to all of the evidence before the Court. Each trust is managed as a separate asset pool and each statutory fund of NMLA has varying interests in each unit trust. Most of the unit trusts have a member of the AXA GST Group as the trustee. I took the approach that in calculating the revenue referable to investments in unit trusts, a "look through" approach should be adopted on the basis that NMLA is an active investor with controlling interests in almost all of its unit trust investments with the unit trust serving merely as a convenient vehicle for holding the investments. Accordingly, revenue derived through the holding revenue units in a unit trust should be treated in the same way as if it had been derived directly by NMLA. The "look through" approach taken by Mr Culliver is relevant to the contested issues concerning the unit trusts. 1. Were the acquisitions of the units by NMLA financial supplies? 84 If the other terms of reg 40-5.09(1) (set out at [43] above) are satisfied, an acquisition of units in a unit trust is a financial supply by the acquirer. One of the conditions specified in reg 40-5.09(1) is that the acquisition be "for consideration" (reg 40-5.09(1)(a)(i)). 85 The Commissioner submits that the fact that NMLA paid for the acquisition of the units satisfies the requirement that the acquisition be "for consideration". 86 AXA submits that the requirement that the acquisition of the units be "for consideration" requires that the "value" or "benefit" constituting the consideration flow to the supplying party, in the present case NMLA because of its being deemed a supplier of the units. Since there was no consideration flowing in this direction, NMLA's deemed supply of the units was not, according to AXA, an input taxed supply because it was not "for consideration". 87 As will be recalled, consideration is defined in s 9-15 (set out at [27] above). 88 Paragraph (a) of s 9-15(1) provides that consideration includes "any payment...in connection with a supply of anything". This provision refers only to a supply, and not specifically to an acquisition. However, the term "supply" is defined to include a "financial supply" (s 9-10(2)(f)) which in turn is defined to include an acquisition of certain interests (reg 40-5.09(1)), including units in a trust (see [46] above). 89 Section 9-15(2) provides that it does not matter whether the payment was voluntary or whether it was by the recipient of the supply (being the entity to which the supply is made: s 195-1). 90 I readily agree that it is odd to think that the payment made by NMLA is to be regarded as the consideration "for" its acquisition (deemed supply) of the units. According to ordinary contractual concepts, one would expect consideration to move from the acquirer to the supplier (because of the deeming, NMLA, the actual acquirer, is the deemed supplier). But ordinary contractual concepts have no application. As the Commissioner points out, consideration in the Act is wider than consideration under the general principles of the law of contract and is an "extended statutory concept". It is not relevant to look to whether there is "discrete factual real world consideration" as AXA suggests. 91 I see no alternative to construing s 9-15 literally: a supply, including an "acquisition supply", is "for consideration" so long as there is a payment, act or forbearance "in connection with" the acquisition. It suffices that there is a payment, act or forbearance furnished by the actual acquirer even though, by reason of the supply being an "acquisition supply", the actual acquirer is a deemed supplier. 92 In my opinion, for the purposes of reg 40-5.09 and the Act, NMLA made a financial supply because it acquired the units for consideration because it made a payment "in connection with" its deemed supply of the units. 93 I think that my construction is consistent with the policy underlying behind the input taxed supply provisions (see [51] above and the comments of Hill J set out at [58] above). It seems to me that by deeming an actual acquisition of an interest mentioned in subreg (3) or (4) of reg 40-5.09 to be a financial supply and defining consideration so widely in s 9-15, the legislature intended to catch an investment of the present kind. In acquiring the units, NMLA added nothing of value on which GST could be assessed. 94 AXA referred to Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2003] HCA 59 ; (2003) 216 CLR 1 ( Visy ), Finanzamt Groß-Gerau v MKG-Kraftfahrzeuge-Factory GmbH (C-305/01 ) [2003] EUECJ C-305_01 ; [2004] All ER (EC) 454 , and Hagemeyer Ireland Plc v Revenue Commissioners [2007] IEHC 49. With respect, I do not see that any of these cases have any bearing on the present issue. The latter two were concerned with "factoring arrangements" arising under the terms of foreign legislation and the Visy case was concerned with s 47 of the Trade Practices Act 1974 (Cth). 95 From the cases referred to, AXA attempted to derive a principle that would limit what I consider to be the plain meaning of the Act. That principle is that in some cases, an acquirer (for example, the factor acquiring a debt as in the two European cases) can be seen to be providing a service to, and conferring a benefit on, the seller. AXA submits that the inclusion of acquisition in the definition of "financial supply" in reg 40-5.09 was intended to be limited in its operation to a situation of that kind. 96 I see no reason to import as authorities on the construction of the Act approaches that were taken in cases concerning different statutory texts and contexts. Accordingly, to be an input taxed supply, a supply must first satisfy the Act's definition of "taxable supply". The Commissioner disagrees and submits that input taxed supplies, GST-free supplies and taxable supplies are three separate categories of supply. 99 I set out s 9 - 5 's definition of "taxable supply" at [25] above. The proviso at the end of that section (beginning "However, ...") does not by its terms require that each of the categories "GST-free supply" and "input taxed supply" lie wholly within the category of "taxable supply". The proviso merely acknowledges the possibility that some taxable supplies may to some extent be GST-free supplies and/or input taxed supplies. 100 However, the word "supply" in s 9 - 5 bears the meaning given to it by s 9 - 10 and therefore includes a financial supply (s 9 - 10 (2)(f)) which is a particular species of input taxed supply (s 40 - 5 (1)). It follows that a financial supply (as defined in reg 40-5.09) is taken into s 9 - 5 by reason of its being included in s 9 - 10 's definition of "supply", and it is then taken out of s 9 - 5 by the proviso at the end of that section ("However, ..."). 101 AXA refers to the fact that to be a taxable supply, a supply must, inter alia, be made for consideration (s 9 - 5 (1)(a)). This is not different from the requirement in reg 40-5.09(a)(i) that a provision, acquisition or disposal of an interest be for consideration. For that reason, AXA does not need its subset argument to make its submission based on the words "for consideration". I have dealt with the "for consideration" argument above. It is not clear to me whether AXA put this argument independently of the arguments referred to above. 103 While the concept of economic activity is relevant to the cases Finanzamt Groß-Gerau v MKG-Kraftfahrzeuge-Factory GmbH (C-305/01 ) [2003] EUECJ C-305_01 ; [2004] All ER (EC) 454 and Hagemeyer Ireland Plc v Revenue Commissioners [2007] IEHC 49 , to which AXA referred, those cases arose under foreign legislation. The concept of "economic activity" that arose in those cases is not relevant to the Act. 104 The Act requires that the supply, whether a taxable supply or a financial supply, be in the course or furtherance of an enterprise (s 9-5(b) and reg 40-5.09(1)(a)(ii) respectively). I referred to the definition of "enterprise" and "business" at [28]-[29] above. 105 In my opinion, when NMLA acquired the units from time to time it was doing an activity or series of activities in the form of a part of its business. That business included not only supplying life insurance for premiums but also the investment of its policyholders' and shareholders' funds. 2. Are the unit trusts or the trustees of those trusts part of the Group? AXA submits that NMFM and NMAM were members of the Group, and that therefore, even if the acquisition of units in the unit trusts is a financial supply, that "acquisition supply" is an "intra-group" supply and must be ignored for the purposes of working out entitlement to input tax credits (see s 48-55 referred to at [8] above). 107 It is common ground that NMFM and NMAM were members of the Group in their personal capacities. However, the Act distinguishes between an entity's personal capacity and its capacity as trustee. 108 Division 184 of the Act, headed "Meaning of entity", distinguishes clearly between a body corporate and a trust, even a trust of which the body corporate is the trustee. In ordinary legal parlance, the word "trust" is used to refer to a particular class of relationship or the congeries of rights and obligations constituting such a relationship generally or on the facts of a particular case. This provision is concerned with continuity irrespective of changes that may occur in the identity of the trustee or trustees from time to time. Under the provisions, a change in the identity of a trustee of a trust does not mark a change in the entity, which is the "trustee of [the] trust". In each of those capacities, the person is taken to be a different entity. As trustee of each trust, he or she is a different entity. The trustees of the further trust are a different entity again, of which the individual is a member. 112 The effect of the above provisions in the present case is plain. Each of NMFM and NMAM is a body corporate and therefore an entity in its own right, but it is also a separate entity in its capacity as trustee of each of the unit trusts of which it is the trustee. 113 Division 48 is headed "GST groups", and I referred to various provisions within Div 48 at [8] above. Section 48-5(1) provides that the Commissioner must approve two or more entities as a GST group if, inter alia, each of those entities "satisfies the membership requirements" for that group (s 48-5(1)(b)). 114 What are the requirements for membership of a group? Section 48-10(1) provides, relevantly, that an entity "satisfies the membership requirements" of a GST group or a proposed GST group, if the entity is, relevantly, a trust that satisfies the requirements specified in the Regulations (s 48-10(1)(a)(ii)) and is registered (s 48-10(1)(c)). 115 Regulation 48-10.03 is headed "Membership requirements for trusts". Regulation 48-10.03(1) provides that, for the purposes of s 48-10(1)(a)(ii) of the Act, the requirements that must be satisfied for a trust to be a member of a GST group are the requirements set out in reg 48-10.03. The evidence does not establish that the unit trusts in question satisfy the requirements, but I need not discuss the nature of these requirements. It suffices to say that the evidence shows that none of the unit trusts were members of the Group. 116 The definition of "entity" to mean, inter alia, a trust, and the distinction between a body corporate in its personal capacity and in its capacity as trustee of a trust leads to the following overlapping results. 117 First, the Group did not include as members either any of the unit trusts or NMFM or NMAM in its capacity as a trustee of any of them. For this reason, the acquisition of units in the unit trusts of which NMFM or NMAM was trustee is not required to be ignored by reason of s 48-55. 118 Second, for GST purposes, each member of the Group, each of the unit trusts and each of NMFM or NMAM as trustee of any of the trusts are separate entities that make their own separate acquisitions and supplies. NMLA is entitled to input tax credits in respect of its acquisitions, except to the extent that, relevantly, they relate to the making of supplies by NMLA that would be input taxed. That relatedness is not shown by a relatedness, if it exists, between acquisitions by NMLA and supplies by NMAM or NMFM as trustee of any of the unit trusts. 119 Third, the enterprise that NMLA or any other member of the Group carried on is not the enterprise that the unit trusts or NMFM or NMAM as trustee for any of them carried on. 3. Is a "look through" approach permitted by the Act? 121 AXA appeared to contend, however, that even accepting that the unit trusts, and NMAM and NMFM in their capacity as trustees of any of them, were not part of the Group, a look through approach was still appropriate. According to AXA's submission, NMLA should be treated as having made the investments directly (and thereby as having made supplies that were not input taxed). AXA's argument appears to be that the Act allows for an acquisition to be related indirectly to a supply, and that where the actual purpose of AXA in investing in unit trust was to make overseas investments, that actual purpose should be determinative. 122 In my opinion, the "look through" approach is inconsistent with the Act. 123 Let it be assumed that the acquisition of the units was merely a "formal mechanism" used in order for NMLA to make investments. This does not mean that the provisions of the Act are to be ignored. 124 The Act entitles an entity to an input tax credit for any creditable acquisition that it makes (s 11-20). To make a creditable acquisition, an entity must have, inter alia, acquired the thing solely or partly for a creditable purpose (s 11-5(a)). Creditable purpose is defined in s 11-15 by way of a positive test (the thing is acquired in carrying on the entity's enterprise --- s 11-15(1)) and by way of a negative test or blocking provision (relevantly, the acquisition relates to making supplies that would be input taxed --- s11-15(2)(a)). Subsection (1) invokes an objective notion. One might perhaps have hoped for a more apt expression than "creditable purpose" to refer to the simple notion of an acquisition in the course of the carrying on of an enterprise. The expression "the acquisition relates to supplies that would be input taxed" in para (a) of s11-15(2) is likewise objective: it refers to a relatedness as a matter of objective fact between an acquisition and a supply. 125 The Act provides in subss (3) and (4) of s 11-15 for circumstances in which an acquisition that would otherwise be related to making supplies that would be input taxed is not to be treated as such. Investment in a unit trust is not one of those situations. No tax will be charged on that supply. Therefore, you do not have a creditable purpose if your acquisition of a thing relates, either directly or indirectly, to a supply you make that is input taxed. Neither the subjective intention of NMLA, nor the activities of NMFM and NMAM in their capacity as trustees of the unit trusts, is determinative of these questions. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | indirect taxes goods and services tax (gst) a new tax system (goods and services tax) act 1999 (cth) (act) input tax credits applicant (axa), the representative member of gst group of companies chief operating company within gst group a life insurance company (nmla) nmla paid gst on certain general management expenses (gme) whether entitlement to input tax credits in respect of that gst not possible to attribute gme directly to particular supplies common ground that some gme related to input taxed supplies which "blocked" entitlement to input tax credits related to those supplies whether there should be apportionment on basis that a proportion of gme related to supplies that were not input taxed nmla invested in unit trusts which made supplies that were not input taxed trustees of the unit trusts were, in their personal capacities, companies within the gst group whether the unit trusts and the trustees of them in their capacity as trustees were members of the gst group as distinct from the trustees being members of that group in their personal capacities whether act permitted a "look through" approach "financial supply" defined to include an acquisition of units in a unit trust whether the requirement that nmla's deemed supply (being an acquisition supply) of the units be "for consideration" required that consideration must move to nmla for a service provided by it. tax |
To recapitulate, Australian investors were induced into purchasing non-existent commodity options on non-existent foreign commodities exchanges and lost more than $8 million. Some of the stolen money (approximately $139,000) was transferred into bank accounts maintained by Mr Lee with the Australia and New Zealand Banking Group Limited and Westpac Banking Corporation Limited. Mr Lee has over $2 million in those accounts. On 11 April 2007 I made an order under s 1323(3) of the Corporations Act 2001 (Cth) that, pending trial, the money in those accounts be frozen. Now, following the trial, ASIC seeks a continuation of that order. 2 An order s 1323(1) can be made if, and only if, the following conditions are satisfied. First, relevantly, that ASIC is carrying on an investigation under the Australian Securities and Investments Commision Act 2001 (Cth) or the Corporations Act 2001 into whether a person (a "relevant person") has acted in contravention of the Corporations Act . It is common ground that ASIC is conducting an investigation of that kind in relation to the activities of Mr Lee. He is, therefore a "relevant person" for the purposes of s 1323. He may not be the only "relevant person". Others are being investigated, but their identity is not presently known. 3 The second condition is that it is "necessary or desirable" to make the order for the purpose of protecting an "aggrieved person" to whom the "relevant person" may become liable in debt damages or for compensation or otherwise. I will return to this condition later. 4 Third, ASIC must establish that the money (strictly we are dealing with a chose in action namely the debt owed by the bank to its customer) the subject of an order either belongs to a "relevant person" (s 1323(1)(f)) or is held on behalf of a relevant person (s 1323(1)(e)). The evidence regarding the "ownership" of the money in the accounts is sparse. The reason is that, as on the interim application, Mr Lee refused to give any evidence. Thus as regards "ownership", all I know is that the accounts exist and that they are maintained by Mr Lee. He is, therefore, legally entitled to the money in the accounts in that he is the legal owner of the chose in action. To go any further and decide whether the money (strictly the chose) is held by Mr Lee on behalf of someone else, who may also be a "relevant person", would be to engage in speculation. 5 This brings me back to the second condition. It has two elements. The first (though not in the order it appears in the section) is that the relevant person (Mr Lee) is or may be liable to pay damages or compensation to an aggrieved person, that is a person who lost money in the scheme. Mr Lee would obviously be liable to an aggrieved person if he were involved in putting the illegal scheme into effect. Even if not involved, Mr Lee may be liable in an action in restitution to account for any stolen money that has come into his possession. 6 On the facts presently known to it, ASIC cannot show that Mr Lee is liable in debt or damages to any aggrieved person. There is no evidence that establishes that he was a party to the illegal scheme. On the other hand, there is plainly a connection between Mr Lee and the scheme. He received some of the stolen money. It may not be much, but it is enough to show a connection. And then there is the fact that Mr Lee simply refuses to explain how he came by that money. I find this to be quite extraordinary. Here we have a man who has millions of dollars in Australian bank accounts. If he could satisfactorily explain that he came by that money honestly it would be released to him. Yet he refuses to tell anyone about the funds. The overwhelming impression I am left with is that Mr Lee refused to give evidence because he is concerned for his personal position. Or, to adopt the language of the High Court in RPS v The Queen [2000] HCA 3 ; (2000) 199 CLR 620, 632: "In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in the party's camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party's case. " I can only conclude that there is a strong case that Mr Lee may (I emphasise the word "may") be liable in debt or damages to an aggrieved person. 7 In reaching this conclusion I have not overlooked the fact that ASIC's investigation thus far has led it to the position that many of the payments made out of the Bank of China account, where the stolen money was deposited and which is the source of approximately the $190,000 that was paid into Mr Lee's accounts, were payments to persons who had no connection with the fraudsters. That, however, does not exonerate Mr Lee. Even thieves have legitimate bills to pay. That ASIC is satisfied that some payments out of the Bank of China account were legitimate does not mean that is true for all the payments out of that account. I emphasise again that if the money paid to Mr Lee was a legitimate payment all he had to do was come forward and say so. That he has not invites suspicion. 8 The second element of the second condition is that it is "necessary and desirable" to make the order. I think an order is both necessary and desirable, but not for an inordinate period. ASIC's investigation has taken them to many overseas jurisdictions. Their investigation requires the cooperation of overseas regulatory authorities. Little can be done quickly. Moreover, ASIC has no control over the speed with which its inquiries are dealt with. As well, one must not lose sight of the fact that these kinds of international frauds are difficult to investigate. Tracking down the culprits and locating the stolen money takes hard work and a lot of time. 9 In all the circumstances I propose to continue the freezing order until 31 July 2007. If the order is to be continued thereafter a further application will need to be made. | asic investigation fraudulent trading scheme stolen money deposited in defendant's account defendant refuses to provide explanation account frozen corporations |
The proceeding is brought pursuant to, at least, s 170VV of the Workplace Relations Act 1996 (Cth) as it was prior to amendment by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) ("the Pre-Reform Act "). Whether or not it was effectively brought pursuant to other provisions is not presently material. 2 The first to fifty-sixth applicants (with the exception of the forty-second applicant who is no longer part of the proceeding) are former employees of Teletech who claim an entitlement to severance pay under the terms of Australian Workplace Agreements (AWAs) which applied to their employment with Teletech. The entitlement of each employee applicant to bring this proceeding is not in dispute. 3 The fifty-seventh applicant is a workplace inspector under the post-reform Workplaces Relations Act ("the Act"). There is no dispute concerning her entitlement to bring this proceeding. 4 Teletech, amongst other activities, provides services to clients in the telecommunications industry. It claims to be involved in the provision of "outsourcing solutions" for its clients, including Telstra Corporation Limited. As part of a commercial arrangement between Teletech and Telstra, Teletech provided Telstra with labour at a call centre site at Moe in Victoria's West Gippsland region. Teletech and Telstra entered into the arrangement in late 2001 but, in July 2004, Telstra advised Teletech that it would not renew the service agreement. The arrangement ceased on 23 February 2005. 5 Teletech terminated the employment of the employee applicants on 23 February 2005. From July 2004 until November 2004 Teletech and Telstra had discussed the method by which certain employees, including the employee applicants, would be offered employment with Telstra. 6 Each employee applicant became an employee of Telstra after being made redundant by Teletech. Each AWA applicable to each employee applicant whilst employed by Teletech provided for the payment of severance pay in the event that Teletech terminated employment due to redundancy. The quantum of severance pay which would ordinarily be paid to each employee applicant is not in dispute. Teletech claims that it is not liable to pay severance pay to the employee applicants because of one of the exceptions contained in each AWA which provides that severance payments "shall not apply where...Teletech is able to arrange alternative employment with another employer that is comparable in wages, terms and conditions of current employment. Those decisions illustrate that severance pay is designed to compensate employees for loss of transferable employment credits, loss of security in employment, loss of seniority and the hardship associated with redundancy for longer serving and older employees. See especially 8 IR 34 at 72-75 and see also the Redundancy Case (2004) 129 IR 155 at [133] - [142]. Those decisions further stress that severance pay is not designed to compensate employees for a period of unemployment. 8 The most common method of providing an exception to the liability to pay severance pay to an employee is for an employer to apply to be exempted from that requirement where it obtains acceptable alternative employment for an employee: see 8 IR at 75. 9 Rather than providing that Teletech must approach an industrial tribunal to be exempted from paying severance pay, the relevant AWAs provide inbuilt exemptions to the severance pay clause, including that referred to at [6] above. 10 An AWA is an industrial instrument and a creature of statute. AWAs are "a species of agreement which derive their legal effect from the [Workplace Relations] Act": McLennan v Surveillance Australia Pty Ltd [2005] FCAFC 46 ; (2005) 142 FCR 105 at [25] . As an industrial instrument created by the Act, an AWA should be interpreted in the same way as one would interpret an award made by an industrial tribunal. One looks to the particular language of the provision in light of its context and purpose: see Amcor Limited v Construction Forestry Mining and Energy Union [2005] HCA 10 ; (2005) 222 CLR 241 at [2] per Gleeson CJ and McHugh J, at [30] per Gummow, Hayne and Heydon JJ, at [66] per Kirby J, and at [129] and [130] per Callinan J. Did Teletech arrange alternative employment with Telstra for the employee applicants? The applicants acknowledge that Teletech assisted the employee applicants to gain employment at Telstra. They contend, however, that Teletech did not "arrange" such employment. The applicants point to the standard severance pay clause prescribed by industrial instruments in light of the 1984 test cases. An application to be exempted from liability to pay severance pay arises, under those clauses, where an employer "obtains" acceptable alternative employment for an employee. 12 The Australian Industrial Relations Commission has discussed the meaning of "obtains acceptable alternative employment" in the context of the redundancy test case standard. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce the new employment; there will usually...remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate. 14 In the relevant AWAs of the employee applicants, the applicable sub-clause refers to the employer being "able to arrange alternative employment. " There is no material difference between obtaining alternative employment and being able to arrange it. If an employer who is about to make an employee redundant said to the employee, "I have obtained alternative employment for you" or said "I have been able to arrange alternative employment for you", the employee would understand the employer on each occasion to be saying that it has found another job for the employee. The employee may not choose to take up the job, but it must be one that is there for the taking if the employee chooses to take it. 15 Teletech assisted its soon to be redundant employees to apply for jobs with Telstra. Teletech had active involvement in the transition of the employee applicants from work with Teletech to work with Telstra. Immediately after Telstra advised Teletech that it would not renew its contract with Teletech for the provision of services at Moe, representatives of each company met to discuss the possible employment of the call centre employees by Telstra. Teletech secured a commitment from Telstra that Telstra would give all Teletech's employees at the Moe call centre the opportunity to apply for employment with Telstra and be available to be recruited by Telstra. Teletech was not, however, a strong moving force towards the creation of the available opportunity. The available opportunity arose because Telstra was to perform functions formerly performed for it by Teletech. Telstra required staff. It made sense for it to approach Teletech staff. Teletech did not secure the offer of a job for Teletech staff with Telstra. As counsel for the applicants submitted, Teletech arranged an opportunity for the employee applicants to participate in a recruitment process undertaken by Telstra. 17 Ms Louise Power is the senior organisational development specialist employed by Telstra. Ms Power gave evidence that Telstra treated its recruitment of former Teletech employees "like any other external market recruitment activity. " She said that Teletech employees were invited to apply for positions at the Moe call centre "along with existing Telstra employees". Ms Power also agreed that the former Teletech employees "were assessed against the same criteria as [were] external applicants". Ms Power further agreed that the selection was "purely based on merit" and that Telstra wanted the best people for the job(s) "whether they were from Teletech, Telstra or elsewhere. So much cannot be denied but that does not mean that Teletech was able to arrange the employment. Teletech facilitated its staff applying for jobs with Telstra in circumstances where they competed on their merits with existing Telstra employees and fellow Teletech employees for the available positions. The encouragement and facilitation of a process is not the same as doing everything possible to ensure a result. Arranging alternative employment means bringing about that employment should the employee choose to accept it. Anything short of that, such as competing with competitor applicants (albeit limited to two categories of applicant: existing Telstra and Teletech employees) does not meet the test provided by the relevant sub-clause in the AWAs. 19 Consequently, the exemption in the AWAs relied on by Teletech is not available to it, as it was not able to arrange alternative employment with another employer. I now pause to consider whether if the Court were wrong in that view, the wages, terms and conditions of each employee were comparable when they left Teletech as compared with when they first joined Telstra. Were the wages, terms and conditions of employment comparable? Nonetheless, I have looked carefully at the wages, terms and conditions of the employee applicants' employment at Teletech and at Telstra and I think it appropriate to set out briefly my approach to the comparative exercise and point to those applicant employees I believe would have an entitlement to severance pay if I were wrong about Teletech's ability to arrange alternative employment. 21 The exercise of comparing the wages, terms and conditions of employment involves a global approach rather than an item by item comparison of every term and condition. The Teletech AWA specifies that alternative employment is acceptable if 'it is on terms which are no less favourable in aggregate' (cl 22.2.4) than those of the Teletech employment. 22 Teletech submits that an assessment of the comparability of wages, terms and conditions must include not just the legally enforceable wages, terms and conditions as found in any relevant industrial instrument or contract, but also those discretionary terms and conditions as found in company policies that relate to the employee's employment. It was argued that this is a commonsense approach that reflects the reality of the employment accepted by the applicant employees. I am satisfied that these policies form part of the terms and conditions of employment in a broad sense. The reality, however, that any benefits conferred under the policies are subject to change at the discretion of the employer is a factor that must go into the global assessment. 23 Teletech submits that the employment position and duties of the applicant employees is not a relevant consideration in the exercise of comparing wages, terms and conditions. It is submitted by Teletech that the terms and conditions of employment are limited to the provisions of the AWAs under which the employees work and the benefits of the various policies. Counsel for the applicants submits, and I agree, that the employees' positions and duties are identified in the AWAs and are so central to the employment that they are terms and conditions of employment. On a commonsense approach, looking at the reality of an employee's employment, one must consider what it is that an employee is employed to do. This approach is consistent with considering discretionary company policies as terms and conditions of the employment, at least for the purposes of this exercise. 24 The exercise of comparing the wages, terms and conditions of the Teletech employment and Telstra employment depends in part on the purpose of the particular provision in question. The severance pay clauses in Teletech's AWAs, Teletech submits, are directed at compensating employees for unemployment that arises from redundancy, not for the loss of ongoing employment and accrued benefits. 25 I do not agree that in this case severance pay is intended only to compensate for a period of unemployment. Its purpose is to compensate for a broad range of hardships that follow being made redundant. This reflects the industrial context as discussed above at [7]. It also reflects commonsense in this particular context. Job security is an important component of employment. It would be difficult to find that wages, terms and condition of employment were comparable in circumstances where an employee has gone from one employment where he or she enjoyed job security to employment with no or minimal job security. There are many factors that contribute to job security. Accrued entitlements, seniority and length of service contribute to job security, as do other terms and conditions of employment such as probation and termination provisions. Job security generally should be taken into account when comparing the wages, terms and conditions of the Teletech employment and the alternative employment. Clause numbers vary between the AWAs. For convenience, where the contents of clauses are the same, I refer to the clause numbers of AWA Attachment 2. The Attachment 17 AWA for Supplementary Workers contains significant differences from the other Telstra AWAs. 31 Not all positions that applicant employees were employed in at Teletech had equivalent positions at Telstra. Resources and Planning Solutions. Teletech may change rostering schedules on reasonable notice. The maximum number of hours of work per day is 12 and the minimum number of hours between shifts worked on consecutive days must not be less than 10 hours. Overtime is to be paid for time worked in excess of ordinary rostered hours. 35 Telstra's ordinary working hours are less well defined in its AWAs. Ordinary hours of work are 'normal business hours'. (There is no definition of 'normal business hours' in the AWAs, however the evidence of Ms Power, Telstra's Senior Organisational Development Specialist, to the Court is that 'normal business hours' means 7am to 7pm, Monday to Friday and that ordinary hours are 36.75 hours per week. ) Telstra may require employees to work additional time which time will be paid in accordance with Telstra policy. Telstra may require the performance of shift work Generally employees are notified of their working hours, shift rosters and any changes of hours by their manager, but no notice period is specified. 36 The normal Telstra working hours do not apply to Supplementary Workers employed under an Attachment 17 AWA. Supplementary Workers are guaranteed to be offered at least 500 hours work per calendar year. A Supplementary Worker is required to be available for work at all times within a specified 'span' of hours over specified days as nominated at the commencement of employment. The span may be, for example, between 6am and 11am Monday --- Friday. Telstra must provide a minimum of 24 hours notice of required work. 37 Telstra counts all hours that a Supplementary Worker is unavailable to attend work or is absent from work for any reason other than annual leave towards the 500 guaranteed hours of work. The effect of this is that in reality a Supplementary Worker may work less than 500 hours in a calendar year. Telstra may also offer a Supplementary Worker work outside of the employee's nominated span and days to make up the employee's 500 hours but the employee is not obliged to accept the work. 38 A number of full time Teletech employees were employed at Telstra as Supplementary Workers. For these applicant employees, they went from 38 hours per week to a guaranteed minimum of approximately 10 hours per week. 39 A number of part time Teletech employees were employed at Telstra as Supplementary Workers. The reduction in hours varied for each applicant in this category depending on how many hours they worked at Teletech. Changes in working hours for applicant employees in this category are set out below. Applicant 14 and Applicant 25 went from part time at Teletech to full time at Telstra. In general terms, most employees' weekly and annual pay increased at Telstra. 42 In the case of two applicant employees, their salary was reduced. These were Applicant 3 and Applicant 33. I discuss these two applicant employees in more detail below at [52] --- [55]. 43 In the case of all the Supplementary Workers, it is very hard to assess what their actual salary was at Telstra. Certainly, the hourly rate for all Supplementary Workers was higher than in their employment at Teletech. However, due to the lack of security in weekly working hours that may not and probably did not translate into an overall annual wage increase. Any Supplementary Worker that worked only the bare 500 hours guaranteed, even paid at the highest possible hourly rate for their 'span', would have been significantly worse off than they were at Teletech. It is hard to align Teletech's and Telstra's entitlements as they are often defined differently or bundle various entitlement together differently. In general, most of the same entitlements are covered in both Teletech and Telstra AWAs and/or policies. Whilst the benefits they confer in substance vary, the overall bundle of entitlements is comparable. I note that the bundle of entitlements conferred under a Telstra Attachment 17 AWA for Supplementary Workers is not comparable to that conferred under the Teletech AWAs and I deal specifically with those differences below at [48]. 45 An important difference in the entitlements conferred under the Teletech AWAs and Telstra AWAs is that many of the key employee entitlements that are enshrined in the Teletech AWAs are instead contained in Telstra policies, procedures and processes. Telstra AWAs specify that employees must comply with Telstra's policies, procedures and processes, though they do not form part of the AWA or the employment contract. Additionally, Telstra's policies, procedures and processes are subject to amendment at any time. Similarly, Teletech AWAs provide that employees must comply with Teletech policies and that Teletech may amend its policies from time to time according to its business needs. However, the majority of Teletech's employee entitlements are contained within its AWAs. 46 The following is a non-exhaustive list of entitlements not enshrined in Telstra's AWAs, but in supplementary policies, procedures and processes: overtime; applying for annual leave; applying for long service leave; maternity leave; parental leave; cultural leave; bereavement leave; equal opportunity complaint processes; severance pay; and dispute resolution. 47 Other entitlements are contained in Telstra AWAs but are at Telstra's discretion. The clearest example is Telstra's personal/sick leave provisions. There is no minimum, nor maximum, entitlement to personal/sick leave days. An employee has a right to 'reasonable paid sick leave', however a manager will determine on a case by case basis whether there is an entitlement to paid sick leave. 48 Supplementary Workers employed under a Telstra Attachment 17 AWA are not entitled to many key entitlements contained both in their Teletech AWAs and in the other Telstra AWAs. Entitlements that don't apply to supplementary workers include additional leave, bereavement leave, blood donor's leave, cultural leave, defence/reservist leave and volunteer leave. The only leave entitlements that Supplementary Workers are entitled to are sick/personal leave, long service leave, maternity leave and annual leave. Supplementary Workers are not entitled to public holidays. At the time of redundancy, no Teletech employee was on probation. Upon the commencement of their employment at Telstra, all applicant employees were placed on a three month probation period, pursuant to the Telstra AWAs. During that probationary period Telstra had the right to dismiss the employees without notice. 50 It was submitted by counsel for Teletech that most new employments involve a period of probation and that, in fact, the applicant employees had been subject to a probationary period on commencement at Teletech. This is so. It is not exactly to the point though. At the time of redundancy, none of the applicant employees was on probation. Had they not been made redundant and had their employment been ongoing, they would not have been subjected to a further arbitrary probation period whilst at Teletech. It is true that if they had organised their own subsequent employment upon redundancy, as I have found they indeed did in this case, a probationary period would have applied, as it did in this case. But the purpose of the exclusion that the respondent relies on, is to say, 'Teletech is not required to pay you severance pay because we have arranged alternative employment that is comparable in its wages, terms and conditions, thereby offering you a transition into new employment as if your employment were ongoing'. It is a relevant and not unimportant factor in the overall assessment of wages, terms and conditions that previously secure employment is subject to a 3 month probation. 51 All the employee applicants were paid out by Teletech for their accrued annual leave entitlements. It was submitted by the applicants that being paid out for accrued annual leave was not equivalent to maintaining the benefit of accrued annual leave days. Whilst I agree with the proposition generally, in practical terms its weight in the overall exercise is limited. With respect to the loss of other ongoing accrued benefits, such as sick days and time towards long service leave, different employees were in different positions. Though I do not intend to set out the benefits lost by each employee, the loss of these accrued benefits can significantly impact on an employee's job security. They were employed by Telstra under an Attachment 18 AWA as Sales Consultants. Both these applicant employees were employed by Telstra in positions that amounted to a demotion from their employment as Team Leaders at Teletech and both suffered a diminution in their wages. 53 I am not satisfied that employment by Telstra as a Sales Consultant is comparable to the employment by Teletech as a customer service Team Leader. The team leader position these applicant employees held at Teletech involved a leadership component that was lacking in their role at Telstra. Ms Christesen gave evidence that team leaders oversee a team of customer service representatives and possibly a senior customer service representative. Upon commencing employment with Telstra, these applicant employees went from a position of seniority to performing the same duties as the applicant employees they had previously helped to oversee. 54 Both applicant employees' wages decreased correspondingly. Both applicant employees' annual incomes of $42,000 (superannuation excluded) at Teletech dropped to $37,753 (superannuation excluded) at Telstra. 55 I am not satisfied that the third and thirty-third applicant employees' employment at Telstra is sufficiently comparable to their employment at Teletech. These applicant employees would be entitled to severance pay, even if my view that Teletech had not been able to arrange alternative employment could not be sustained. As I have shown above, these applicant employees were denied access to a number of important entitlements that they had enjoyed at Teletech and lost the security of a fixed number of working hours per week. While their hourly rate increased, the loss of almost all the job security that these applicant employees had enjoyed in their employment at Teletech cannot be compensated. Looking globally at their employment at Teletech and their employment at Telstra, I consider that the wages, terms and conditions of employment at Telstra are not comparable in aggregate. These applicant employees would be entitled to severance pay, even if my view that Teletech had not been able to arrange alternative employment could not be sustained. In general terms, I think it sufficient to comment that the wages, terms and conditions of employment are comparable for the purposes of the severance pay clause in question. Generally, the positions of employment of these applicant employees were comparable, their wages were comparable and the other terms and conditions governing their employment, though not identical, were also comparable. Some of these applicant employees were employed in positions at Telstra that effectively amounted to a demotion. Nonetheless, I have weighed the change of position with the varying wage increases enjoyed by these applicant employees at Telstra and I am satisfied that the employment is comparable on this approach. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | australian workplace agreements whether employees entitled to redundancy payments within meaning of particular redundancy provisions whether employer was 'able to arrange' alternative employment if so, whether the wages, terms and conditions of alternative employment were comparable industrial law |
The application before the Federal Magistrate sought judicial review of a decision of the Refugee Review Tribunal (Tribunal) dated 10 August 2005 and handed down on 1 September 2005. 2 The applicants are a mother and her three non-adult sons. They are citizens of Bangladesh. The first applicant is married and her husband is currently in Bangladesh. 3 On 27 August 2004 the applicants lodged an application for protection visas with the Department of Immigration and Multicultural Affairs (as it was then known). The first and second applicants (namely the applicant mother and her eldest son) applied as applicants with their own individual claims. A delegate of the first respondent refused the application for protection visas on 20 October 2004. On 15 November 2004 the applicants applied to the Tribunal for a review of that decision. 4 The application for protection visas was based on the threats to the applicants' family from a terrorist known as Mr Kala Jahangir, whom the first applicant claimed was a notorious local leader of the Bangladesh National Party (BNP) who had protection by the authorities. The first applicant claimed her husband is a long-term member of the BNP in their local area in Bangladesh and although he was not a 'big leader', he was well-known in his local area for his activities with the BNP. Submissions from the applicants' representative to the Tribunal indicated that factionalism within the BNP was a very serious problem. The first applicant indicated that her husband ran two businesses and had difficulties setting up business due to insecurities regarding Mr Jahangir. 5 The first applicant claimed that in April 2004, her husband received a telephone call from Mr Jahangir demanding and threatening that the first applicant and her husband bring a specified amount of money to him or their eldest son would be kidnapped. The first applicant's husband sought advice from certain authorities and as a result did not send any money. Instead the applicants requested the second applicant's uncle in Australia enrol him in a school in Sydney. The first applicant and her children obtained visas to Australia. The applicants arrived in Australia on 30 July 2004. 6 On 21 August 2004, the first applicant's husband informed her that many people were killed and injured during public meetings organised by the opposition party at that time. He explained that the situation in Bangladesh was extremely bad. The first applicant also gave evidence that her husband telephoned from Bangladesh and told her that a bomb (later removed) had been placed at the higher secondary school in which their eldest son was a student. It purportedly found there was no reliable evidence of the kidnap threat having taken place. It noted the first applicant's husband 'has been silent throughout this whole process' and indicated he had given limited evidence. The Tribunal found 'the Applicant's account of the alleged threat from Kala Jahangir on her family lacks credibility' . The Tribunal was confident the applicants improvised the 'kidnap' story. It noted Mr Jahangir did not take action against the family. It was also unimpressed with the reasons why the first applicant's husband did not go to the police. 8 The Tribunal did not accept the first applicant's family was the target of a kidnap threat. The Tribunal also noted that if it were to have accepted the kidnap threat at face value, it would not have found a Convention Relating to the Status of Refugees 1951 and amended under the Protocol Relating to the Status of Refugees 1967 (the Convention) reason. It accepted the first applicant's husband was a local member of the BNP, but did not accept that membership should be of concern in the present matter. Information "...located by the Tribunal after an extensive Google search of news media sites and commentary pages, [that] did not support a position to the effect that Jahangir had been aligned with the ruling faction of the BNP". He was convicted during the current BNP government, which was elected in October 2001. Another report observes that the Awami League leader Sheikh Hassina has been alleging "the BNP-Jamaat alliance government has been patronizing the terrorist groups including that led by notorious criminal (sic) like Kala Jahangir to carry out its elimination drive against Awami League's stalwarts" ("Coastal land grabbing blamed on men blessed by BNP bigwigs, "Awami League website, Thursday, 19 May 2005. The Tribunal also noted that the First Applicant's son was not kidnapped nor was any ransom ever paid, and found that there was no reliable evidence of the kidnap threat having taken place. 24. The behaviour the Applicant attributed to Kala Jahangir in her claims does not closely, or otherwise convincingly, resemble the cunning and ruthless behaviour attributed to him in independent reports... The Tribunal is confident on the evidence before it that the real improvisation has been the Applicant's improvisation (with or without the help of others) of the whole 'kidnap' story. The Tribunal finds that the Applicant's claims about the lack of rule of law in Bangladesh are grossly exaggerated, particularly in relation to the kind of problem she claims she and her family faced there. The Tribunal does not accept that the Applicant's family was the target of a kidnap threat, let alone from Kala Jahangir. In summary, the Tribunal was not satisfied that the Applicants faced a real chance of Convention-related persecution in Bangladesh and found that their claimed fear of persecution was not well-founded. The Tribunal found that the Applicants were not refugees and affirmed the delegate's decision not to grant protection visas to the Applicants. The first was the absence of evidence from the first applicant's husband. The second was the first applicant's own account of the alleged threats. In the Applicant's account, Jahangir did not use any agents or intermediaries but made the telephone calls himself. More odd than that, though, he set no deadline for the payment of the money he was demanding. Bearing in mind the claimed circumstances, he somewhat illogically went into some detail in his telephone call as to where he wanted the ransom money to be left, but did not say when he wanted it left there. He personally provided his intended targets with enough information to allow them to advise the police where to set up covert surveillance (of the kind that has probably led to the arrest of other extortionists, mentioned in independent material provided by the Applicant). Then, just a few days later, Jahangir reduced the ransom by 90% for no apparent reason. He specified the harm he was threatening to perpetrate so that the intended victims could take evasive action, pulling the child out of school. According to the Applicant's evidence, he behaved throughout the whole affair like an amateur, or at least as though he was improvising the plot as he went along. There was no breach of s 424A of the Act according to his Honour and he dismissed the application. The first applicant stated she advised her solicitor of her situation on 9 October 2007. Information "...located by the Tribunal after an extensive Google search of news media sites and commentary pages, [that] did not support a position to the effect that Jahangir had been aligned with the ruling faction of the BNP". The information utilized by the Tribunal goes beyond that which was disclosed in the Tribunal' s s.424A letter at pages 393 and 394 of the Court Book. The Full Court of the Federal Court held in SZEEU v Minister for Immigration & Multicultural & Indigenous Affairs that this disclosure must be made where the information is part of the reason for the affirmation. It was information that was a part of the reason for affirming the decision under review, and it was personal to a particular person, Kala Jahangir. Particulars of that information should have been disclosed to the Applicant in writing and the Tribunal's failure to do so amounted to jurisdictional error. In SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 at 215 the Full Court held that such a disclosure must be made where the information concerned is only part of the reason for such affirmation. The first applicant argues that the failure to disclose the content of the independent reports on the behaviour of Kala Jahangir and the detail and the extensive searches relating to Kala Jahangir motives and allegiances was not disclosed in accordance with s 424A thus amounting to jurisdictional error. 18 By O 52 of the Federal Court Rules (the FC Rules), the manner in which appeals are to be brought before the Court is regulated. Pursuant to O 52 r 15(1)(a)(i) a notice of appeal must be filed and served within 21 days after the date when the judgment appealed from was pronounced. However, O 52 r 15(2) provides that a judge may for special reasons and at any time give leave to file and serve a notice of appeal. The expression 'at any time' clearly refers to notices of appeal which are filed outside the 21 day period. 19 The expression 'Special reasons' has received a deal of attention. In Kweifio-Okai v Royal Melbourne Institute of Technology [1999] FCA 894 considerations to which the Court should have regard were said to include the length of delay involved in filing a notice of appeal, whether the respondent will suffer prejudice by reason of the delay and finally the nature of the injustice to the applicant if the applicant is denied the right to appeal. In considering the question of injustice, the question may arise as to the strength of the appeal. Little injustice may be occasioned if an appeal were hopeless. "Special reasons" must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served. Furthermore, it was explained on the basis that the first applicant did not have sufficient funds to pay the filing fee for the notice of appeal. 22 The short delay and the reasons for it support the grant of an extension of time within which to file the notice of appeal. Equally, any significant prejudice to the first respondent is by no means self-evident. That, therefore, is a further reason in support of the grant of an extension of time. 24 A question arises as to the extent to which it is necessary to satisfy the Court as to the prospects of success on the appeal. Before me counsel for both parties took the view that the Court should be satisfied that an appeal had reasonable prospects of success. 26 In the exercise of any judicial discretion, which is required by statute or rules to be exercised, an important consideration as to the course to take will be determining which course attracts the least risk of doing an injustice. In the present circumstances, when considering the merits of the proposed appeal, it is important also to consider the risks of doing an injustice. If other factors favour the granting of the relief sought, the fact that the appeal might not ultimately succeed but nevertheless is reasonably arguable should not stand in the way of granting relief. In Ally v Minister for Immigration and Citizenship [2007] FCA 1373 it was said that 'the fact that an appeal is unlikely to succeed is a different question from whether an appeal has any prospect of success or is arguable'. It was submitted, in short, that the proposed appeal would be bound to fail. The fact that an appeal is unlikely to succeed is a different question from whether an appeal has any prospect of success or is arguable. Consistent with the judgment of the Full Court in Jess v Scott (1986) 12 FCR 187 , I am satisfied that there are special reasons for granting leave to appeal in the present case. I am not to be taken from the observations set out earlier that there are strong grounds for thinking that the proposed appeal will be successful. However, the unusual factual circumstances of this case and the detailed analysis by Smith FM to the proper use of later facts in respect of the factual question to be determined at an earlier time, persuade me that the appeal is not "doomed to fail". Technical default as to filing within time should not be an unscaleable hurdle where possible injustice might result in the absence of the grant of leave. If there is a reasonable possibility that there might be a miscarriage of justice if leave is not granted, that in my view would be a significant reason to grant leave (cf Parker v The Queen [2002] FCAFC 133). 28 In this matter the first respondent submits that the Tribunal did not breach s 424A of the Act as the information on which the Tribunal relied was either given by the applicants to the Tribunal for the purposes of the application or alternatively it was discernible from the content of the s 424A letter dated 24 May 2005. 29 The applicants, on the other hand, contend that the descriptions or the information about a particular person given in the letter were of such a general nature that the disclosure was quite inadequate. 30 In my opinion the ground of appeal which the applicants would advance is not as hopeless as the first respondent would contend but equally it is probably not as favourable as the applicants would contend. For the purposes of exercising discretion as to whether or not to grant the relief to extend time in which to lodge the appeal, in my opinion, the case is sufficiently arguable to exercise that discretion. 31 Accordingly leave will be granted in terms of the application and I will hear counsel on the question of 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 McKerracher. | application for leave to file and serve notice of appeal whether special reasons for granting leave practice and procedure |
The company was de-registered following a resolution of its members at a meeting on 26 August 2003 that it be wound up voluntarily. Mr John Frederick Taylor was appointed a liquidator for that purpose and his fees were paid by agreement between him and the directors of the company. The final accounts of the company, which were prepared by Mr Taylor, were lodged with ASIC on 10 March 2004 and showed that at that time the company had no liabilities and no assets. 2 GC & Associates was a party to the business sale agreements pursuant to which the business of NRS (both the main business and the Western Australian business) was transferred to what is now J P Morgan Portfolio Services Limited. The agreements provided that trade debts owed to NRS at the time of the sale were not included in that sale but were retained by the parties defined as the 'asset vendors', of whom GC & Associates was one. The agreements imposed obligations in respect of the collection of the debts on the purchaser of the business. Those obligations are the subject of a cross-claim in this proceeding, however, being deregistered, GC & Associates was not a party to the cross-claim. 3 The cross-claimants now seek to reinstate the company so that it can be joined as a cross-claimant. The application is brought under s 601AH(2) of the Corporations Act 2001 (Cth) which empowers the Court to make an order that ASIC reinstate the company if the application is made either by a person aggrieved by the deregistration or a former liquidator, and the Court is satisfied that it would be just to do so. No issue has been taken as to whether, in the present circumstances, the applicants on the notice of motion are persons aggrieved by the deregistration of the company; s 601AH(2)(a)(i). It therefore remains for me to consider whether, in all the circumstances, it is just to make the order. 4 The Court's discretion under s 601AH is very wide. The factors to be taken into account in the exercise of that discretion include the circumstances in which the company was de-registered, the purpose in seeking its re-registration and the likely prejudice to any person; Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316 ; (2000) 174 ALR 688 at 693. In this case the purpose of the order is to allow the company to take its place alongside the other asset vendors as a respondent and cross-claimant in the proceedings. As such, its fortunes would stand or fall with the other respondents and cross-claimants. The company's ability to contribute financially to any order made against the respondents would depend on its success in the cross-claim, however there is no suggestion that its position in defending the claims made by the applicants in the main proceeding or in pursuing the cross-claim would differ from that of the other respondents and cross-claimants. At this stage there has been no submission that the company's participation would be likely to add to the costs in the proceeding. The applicant notifies ASIC upon conclusion of the winding up so that the company may be deregistered. Clearly condition 2 above assumes that re-registration of the company would not automatically reinstate Mr Taylor as liquidator and therefore that it would be necessary to appoint a liquidator. 7 There are conflicting authorities as to whether a liquidator of a company who was in office at the time the company was de-registered is automatically reinstated to that office when the company is restored to the register. In Brownlie v TTPM Pty Ltd (2003) 21 ACLC 1204 , Hamilton J held that in such circumstances the liquidator was automatically reinstated and approved a statement to that effect made in A R Keay, McPherson: The Law of Company Liquidation 4 th ed, 1999 at 678; see also Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316 ; (2000) 174 ALR 688 at 697. 8 The opposite conclusion was reached by Barrett J in Ramantanis v G & M Excavations [2003] NSWSC 250 ; (2004) 22 ACLC 22 and Donmastry Pty Ltd v Albarran (2004) 49 ACSR 745. In Ramantanis his Honour noted that the statement in McPherson approved by Hamilton J appeared to have been made by reference to cases under earlier and somewhat different legislation to the present. His Honour noted that the specific provision in s 601AH(5) for the automatic reinstatement as director of a person who was a director of a company immediately before it was deregistered suggests that the deemed continuity of existence of the company is not sufficient to cause a director to resume his former position upon reinstatement of the registration. By analogy his Honour concluded that it followed that re-registration per se was also not sufficient to reinstate a liquidator. Section 601AH(3)(b) empowers the court to make "any order it considers appropriate", when making an order for reinstatement. There are detailed provisions in the Act as to the resignation and replacement of liquidators. If a new liquidator is to be substituted, those provisions should be observed. In Donmastry Barrett J confirmed the view he had expressed in Ramantanis although, as the liquidator at the time of deregistration did not wish to continue in office and had expressly consented to another liquidator being appointed in his place, his Honour acceded to that request. 10 I respectfully agree with Barrett J as to the implication to be drawn from the fact that s 601AH(5) specifically provides for the continuity of directors of a re-registered company. In my view the better construction of the subsection is that on re-registration of a company the liquidator who was in office at the time of his deregistration is not automatically reinstated and therefore, it is necessary for the Court to make a new appointment to take effect on re-registration. I also agree with his Honour that, all other things being equal, it is preferable that the same liquidator be appointed. In the case of GC & Associates the applicants on the notice of motion have tendered a letter dated 14 March 2008 from the former liquidator, Mr Taylor, consenting to be appointed as liquidator of the company and to act as a liquidator if appointed by an order of the Court. Those matters relate to Mr Taylor's existing role in this proceeding. As a member of the firm of Greenwood Challoner & Co, which is the third respondent in the proceeding, Mr Taylor is personally a respondent. Mr Taylor was a shareholder of GC & Associates and, if the company is reinstated he would, by virtue of s 601AH(5) , also be a director. Appointment as a liquidator would give him a fourth role in the proceeding and, in J P Morgan's submission, it may involve him in unacceptable conflict. 13 Mr Stoljar, for J P Morgan, drew my attention to s 532(2)(c)(i) of the Corporations Act which provides that, subject to the section, that a person must not consent to be appointed a liquidator or act as a liquidator of a company if he or she is an officer or employee of that company. Subsection 532(2)(c)(v) imposes the same limitation on a person who is a partner, employer or employee of an officer of the company. Mr Taylor falls within both subsections and therefore, it was submitted, should not be appointed as liquidator. 14 The "Caesar's wife" standard of impartiality and independence for liquidators is established beyond the need for authority, however, if support for the proposition is needed it is not necessary to go beyond Young J's comprehensive discussion of the issue in National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1 at 29-32. Nevertheless, as Mr Stoljar accepted, the mere fact that a proposed liquidator's relationship with the company falls within one or more of the categories listed in s 532(c) does not preclude his or her appointment as the section itself provides that the Court has discretion in the matter. When asked what was the substance of the conflict that J P Morgan fears, Mr Stoljar was not able to put the matter higher than that his client has "an apprehension" that Mr Taylor would find it difficult to reconcile his various roles in the proceedings, particularly his role as liquidator of a company, a contingent creditor of which is his client. 15 In this case the application for reinstatement of the company has been brought for the limited purpose of this litigation. Although, once reinstated, the company exists for all purposes there is no reason to suspect that there is any purpose behind the application other than that stated. It seems to me that, as matters presently stand, the reinstatement of GC & Associates has the effect of preserving the respondents' position without substantive prejudice. The main proceeding here is estimated to be long and complicated and it seems unnecessary to add further expense and delay by requiring a liquidator other than Mr Taylor to be appointed because of a potential conflict that may, in substance, never eventuate. Should the proceeding result in the company being indebted to Mr Stoljar's client, any substantive prejudice can be addressed by an appropriate application to the Court at that stage. I should also note that J P Morgan may also reserve its position in relation to the matters mentioned in [10] above. 16 The applicants on the notice of motion have brought in short minutes of order providing for the re-instatement of GC & Associates Pty Ltd by ASIC; the subsequent appointment of Mr Taylor as liquidator of the company and all ancillary matters including any amendment of the cross-claim, the defence to the cross-claim and any application for security for costs. I shall make orders in accordance with those short minutes. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | reinstatement of the registration a company whether re-registration automatically reinstates previous liquidator of the company whether a liquidator's multiple roles in the proceeding involve him in a potential conflict corporations law |
The Tribunal set aside the decision under review namely, the applicant's ('the Commissioner's) decision to disallow the respondents' objection dated 16 May 2005 and substituted for the decision under review a determination that the respondents, as trustees of the Kalos Metron Charitable Trust ('the Fund'), were entitled to be endorsed as exempt from income tax under Subdiv 50-B of the Income Tax Assessment Act 1997 (Cth) ('the 1997 Act') as at 9 September 2005, with effect from 1 July 2000. The Commissioner's notice of appeal stated that it raised four questions of law (paras (1) --- (4) inclusive) and eight grounds of appeal (paras (5) to (12) inclusive). At the outset of the hearing of the appeal, indeed in the Commissioner's reply submissions filed prior to the hearing, senior counsel for the Commissioner, correctly in my view, abandoned the first issue in [3(1)] above (ground (5) of the notice of appeal) in the face of the reasons of the joint judgment in Word Investments . During the hearing of the appeal, senior counsel for the Commissioner informed me that he had been instructed, again correctly in my view, not to pursue the third issue in [3(3)] above (ground (6) of the notice of appeal). 4) 1997 at 5.69 and 5.70. I hasten to add that the Commissioner's new position on this issue had nothing whatsoever to do with anything the High Court said in Word Investments. Nevertheless, I was informed by senior counsel for the respondents that ground (12) had been abandoned. Senior counsel for the Commissioner did not expressly confirm this, but there was certainly no dissent and no submissions were advanced in support of the ground. The remaining live grounds are in the following terms: The Tribunal erred in law in deciding that the application of part of the fund to payment into an interest offset account which diminished the personal liability of the trustees to the bank in respect of their home loan was an application of that part of the fund 'for the purposes for which it was established' and should have held that such application caused the Respondent to fail to satisfy the requirement in section 50-60. The Tribunal erred in law in concluding that an application of a fund 'substantially in accordance with its constituent terms' satisfies the requirement of section 50-60 that the fund 'is applied for the purposes for which it was established', and should have held that application of part of the fund otherwise than for the purposes for which it was established caused the Respondent to fail to meet the requirement in section 50-60. The Tribunal erred in law in concluding that for the purposes of section 50-60 the application by the accountant to whom part of the funds had been entrusted should not be taken into account and should have concluded that the criterion in sec 50-60 is to be applied to the objective application of the funds and not to 'the conduct of the trustees themselves'. The Tribunal erred in law in not deciding that payment of part of the fund into an account maintained by a relative of the Respondents on terms that the interest on the account be paid to the relative and not to the fund was an application of the fund otherwise than for the purposes for which it was established and should have decided that the payment caused the fund to fail the condition in sec 50-60. The Tribunal erred in law in deciding that the application of part of the fund to the making of a loan to Rocfish Pty Ltd on the terms found by the Tribunal at paragraph [111] of its reasons was an application of that part of the fund 'for the purposes for which it was established' and should have held that such application caused the Respondent to fail to satisfy the requirement in section 50-60. Significantly, there was no ground that directly raised what seemed to be, if the Commissioner's written and oral submissions can be taken as a guide, at the forefront of the Commissioner's challenge to the Tribunal's decision: the criteria or test applied by the Tribunal in determining whether the primary facts satisfy the conclusion required to be drawn for exemption from income tax under s 50-60, namely, that the fund 'is applied' for the purposes for which it was established, although arguably it underlies all remaining live grounds. The Commissioner submitted that whether or not one can draw that conclusion is a matter of objective fact untrammelled by the subjective intentions of the trustees or others having the carriage of the administration of the Fund. He challenged the approach of the Tribunal which is perhaps best summarised at [50] and [51] of its reasons: ... But I do consider that at least in its application to conduct involving the management and administration of the fund the 'is applied' criterion is directed towards an overall characterisation of the conduct of the fund and does not require satisfaction about the appropriateness of every action of the trustees and those administering the trust on their behalf. Where the conduct under consideration is of this kind (that is the administration, as distinct from the distribution, of the fund) an examination of the purpose for which it has been undertaken is necessarily of a general kind, and must properly take into account the totality of the fund's activities. This does not give priority to the trustee's merely subjective intentions, motives and beliefs but, contrary to the Commissioner's contention, neither are they wholly irrelevant. The permissible breadth of relevant considerations recognises that ultimate purposes may be pursued in different ways and with different degrees of immediacy. It also recognises that particular shortcomings in the administration of a fund, including some kinds of failure to comply with the terms of the trust, will not necessarily require, and may not even justify, a conclusion that the fund is applied for purposes other than those for which it was established. Returning to what I have described as the competing generalities, it is appropriate to apply the 'is applied' criterion by enquiring whether the fund is administered substantially in accordance with its constituent terms. Substantial compliance will ordinarily provide some evidence that the fund is being held for its intended purpose and, at least in the absence of contrary indications, justify an inference that the fund 'is applied' for its established purposes. The strength of the inference in any particular case will depend on the degree of compliance and the nature, extent and reason for any non-compliance. This approach to the 'is applied' criterion is essentially that adopted by Oliver J in IRC v Helen Slater Charitable Trust Ltd [1981] Ch 79; [1982] Ch 49. It is also accords with the view that where a transaction or conduct is within the powers of trustees or directors, it will not result in a relevant misapplication of property under their control unless the court is satisfied that it has an intended operation 'other than ancillary to the conferring of benefits upon the objects of the trust' or the purposes of the company: Bray v The Commissioner of Taxation [1978] HCA 18 ; (1977-1978) 140 CLR 560 at 577 per Jacobs J; see also Ngurli Ltd v McCann [1953] HCA 39 ; (1953) 90 CLR 425 at 440; and the circumstances tend to indicate a clear purpose of achieving some other extraneous benefit: see Case X60 (1990) ATC 438 at 446. The difficulty of arriving at such a conclusion, and the extent to which its appropriateness is likely to be influenced by impressionistic assessment of the overall good faith of the trustee, is illustrated by comparison of the comments made by Taylor J in Driclad Pty Ltd v Federal Commissioner of Taxation [1968] HCA 91 ; (1966-1968) 121 CLR 45 at 61 with the same judge's comments in the context of the different circumstances in Compton v The Commissioner of Taxation [1966] HCA 1 ; (1965) 116 CLR 233 at 239. The difficulty is not avoided, even where the legislative criterion requires exclusivity of purpose, merely by demonstrating that parts of the fund has been invested in breach of the terms of the constituent trust: Case X60 (1990) ATC 438 at 447. A breach of trust is a relevant, but not necessarily decisive, consideration in determining whether the fund 'is applied' for the required purposes: per Owen J in Mahoney v Commissioner of Taxation (1965) 39 ALJR at 64. As noted in [9] above, the process of reasoning at [50] of the Tribunal's reasons is not expressly raised as a ground of appeal, although the reasoning at [51] is undoubtedly raised by ground (8). No point was taken by the respondents as to any deficiency in the Commissioner's entitlement to advance the argument he did and, in the circumstances, it would be inappropriate to now hold that there was any impediment to his doing so. In any event, as I have already observed at [9] above, what is at the forefront of the Commissioner's challenge to the Tribunal's decision arguably underlies all remaining live grounds. Finally, during the hearing of the appeal I was informed by senior counsel for the Commissioner that, contrary to the prayer for relief at para (3) of the notice of appeal namely, that the respondents pay the Commissioner's costs of the appeal, the Commissioner would be paying all costs of the appeal and I accordingly granted the Commissioner leave to amend his notice of appeal by striking out the relevant paragraph. The trustees are husband and wife. Mrs Bargwanna's father, Mr Craik, is a partially retired chartered accountant who has administered the Fund's accounting affairs and provided advice to the trustees since the Fund's establishment. Mr Craik made a gift of $160,000 to the trustees of the Fund in January 2002. From June 2002, Mr Craik has provided various accounting services to Pacific Air Express Australia Pty Ltd ('PAEA'), an airline company, on behalf of the Fund, at no cost to the Fund, to enable the Fund to derive substantial income from a contract it had with PAEA for the provision of such services. In each of the years ended 30 June 2003 to 2007, accounting fees in an annual amount of some $100,000 were paid by PAEA for the services performed by Mr Craik and treated as income of the Fund. The offset account was a non-interest bearing bank account maintained by the respondents personally with the National Bank, the balance of which was deducted from the outstanding balance of their home loan account in calculating the interest payable by them on their home loan (see [21] and [22] below). The income arising from the trust account was appropriated by Mr Craik for his own benefit or that of his accounting practice, pursuant to what was accepted by the Tribunal as a standard arrangement he had with all of his clients to forgo interest on funds in his trust account. Amounts held for clients of the accounting practice were applied for the benefit of other clients; at times the balance of the trust account was less than the amount recorded as held for the benefit of the respondents. A sum paid into the trust account by Mr Craik shortly before the Tribunal hearing as compensatory 'interest' was wrongly calculated. As partial consideration for the making of the advance, the respondents (as trustees) applied $210,000 of the Fund's moneys by payment into an interest offset account, under which no interest accrued to the Fund and the interest due on their personal housing loan was reduced. The balance of the offset account was maintained at an amount equal to the home loan debt. Further amounts were paid into and (for renovations) withdrawn from the offset account by the respondents on their own account, and in withdrawing funds from that account the respondents exceeded the amount they had paid into the account and hence effectively withdrew Fund moneys for their own purposes. In June 2007 an amount representing a 'shortfall' in the Fund's funds, some $40,954, was credited to the Fund's trust ledger account by Mr Craik. On 24 September 2007 Mr Craik paid a further $6,706.22 into the Fund's bank account as 'compensation' to the Fund. The accountant and the wife trustee did not regard the substance of the interest offset arrangement, and the interest offset account in particular, as disclosing a loan by the Fund to the trustees personally. The husband trustee, on the other hand, had some understanding that the interest offset account was effectively a loan to the trustees personally. The arrangement as proposed, which need not have involved the trustees having direct personal access to the Fund's deposit account, would have had substantially the same effect, save for the increased interest rate, as a term deposit with the bank. In these circumstances the transaction as proposed was an ordinary investment transaction for the benefit of the trust and was a proper application of its funds consistent with the trust purposes. Those circumstances include the fact that from the outset the trustees accepted an interest obligation in relation to the whole of the Fund's deposit amount, and that this was intended to advantage the Fund by earning interest at a higher rate. They also include both the subsequent accrual of interest, and its payment by the accountant. In addition, the evidence establishes that although the male trustee's withdrawals from the interest offset account contributed to a temporary shortfall in the balance of the Fund's deposit, that shortfall was unintended and later remedied by the accountant. These circumstances justify the conclusion that the interest offset transaction was in the nature of an ordinary commercial investment for the benefit of the trust fund itself. They are not implicated in the accountant's apparent failure to apply the funds in his trust bank account exclusively for the benefit of each of the persons entitled to them. Consequently that failure does not contradict the inference, otherwise required by the general evidence about the conduct of the Fund's affairs, that the fund was applied for the purposes for which it was established. In these circumstances, the occurrence of those debit balances, or the shortfalls revealed in the spreadsheet exercise, does not evidence that the Fund was applied for purposes other than those for which it was established. But the basic and dominant purpose of his administration remained those for which the Fund was established. It provided for 7% interest that was payable annually in arrears. It contemplated interest default and permitted capitalisation. No interest was in fact paid throughout the currency of the loan. At that time the accountant provided Rocfish Pty Ltd with a replacement loan from his own funds and the loan was fully repaid to the Fund. The Commissioner stresses that, despite the apparently religious nature or association of Rocfish Pty Ltd's business, the accountant said he regarded the loan as a purely commercial transaction. But it is necessary to take into account the nature of Rocfish Pty Ltd's business and the fact that its religious connotations apparently favourably influenced both the accountant and the trustees. To recognise the relevance of this consideration to their decision is not to contradict the accountant's evidence that he regarded the loan as a proper commercial investment. What it does is provide an insight into some of the reasoning that was likely to have influenced his assessment of the loan as a sound commercial transaction, but one that might not permit the consistent timely payment of interest during the whole of the loan term. The accountant's evidence that he regarded the loan as a sound and proper investment for the Fund to make should, in my opinion, be accepted. As the principal adviser to the Fund's trustees, and in practical reality, the Fund's principal benefactor, he is hardly likely to have knowingly hazarded a significant part of the fund's assets in a doubtful transaction. Moreover there is no suggestion that either the accountant or the trustees benefited in any way, directly or indirectly, from the loan advance to Rocfish Pty Ltd. In these circumstances, whilst objective assessment of the Rocfish Pty Ltd advance suggests that its commerciality was questionable and its favourable resolution perhaps fortuitous, the evidence does not warrant rejection of the accountant's evidence that he regarded it a proper investment in conformity with the trust purposes. The circumstances of the loan do not evidence that the Fund was applied other than for the purposes for which it was established. Thus an exemption which exists for the purpose of encouraging, rewarding or protecting some class of activity is to be given a liberal rather than a narrow construction and application: see Commissioner of Taxation v Reynolds Australia Alumina Ltd (1987) 18 FCR 29 at 35 per Beaumont J and at 46 --- 47 per Burchett J; Diethelm Manufacturing Pty Ltd v Commissioner of Taxation [1993] FCA 437 ; (1993) 44 FCR 450 at 457 per French J. But in the case of a provision which confers an exemption upon a particular kind of body or fund which meets certain requirements, Parliament's purpose is not promoted by construing the provision in a manner favourable to the body or fund referred to in it: see TAB at 323C per Hill J. Indeed, there is much to be said for the view that the privileged status of exemption from income tax on the income of a fund which aspires to that status demands strict adherence to the requirements that must be met before that status is conferred; in the present case, the requirements of s 50-5, Item 1.5B, and s 50-60. General or holistic examination or assessments of compliance with, or satisfaction of, those requirements 'directed towards an overall characterisation of the conduct of the fund' ([50] of the Tribunal's reasons) runs the risk of detracting from, rather than promoting, Parliament's purpose. The text of s 50-60 is quite clear. It requires that 'the fund is applied for the purposes for which it was established'. Subject to what is said at [31] below, the intention of the trustees of a fund, where the purpose for which an application of the whole or part of the fund is in question, is not relevant although the intention of the settlor and other promoters of the fund is undoubtedly relevant to the s 50-5 requirement that the fund be established for public charitable purposes (Item 1.5B). On the other hand, s 50-60 applies to item 1.5A in the table in s 50-5 (a 'trust covered by para 50-80(1)(c)') and to item 1.5B (a 'fund established in Australia for public charitable purposes by will or instrument of trust (and not covered by item 1.5 or 1.5A)'). And s 50-57 applies to item 1.5 (a 'fund established for public charitable purposes by will before 1 July 1997'). Further, s 50-65 applies to item 1.6 (a 'fund established to enable scientific research to be conducted by or in conjunction with a public university or public hospital'). In context the expression 'fund' means a fund held by a trustee for charitable purposes. The trust covered by s 50-60, and the funds covered by ss 50-57, 50-60 and 50-65, continue to have their status as a trust or a fund even if the trustees are acting in breach of trust and not applying the assets to the relevant trust or fund purposes. Hence it was necessary to do in relation to ss 50-57, 50-60 and 50-65 what it was not necessary to do in relation to s 50-50, namely make express provision for loss of tax exemption where the trust or fund was not applied for the purposes for which it was established. As Word submitted, the difference in drafting flows from the fact that ss 50-57, 50-60 and 50-65 (unlike s 50-50) speak of funds or trusts which were 'established' for certain purposes, and the legislation requires not merely that they be established at the outset for those purposes, but also that their assets be applied for those purposes from time to time thereafter. If the legislature had intended that substantially applied for those purposes was sufficient, it would have been easy enough to say so. Where the purpose of an application of moneys of a fund is in question, the intention of the trustees or manager/administrator in applying the moneys may be relevant where there is an incidental or inadvertent misapplication of part of those moneys, but that is not this case. The assailed applications in this case were intentional applications; in at least two of the cases for significant sums of money representing substantial proportions of the Fund; and carried significant benefits for persons who were clearly not objects within the ambit of the purposes for which the Fund was established. The respondents, who were the trustees of the Fund, did not pay interest to the Fund, either concurrently with the effective reduction of their interest liability to the Bank or, it seems, at any time afterwards. Compensation to the Fund for the interest foregone was effected by and through the instrumentality of Mr Craik. But this does not, in my view, cure the misapplication of the Fund's funds to purposes other than purposes for which the Fund was established. Putting to one side the 'irregularities' in his recording of his trust account which made it impossible to ascertain what amount of money was available to answer the Fund's claims, such failure to pay interest and Mr Craik's application of trust account funds to payment of debit balances recorded in such accounts, even if small as found by the Tribunal '...over the whole 4 year period was less than $1000' ([82]) --- and, albeit late in the peace, compensated by Mr Craik, does not, in my view, cure or exculpate the intentional misapplication of the Fund's funds, even if Mr Craik did not intend to benefit himself. On the other hand, if it were the only assailed transaction, I would not be prepared to answer that issue in the negative. In the circumstances of my view in relation to the other assailed transactions, in particular the interest-offset transaction, my view of the transaction does not matter. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | entitlement to be endorsed as exempt from income tax under subdiv 50-b of income tax assessment act 1997 (cth) appeal from decision of administrative appeals tribunal that fund entitled to be so endorsed whether fund applied for the purposes for which it was established within s 50-60 correct test: relevance of intention of settlor/trustees and delegates. income tax |
The applicants therefore apply pursuant to ss 405 , 408 , 409 and 414 of the Act and ss 21 and 23 of the Federal Court of Australia Act 1976 (Cth) for declarations and other relief in respect of conduct allegedly engaged in by Luxottica in contravention of ss 332, 340(2), 341(1) and 343(1) of the Act. The second respondent ('the Commission') submits to any order the Court might make, save as to costs. The second applicant is an employee of Luxottica and is a member and workplace representative of the first applicant. The applicants will henceforth collectively be referred to as 'the AMWU. ' Luxottica is engaged in the business of the manufacture, supply and retail of optical products. The manufacturing activities of Luxottica are conducted under the business name of Eyebiz in laboratories situated at Unit 2, 41-43 Riverside Road, Chipping Norton, New South Wales ('the laboratory'). At these premises spectacle prescriptions are made in accordance with orders submitted by numerous retail outlets operated by Luxottica. The manufacturing activities engaged in at the laboratory include the cutting, grinding and polishing of the raw product to produce a lens which is made to prescription, and the fitting of those lenses to spectacle frames in fulfilment of orders. The AMWU has 77 members employed in the laboratory as optical technicians, tradespersons, process workers, maintenance employees and administrative employees. Approximately 257 employees are engaged at the laboratory. Luxottica also conducts retail operations at approximately 600 retail stores ('the retail outlets') under various trade names such as OPSM, Budget Eyewear, Laubman and Pank, Sunglass Hut and Oakley stores. Approximately 1,571 employees are engaged in Luxottica's retail operations. The Luxottica Retail Australia Optical Enterprise Agreement 2006-2009 ('the Retail Agreement') governs the industrial relations of the employees engaged at the laboratory and in most of the retail outlets. Such agreement expires on 30 September 2009. Luxottica conducts a distribution centre at its warehouse located at Unit 2, 31-33 Mavis Street, Revesby. Approximately 64 employees are engaged in such premises. In respect of their employment, the Luxottica Retail Distribution Centre Enterprise Agreement 2006 ('the Distribution Agreement') is operative. Such agreement expires on 30 June 2009. In February 2009 Luxottica proposed the making of a new industrial agreement to commence in 2009 to be known as the Luxottica Retail Australia Enterprise Agreement 2009-2012 ('the proposed agreement') in respect of all of its employees engaged at the laboratory; the Revesby distribution centre; and the various retail outlets. The proposed agreement was considered by all employees at information sessions or ' road shows ' held on 5 and 6 March 2009 and in early May 2009. Jason Green, an employee who works in the laboratory, and other employees attended the ' road show ' in early May 2009. During the meeting he recalls the question being asked ' what happens if we vote no? [to the agreement]'. Mr Green recalls that Ms Victoria Mackenzie-Andrew, the Senior Human Recourses Operations Manager of Luxottica, allegedly responded ' We don't want to go down that path, but if you vote no you'll go back to the award '. Ms Mackenzie-Andrew has no recollection of such question being asked and denies making such statement, but the Court will proceed on the assumption that the statement was made. A pamphlet entitled ' Frequently Asked Questions and Answers ' ('the information sheet') was simultaneously distributed to employees in respect of the proposed agreement. A: We really want to provide you with an EA that you want to vote 'Yes' for however in the case of a 'No' vote, we would revert to the relevant Industry Award to determine the employment conditions for the relevant employees. On 15 May 2009 the proposed agreement was distributed to Luxottica's employees. On 18 May 2009 the Commission forwarded ballot papers, including the above information sheet, by post to employees of Luxottica in Western Australia and other remote locations and to all other employees who would be subject to the proposed agreement on 19 May 2009. Due to a delay in the process, the voting period was extended to 10 am on 29 May 2009. These proceedings were commenced by an application seeking urgent injunctive relief on 26 May 2009. The proceedings were returnable before the Court on 28 May 2009. On that day the application was set down for hearing to commence on Monday 1 June 2009 for a final hearing. At the same time the Commission was directed, by consent of the parties, to refrain from opening the ballot votes submitted for the ballot. Because of certain time constraints, the parties seek an early determination. The AMWU seeks to restrain the continuation of the ballot on two grounds. Firstly, it claims that employees have not had a ' reasonable opportunity to decide whether they want to approve the agreement ' as required by s 340(2) of the Act. Secondly, the AMWU claims that Luxottica's business is a multiple-business within s 331 of the Act and accordingly the Commission cannot approve the proposed agreement since it is not a single business agreement as defined in s 328 of Act. The AMWU claims that the statements inferred that if a 'no' vote resulted from the ballot, it would follow as a direct and immediate consequence of such vote that award conditions would operate in respect of Luxottica employees. The AMWU submits that, contrary to the statements, if a 'no' vote resulted it would have the direct and immediate consequence that the extant Retail Agreement and Distribution Agreement would continue to operate. The Retail Agreement and the Distribution Agreement which currently regulate the industrial relations between the employees and Luxottica are each employee collective agreements made in accordance with s 327 of the Act. As such, each agreement will continue to operate until it is terminated in accordance with s 381 of the Act. Even though each agreement has a nominal expiry date, they will continue in force unless action is taken to have the agreement terminated, it is replaced by another agreement, it is found not to pass the no-disadvantage test or the Court declares it to be void. It follows that the existing Retail Agreement and Distribution Agreement remain current until one of the events referred to in s 347(4) occurs. The AMWU submits that the award rates of pay for employees are substantially less than those contained in the proposed agreement. Accordingly, the AMWU submits that the statements are misleading and have deprived employees of ' a reasonable opportunity to decide whether they want to approve the agreement '. As an alternate submission that a ' reasonable opportunity ' has not been provided, the AMWU claim that those employees engaged by Luxottica at the laboratory are being denied such opportunity because their vote would be subsumed by the majority of other employees who are engaged in the retail outlets of Luxottica. A petition was circulated and signed by 209 persons at the laboratory, indicating a preference to have a separate proposed agreement. The most generous rates of pay fixed by the Award in respect of an optical mechanic vary between $630.40 and $658. In contrast, the rates of pay for such classification of employees under the Retail Agreement are approximately $772.47 to $886.51. Accordingly the Award rates in respect of such employees are less than that prescribed by the Retail Agreement. Under the proposed agreement the wage rates for the same classification would increase to between $908.67 and $956.75, but the new rates would not take effect (assuming the proposed agreement is adopted and found valid) until 1 March 2010. The AMWU submits that the Court can treat as self-evident the fact that the statements would convey the impression to the employees that in the event of a 'no' vote they would fall back onto the relevant Award and that the pay and conditions thereof are less advantageous to them. It submits that the evidence does not establish that there is any falsehood in the statements because it has not been shown that the company does not have the intention to revert to Award conditions in the event of a 'no' vote. As to the AMWU's claim of the direct and immediate effect of the vote, Luxottica submits that the AMWU has not proven that there is any temporal scope to the statements. Given this circumstance and since it cannot be shown that Luxottica did not intend to revert to award conditions, the AMWU is unable to establish that the statements were misleading. Further, Luxottica submits that there has been no evidence provided by the AMWU to establish that any employees were misled by the statements. We consider that his Honour was correct to do so. An employee who is given false and misleading information that may affect his or her decision on whether to approve an agreement is, by the very provision of that information, denied a reasonable opportunity to decide whether to approve the agreement. That is, because there is information available to the employee which has the capacity to distract him or her on voting on the agreement and from considering its actual effect. A decision that is capable of being affected by false and misleading information is not a decision about approving the agreement, but a decision about extraneous matters not given effect to by the agreement. That is, whether, on the balance of probabilities, the inference is established that the statements were inaccurate. In Ricochet Pty Ltd and Others v Equity Trustees Executor and Agency Company Ltd [1993] FCA 99 ; (1993) 41 FCR 229 Lockhart, Gummow and French JJ rejected the submission that, in accordance with the observations of Wilson J in Gould v Vaggelas (1985) 157 CLR 215 at 236-238 the trial judge was bound to infer, in the absence of evidence to the contrary, that the appellants had been induced by the representations to enter into the lease in question. Whether they are misleading depends on the scope of the question ' what happens if I vote no? '. If the question is to be construed as referring only to the immediate outcome of the vote, then the statements made were misleading, in view of the fact that if the vote failed the extant Retail Agreement and Distribution Agreement would continue to apply. However, both the Retail Agreement and the Distribution Agreement are due to expire within three months, by 30 June 2009 and 30 September 2009 respectively. Upon expiry Luxottica is entitled to apply to terminate both Agreements unilaterally pursuant s 392 of the Act. After such termination the relevant Award will apply to laboratory employees. Therefore, while Luxottica must initiate positive steps to cause the Award to apply, such course is available to the company. It follows that if the question ' what happens if I vote no? ' is directed to the future regulation of the industrial relations between the employees and Luxottica, the answer is not misleading. Mr Green provided no evidence of the effect of the statement contained in the information sheet or of the statement made to him by Ms Mackenzie-Andrew other than his belief that the Award would apply. He did not refer to having any knowledge whatsoever of the conditions contained in the Award. Nor does he state that he would be disadvantaged if the Award conditions applied, and that this belief caused him to vote in favour of the proposed agreement. It is not even apparent whether he was influenced to vote in favour or against the proposed agreement. Nor, more significantly, did Mr Green specifically say that he understood that statements to say that the reversion to the Award would be direct and immediate. Ms Mackenzie-Andrew was cross-examined on various issues, but no questions were directed to her concerning the accuracy of the statements, nor were any questions asked of her relating to Luxottica's intention if a 'no' vote resulted. Whilst the AMWU submits that the statement conveyed that a reversion to the Award was a direct and immediate consequence of a 'no' vote, such proposition was never put to Ms Mackenzie-Andrew. The AMWU has not adduced any evidence that the stated intention of Luxottica is not genuine. In these circumstances there is no reason for the Court to doubt the accuracy of the statements made by Luxottica. Luxottica and its employees were engaged in the formulation of a new industrial relationship which would operate in the future. In this context the Court infers that it is more likely than not that the question contained in the information sheet and the question asked of Ms Mackenzie-Andrew were directed towards the future industrial relationship between the parties, rather than the direct and immediate outcome of a 'no' vote in the ballot. In these circumstances the Court finds that the statements were not misleading. If, contrary to this finding, the statements were misleading the Court would be required to consider the ' likely effect ' of such misleading statement. The onus of proof in establishing the employees would have been ' distracted ' by such statements or that the ' likely effect ' would have been that employees were misled must be established to the reasonable satisfaction of the Court: see Dixon CJ in Jones v Dunkel and Another [1959] HCA 8 ; (1959) 101 CLR 298 at 304-305, adopted by Stephen, Mason, Aickin and Wilson JJ in West v Government Insurance Office of New South Wales [1981] HCA 38 ; (1981) 148 CLR 62 at 66. Mr Green's statement contained at paragraph seven of his affidavit, reproduced at [19] above, is the only evidence that any employee might have been misled, assuming the statements to be wrong. The Court is mindful of the finding of Graham J at [49] in Shop, Distributive and Allied Employees' Association v Karellas Investments Pty Ltd (No. 2) (2007) 166 IR 51 (' Karellas No. The Court could conclude, upon a review and comparison between the Award and the current or proposed agreement that the rates of pay presented by the Award are clearly less advantageous to the employees of Luxottica, and that if employees believed that Luxottica would revert to the Award, they would be likely to be misled into voting for the agreement proposed. However, the Court must have some evidence before it that the employees were aware that the proposed agreement was clearly more advantageous to the Award, that is, whether the employees were aware of the content of the Award. In Karellas No. 1 the information provided to the employees was sufficient to enable the Court to find that it was misleading and was likely to ' distract ' the employees. For example, the employees were told the agreement would provide a pay rise over the previous agreement when it did not. Graham J had before him all the evidence necessary to decide the ' likely effect ' of such misinformation upon the minds of the employees. It was self-evident that the misinformation was likely to have provided an incentive to vote for the agreement. Without similar evidence the Court is unable find the ' likely effect ' of the alleged misinformation, since any such finding would be wholly speculative. The evidence is inadequate to warrant a finding that the statements caused employees to be distracted in their voting. In short, the Court is, on the evidence, unable to find that ' there is information available to the employee which has the capacity to distract him or her on voting on the agreement and from considering its actual effect ' (see Karellas No 2 at [54]) without knowing whether the employees knew of the content of the Award. More than mere conjecture is required to establish the facts relied upon in order that the Court might grant relief: see TNT Management Pty Limited v Brooks (1979) 23 ALR 345 per Gibbs CJ at 350; West v Government Insurance Office of NSW at 66. Mr Green's affidavit merely makes reference to the Award without any indication of his knowledge of its contents. This vital aspect is left entirely to speculation. For the above reasons, the claim that the information provided by Luxottica to its employees was misleading thereby failing to provide them a ' reasonable opportunity to decide ' fails. That is, their vote would be diluted in consequence of the votes of the other employees. Whilst this submission was not advanced to any significant degree, the Court observes that in National Union of Workers v Coles CDC Eastern Creek Pty Limited [2009] FCA 523 Graham J considered a submission to the same effect. His Honour at [50] dismissed the fact that certain employees engaged at a particular location would not have a ' reasonable opportunity to decide ' because of their voting power. His Honour found such claim lacked any substance. No authority has been quoted in support of such proposition, nor is there any evidence to support the submission that Luxottica had, as asserted by the AMWU, ' deliberately ' structured the proposed agreement to deny the laboratory employees a ' reasonable opportunity ' to decide to approve or to reject the proposed agreement. The claim that the vote of the laboratory employees would be completely irrelevant because they comprised a minority of the total number of employees is without evidential foundation. Pursuant to s 340(2)(b) of the Act an employee collective agreement may be made provided it is approved by a majority of employees. The vote of each member is of equal value and pursuant to s 340(2)(b)(i) of the Act the majority of those persons who vote will determine whether the agreement is to be made. For the above reason the Court rejects the submissions that a reasonable opportunity has not been afforded to the employees of Luxottica to vote in respect of the proposed agreement. The AMWU accordingly submits that the business of Luxottica is in effect three businesses comprising the laboratory, the distribution centre and the retail outlets. As a consequence, the AMWU submits that the proposed agreement cannot be submitted to the Workplace Authority Director as a ' single business agreement ' in accordance with s 342 of the Act. The AMWU further submits that if Luxottica is held not to be a 'single business' for the purpose of s 328 of the Act and the proposed agreement is not a 'single business agreement', it cannot be made and lodged without authorisation of the Workplace Authority Director. Instead a multiple-business agreement authorisation would be required as provided for in s 332 of the Act. It relies upon the oral evidence of Michael Glenn Fretwell, Group Manufacturing Manager for Luxottica, and of Ms Mackenzie-Andrew and documents produced by Luxottica being a profit and loss spreadsheet ('the spreadsheet') dated December 2008, a financial forecast and a financial summary relating to the laboratory. Such documents and evidence are relied upon as establishing that Luxottica conducts a single business. In National Union of Workers v Coles CDC Graham J considered the prospect of a multiple-business at [44]. Would those together constitute a single business, each being 'part of a single business' or, would they be three separate single businesses? Whilst it may be arguable that the three businesses were, for the purposes of the Act, a single business, with the answer to the question depending upon the unique facts of the given case, I am inclined to the view that there would be three separate 'single businesses' for the purposes of the Act. A record is also maintained relating to service and material charges made against a particular order received from a retail outlet. The material costs relate to the provision of spectacles and lenses which are ground, coated, edged and assembled to frames. The spreadsheet records all items of expenditure and notional income. Luxottica produced a budget forecast entitled ' Eyebiz Q2 Forecast ' which was a forecast and budget for labour costs and unit costs being the costs incurred in the processing of each order. The laboratory does not maintain any bank account and if cash is required for its operations it is supplied by a Luxottica retail cheque which is then cashed by the laboratory. No cash transactions take place between the retail outlets and the laboratory. Instead, an electronic record is maintained by the laboratory of the charges made for each order fulfilled by the laboratory. Mr Fretwell said that there was no pricing on any document which might accompany the order returned to the retail outlet. Rather, the costing is internal and nominal, and is used for ensuring that the laboratory is meeting its performance targets by matching its expenses to a notional 'profit' for the service provided to the retailer. Further, the laboratory only services orders placed from retail outlets operated by Luxottica or by one franchised retail outlet. That is, the laboratory does not provide any service to, and derives no profit from, eyewear retailers not owned or franchised by Luxottica. In the case of a commercial enterprise, identifying the employer's "business" will usually require identification both of the particular activity that is pursued and of the tangible and intangible assets that are used in that pursuit. The "business" of an employer will be identified as the assets that the employer uses in the pursuit of the particular activity. It is the assets used in that way that can be assigned or transmitted and it is to the assets used in that way that an employer can be a successor. At [3] the Full Bench observed that the evidence revealed that each of the five businesses conducted by the employer had separate resources, budgets, profits, employees, cost centres and billing centres. The respondent contended that the business of the employer was 'a multiple-business '. The Full Bench observed several obstacles with the respondent's submission. Counsel were unable to point to a single instance of a multiple-business agreement applying to only one employer. It would also introduce an element of unpredictability and caprice into the application of the agreement-making provisions depending upon the operating structure used by the employer. The interpretation would also give rise to a conflict between the operation of the multiple-business provisions and the definition of single business in s 322(1)(a). The terms "business, project or undertaking" in s 322(1)(a) should not be given a technical meaning. We think that the term "business" and perhaps also the term "undertaking" are capable of referring to the whole of the operations of one employer. While management jargon might support a narrower view, we think it is consistent with normal usage to describe the disparate operations of a single employer as that employer's business. The laboratory is entirely dependent upon Luxottica for payment of such expenses on a daily basis and the laboratory has no separate bank account. There is no evidence that the laboratory has a separate management structure to that of the other operations conducted by Luxottica. Nor are there any financial records to suggest that it is a separate employer having a personality of its own. In these circumstances the Court concludes that the laboratory operates, for administrative purposes, as an internal division of Luxottica's business and that Luxottica operates as a single business. For these reasons the AMWU's submission that the proposed agreement would not constitute an employee collective agreement within a single business within the meaning of s 327 of the Act does not succeed. In particular, the respondents relied upon the observations of Dawson J in Oil Basins Limited v The Commonwealth of Australia and Other [1993] HCA 60 ; (1993) 178 CLR 643 at 649. In view of the findings of the Court made above it is unnecessary for the Court to consider the question whether the Court would, if either of the AMWU's submissions had been upheld, have had power either under the Act or pursuant to the Federal Court of Australia Act to grant injunctive or declaratory relief. | ballot process to adopt new workplace agreement whether employees had a 'reasonable opportunity to decide whether to accept' whether statements made by employer were misleading whether likely effect of statements would be that employees were misled such as to deny 'reasonable opportunity to decide' whether votes from one part of business would be diluted resulting in 'no reasonable opportunity to decide' ballot process to adopt new workplace agreement whether business single business or multiple-business whether business was required to seek approval to lodge multiple-business agreement industrial law industrial law |
He alleges they were defective because after a period of time they began to tarnish. The cufflinks were replaced but the replacement cufflinks also were suggested to be defective for the same reason. The respondent ('the Commonwealth') has offered to replace the cufflinks again or to refund Mr Croker the $50 purchase price. Mr Croker prefers to litigate. Mr Croker sought to commence proceedings in relation to the alleged defect in various courts and tribunals which included the New South Wales Consumer, Trader and Tenancy Tribunal, the Supreme Court of New South Wales and the High Court of Australia. Each of those proceedings was dismissed. On 19 December 2006 Mr Croker commenced proceedings in this Court. On 6 February 2007 the proceedings were transferred to the Federal Magistrates Court of Australia ('FMCA'). 2 On 14 August 2007 the FMCA refused to grant a stay of the proceedings pending a further proposed application to the High Court and ordered Mr Croker to provide security for costs in favour of the Commonwealth before his case proceeded further. Some other procedural orders were made. Mr Croker has sought leave to appeal against 'the order' made on that day. Without limiting the Court's overall discretion, the question to be addressed is whether, in all the circumstances, the decision under challenge is attended with sufficient doubt to warrant it being reconsidered and whether substantial injustice would result if leave to appeal was refused, supposing the decision to be wrong. 7 At the commencement of proceedings to deal with his application for leave to appeal Mr Croker sought an adjournment so that he might have further time to prepare. The application for an adjournment was not consented to. I refused it. This is Mr Croker's second application for leave to appeal against interlocutory orders made in the present proceedings before the FMCA. In Croker v Commonwealth of Australia [2007] FCA 831 , when dismissing his first application, Edmonds J referred (at [4]) to the test to be applied in the disposition of such an application. In my view Mr Croker had ample opportunity to prepare himself to address the orders with respect to which he seeks leave to appeal in the light of the test to be applied. I am over the age of eighteen (18) and subject to no infirmity, which would preclude me from recollecting or recounting the information, set forth in this Affidavit. I am the Applicant in the case of Clayton Robert Croker v. Commonwealth of Australia in the Federal Court of Australia This Affidavit is being submitted in support of that application and to provide evidence demonstrating that the Federal Court of Australia has jurisdiction over that application. The appeal is brought pursuant to the Federal Court Australia Act 1976 (Cth) s 24(1)(d). Clayton Robert Croker, I am a citizen of the State of New South Wales within the Commonwealth of Australia and a qualified paralegal as of the 7/7/2001. I am a student, Curtin University of Technology and Sydney Institute of Technology. I have the right to sue as a natural person under the laws of the Commonwealth of Australia. Commonwealth of Australia, High Court of Australia, is the pinnacle of the Australian justice system and the supplier of the official commemorative centenary 1903 --- 2003 products. The tribunal can be sued under the laws of the Commonwealth of Australia. It is alleged the orders are not in the public interest; cases of public interest, importance or complexity, should be heard without extra costs to the applicant or being procrastinated by unnecessary litigation. It is alleged the orders are not relevant to the subject matter of the undertaking; my financial position bears no relevance to the subject matter of consumer protection in which the case is brought. It is alleged the application has high prospects of success; the application should have an out come in which it is favourable to the applicant. It is alleged the orders manifest a gross miscarriage of justice. The returning of the ordered documents is not in the interest of justice or of judicial importance and therefore manifests a gross miscarriage of justice. It is alleged that the Federal Court of Australia is a more appropriate court for cases of public interest, importance or complexity. The case should be heard in this honourable court in the interests of the administration of justice. I confess that there are parts of the affidavit which I do not understand at all. Leave to appeal was refused by Edmonds J. The Federal Magistrate records that Mr Croker has never complied with the requirement for him to produce the documents identified in Order (1) made on 23 March 2007. Mr Croker informed me at the hearing of his application that he has still not complied with the order made on 23 March 2007. The Commonwealth however, as required, complied with Order (3) and filed a motion seeking summary dismissal of the proceedings as well as seeking other orders. I can see no merit in any suggestion that the hearing in the FMCA to deal with the notice of motion filed by the Commonwealth should have been stayed. The Federal Magistrate records that there was no evidence before him that any application in the High Court had been filed or would be filed. He records that the Commonwealth had complied with the order that it file its notice of motion by 5 April 2007. It was initially to be dealt with on 20 April 2007 but in fact was heard on 7 June 2007, some two months after filing. Mr Croker, for his part, was by then more than two months in default of his own obligations and, by the date of the FMCA's judgment, 41/2 months in default. In my view there is no reasonable prospect that Mr Croker could succeed in any appeal against Order (1) made on 14 August 2007 if leave to appeal were granted. As a further alternative the Commonwealth sought an order for security for costs in the amount of $30,000. The Commonwealth succeeded only on its last alternative. 15 One matter relied on by the Commonwealth was that Mr Croker had not given an effective address for service as required by the FMC Rules. In Croker v Sydney Institute of TAFE (New South Wales) [2003] FCA 942 ('Sydney Institute of TAFE' ) Bennett J discussed a number of authorities to the effect that an address for service which is the address of a post office is not a proper address for service. In other proceedings involving Mr Croker in the Supreme Court of New South Wales ('the Supreme Court') the same conclusion was reached about the same address --- Darlinghurst Post Office ( Croker v Ewan; Croker v Challoner [2000] NSWCA 186). Mr Croker's continued practice of giving an ineffective address for service which this Court and the Supreme Court have ruled is not a proper address exposes him to the possibility that an inference may be suggested he is taking steps to avoid effective service of court orders, including orders for costs. Bennett J in Sydney Institute of TAFE was not prepared to draw such an inference but did take into account, on an application for security for costs, the fact that Mr Croker gave an ineffective address for service. It is not clear whether the FMCA took this matter into account and so I will not, independently, give it any weight. 16 It was pointed out also before the FMCA that Mr Croker had failed to comply with an outstanding costs order made by the Supreme Court in one of his earlier attempts to litigate about the allegedly defective cufflinks (see Croker v Commonwealth of Australia [2005] NSWSC 994 ; (2005) 194 FLR 366). Further, it was argued that his failure to produce documents as ordered by the FMCA on 23 March 2007 meant that there was no basis to accept any alleged impecuniosity. Conversely, there was no evidence that Mr Croker has adequate means to meet a costs order if he is unsuccessful in the proceedings he has commenced. Other and subsidiary arguments were relied upon which are set out in the judgment of the FMCA. 17 Sydney Institute of TAFE provides a very useful analysis of the principles to be applied in considering an application for security for costs. He concluded that it was appropriate that Mr Croker provide security for costs. An order that security for costs be provided is made in the exercise of a judicial discretion. Mr Croker, in my view, is unable to show any error in the exercise of the Federal Magistrate's discretion to order security for costs or the amount of such security. He deprived the FMCA of relevant material which might have been used to assess the extent, if any, of his impecuniosity. Moreover, for the same reason, no serious question arises in the present case of any substantial injustice being occasioned to Mr Croker by reason of the requirement to provide security for costs. Leave to appeal should not be granted to challenge this order. Whether Mr Croker elects to replead the existing claim, or, alternatively, abandon the action and recommence his claim is a matter for him. Nevertheless, I will make orders granting him leave to amend his application, statement of claim and any affidavits in support. He informed me at the hearing of his application for leave to appeal that he has not done so. The leave he was granted has now expired. He faces the risk that the proceedings might yet be dismissed. The possibility of such an order is not a matter with which the present application for leave to appeal may deal. In my view the grant of leave which is incorporated in Order (3) does not give rise to any right of interlocutory appeal. Order (5) simply reserves costs, either for later consideration or to follow the result of the proceedings in due course. They provide no basis upon which to grant leave to appeal. Mr Croker's failure to comply with the order of the FMCA made on 23 March 2007 is a serious matter. If the case for rejecting his application for leave to appeal was not so clear cut I would have given serious consideration to deferring any consideration of the present application until that order had been complied with. 24 It is appropriate to dismiss the application 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 Buchanan. | appeal from interlocutory judgment no reasonable prospects of success no substantial injustice principles to be applied appeals security for costs |
The University of Western Australia (the University) claims damages and other relief against Dr Bruce Gray, its former Professor of Surgery, in respect of inventions said to have been discovered and developed by him while working for the University. It alleges breach of contract and of fiduciary duty by Dr Gray in his exploitation of the relevant technologies which are used in the treatment of cancer. They involve the use of microspheres in the targeted delivery of therapies to cancers and, in particular, to cancers in the liver. The University sues Sirtex Medical Limited (Sirtex), a public company established to develop and market the technology. It also sues the Cancer Research Institute (CRI), a charitable incorporated association, which holds shares in Sirtex in consideration of assignments to Sirtex of rights in relation to some of the technology which it had acquired from Dr Gray. The University, subject to the approval of the Court, has settled with CRI but the settlement approval by a judge of this Court is under challenge in an appeal to the Full Court. 2 A question has arisen about amended replies filed by the University purportedly pursuant to leave given by the Court earlier during the hearing, in answer to reamended defences filed by Dr Gray and by Sirtex. On 19 April 2007 leave was granted to Dr Gray to amend his defence insofar as it pleaded to [164] of the statement of claim. The amendment involved the addition of a new subpar 269.4 and new [270] and [271]. The amendments all invoked the settlement agreement between the University and CRI to support a plea that the University had failed to mitigate its loss or damage in consenting to the dismissal of its claim against CRI. The terms of that settlement, under which the University authorised CRI to transfer its shares and options to a third party entity, were also pleaded ([270]). In [271] it was said that any loss the University suffered in respect of the technologies which were held by CRI was caused by the University's conduct in agreeing to the dismissal of its action against CRI in these proceedings and entering into the agreement with the association in the form approved by the Court on 8 March 2007. 5 In an amended defence and cross-claim against the University, Sirtex pleaded, at [174] an awareness on the part of the University prior to 11 October 1999 that certain provisional patents had been lodged by its predecessor company and that in July 2000 the University was aware of the contents of its prospectus. By 11 October 1999, 17 July 2000 and 28 February 2003 the University was said, by Sirtex, to have been put on inquiry as to information then publicly available on the database maintained by the Australian Commissioner of Patents in reference to the names of Bruce Gray and Paragon Medical Ltd (Paragon Medical) ([174]). Despite being put on inquiry of these matters it was said by Sirtex that the University chose not to take any action to vindicate the rights it asserted against Dr Gray, Sirtex or CRI and chose not to communicate with Sirtex. It was said to have stood by and permitted the raising of funds and acceptance of subscriptions for, and issue to investors, of shares in Sirtex. In addition Sirtex said that between 26 March 2003 and 26 October 2004 the University knew each fact upon which it based the claim which it asserted against Dr Gray, Sirtex and CRI and despite such knowledge consciously concealed its claims from Sirtex and thereby stood by and permitted Sirtex to make profits ([176A]). 6 Sirtex also relied upon the settlement by the University with CRI to support a plea, inter alia, that it waived certain of its rights ([182A]), that Sirtex was entitled to a credit ([182B]) and that the University had failed to mitigate its loss ([182C]). 7 Sirtex cross-claimed against the University and in its amended cross-claim alleged that the University breached a duty of care and engaged in conduct that was misleading or deceptive or likely to mislead or deceive. This plea was based upon representations said to have been made by an officer of the University, Professor Barber. It claimed that in reliance upon representations made by Professor Barber, it entered into transactions under which it acquired the relevant technology. By its amendment, Sirtex asserted that if the University were to succeed in the proceeding on its claim for ownership of the "Acquired Inventions" then Sirtex ought to be entitled to an equitable lien against the inventions corresponding to its investment in their development, protection and marketing. It added to the relief claimed, a claim for a declaration of its entitlement to such a lien. 8 On 19 April 2007 I gave leave to the University to file a reply to the amended defence filed by Dr Gray. It is not in dispute that that leave was limited to an amendment to the University's reply to deal with the matters raised in the amendment to Dr Gray's defence, ie failure to mitigate loss by reason of the CRI settlement and associated pleas. The amended Sirtex defence and cross-claim also required an amended reply to be filed. 9 The amendments to the replies filed on 14 June 2007 went well beyond the responses to the amendments to the defences. That is accepted by counsel for the University. 10 The Court heard submissions on whether, and to what extent, the amended replies should be allowed. He said that either CABR or Dr Gray, at CABR's directions, sought external funding to support the development of what was known as the SIRT2 Invention ([21.4B]). Dr Gray said that in early 1988 he prepared and submitted to the University an equipment grant application explaining the work performed in relation to the SIRT2 Invention, the DOX Spheres Invention and the Thermo-Spheres Invention ([21.4C]). It was then said in the defence that in late 1988 or early 1989 CABR, acting as delegate of the University's Vice Chancellor determined that it would cease work on obtaining patent protection for the SIRT2 Invention and Thermo-Spheres Invention, cease any attempt to commercialise any of the research projects being conduct by Dr Gray and cease any attempt to raise funds to support those projects. The University was said to have thereby abandoned the exploitation of the relevant inventions ([21.4D]). 13 In [17(e)] of its amended reply dealing with these paragraphs, the University said that in September or October 1988 Uniscan, which was a company owned or controlled by the University under the name of CABR, referred the projects then under consideration by it back to the University Department of Surgery for further research and development. Such referral was said not to have constituted an abandonment or waiver or to have affected Dr Gray's contractual or fiduciary obligations to the University as pleaded in the statement of claim. In [24] Dr Gray said that, in reliance upon the University's conduct pleaded in [21.4D] amounting to abandonment of the exploitation of the inventions [24A.1] and the University's failure to assert any right or interest in research into microsphere targeted treatment of liver cancer, he procured CRI to enter into the Centre for Applied Cancer Studies agreement and devoted funds and resources to the development of the treatment ([24A.2]). Dr Gray also said in his defence that he met with the Deputy Vice Chancellor, Professor Michael Barber, on or about 24 July 1996 and disclosed the nature of his research, the fact that the company Paragon Medical was funding CRI's research into microparticle technology and that Paragon Medical would acquire the intellectual property to such technology and attempt to commercialise it ([24.1]). He said that he repeated this in a letter dated 26 July 1996 ([24.2]), that the University with knowledge of those matters stood by and allowed or acquiesced in the funding of research conducted by CRI to be supplied by Paragon Medical. He said that in or about January 1997 CRI, by a letter dated 17 January 1997 addressed to the Deputy Vice Chancellor-Research, sought assurances that the University had no claim on the relevant technology ([24.3 and 24.4]). Various things said to have been known to the University were then set out in the defence. The University was said to have been put on inquiry from the time of receipt of the letter as to the nature and extent of interest which might be asserted by it arising from the research and the matters referred to in the letter ([24.4B]). 15 The University was said to have made reasonable inquiries and to have determined on the basis of those inquiries that it had no interest or claim to the intellectual property ([24.5]). It was said by Dr Gray that, in reliance on the University's conduct and the representations made by Professor Barber, Dr Gray and Sirtex and any venture partner were entitled to act on the basis that the University asserted no financial or other interest. It was also alleged that the University had either waived any breach by Dr Gray of its Patent Regulations and Intellectual Property Regulations or was estopped from asserting any interest in the intellectual property. 16 In its amended reply, in [20(c)], the University pleaded a new set of representations said to have been made by Dr Gray. It asserted that by Dr Gray's conduct in not complying with notification conditions under the patent and intellectual property regulations he impliedly represented that no patentable invention and no intellectual property likely to be commercially significant had been developed and/or discovered by him. He was also said to have expressly represented to the University that it did not have any rights or interests in the relevant inventions and that their development and discovery was not as a result of work undertaken by any University employee within the course of their employment. Particulars of the representations were then given, including one said to be by way of a letter from Dr Gray to Professor Derek Schreuder of 16 July 1999. The representations were said to have been false. For this reason it was said the University did not know that it had, and was unable to pursue, any causes of action in relation to breaches of the prompt notification condition and the prompt reporting condition prior to its receipt of counsel's advice on 23 September 2004, alternatively, in or about April 2003 when Dr Yan Chen met with representatives of the University and, alternatively, in or about July 2000, the date of the Sirtex prospectus. A fourth alternative of 22 December 1998 was also pleaded, being the day six years prior to the commencement of the proceedings. Then it was said, further or in the alternative, that in reliance upon the representations the University did not pursue any causes of action in relation to breaches of the reporting conditions before in or about February or March 2003. The inclusion of the reference to [16A] and [146A] is appropriate. 19 A similar reference to [16A] and the non-existent [146A] appeared in [59(b)(iv)] and [63(b)(iv)] of the amended reply. It also appeared in [68(b)(iv)], [77(d)], [78(b)(iv)] and [84(b)(iv)]. At [85(b)(ii)] the University would amend its reply to assert that Dr Gray's breaches of the prompt notification condition and the prompt reporting condition precluded it from bringing proceedings in respect of such breaches prior to each of the alternative dates mentioned earlier. This was in lieu of the previously pleaded earliest date of 21 December 2004. In [85(d)] it was newly alleged that Dr Gray's contract contained an implied term that he owed to the University a duty of fidelity and good faith and that by the matters pleaded in [20(c)(ii)] and [20(c)(iii)(A) to (C)] he breached that duty. The University said that by reason of that breach it suffered loss and damage. It said that, on a proper construction of s 47 , that section does not apply to Dr Gray's breaches of fiduciary duty in that such claims are founded upon a fraud or a fraudulent breach of trust within the meaning of s 47. Further or alternatively, it was said the University seeks to recover the proceeds of trust property previously converted by Dr Gray to his own use. That amendment is not contentious. 24 In [8(d)] of the reply the University raised a response to [13(d)(4)] of the Sirtex defence. In that part of its defence Sirtex alleged that Dr Gray disclosed to CABR the research conducted by him in relation to microparticle treatments including the treatment of tumours with radiation, cytotoxic drugs and by hysteresis heating and sought CABR's assistance in its commercialisation. By the amendment to the reply the University did not admit any of the matters alleged and said that they did not constitute disclosure. This amounted to little more than a joining of issue and appears to be uncontroversial. 25 In [8(j)] of the amended reply to Sirtex, the University added a new subpar (iii) asserting that in September or October 1988 Uniscan referred projects then under consideration by it back to the University Department of Surgery for further research and development. Such referral did not constitute an abandonment or waiver of the University's rights or affect Dr Gray's contractual or fiduciary obligations. This was put in in answer to [13(10)] of the Sirtex defence which alleged abandonment by the University of the exploitation of the relevant inventions. Again this does not appear to be much more than a joining of issue. In [10(c)] a new subpar (ii) was introduced and implied an express representation alleged in the amended reply to Dr Gray's defence raised and linked in [(iv)] to each of the dates before which it was said, in the alternative, that the University was precluded from bringing any action. In [10(d)] the University newly alleged breach of fidelity and good faith to the University by Dr Gray with the University suffering loss and damage as a result. The amendments are said to have no evidentiary consequences. The University says no issues of prejudice arise. 29 In relation to the representations the University says that in their respective defences Dr Gray and Sirtex plead various equitable defences and the Limitation Act . The University has already pleaded the making of representations by Dr Gray said to disentitle him and Sirtex to the benefit of equitable defences or to preclude their reliance on provisions of the Limitation Act . The University refers to its existing pleading at [20(d)(iii)] of the reply. However, one of the proposed amendments to the reply that would bring in Dr Gray as a representor whereas previously the representation was attributed to CRI only. In [85(c)(i)] of the reply prior to amendment, there was a plea that Dr Gray impliedly represented that no patentable invention and no intellectual property likely to be commercially significant had been developed and/or discovered by him. This representation is said to have emerged from his conduct in not complying with the prompt notification and prompt reporting condition. 30 The University says that by its amendments it pleads the making by Dr Gray of two additional express representations namely that the University does not have any right or interest in the inventions and that they were not as a result of work undertaken by any University employee within the course of employment by the University. Such representations are said to be of similar importance to those pleaded previously. They have no evidentiary consequences and no issues of prejudice arise. 31 In relation to the plea of breach of duty of fidelity and good faith, the University now seeks to plead in reply that Dr Gray's misrepresentations breached his fidelity and good faith and that through those breaches the University lost the opportunity to be put in the position that it would have been in had he complied with the conditions. In so doing the University is said simply to be pleading an additional legal consequence of matters otherwise pleaded. 32 In relation to s 47 of the Limitation Act the University points out that Dr Gray pleaded reliance upon the Limitation Act without specific reference to s 47 of that Act. On the other hand, the Sirtex defence relied upon s 47 of the Limitation Act in answer to the claims based on breach of fiduciary duty by Dr Gray and s 38(1)(c) of the Limitation Act in relation to alleged breach of contract by Dr Gray. In reply to Sirtex's defence, which expressly raised s 47 , the University did raise a contention that its claims of fiduciary duty were founded upon a fraud or fraudulent breach of trust within the meaning of s 47 of the Limitation Act to which Dr Gray was a party. 33 The University relies upon the fact that during the course of Dr Gray's opening it was asserted that references to the Limitation Act in his defence should be construed as references to s 47. The University maintains a position, which it has previously stated at the trial, that the paragraphs of Dr Gray's defence which invoke the Limitation Act are pleas in response to allegations by the University of breaches of contract and are not in response to allegations by the University of breaches of fiduciary duty. In consequence it is said Dr Gray's defence pleads s 47 in response to allegations of breach of contract to which s 47 simply cannot apply and does not plead s 47 in response to the allegations that Dr Gray breached his fiduciary duty. In the alternative, the University now seeks to plead, in reply to Dr Gray's invocation of s 47 , fraud or fraudulent breach of trust in identical terms to what was previously pleaded in response to Sirtex's and CRI's pleading of that section. The first reply was filed by the University on 24 March 2006. It was amended on 12 March 2007 pursuant to orders made on 23 February 2007. 35 It is said that the proposed amendments to [17(e)(i)] are unsupported by the present evidence. As to the new proposed pleading in [20(c)(iii)] which raises the implied and expressed representations attributed to Dr Gray, he says that they constitute a major expansion of the allegation of breach of the notification condition. Moreover they raise a wholly new positive case of a course of conduct by him in the way of representations made to the University. Some of the representations are said to have been made at dates which are not relevant to particular inventions. By way of example if, as set out by way of particulars in a letter from the University's solicitors of 14 June 2007, the Thermo-3 Invention did not occur prior to December 1998, then meetings between Dr Gray and Mr Lennon in December 1994 and January 1995 could not be relevant. Yet they are purportedly pleaded as supporting representations relevant to those inventions. 36 Paragraph 20(c)(iii)(D) is said to plead a wholly new series of dates by which it is said the University was unable to have knowledge of the alleged breaches. Dr Gray complains that no adequate particulars are given of those matters. Moreover it is said the particulars of the representations alleged would require the recall of Messrs Lennon and Barber. 37 In relation to the pleading in [20(c)(iii)(E)] this is said to require the recall of Messrs Barber, Robson, Lennon and Sierakowski. Consequential amendments in [20(e)] are said to require the recall of Professor Barber. As to amendments to [85(b)], the cascading dates, it is said that the University claims privilege over notes of a meeting between Dr Chen and representatives of the University, being the date referred to in that cascade. This would require the recall of Dr Chen and Mr Heitman and any other relevant member of the University and the discovery of the additional documents. 38 Paragraph 85(b) which, in effect, raises the breach by Dr Gray of his implied obligation of a duty of fidelity and good faith to the University, is said to raise a new cause of action which is impermissible in reply. 39 As to [85(e)] which raises the fraud defence to s 47 , it is submitted that a fraud should not be raised after the cross-examination of Dr Gray. 40 Dr Gray also complains that the University has given no evidence as to the delay in bringing on the non-responsive amendments. I do not propose to expound at length upon my rulings. It is a matter of concern that the University should have sought to introduce substantial amendments to its reply at such a late stage in the proceedings and that it did so simply by filing the amendments without first seeking the leave of the Court. In this respect I am not concerned with those amendments which were responsive to the amended defences and in respect of which leave was given in April and, by implication, in May when Sirtex amended its defence. There has been no real explanation for the delay in the University's filing of the amendments. 42 In the end, however, I am concerned to ensure that the pleadings reflect the real issues in the case and that amendments be allowed to that end provided they do not unfairly prejudice any party. The question whether any amendment is likely to have any effect on the length of the trial or to delay its completion is also relevant. At this stage the trial of the action is in the final days of evidence. It is expected that evidence will be concluded by the middle of this week and that closing submissions will commence on 4 July 2007. Applying those general considerations, I rule as follows on the proposed amendments to the replies. A. Rulings in relation to the reply to Dr Gray's defence. Paragraph 17(e) is allowed --- it is open as a matter of characterisation of CABR's conduct covered in evidence in cross-examination. No unfairness is involved. 2. Paragraph 20(c)(ii) --- is allowed, it simply appears to join issue with [24] of Dr Gray's defence by reason of matters set out in the statement of claim. 3. Paragraph 20(c)(iii) --- these amendments seek to make a positive case out of matters which have emerged from the evidence. This positive case of representation could reasonably have elicited a different approach in cross-examination of those witnesses said to have been affected. If the University is thrown back on those matters which it has already pleaded it is not, in my opinion, being treated unfairly. The representation pleas simply complicate matters by bringing in additional arguments of characterisation which are unlikely to have little bearing on the analysis of cause and effect in relation to Dr Gray's conduct and that of the University. 4. Paragraph 20(d) --- this amendment which asserts that the Gorn letter was a representation by Dr Gray as well as by CRI is allowed. The question of the drafting and authorship of the letter was covered in cross-examination of Dr Gray. 5. Paragraph 28(b)(iv). This is the first of a number of like amendments which refer, inter alia, to [146A] of the statement of claim. It seems the amendment, which also brings in a reference to [16A] of the statement of claim, is unexceptionable. See also [47(b)(iv)], [59(b)(iv)], [63(b)(iv)], [68(b)(iv)], [77(d)], [78(b)(iv)], [84(b)(iv)]. 6. Paragraph 85(b). I will allow this amendment on the basis that it specifies dates before which it is said the University was precluded by Dr Gray's non-disclosure from bringing proceedings in respect of his alleged breaches of duty. I see no basis for the recall of any witness in respect of these matters. They stand or fall on the existing state of the evidence. 7. Paragraph 85(c)(i). This will be allowed to the extent that it relies upon [20(c)(ii)]. 8. Paragraph 85(d). This amendment is disallowed. There is no proper basis disclosed for asserting in reply what amounts to a new cause of action. 9. Paragraph 85(e). The plea of fraud or fraudulent breach of trust, for the purposes of s 47 of the Limitation Act , was already in issue in the Sirtex pleading. To that extent Dr Gray has had some notice of it. The assertion of fraudulent breach of trust for the purpose of s 47 stands or falls on the state of the existing evidence and is a matter of characterisation on issues which have been canvassed in cross-examination. 10. Paragraph 86 of the amended reply is allowed as it is responsive to the amended defence. B. Paragraph 8(d) is little more than a joinder of issue on the basis of matters set out in the statement of claim and is allowed. 2. Paragraph 8(j) is allowed consistently with the ruling in relation to the like amendment to the reply to Dr Gray's defence. 3. Paragraph 10(b) is allowed consistently with the previous ruling. 4. Paragraph 10(c)(ii) and (iii) is disallowed. 5. Paragraph 10(c)(iv) is allowed. 6. Paragraph 10(d) is disallowed. 7. Paragraph 11A is not objected to and is allowed. 8. Paragraph 16 is not objected to and is allowed. 9. Paragraph 28(c) is allowed. 10. Paragraph 29A is not objected to and is allowed. 11. Paragraph 30 is not objected to and is allowed. 12. Paragraph 37A is not objected to and is allowed. 13. Paragraph 43A is not objected to and is allowed. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | pleadings lengthy trial amended defences filed leave to file amended replies replies filed substantially later in time and exceeding responses to amended defences whether additional amendments should be allowed considerations of fairness, prejudice and case management amendments allowed in part practice and procedure |
The trial is now in its 11 th day. It is necessary to decide whether an affidavit made by Bernard Lloyd, a solicitor acting for Allphones can be tendered by Hoy Mobile as an admission by Allphones. The affidavit was used in support of Allphones' successful assertion of legal professional privilege during an interlocutory hearing before Tamberlin J. 2 I am not intending to express any view about the substantive matters in issue in the trial in these reasons. But, it will be necessary or convenient for me to refer to matters in issue sometimes by a shorthand expression which otherwise may indicate that they are taken as facts. However, I have assumed these matters in order to assess the admissibility of the representations in the affidavit. For example there is an issue as to precisely what the franchise agreement, if any, was between the parties. So, in these reasons, it is necessary to assume that there was a franchise agreement in place between the parties because the issue sought to be proved by the tender of the affidavit is that Allphones, with knowledge of the facts entitling it to terminate the franchise agreement for fraud, instead affirmed it. 3 That issue arises in this way: It is common ground that in the middle of 2003, Allphones franchised to Hoy Mobile at least the right to operate a franchised store in the East Gardens shopping centre, which is in a suburb of Sydney. Under the franchise arrangement, Hoy Mobile was authorised to sell, as agent for Allphones, mobile phones and to enter into dealings with retail customers for the sale of those phones and other products and services to members of the public. 4 At some time in 2006, it came to Allphones' notice that Craig Hoy, one of the two principals of Hoy Mobile and the manager of the store, had engaged in questionable conduct in relation to the sale of mobile phones at the store. That conduct involved what has been described in evidence as 'unlocking' telephones. The supplier of the locked phones was generally a telecommunications carrier, such as Telstra, Optus or Vodafone. The suppliers had caused the locked telephones to be operated in such a way that they would only function on the network of that carrier. Thus, a customer who bought such a telephone would necessarily use the carrier's services when using it, thus generating call revenue for the carrier. If such a phone were unlocked, a customer would be able to use it on any network, not just that of the carrier who supplied the telephone to Allphones for retail sale in, among others, the Eastgardens shop. Allphones asserted that such conduct was fraudulent and a breach of the franchise agreement. 5 There is another aspect of Mr Hoy's conduct which is in issue in relation to the unlocking of telephones. When reporting the sale of the telephone in the Allphones computer system, the item would be recorded as sold at its recommended retail price, that is, at the price of a locked telephone. That price was generally cheaper than the actual price received by Hoy Mobile for the by then unlocked phone. Thus, the second aspect of this conduct involved the assertion that Hoy Mobile was receiving money for which it was not accounting in respect of the sale of the unlocked telephones. 6 Allphones gave Hoy Mobile a notice of its intention to terminate the franchise agreement in late August 2006. Before that occurred, but after Allphones became aware of the allegation of unlocking of the telephones, Hoy Mobile alleges that Allphones acted in a way which affirmed the franchise agreement. Hoy Mobile alleges that Allphones required it to do certain things in accordance with the franchise agreement. Hoy Mobile relies on this affirmation, or election, to deny that Allphones was entitled to terminate the franchise agreement. It claimed that when Allphones sought to require Hoy Mobile to comply with requirements made by it earlier in June and July 2006 that conduct was inconsistent with Allphones' subsequent attempt to exercise a right to terminate: see Sargent v ASL Developments Ltd [1974] HCA 40 ; (1974) 131 CLR 634 esp at 642 per Stephen J. 7 The issue here is whether Allphones knew in June or July 2006 both about the unlocking of the phones and the failure to account, on which it relied, to uphold its exercise of a right to terminate. It gave notice of its intention to exercise the right to terminate in late August 2006. 8 This matter has had a long history of interlocutory case management. During early 2007, a question arose as to whether some documents produced on discovery by Allphones were entitled to be withheld from production on the ground of legal professional privilege. An interlocutory hearing took place before Tamberlin J on 1 June 2007. At that hearing, Allphones read and relied upon a sworn affidavit by Mr Lloyd on 5 April 2007. He was a solicitor employed by its solicitors on the record. Mr Lloyd said that he deposed to the matters in the affidavit based on information and belief unless otherwise stated. But, relevantly, he did not identify the sources of the information and belief. Nonetheless, the affidavit was read in full before Tamberlin J. 9 Allphones now objects to the affidavit being received as an admission by it of its state of knowledge during the period leading up to its giving its notice of intention to terminate. In or around May 2006, the respondent became aware that the applicant may have been engaging in fraudulent conduct in relation to its business. The respondent sought legal advice in relation to the matters referred to in paragraphs 5, 6 and 7 above in June, July and August 2006 and in anticipation of proceedings being commenced by the applicant upon termination of the franchise agreement the respondent and its legal advisers spoke to and obtained statements from various persons in relation to the applicant's fraudulent conduct. 11 The parties have asked that I give a ruling on the capacity of this material to be received as an admission before determining, were I to rule it capable of being an admission, on further matters going to the exercise of my discretion under ss 135 and 136 of the Evidence Act 1995 . Those further matters concern whether, at this stage of the trial and in the circumstances in which the evidence is sought to be led, the affidavit ought then be admitted into evidence. What the parties have suggested is a convenient approach. However, there is a debate as to their weight and the character and context in which they ought be read. The affidavit of Mr Lloyd is capable of being such a document within the meaning of s 82(b). However, there is an issue whether Mr Lloyd could make an admission binding on Allphones. By dint of s 87(1)(a) the Court must admit a representation for the purposes of determining whether it is taken to be an admission if it is reasonably open to find that, when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made. Allphones put Mr Lloyd forward to Tamberlin J as a person who was giving evidence of its case on its behalf and with its authority. It relied on his evidence to prove, at least in part, its claim for legal professional privilege. In my opinion, it is reasonably open to find that in those interlocutory proceedings Mr Lloyd had authority to make admissions on behalf of Allphones to the extent that the affidavit could otherwise be read as having done so. 16 As a matter of common sense Mr Lloyd was relied on as a person with authority to attest to significant facts upon which Allphones' case for the claim for privilege was put to Tamberlin J. Allphones intended that his evidence be acted upon by the judge hearing the interlocutory dispute as to whether or not it was entitled to maintain its claim for legal professional privilege. 17 Mansfield J briefly touched on the authority of counsel in separate proceedings to make admissions which affected that counsel's client in In the matter of Simionato Holdings Pty Limited; Commissioner of Taxation of the Commonwealth of Australia v Simionato Holdings Pty Limited [1997] FCA 125. I can see no reason why they should not be regarded as prima facie evidence against the client on whose behalf counsel was addressing the court. Rather, they were statements put forward by him, on behalf of his client, in an affidavit tendered as evidence of the facts. 18 It has long been the law that in civil cases a solicitor has implied authority to make admissions receivable by the Court against his or her client during the actual progress of litigation, either for the purposes of dispensing with proof at trial or in certain other respects. Thus formal admissions made by attorneys of both sides at a first trial could be relied on at the second trial after the first verdict had been set aside. Lord Denman CJ said that there was no doubt that the admissions were receivable at the second trial, albeit that they had been made before, and for the purposes of, the first trial: see Doe d. Wetherell v Bird (1835) 7 C & P 6 at 7. And in Langley v Earl of Oxford (1836) 5 LJ Exch 166 at 167, Lord Abinger CB held that an admission to be used at the trial of a cause, whenever it should take place, was admissible. It did not matter that the admission had been made before the first trial. Once made, it could be used at the second trial: see also Phipson, The Law of Evidence (8 th edition, 1942) at p 234. 19 For these reasons, I am of opinion that it is reasonably open to find, and I find, by force of ss 87 and 88 of the Evidence Act , that Mr Lloyd had authority when his affidavit was read before Tamberlin J to make statements on behalf of Allphones which, if those statements are capable as a matter of law as being treated as admissions, can be received in evidence as admissions by Allphones. WERE THE PROCEEDINGS BEFORE TAMBERLIN J THE SAME PROCEEDINGS AS THE TRIAL WITH THE MEANING OF 'PREVIOUS REPRESENTATION'? Allphones argued that Mr Lloyd's evidence cannot be a 'previous representation' within the meaning of that term in the Evidence Act because it was made in the course of giving evidence in the proceedings in which evidence of the representation was sought to be adduced. That is, Allphones argued that the evidence now tendered at this trial had already been given in evidence 'in the proceedings' when it was read during the interlocutory proceeding heard by Tamberlin J. Counsels' and my own researches have not been able to uncover any authority on the meaning of 'previous representation' in respect of representations made during earlier stage of a matter filed in a court which are later sought to be used as a 'previous representation' in the same matter. 21 The Evidence Act was substantially the product of a report by the Australian Law Reform Commission: Report No 38, Evidence . When the legislation was enacted there were some departures from the recommendations in the Commission's report. However, the Commission explained that the Bill which it had prepared was drafted so that it applied whenever evidence was to be adduced, including in bail applications, interlocutory proceedings and proceedings heard, not in open court, but in chambers (see ALRC 38 [57]). And, that intention is reflected now in s 4 of the Evidence Act . 22 The Commission also commented on the terminology which it had used in the introduction to ALRC 38. The party who is questioning the witness (whether in examination-in-chief or in cross-examination) is 'adducing' the evidence that the witness is giving. It is the court's function to admit or refuse to admit the evidence so adduced. The Commission noted that 'admission' was defined in its interim proposal as a representation made out of court by a party which was adverse to that party's interests in the outcome of the proceedings (ALRC 38 [152]). That concept was one well known at common law: namely that a person may be taken by words or conduct to have made an admission out of court, which is sought to be adduced in evidence in court. 24 In the present case, Mr Lloyd's affidavit could in no real sense be treated as being a statement made in court in this trial. This is because it was not put forward in the course of him giving evidence in the trial. Allphones argued that, nonetheless, it contains statements or representations made by Mr Lloyd in the course of giving evidence in these 'proceedings' in a more general sense. 25 The Evidence Act does not, itself, define the expression 'proceeding', although it does provide definitions for 'Australian or overseas proceeding', 'civil proceeding', 'criminal proceeding'. And in s 75 the Act also provides that the hearsay rule does not to apply in an 'interlocutory proceeding'. Indeed, s 4 provides that the Act is to apply in relation to 'all proceedings in a federal Court or an ACT Court', including, among others, proceedings relating to bail, interlocutory proceedings or proceedings of a similar kind, proceedings heard in chambers or, in some exceptions, sentencing proceedings. The Act deals with rules to be applied in determining the reception or admissibility of evidence at a particular point of time in a particular context. The definition of 'judge', lends force to this view. It is frequently the case, particularly in courts which do not maintain a docket system, that different aspects or stages of a legal proceeding initiated in a particular court may be before different judicial officers at any different times up to and including a trial or final hearing (e.g. of an appeal). 'Proceedings', in the loose or common usage of that term, can be heard by any number of judges (as defined) through their interlocutory stages. Each such stage may involve the judge (as defined) giving a judgment or decision which could be made the subject of an application for leave to appeal. Interlocutory decisions do not finally determine parties' rights, yet they can be the subject of substantial contests and evidence and can lead to application for leave to appeal or to appeals. Nor need those contests be held before the same judge who hears the trial, as indeed is the case here. Either party, depending on the result, could have sought leave to appeal from what Tamberlin J decided. The interlocutory proceeding before his Honour and any application for leave to appeal or appeal from his decision would have had to be decided on the evidence before him. That evidence included Mr Lloyd's representations (for the purposes of the Evidence Act ) made in his affidavit. 27 I am of opinion that the proper construction of the definition of 'previous representation' in the Act requires that the expression 'in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced' be treated as a reference to the hearing before the judge, as defined, in which the evidence is sought to be adduced. It does not extend to other hearings or phases, including any interlocutory proceeding, in which the parties have been engaged prior to that hearing. Of course, if a matter is part heard, on the resumption of hearing it is the same proceeding for the purposes of the definition of 'previous representation'. But where one can readily segregate the interlocutory or other phases of a matter from the trial, proceeding or phase in which the evidence is sought to be adduced, I am of opinion that a representation made before the current hearing is capable of being a previous representation within the meaning of that term in the Act. 28 Allphones also argued that the word 'proceeding' in the Evidence Act should be given the extended meaning for which it contended by reference to the use of the same term in the Federal Court of Australia Act 1976 . That Act identifies the courts and proceedings to which it is to apply in s 4. Expressions in the Evidence Act such as 'proceeding' cannot take their character from that same word used in a different Act, such as the Federal Court of Australia Act . The process of statutory construction requires the Court to have regard to the way in which the Parliament expressed itself with respect to the subject matter with which it is then dealing. The Evidence Act is intended to apply its series of provisions to the conduct of proceedings in a federal court (as defined) in which evidence is sought to be given. 30 Like the Judiciary Act 1903 , the Evidence Act takes the courts to which it applies as it finds them. The Evidence Act deals with incidents of a proceeding which it characterises as such. The statutory regime which the Evidence Act itself provides, of course, does not create any civil or criminal proceeding. Rather, it applies the rules of evidence which it lays down for the conduct of civil or criminal proceedings to proceedings of the relevant character when and how they are constituted under other legislation. 31 I am of opinion that the definition of 'proceeding' in the Federal Court of Australia Act does not affect the construction of 'proceeding' as that term is used in the Evidence Act . I am fortified in this view by the recognition that the Evidence Act itself is procedural in substance. It regulates how evidence is to be received and what is admissible. It does not itself create rights or liabilities. That is why the Act is careful to distinguish between various proceedings and to provide rules for the adducing of evidence in them. In Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49 ; (2003) 216 CLR 161 at 200 [122] and 205 [133] Hayne J (with whom Gleeson CJ and McHugh J agreed) said that the rules governing the admissibility of evidence fall under the expression 'practice and procedure'. Gummow J, with whom Kirby J agreed on this point, said that more substantive rights were involved: Labrador 216 CLR at 173 [33]. Kirby J referred to the assignment of the burden and identification of a standard of proof as being matters which can be of critical importance to the conduct of a trial. They could thereby partake of certain features of practice and procedure, but he also recognised that each was arguably something more than that because each affected, in a way, the very character of the trial. In that case the provisions of the Excise Act 1901 dealt with how matters might be proved: Labrador 216 CLR at 185 [76]. 32 Essentially, whether or not a previous representation amounts to an admission is a question of the law of evidence. That question has the character of a matter of practice or procedure. The Evidence Act regulates the way in which a proceeding is conducted. Of course, the Act applies a particular standard of proof depending on whether the proceedings are civil or criminal and in that way the application of the Act may affect substantive rights. But the substantive operation of the Act applies the practice and procedure apposite to regulate the adducing of evidence on each occasion on which it is tendered. The Act does not create any proceeding in a court. Rather, it provides a procedure to apply to or in an existing cause of action or matter for adducing evidence. 33 Proof of what occurred before Tamberlin J is capable of establishing a fact that occurred on an occasion outside this trial. The interlocutory proceeding was not this trial of the issues between the parties. For these reasons, I am of opinion that what occurred before Tamberlin J did not occur in the course of giving evidence in the proceeding in which it is now sought to tender Mr Lloyd's affidavit. It follows that Mr Lloyd's affidavit is capable of being a previous representation and thus capable of falling within the meaning of 'admission' as a matter of law. WERE THE REPRESENTATIONS IN MR LLOYD'S AFFIDAVIT ADMISSIONS BY ALLPHONES? In British Thomson-Houston Co Limited v British Insulated and Helsby Cables Limited [1924] 2 Ch 160 at 164-165 (see also at 170-171 per Atkin LJ) Pollock MR said that affidavits or documents which a party knowingly used as true in a judicial proceeding for the purpose of proving a particular fact are capable of being evidence against that party in subsequent proceedings to prove the same fact. He said that the principle applied in cases where the party adducing the document, whether an affidavit or deposition, knew of its contents beforehand and elected to put it forward in support of the party's case. It may be given in evidence against him in any suit or action in which the fact so asserted or admitted becomes material to the issue to be determined. And in principle, there can be no difference whether the assertion or admission be made by the party himself who is sought to be affected by it, or by someone employed, directed or invited by him to make the particular statement on his behalf. In like manner, a man who brings forward another for the purposes of asserting or proving some fact on his behalf, whether in a court of justice or elsewhere, must be taken himself to assert the fact that he thus seeks to establish. But if there are statements in it that are irrelevant to the purpose for which it is prepared, the client is not bound by those statements. It can have no opinions because it has no mind, but it can have attributed to it a state of mind or knowledge based on what those whom it authorises to act on its behalf say or do: Lloyd v David Syme & Co Ltd [1986] AC 350 at 366; (1985) 3 NSWLR 728 at 736 per Lord Keith of Kinkel. For these reasons, I am of opinion that Mr Lloyd was a person whose evidence can be treated as being an admission by Allphones. WAS THE QUALITY OF MR LLOYD'S EVIDENCE INCAPABLE OF AMOUNTING TO AN ADMISSION? It pointed to the fact that Mr Lloyd did not state his source of knowledge or belief in the affidavit. This is a complaint which does not go to the capacity of the statements to be used as evidence. It merely may go to their weight, albeit that Mr Lloyd's evidence was put forward by Allphones to prove some of the very facts it now says should not be accepted from the same information. The question is whether the representations in pars 7 and 8 are capable of showing that before giving its notice of intention to terminate, Allphones had knowledge of the failure of Hoy Mobile to account for receipts from sales of the unlocked phones. As Allphones pointed out the introductory phrase in par 7 'in or around May 2006' is somewhat vague. It also argued that pars 7 and 8 of the affidavit are vague in relation to the extent of Allphones' knowledge and the circumstances in which it was obtained. 38 I am of opinion that these criticisms do not prevent their reception into evidence of the representations as admissions. When admitted in evidence however its probative force must be determined by reference to the circumstances in which it's made and may depend all together upon the party's source of knowledge. The Court later applied them in Smith v Joyce [1954] HCA 15 ; (1954) 89 CLR 529 at 535-536. There Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ said that it was a question of law whether a statement made by a party to an action is capable of constituting an admission on any relevant issue and that this, in general, must be determined by an examination of the words used: Smith 89 CLR at 535; see too Dovuro Pty Limited v Wilkins [2003] HCA 51 ; (2003) 215 CLR 317 at 340-341 [68] - [71] per Gummow J. 40 I am of opinion that the representations made in pars 7 and 8 of Mr Lloyd's affidavit are capable of being read as statements that at least prior to the giving of the notice of intention to terminate and, perhaps some time prior to that notice, Allphones was aware of each of the three matters referred to specifically in the subpars of par 7, namely, the unlocking of phones, the failure to account and the failure to disclose that conduct to Allphones. In those circumstances it seems to me that this evidence is capable of being admitted into evidence in the proceedings. 41 The parties conducted the substantial argument around pars 7 and 8. I should record that objection was taken to the reception into evidence of pars 1-17, 36-40 and 42 although no separate elaboration was made as to their character were I otherwise minded to admit pars 7 and 8. However, the circumstances in which the evidence has been tendered and any potential prejudice that might occur to Allphones in dealing with that evidence have not been fully explored or argued at this stage. I make no ruling on those matters at the present time. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | admissibility of evidence affidavit sworn by solicitor of party and read by it as evidence in earlier interlocutory proceeding subsequently at trial, affidavit sought to be adduced as evidence of admission by solicitor's client whether, for the purposes of s 87(1)(a) of evidence act 1995 (cth), solicitor had authority to make admission on client's behalf whether representations in solicitor's affidavit constituted an 'admission' whether hearsay rule did not apply pursuant to s 81(1) of evidence act whether, for purposes of definition of 'previous representation' in evidence act , earlier interlocutory proceedings were same proceedings as the trial within meaning of 'the proceeding in which evidence of the representation is sought to be adduced' evidence |
The proceeding has been set down for trial for seven days commencing on Monday, 25 June 2007. On Wednesday, 13 June 2007, the solicitor for the applicants Mr Black of the firm Drakopoulos Black suffered a cardiac event, underwent an operation and had a stent inserted in his coronary artery. For these reasons, the applicants' solicitor has not been able to undertake inspection of the respondents' disclosed documents. The applicants are represented by Mr Anderson of counsel. However, Mr Anderson is not led at the trial by senior counsel. Mr Black is the only solicitor within the firm with any relevant knowledge of the issues in the proceeding. Accordingly, the applicants seek an order that the dates allocated for trial be vacated. 2 The respondents are represented by Mr Flanagan SC. Having regard to the circumstances, Mr Flanagan SC does not oppose the proposed order. 3 This is the second occasion on which dates for trial have been vacated. On the first occasion trial dates were vacated on the footing that substantial amendments were to be made to the proceeding. The parties jointly sought an adjournment of the trial. The present dates for trial commencing on 25 June 2007 were allocated with a view to ensuring that the matter would be able to proceed and be completed without any risk of any further adjournment. 4 The Court however is sympathetic to the circumstances confronting both Mr Black and the applicants by reason of Mr Black's cardiac event. The Court will identify a further seven days for allocation to this matter to enable the trial to proceed at the earliest opportunity. In the interim, I am advised that discussions are taking place between the parties in any event and further amendments are proposed to the pleadings. 5 Accordingly I propose to make a direction vacating the dates for trial. I propose to reserve the costs of today including costs thrown away by reason of the vacating of the trial dates. My Associate will contact the parties to discuss possible new dates for trial. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | application to vacate trial dates due to the illness of the solicitor for the applicants practice and procedure |
The application and the subsequent notice to produce seek documents from the respondents ("Tibra") relating to computer programs written by employees or former employees of Optiver during their employment with Optiver, and other related information. It buys or sells securities in different markets in order to capture a profit on the price differences between those markets. Its modus operandi is to identify securities on Australian and foreign markets which appear to be mispriced, and then buy or sell those securities for a profit. This process has the effect of reducing anomalies in those markets by trading the relevant securities back into equilibrium. Optiver conducts this business for its own profit, not for the profit of clients, and has done so in Australia since 1997. 3 The respondents also conduct a proprietary arbitrage business. The first to fourth respondents were each incorporated in 2006 or 2007, and their directors and employees are drawn variously from the fifth to ninth respondents, all of whom were previously employees of Optiver. 4 Arbitrage firms rely on speed. Due to the speed with which trades take place, any hesitation or delay by the trader or the trader's computer software can result in lost trades. Arbitrage computer software is designed to identify price anomalies, to place trades which will yield a profit, and to do so at a speed which will beat other traders to those trades. 5 Optiver's computer software has gone through several stages of development. When it began trading in 1997, Optiver used an "off-the-shelf" software product known as "Orc". This program was capable of responding to market data in about 80 milliseconds. Over time, Orc was superseded by other software. In response to improving "off-the-shelf" software, Optiver sought to program its software so that it would be faster than any other program. 6 In early 2004, employees of Optiver wrote a source code for a piece of software which would operate in conjunction with Orc. It was known within Optiver as "CATS". This program dramatically reduced Orc's response time to between 0.5 and 1.5 milliseconds. 7 Despite the success of CATS, Optiver continued to produce faster software. In late 2004, several of Optiver's employees developed an enhancement of CATS. The product was called "F1", and was regarded by Optiver as crucial to the success of its arbitrage business. F1 is extremely fast, utilises complex algorithms which allow it to "think like a trader", and contains in-built mechanisms to minimise losses resulting from market or human errors. 8 In late 2005 and early 2006, Optiver's staff structure changed. Optiver terminated the employment of the fifth respondent, Mr Dinesh Bhandari, in November 2005. By June 2006, six further employees of Optiver, including each of the sixth to ninth respondents, tendered their notices of resignation. Optiver's evidence as to the circumstances surrounding these resignations --- adduced in two affidavits of Mr Robert Keldoulis, Optiver's Managing Director, and one affidavit of Mr Charles Shale, a Software Developer at Optiver --- details the way in which Mr Keldoulis formed suspicions that the fifth to ninth respondents were leaving to establish a company in competition with Optiver. 9 Soon after their respective resignations, each of the fifth, sixth, seventh and ninth respondents either incorporated or were appointed as director of at least one of the first to fourth respondents. Mr Andrew King, the eighth respondent, was employed by Tibra. 10 In July 2006, the first respondent was registered with the Australian Stock Exchange as a "market maker", which allows it to conduct an arbitrage business in the same way that Optiver does. Optiver's evidence was that Mr Keldoulis became suspicious at the speed with which Tibra had moved from a newly incorporated company to a successful competitor. The evidence indicated that Mr Keldoulis discovered emails sent from some of the fifth to ninth respondents' email addresses at Optiver to their personal email addresses. One of these emails, sent by Mr King, itemised ways in which Optiver's F1 system could be improved. The other, sent by Mr Kinsey Cotton, the ninth respondent, contained key codes for Orc, for which Optiver had acquired licences and on which Optiver had built its F1 automated trading system. The information contained in these emails, says Optiver, is not only information crucial to a successful arbitrage business, but also information which the fifth to ninth respondents, who were traders and not software developers, could not have easily recreated. 11 At times in cross-examination Mr Keldoulis appeared evasive, and the correctness of some of the details of his affidavits was undermined, and consequently I consider that his evidence reflects an eagerness to advance his claims and an unwillingness to reveal Optiver's position in an untimely manner. However, despite this, I accept the substance of his evidence. On the material presently before me, I do not consider that that substance has been materially shaken. 12 Optiver also adduced evidence from Mr Shale concerning the performance of Tibra as an arbitrage business and the speed with which a software developer could develop a program competitive with F1. 13 In relation to the performance of Tibra, Mr Shale's evidence was that Tibra began beating Optiver to an increasing number of trades in late 2006. Although the evidence deposed to in his affidavit addresses only the period between September 2006 and December 2006, a graph annexed to his affidavit asserted that Tibra's rate of success over Optiver continued to increase into early 2007. Based on his experience as a software developer, Mr Shale concluded that Tibra would need to have deployed an automated trading system at least as fast, if not faster, than Optiver's F1. 14 Furthermore, Mr Shale deposed that, for a skilled software developer to generate a source code with functionalities equivalent to F1, the developer would need, even taking into account several assumptions in favour of the developer, at least 110 weeks of development time. Having concluded that Tibra began using a software program equivalent to F1 in November 2006, Mr Shale concluded that it was highly unlikely that Tibra could have developed such software by that time. Although his evidence was challenged in cross-examination because it did not clearly set out the time necessary to develop CATS as distinct from F1, I consider that the substance of Mr Shale's evidence was not significantly shaken. 15 Tibra did not lead any evidence in response to that adduced by Optiver. It tendered a letter sent by Tibra's solicitors to Optiver's solicitors, responding to a request by Optiver that Tibra voluntarily surrender certain relevant documents, source code and computer systems. Tibra's response addressed each of the substantive arguments put against it in the preliminary discovery proceedings. 16 In the absence of the calling of a witness to explain the information contained in Tibra's letter, it is difficult to give the document great weight or probative value. It suffices to observe that Tibra, through their solicitors in this letter, formally rejected Optiver's suspicions of breach of confidence and copyright and refused to produce the documents, source code and computer systems listed in the application. (Emphasis added. There is no significant dispute about the likelihood of Tibra having possession of documents which concern Optiver's right to obtain relief and which would aid its decision to commence proceedings. In particular, Optiver argues that the circumstances surrounding the fifth to ninth respondents' respective terminations or resignations, their subsequent establishment of a new and successful arbitrage business, the discovery of two worrying emails by Mr Keldoulis, and Mr Shale's calculations, all show that Optiver has reasonable cause to believe that it may have a right to obtain relief. 21 In response, Tibra submits that there are significant shortcomings in the evidence on which Optiver grounds its belief. It says that the fifth to ninth respondents' departures were not suspicious; that Tibra's success is explained by circumstances in no way related to or dependant upon a misappropriation of Optiver's confidential or copyright information; that the two emails were either anodyne or accidental; and that Mr Shale's graph is far from conclusive. 22 The principles concerning whether an applicant for preliminary discovery has a "reasonable cause to believe" are well established, and are summarised by Hely J in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at 153-154. I do not propose to repeat those principles here. 23 In this case, Optiver has reasonable cause to believe that it may have a right to obtain relief from Tibra. The circumstances outlined above, when taken together, provide sufficient objective basis on which that belief is grounded. I am persuaded that Optiver's belief goes beyond mere conjecture or supposition; rather, Optiver has reasonably formed a conclusion that the circumstances surrounding the departure of its employees and the success of their subsequent business may depend to some degree on a breach of a duty of confidence owed to Optiver or a breach of its copyright. 24 It is important to stress that the above view does not mean that Optiver's belief is correctly held, in the sense that it is likely to be vindicated in the proceedings. The evidence presently before the Court does not, and need not, go so far as to establish a prima facie case or crystallise a successful cause of action. Under O 15A r 6(a), Optiver's evidence need only establish a tenable objective basis for its belief, which it has done. Accordingly, while Tibra's submissions regarding the shortcomings in Optiver's evidence are important, they are not sufficient to weaken the objective grounds on which Optiver asserts its belief to the extent that O 15A r 6(a) is not satisfied. Shortcomings will be relevant if and when the dispute progresses to hearing, at which stage detailed evidence can be fully adduced and weighed. 26 I am persuaded that Optiver is equipped with sufficient information to decide whether to commence proceedings to obtain at least some of the relief which it submits may be available to it. 27 It is settled law that the purpose of preliminary discovery is not to procure documents that will strengthen an applicant's decision to commence proceedings, but rather to furnish it with information which is reasonably necessary to enable that decision to be made: see Matrix Film Investment One Pty Ltd v Alameda Films LLC [2006] FCA 591 at [19] . In other words, once a prospective applicant has enough information to meet the threshold of "a bare pleadable case" ( C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [44] ), an order under O 15A r 6 is no longer appropriate. Simply because it may be difficult to ascertain the finer detail of those pleadings and assess with accuracy the likelihood of success does not mean the prospects of success in the litigation should be amplified for the prospective applicant through the effects of an invasive order for preliminary discovery. An applicant which is unsuccessful in its preliminary discovery application can always plead its case as best it can, acquire further information and documentation through the ordinary processes of discovery and issue of subpoenas, and then, if necessary, amend its pleadings to assert further or different breaches of its rights or abandon any grounds or causes of action no longer considered tenable. 28 It follows that an applicant, upon obtaining enough information to plead its case, is no longer entitled to preliminary discovery. Delay may also be important: see Western Bulk Carriers (Aust) Pty Ltd v Cosco Bulk Carrier Co Ltd [2002] FCA 1520 at [25] . Once an applicant has obtained information sufficient to plead its case, or has unnecessarily delayed that acquisition, preliminary discovery will not be ordered, and the proceedings must commence. The threshold, once crossed, arrests the preliminary discovery process: see Ricegrowers Co-Operative Ltd & Seatide Pty Ltd v ABC Containerline NV & MED Containerline Antwerp NV (1996) 138 ALR 480 at 484. 29 Orders of preliminary discovery are not intended to convey a forensic or tactical advantage, but rather to clarify whether litigation is warranted. While preliminary discovery will be beneficial to an applicant to the extent it crystallises their cause of action, or in some cases the availability of a defence to an anticipated claim, it should not be oppressive to a prospective defendant. Preliminary discovery is a one-way transaction, in the sense that there is no reciprocal obligation to produce documents. Only the applicant receives documents, which is markedly different to ordinary discovery in the course of a legal proceeding. In practical terms, the handing over of information which may be highly sensitive can be commercially damaging to a business. It is appropriate to exercise caution not to unnecessarily burden a prospective defendant to the point where its unilateral disclosure of information in preliminary discovery injures its commercial position vis-à-vis a competitor, or confers an unfair advantage on that competitor. 30 Two conclusions can be drawn from application of the above principles to the present facts. The first is that Optiver has crossed the threshold of "a bare pleadable case", and therefore does not satisfy O 15A r 6(b). 31 The information which Optiver has at present --- in particular, the termination or resignation of the fifth to ninth respondents, their subsequent establishment of Tibra, the discovery of two emails by Mr Keldoulis, and Mr Shale's calculations --- sufficiently equips it to decide whether to commence proceedings. This information is a basis for substantially more than what is required to institute "a bare pleadable case". Although Optiver's initial pleadings may not be as comprehensive as they would be after preliminary discovery, this is not a reason to grant the application. It often occurs that pleadings, as initially drafted, are amended in light of extra information gleaned from discovery. 32 Optiver stressed that the question for it to decide pursuant to O 15A r 6(b) is whether it should commence proceedings against Tibra to obtain the relief to which it asserts an entitlement , that is, relief for breach of confidence and copyright. Optiver also referred to the observation by Sackville J in Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 543 to the effect that an order under O 15A r 6 may be available to assess the extent of any alleged infringement of an applicant's rights. While these are correct statements of principle, I do not believe they are decisive in this case. 33 The observation by Sackville J in Quanta Software 175 ALR at 543 was made in the context of dismissing the clearly untenable proposition that "documents relating only to quantum are necessarily irrelevant in determining whether an applicant has satisfied O 15A r 6(b). " This does not mean that the extent of the alleged infringement must always be relevant to every preliminary discovery application in which the applicant hopes for a greater or more wide-ranging form of relief. The notion of "reasonable sufficiency" articulated by Lindgren J in Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (unreported, 24 May 1996) at 24 requires only that uncertainty about the available type and extent of relief be taken into account as one of the considerations relevant to the test in O 15A r 6(b), and that it not be treated as decisive. 34 In this case, there is real doubt about the extent of the relief to which Optiver may be entitled, particularly in relation to the amount of compensatory and additional damages it might receive under s 115 of the Copyright Act 1968 (Cth). However, there seems to be little doubt in the submissions and evidence of Optiver that it will seek compensatory damages under s 115(2) , additional damages under s 115(4) , equitable compensation for breach of confidence and injunctive relief restraining further breaches of copyright and confidence. Given that the type of relief which might be obtained is clear, and given that there is sufficient information to formulate the necessary pleadings, I do not accept that some uncertainty regarding the extent of relief renders Optiver unable to decide whether to commence proceedings to obtain that relief. 35 The second conclusion I have reached is that requiring Tibra to reveal the information Optiver seeks may be unfairly prejudicial to Tibra, in a commercial and litigious sense, and therefore warrants an exercise of the Court's discretion to deny preliminary discovery. Accordingly, even if Optiver's case, as it currently stands, is not "a bare pleadable case", I am inclined to exercise the Court's general discretion in O 15A r 6 and not grant the orders sought. 36 The source code to an arbitrageur's computer software program is an extremely sensitive piece of information. The arbitrage trading business is very competitive, and the success of an arbitrageur depends heavily on the speed of its computer trading systems and its ability to constantly develop new and faster software. To reveal a successful arbitrageur's source code could be to reveal a roadmap to its success, and undermine its competitive advantage. While it is true that a strict confidentiality regime could be instituted, this would almost certainly introduce an undesirable degree of complexity, delay and cost which the evidence presently before me does not warrant. 37 I am not satisfied that information of such sensitivity to Tibra should be disclosed at this early stage. The authorities, taken together, stress that the confidentiality of the information sought in a preliminary discovery application is a relevant consideration in the discretion of the Court to grant the relief, but not an overriding consideration: Griffin Energy Pty Ltd v Western Power Corporation [2006] FCA 1241 at [110] ; Telstra Corporation Limited v Minister for Communications, Information, Technology and the Arts [2007] FCA 1331 at [31] - [32] . The Court has tended to permit applicants to erect suitable regimes to ensure the confidentiality of any material acquired by way of preliminary discovery. In this case, however, despite Optiver's proposal of a confidentiality regime, the exercise of the general discretion to refuse preliminary discovery is supported by two other considerations. 38 The first is the substantial delay in Optiver's agitation of its application. As noted above, Optiver's suspicions were aroused in July 2006, but it did not commence these proceedings until almost a year later, preferring instead to monitor Tibra's performance and engage private investigators. One consequence of this substantial delay, which has not been satisfactorily explained, is that Tibra's source code is said to have now developed beyond the version it was using at the time which Optiver's evidence addresses. The nature of the information sought means that Tibra would have to disclose its current source code, from which its source code as it stood in late 2006 could be derived. This would necessitate revealing any developments in Tibra's software since late 2006. This entails a disclosure which, in my view, is not necessary or appropriate for Optiver's preliminary discovery application, and which could lead to the acquisition by Optiver of an unnecessary and unfair commercial advantage. 39 A second consideration in relation to the Court's discretion is that Tibra could suffer undue prejudice in respect of the conduct of the anticipated proceedings. Preliminary discovery is an invasive process, and can be granted only where the three limbs of O 15A r 6 are made out. One reason for this is that the grant of preliminary discovery, particularly if the application is as broadly drawn as it is in this case, can place the prospective defendant in a position of disadvantage in respect of the conduct of future negotiations and proceedings: see C7 Pty Ltd v Foxtel Management Pty Ltd [2002] FCA 1266 at [7] . Unlike full discovery, where both parties can ascertain and test the strength of the case put against them, preliminary discovery is unilateral, and the Court should be wary of creating an imbalance between the parties, since the purpose of preliminary discovery is not to furnish an applicant with information of such breadth or significance as to prejudice or unnecessarily curtail the respondent's prospects in the proceedings, but rather to ensure an applicant is able to identify and consider the documents and information necessary to commence proceedings. 40 I am of the view that the disclosure at this early stage of Tibra's source code, particularly in circumstances where Optiver already has sufficient information to decide whether to start litigation, would not be consistent with the purposes of O 15A r 6 and would create an inappropriate imbalance between Optiver and Tibra in respect of any litigation. I certify that the preceding forty-one (41) 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) circumstances of departure of applicant's employees giving rise to reasonable cause to believe breach of confidence or copyright occurred applicant has sufficient information to decide whether to commence proceedings threshold of "a bare pleadable case" met o 15a r 6 not to convey advantage, but to clarify whether litigation is warranted extent of available relief relevant but not decisive court has general discretion under o 15a r 6 delay and prejudice relevant discretionary considerations practice and procedure |
The Tribunal handed down its decision on 30 October 2003 affirming the decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs refusing to grant a protection visa. Also on 13 January 2006, the Federal Magistrate dismissed an application by the appellant for an adjournment to seek legal advice: see SZBZK v Minister for Immigration and Anor [2006] FMCA 32. 2 The appellant is a national of Chile who claimed to have a well-founded fear of persecution based on both his sexuality and his political opinion as a member of the Communist party. The appellant claimed that he had been subjected to violence, detention and arrest in Chile and that he might have difficulty in obtaining work if he were to return. The Tribunal accepted most of the appellant's account of his experiences in Chile. However, it did not accept, in the circumstances, that the appellant had a well-founded fear or persecution if he were to return to Chile. 3 In the Federal Magistrates Court proceedings, several grounds were raised. The notice of appeal, which was filed 2 February 2006, contained three themes which can be treated as grounds of appeal. Firstly, there was a complaint about the costs order made by the Federal Magistrate, whereby the appellant was ordered to pay the first respondent's costs fixed in the sum of $5000. Secondly, the appellant complained that the Federal Magistrate had refused to adjourn the hearing of the application in that Court. Thirdly, the appellant claimed that the Federal Magistrate had erred in not identifying error in the Tribunal's decision, having regard to the way the Tribunal dealt with the independent country information provided by the appellant. I deal with each of these matters in turn. 4 In relation to the first ground, the appellant was unsuccessful in the proceedings before the Federal Magistrate, and in the ordinary course, would therefore be obliged to pay the first respondent's costs. The appellant stated in support of this ground that he did not have legal representation to assist him in the Court below and that his financial difficulties prevented him from obtaining legal representation. Nothing has been put in argument to suggest that the Federal Magistrate erred in the exercise of the discretionary power to order costs. As to the quantification of those costs, I have been informed by the solicitor for the first respondent, and I accept, that at the relevant time, an order in the amount awarded was within the range of costs then being fixed by the Federal Magistrates Court for such matters. Indeed, the range is now reflected in schedule of costs in the Federal Magistrates Court Rules 2001 (Cth) (see Schedule 1 to the Rules), although those amendments do not apply as such in this case which was decided before the provision was inserted. 5 In relation to the Federal Magistrate's decision to refuse an adjournment, the appellant again stressed that he had no legal representation in the Court below. The appellant claimed before the Federal Magistrate that he had recently contacted a possible source of legal advice through an association. The first respondent had objected to any adjournment on the basis that the appellant had already had sufficient time to obtain legal advice. Indeed, the Court book had been provided to the appellant and his panel legal advisor over two years earlier. The Federal Magistrate accepted that allowing the adjournment would merely add to what was already a very considerable delay and noted that the association through which he claimed he had been offered help could have been found a few days before the hearing by a diligent search. There was no error attending the Federal Magistrate's exercise of the discretionary power to refuse an adjournment in those circumstances. It was not a case where there was some real prospect that the appellant would imminently be legally represented. Indeed, it appears to that the appellant had sought legal representation before the hearing from a variety of sources including Legal Aid and some form of pro bono assistance, but had been unsuccessful. 6 Finally, there is the matter of the Tribunal's evaluation of the independent country information. In considering this ground, the Federal Magistrate pointed to the fact that the appellant had succeeded in persuading the Tribunal that many of his claims were true. However, his Honour also pointed out that, ultimately, it was a matter for the Tribunal to place what weight it thought appropriate on the independent country information concerning whether the appellant had a well-founded fear of persecution were he to return to Chile, notwithstanding that it accepted the basis elements of his claim. I am not satisfied that the Federal Magistrate erred in so concluding. 7 The appeal is dismissed. The appellant should pay the first respondent's costs. | no point of principle migration |
The Tribunal had affirmed a decision of a delegate of the first respondent to refuse to grant the appellants a Business Skills (Residence) (Class BH) visa. 2 The first appellant ('the appellant'), a citizen of the People's Republic of China, applied for the relevant visa on 27 February 2003, with the other appellants (her spouse, daughter and stepson) relying on membership of the appellant's family unit. 3 The delegate decided to refuse to grant the visas on 14 October 2003. The appellants sought review of that decision by the Tribunal and on 30 June 2005 the Tribunal affirmed the decision of the delegate. By application to the Federal Magistrates Court filed 23 August 2005, the appellants sought relief under s 39B of the Judiciary Act 1903 (Cth) against the Tribunal's decision. On 21 December 2006 the Federal Magistrates Court declined to grant relief. 4 The federal magistrate conveniently set out the relevant legislation in his reasons: see Xin v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FMCA 1925 at [7] . 6 The Tribunal was satisfied that Quincy was a main business, and the first appellant had an "ownership interest" in Quincy. However the Tribunal found that the first appellant did not satisfy the criterion in cl 845.215. In applying the criterion in cl 845.215 the Tribunal identified the relevant period as being from 27 February 2002 to 27 February 2003, this being the "period of 12 months immediately preceding the making of the application". 7 In determining the total value of the net assets owned by the appellant in the main business the Tribunal took into account that the appellant had a 49% shareholding in Quincy during the relevant period. The appellant claimed that during the relevant period, Quincy owed her $61,000. The Tribunal took this into account in determining the appellant's net assets in the business, in the sense that the debt owed by the business to the appellant was added to the value of the net assets of the business itself. Based on the evidence as to the net assets of Quincy and taking into account the $61,000 debt owed by Quincy to the appellant, the Tribunal made preliminary calculations of the value of the appellant's net assets in Quincy, indicating at relevant times net assets over $100,000. 8 It was the financial records given by the appellant to the Tribunal through her representative that provided the framework and evidence for the Tribunal's findings as to the assets of Quincy. After making the preliminary calculations, the Tribunal identified four additional factors bearing on the valuation of Quincy's assets, including the need to adjust the "Cash at Bank" amount to more accurately reflect Quincy's position as at 27 February 2002. The Tribunal only needed to consider this factor, namely the need for an adjustment of the "Cash at Bank" figure, because making the adjustment meant that the appellant did not satisfy the criterion in cl 845.215. 9 The Tribunal undertook a calculation of the figures before it and, putting aside one trivial error which was in the appellant's favour, determined the adjustment necessary to be made to the "Cash at Bank" amount. 10 The adjustment to the "Cash at Bank" figures to reflect the true position as at 27 February 2002 took the value of the total value of the appellant's net assets in Quincy well below $100,000. The Tribunal considered this sufficient to dispose of the application. Relevantly, cl 845.215 requires that the total value of the net assets owed by the visa applicant in the main business must have been at least $100,000 throughout the period of 12 months immediately preceding the making of the application. Accordingly, once the Tribunal had concluded that, as at 27 February 2002, the total value of the net assets held by the appellant in Quincy was less than $100,000, then on this analysis the appellant would not satisfy the criterion in cl 845.215. 11 Having identified a reduction in the assets below $100,000, the Tribunal went on to consider whether the deficit could be made up by some other asset. However, the Tribunal concluded there was nothing to suggest that any such asset existed to lift the value of the appellant's holding back above $100,000. The Tribunal noted that payments made to Quincy after 27 February 2002 could have no bearing on the question of the value of Quincy's on 27 February 2002. It was thus not necessary for the Tribunal to elaborate on its concern about the other three factors that would otherwise have necessitated an adjustment to the figures, and it was unnecessary for the Tribunal to put a precise figure on the adjustments that it may otherwise have needed to consider. 12 The Tribunal, having concluded that the appellant did not satisfy the criteria for a business visa, necessarily determined that the members of the appellant's family unit (the other appellants in this proceeding) were also not entitled to visas. 13 The decision of the Federal Magistrates Court, which is the subject of this appeal, addressed the grounds identified in the appellant's application and also identified additional grounds raised in an affidavit filed by the appellant. Having concluded there was no error on the part of the Tribunal, the Federal Magistrates Court dismissed the application. 14 Before this Court, the notice of appeal identifies two grounds of appeal. The first ground is a bare assertion of legal error. The second ground asserts that an error was made by the Tribunal when it applied the criterion in cl 845.215, which was addressed by the Federal Magistrates Court. 15 I adopt the reasons of his Honour in relation to the second ground of appeal. The interpretation by the Tribunal of cl 845.215 was plainly correct, and the clause was properly applied. The Tribunal was not at large and had to apply the law as provided in the Regulations. 16 When the Act says that the Tribunal is not bound by technicalities, legal forms or rules of evidence, and shall act in accordance with the substantial justice and merits of the case (see s 353(2)), it does not mean the Tribunal can ignore the application of cl 845.215. In my view, having determined the correct interpretation of cl 845.215, the Tribunal then applied it correctly. The appellants had ample opportunity to present evidence to the Tribunal in the way they chose to satisfy the criterion set down by cl 845.215, and they failed to satisfy such criterion. 17 The Tribunal's function was to assess the evidence, and although it was of an accounting nature, there is nothing in the Tribunal's reasoning to indicate error. On the contrary, the evidence before the Tribunal supports the analysis undertaken. I do not consider that the trivial arithmetic error pointed out by the appellant in the Tribunal's reciting of a figure indicates an error of reasoning or analysis to justify the intervention of this Court. The error involved the Tribunal making reference to an incorrect amount in the Commonwealth Bank account. However, on 27 February 2002, the balance in the Commonwealth account was $76,118.82. However, in my view the error was of a trivial nature and was in any event in the appellant's favour. But as I have said, the more important point is that it does not indicate a more substantial error of reasoning or analysis on the Tribunal's behalf. 19 The Tribunal need not be comprised of members who are qualified accountants or auditors, as seems to be suggested by the appellants. The Tribunal is entitled to act upon the evidence before it to reach a conclusion according to law. In any event, in the way the Tribunal approached its task, I do not consider the conclusions reached depended upon any specific accounting expertise it needed to have itself. 20 To the extent that the appellant wanted a further opportunity to address the material she presented to the Tribunal, it was incumbent upon her to explain or put in context the accounts or transactions which occurred, or to indicate where a document may be inconclusive or needed further elaboration. 21 If the appellant desired to place evidence before the Tribunal she could do so. I note that the appellant did introduce accounting evidence. I observe the Tribunal allowed on a number of occasions time for additional information to be provided. In the end, once the Tribunal came to the conclusion that the relevant period was 27 February 2002 to 27 February 2003, then on the evidence presented to it, it could not have been satisfied the appellant met the criterion set forth in cl 845.215. 22 In addition to the grounds of appeal, the appellant relied upon grounds which were in almost identical terms to grounds relied upon in the Federal Magistrates Court. Each of the discrete points raised (i.e. error of law and misapplication of cl 845.215, breach of s 353, breach of s 359A and breach of s 379A) were addressed by the Federal Magistrates Court. Subject to one qualification, I find no error in his Honour's reasoning or conclusions in this regard. I do observe that the mere fact that reference is made to information in the Court book or to information being given to the delegate (as distinct from the Tribunal) is not sufficient to establish compliance with s 359A. Here, it is clear that the Tribunal itself was given all of the information relied upon for the purposes of the application by the appellant or her representatives. 23 It is my view, therefore, that the appeal should 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 Middleton. | review of a decision of the migration review tribunal to refuse a business visa whether cl 845.215 of the migration regulations 1994 (cth) migration |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse the grant of a protection visa to the appellant. 2 The appellant is a citizen of the Peoples Republic of China ('China') who arrived in Australia on 27 February 2005. Before the Tribunal the appellant claimed to have a well founded fear of persecution because he was a Falun Gong practitioner. The appellant claimed that he became addicted to Falun Gong in 1998 when his neighbour told him about the health benefits. When Falun Gong was banned he hid his participation, but he went to Beijing and joined demonstrations. In 2000, he claimed that he was questioned and detained by police for 1 month, suffering physically and mentally. The appellant stated that he was released upon payment of a bribe but was arrested again in June 2000 and was detained for 10-20 days and released after paying another bribe. The appellant asserted that, in mid 2004, the police came to his home, took his computer and informed his company of his illegal practice. The appellant claimed that he then paid a large sum of money to obtain a passport, and, with the assistance of a friend, he obtained his visa. 3 The Tribunal found that the appellant's knowledge of facts relating to Falun Gong was incommensurate with his claim that he was a long-standing Falun Gong practitioner. It held that the appellant's answers to its questions were vague and that the appellant was unable to provide any details of his claims. This raised credibility concerns for the Tribunal. The Tribunal did not accept that the appellant was a Falun Gong practitioner, that he was involved in asking the Chinese government to provide what he had called a "sufficient political and legal system" in China or that he had political opinions different from the Chinese authorities. The Tribunal made an adverse credibility finding and did not accept that the appellant had suffered any harm. It was satisfied that the appellant had fabricated his claims. 4 The appellant sought judicial review of the Tribunal's decision in the Federal Magistrates' Court. The appellant relied on two grounds. The first was that the Tribunal had failed to carry out its statutory duty. 5 The Federal Magistrate held that the decision was unaffected by jurisdictional error and was, therefore, a privative clause decision. His Honour held that the Tribunal did not rely on any information provided by the appellant because the decision was based upon its dissatisfaction with the appellant's answers to its questions. The Tribunal did not make its decision based on assumption but based its conclusions as to the appellant's lack of knowledge of facts pertaining to Falun Gong. The Tribunal's findings and reasons referred specifically to the appellant's evidence given to the Tribunal and it had formed an adverse opinion of the appellant's credibility having questioned him at the hearing. The Tribunal did not believe the appellant's evidence. The Federal Magistrate was unable to discern any other error after a thorough reading of the decision. The bias ground had not been advanced before the Federal Magistrate. 7 The appellant appeared in person. He had the assistance of an interpreter. He had prepared a written statement which elaborated on the grounds appearing in his notice of appeal. He said that he had had the assistance of a legal aid lawyer in preparing the document. The submissions involved a restatement of contentions relied on in the Federal Magistrates' Court. In addition there was a claim that the Tribunal had not taken into account information provided by the appellant and the bias allegation. When asked, the appellant was unable to identify any information which he had provided, but which had not been considered by the Tribunal. The bias allegation amounted to no more than a complaint that the Tribunal had rejected his claim to be a Falun Gong practitioner. 8 No error is shown in the learned Magistrate's decision. The appeal will be dismissed with costs. The costs will be fixed at $1450. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | no point of principle migration |
Not long after his employment commenced, he began to be stressed at work. The difficulties which he was experiencing at work came to a head in March 2003 when he was involved in a verbal altercation with a co-worker. The applicant has claimed compensation from the respondent under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ( the Act ). He made two claims, both of which were rejected by the respondent. The first claim made by the applicant was a claim for Workers' Compensation made pursuant to s 14 of the Act. That claim was dated 25 January 2006. That claim was rejected on 3 July 2006. In a decision made on 27 September 2006, that officer confirmed the initial determination. The applicant then sought a review of that decision in the Administrative Appeals Tribunal ( the Tribunal ) (Application N2006/1488). In mid 2006, lawyers representing the applicant forwarded a Compensation Claim for Permanent Injury to the respondent. At the same time, those lawyers requested: These additional claims were rejected by the respondent on 20 December 2006. That decision was also reviewed and confirmed by a further decision given on 2 May 2007. The applicant then applied to the Tribunal for a review of the decision made by the respondent on 2 May 2007 to the effect that he was not entitled to compensation pursuant to ss 16 , 19 , 20 , 21 and 21A of the Act in respect of his claimed " aggravation of major depressive disorder, recurrent episode ". On 19 March 2008, the Tribunal affirmed the two decisions made by the respondent dated 27 September 2006 and 2 May 2007 ( Nelson v Comcare [2008] AATA 214). The applicant appeals to this Court from that decision of the Tribunal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). An appeal under that section must be on a question of law. The applicant's Notice of Appeal raises four questions of law and advances several grounds in support of his contentions in respect of those questions of law. Despite the length of the Notice of Appeal, the applicant's appeal raises only one issue, namely, whether the Tribunal failed to address and make a determination concerning the applicant's contention that his underlying psychiatric condition was " aggravated " within the meaning of the definition of " disease " in s 4(1) of the Act by his employment with Centrelink. The applicant accepted that the above formulation of the matters which the applicant seeks to raise on appeal from the Tribunal captures the essence of the applicant's case on appeal. aggravation includes acceleration or recurrence. impairment means the loss, the loss of the use, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function. ailment means any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development). He has complained of a psychological condition, contending it was sustained because of his employment. ● If so, did the Applicant's employment with Centrelink contribute to the illness in a material degree? ● If yes, is the Applicant entitled to compensation for medical treatment under section 16 of the Act and to compensation for incapacity under sections 19 , 20 , 21 or 21A of the Act? It quoted extensively from ss 4 , 14 and 16. In particular, the Tribunal set out the definitions of disease and injury in the terms in which those definitions were expressed in s 4 of the Act at all relevant times. The Tribunal then proceeded to examine the evidence before it and to make relevant findings. These findings may be summarised as follows: The Tribunal then reviewed the medical evidence. Dr Butler, the applicant's treating psychiatrist, was of the opinion that the applicant had a psychological injury which was contributed to by his employment. He said that the incident with the co-worker was only one of the reasons why the applicant had become symptomatic. Dr Sagar, a psychiatrist who saw the applicant and testified at the behest of the respondent, described the applicant's condition as decompensation. He said the applicant was in a melancholy depressive state. He said that the applicant had an obsessional or defensive narcissistic personality. Dr Sagar said that the incident with the co-worker was the straw that broke the camel's back. It was possible that the applicant had decompensated before joining Centrelink. The PTSD diagnosis in 1991 was significant. Persons with that disorder typically, on securing a job, quickly have interpersonal problems at work. Dr Akkerman, a psychiatrist, also gave evidence on behalf of the respondent. He said that the applicant had a personality problem which was unaffected by his employment. At [39]---[44] of its Reasons, the Tribunal referred to the parties' submissions. At [40], the Tribunal noted that it was submitted on behalf of the applicant that the sole contributing factor to the applicant's condition was his employment with Centrelink. There was no mention in this section of the Tribunal's Reasons of any submission directed to the concept of " aggravation of an ailment ". At [45]---[60], the Tribunal considered each of the issues which it had identified at [3] of its Reasons. The Tribunal held that the applicant suffered from a psychological injury (Reasons at [45]---[47]). It also held that the psychological injury from which the applicant suffered resulted in impairment and incapacity for work within the meaning of s 4 of the Act in March 2003, October 2003 and May 2005. The Tribunal then considered the second issue which it had identified at [3] of its Reasons under the heading: " Did the Applicant's employment with Centrelink contribute to the condition in a material degree? " At [50] of its Reasons, the Tribunal described this as " the crux of this case ". The Tribunal then discussed the concept of " material contribution " and the evidence relevant to that question. The Tribunal seemed to hold that the applicant already suffered from an underlying personality disorder when he commenced working for Centrelink (see [57] of the Tribunal's Reasons). The co-worker incident, in our view, produced only an episodic increase in his pre-morbid stress condition. At this point in its reasons, it referred to and discussed the judgment of Finn J in Comcare v Sahu-Khan [2007] FCA 15 ; (2007) 156 FCR 536. Mr Nelson is not entitled to compensation pursuant to section 14 of the Act. It follows that he is not entitled to compensation in respect of medical expenses under section 16, nor is he entitled to compensation for incapacity under sections 19 , 20 , 21 or 21A of the Act. The terms aggravation and acceleration in the present context have been given their normal English meanings in judgments of this Court (see Casarotto v Australian Postal Commission [1989] FCA 116 ; (1989) 86 ALR 399 at 404---405 and Martin v Australian Postal Corporation [1999] FCA 655 at [22] ---[28]). In the present case, in order to make good the contention concerning aggravation of an existing ailment which the applicant submits was advanced to the Tribunal, the applicant would need to demonstrate that, at the time he commenced his employment with Centrelink, he was suffering an ailment within the relevant definition and that that ailment was aggravated (ie made more severe) by his employment by Centrelink or that the aggravation was contributed to in a material degree by his employment by Centrelink. The notion of material contribution was explained by Finn J in Sahu-Khan [2007] FCA 15 ; 156 FCR 536. In that case, his Honour concluded that, in order to assess whether the aggravation of an ailment was contributed to in a material degree by the employee's employment, the Court was obliged to evaluate all relevant contributing factors in order to determine whether the employment made a contribution which was more than a mere contributing factor. His Honour described the exercise as a matter of fact and degree ( Sahu-Khan [2007] FCA 15 ; 156 FCR 536 at [16] (p 542---543)). The fundamental premise of the applicant's argument is that the Tribunal simply failed to address his case based upon alleged aggravation of an existing ailment (viz his underlying psychiatric condition). The Tribunal described the applicant's complaint at [1] of its Reasons as a complaint to the effect that his psychological condition was sustained because of his employment. That language tends to suggest that the Tribunal regarded the applicant's case as being confined to a case based upon the contention that he sustained an ailment as an employee of Centrelink, being an ailment that was contributed to in a material degree by Centrelink. The terms of the general formulation of the issue in [1] of the Tribunal's Reasons tend to suggest that the Tribunal did not regard aggravation of an existing ailment as being an alternative basis for the applicant's claims before it. The language used by the Tribunal in the second dot point in [3] of its Reasons also suggests that the Tribunal did not have under consideration the question of aggravation. As mentioned at [26]---[27] above, the Tribunal described the crux of the case as being captured in the heading to the last part of its Reasons for Decision, namely: " Did the Applicant's employment with Centrelink contribute to the condition in a material degree? " At [58], the Tribunal appears to make a finding that the applicant's condition was not materially contributed to by his employment. Whilst it is true that the word aggravation appears in [60] of the Tribunal's Reasons, the substance of that paragraph is a finding directed to the question of whether or not the applicant's employment substantially contributed to his psychiatric condition. That is to say, the proposition being addressed in that paragraph of the Tribunal's Reasons is: Was the onset of the applicant's condition caused by or materially contributed to by the applicant's employment by Centrelink? In [60] of its Reasons, there is no application of the mind of the Tribunal to the alternative case put by the applicant to the effect that his underlying psychiatric condition was made more severe or hastened by his employment by Centrelink. For these reasons, I am of the view that the Tribunal did fail to address the question of aggravation in its Reasons and in its decision. But that is not the end of the matter. The Tribunal would not be obliged to address the question of aggravation unless the applicant had advanced a case to the Tribunal based upon aggravation of his underlying psychiatric condition. The submissions made on behalf of the applicant to the Tribunal were made orally. They were amplified by a Written Submission. In the Written Submission, the author of that document did not develop with any precision the reasons why it was contended on behalf of the applicant that the applicant had suffered a disease at work of the requisite kind. But, as I have said, there is no development of the argument so as to make clear the basis upon which the proposition that the applicant had suffered a disease of the requisite kind was being advanced. In his oral submissions to the Tribunal, Counsel for the applicant did specifically put that the applicant had suffered an aggravation of a disease and thus an injury at work. A little later in his submissions, aggravation was mentioned again. It is also fair to say that the submissions made in the Tribunal on behalf of the applicant seemed also to rely upon sub-clause (a) of the definition of disease in the sense that Counsel argued that the applicant had sustained his psychological condition as a result of his employment by Centrelink. Counsel for the respondent quite properly and fairly conceded that the question of aggravation had been argued before the Tribunal. His submissions in the appeal proceeded upon the footing that the case based upon aggravation of the applicant's existing psychiatric condition had been understood and addressed by the Tribunal. It was submitted on behalf of the respondent that conformably with the medical evidence adduced by the respondent before the Tribunal, the Tribunal found that the applicant suffered from underlying psychological disorders which were inevitably going to bubble to the surface in the workplace and that those disorders had not been aggravated by the applicant's employment by Centrelink. All that had happened was that the inevitable consequences of those disorders manifested themselves during the applicant's employment by Centrelink. Counsel for the respondent submitted that the medical evidence made clear that the applicant's underlying condition was such that it was always going to manifest itself in the ways that it did, no matter where he worked or what the circumstances of his employment turned out to be. Counsel was at some pains to demonstrate that there was a significant body of medical evidence before the Tribunal which would have justified a conclusion being reached by the Tribunal to the effect that, notwithstanding the fact that the applicant did suffer from an underlying condition, the symptoms which manifested themselves from 2003 onwards were the inevitable result of that underlying condition rather than the result of exacerbating factors caused by his employment. It is true that there is evidence to that effect submitted by Counsel for the respondent. However, there was also evidence called on behalf of the applicant to the effect that the applicant's underlying condition was made worse or more severe by his employment with Centrelink. I do not think that the respondent can answer the criticisms presently raised by the applicant by submitting, in effect, that, if the Tribunal had considered the question of aggravation, it would inevitably have come to the view that the applicant's underlying condition was not aggravated by his employment. Of course, I appreciate that the respondent does not quite put its submission in this way. The respondent's submission is that the Tribunal did, in fact, address the question of aggravation and gave it short shrift. The respondent submitted that the Tribunal was entitled to give the question of aggravation short shrift because there was a substantial body of evidence that would justify the Tribunal taking that approach. The applicant did argue before the Tribunal that his underlying condition had been aggravated by his employment in the sense contemplated by the definitions in s 4 of the Act. The argument was not developed much but this does not detract from the fact that the argument was put. The Tribunal was obliged to turn its mind to the argument and to deal with the question of aggravation. It was a significant part of the applicant's case before the Tribunal. The argument was seriously advanced by the applicant and was worthy of serious consideration. Whilst it is true that the Tribunal is not required to consider and address every submission made to it, serious submissions of the type to which I have just alluded must be addressed ( Dennis Willcox Pty Ltd v Federal Commissioner of Taxation (1988) 79 ALR 267 at 276---277 per Jenkinson J). It is an error of law for the Tribunal not to consider such a submission and not to reveal its consideration of that submission in its Reasons for Decision (see Hartnett v Migration Agents Registration Authority [2004] FCA 50 at [50] ; and Australian Postal Corporation v Sellick [2008] FCA 236 ; (2008) 245 ALR 561 at [88] ---[89] (pp 579---480)). This statement of principle is consistent with the more general statements of principle directed to giving content to the concept of error of law made by the Full Court in Repatriation Commission v Hill [2002] FCAFC 192 ; (2002) 69 ALD 581 at [59] (pp 597---598). In order to meet its obligations in this regard, it was incumbent upon the Tribunal to turn its mind by a rational process of reasoning to the question of aggravation and to come to a view as to whether or not the applicant's argument should be acceded to. In order to meet those requirements in the present case, the Tribunal was obliged to make reference to the relevant medical evidence, to come to a view about that evidence and to explain its reasons for doing so. It was then obliged to relate that evidence to the notion of aggravation by reference to the relevant statutory provisions and authorities. The Tribunal did none of those things. Counsel for the applicant also submitted that the Tribunal had committed a reviewable error of law by failing to give any or adequate reasons for its decision when it failed to address the applicant's case based upon aggravation of an existing ailment. I think that the error committed by the Tribunal is more aptly described as a failure to consider and address that case rather than a failure to give reasons or adequate reasons for rejecting that case. For these reasons, the Tribunal's decision must be set aside. I will make orders accordingly. The applicant seeks an order that, in the event that his appeal is successful, the matter be remitted to a differently constituted Tribunal to be determined according to law. This application was not supported by any particular submissions. I do not think that the applicant has made out a case for such an order and I decline to make an order in those terms. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | appeal on a question of law pursuant to s 44(1) of the administrative appeals tribunal act 1975 (cth) applicant contended that the administrative appeals tribunal failed to consider and address submissions which were seriously advanced by the applicant and worthy of serious consideration applicant argued a case for compensation made under the safety, rehabilitation and compensation act 1988 (cth) in the alternative alternative based upon aggravation of an existing psychiatric condition not considered or addressed by the tribunal tribunal committed reviewable error of law tribunal's decision set aside matter remitted to the tribunal for reconsideration according to law administrative law |
I give leave to file the notice of motion. The notice of motion seeks permanent orders and other interlocutory relief. For present purposes, I will not consider those aspects any further. The principal application is for a search order, pursuant to order 1 of clause BA of the notice of motion. That application is one for a further search order, consequent upon a search order I made in the existing proceedings yesterday. I also, yesterday, made an order restraining the first, second and third respondents from engaging in particular conduct identified by the order, until 4 pm on 1 April 2008. 2 There is no utility in making any further interlocutory order restraining those respondents in terms of paragraph 2 of clause BA of the notice of motion as a restraining order in those terms was made yesterday. As I say, the question to be determined today is whether there is a proper basis for making a further search order in respect of two additional premises. The search order made yesterday was directed to a search of premises at number 4 Parry Street, Moonee Ponds, in the State of Victoria. In support of the present application, an affidavit has been sworn by Mr Dale Patrick Brown. That affidavit bears the date 18 March 2008, but in fact it was sworn today, 19 March, and deposes to events which occurred in the course of giving effect to the search order made yesterday. 3 In summary, there was some difficulty in securing access to the premises of Mr Michael Young, the first respondent, at 4 Parry Street, Moonee Ponds. In the course of conducting an inspection of the premises, as a result of ultimately obtaining access around 9am Australian Eastern Time, information became apparent that there was material on the premises, in the form of an envelope bearing an address, "Care of Synergy, 3 The Causeway, Melbourne". In addition, the affidavit deposes to facts concerning efforts made by Mr Grenfell, who went to premises at Shop 3, The Causeway, Melbourne, and asked to purchase a GHD hair styler. Ultimately, one was supplied. 4 The affidavit deposes to events which involved one of the assistants going to another place to obtain the article. The article was a black GHD styler, and was purchased by Mr Grenfell for $299. There was also produced a pink GHD hair styler, which might have been supplied. The affidavit exhibits a search of the company called Synergy Hair Education Pty Ltd. That search demonstrates that Mr Tom Kotsimbos, the third respondent, is an officer of that company. I am informed by Mr Brown that the officer described as Peter Young, is the brother of the first respondent, Michael Young. 5 The affidavit material also deposes to information concerning a conversation with Mr Luke Fox, the applicant's general counsel. Mr Fox was, at 8am Brisbane time, standing outside the premises at Synergy Hair store, at 3 The Causeway, Melbourne, and had just at that time attended another site described as Shop 17, The Block Arcade, Melbourne. The affidavit also exhibits a search of the White Pages directory, which reveals an entry for "Synergy Hair," and two sites are recorded. Shop 3, The Causeway, Melbourne 3000, and Shop 17, The Block Arcade, Melbourne 3000. Having regard to the material deposed to in the affidavit of Mr Brown, I am satisfied that, consistent with order 25B of the Federal Court rules, and the practice direction, that there is a serious prospect that evidence will not be preserved in the absence of an order being made. 6 I am satisfied as to all of the elements of order 25B of the rules and I propose to make a further search order. 7 The order will be that a Search Order issue in the form of the Search Order annexed to the draft order. The Search Order to be annexed to that formal order will require an amendment to reflect the appropriate telephone number at paragraph 3 of the order as 3248 1166. A further amendment will be required at paragraph 23(a), to reflect in line 2 a reference to paragraph 22(b) to (g). And the order will be amended to delete from schedule A the premises described as (i) 4 Parry Street, Moonee Ponds in the State of Victoria, with a result that the order is confined to the two additional premises I have described. 8 The further orders will be that the notice of motion filed by leave will be returnable before the court at 10.15am on Tuesday, 1 April 2008; the costs of and incidental to the application today are reserved; and service of the notice of motion and the affidavits in support of this order, together with the order and search order, shall be served by delivering facsimile copies of each document to the first, second and third respondents. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for a search order under order 25b of the federal court rules practice and procedure |
Mitsui has a wholly owned subsidiary, Mitsui & Co (Australia) Ltd ("Mitsui Australia"). 2 Salt Asia Holdings Pty Ltd ("SAH") is an Australian proprietary company. The shareholders of SAH (other than Mitsui and Mitsui Australia) are Hanwha (HK) Co Ltd ("Hanwha") (the defendant, a company incorporated in Hong Kong) and PT Sempurna Caturguna ("Sempurna") (a company incorporated in Indonesia). 3 Onslow Salt Pty Ltd ("Onslow Salt") is a wholly owned subsidiary of SAH. Prior to May 2007, SAH held a 92.7% interest in Onslow Salt. 4 Akzo Nobel Chemicals International BV ("Akzo") and Akzo Nobel NV ("Akzo NV") are companies incorporated in the Netherlands. These acquisitions by Mitsui constituted it a "90% Holder" in relation to securities in SAH by reason of s 664A of the Corporations Act 2001 (Cth) ("the Act "). 7 On 19 January 2007, PKF Corporate Advisory Services (NSW) Pty Ltd provided Mitsui with its independent expert report. PFK concluded, among other things, that the terms proposed by Mitsui for the acquisition of Hanwha's and Sempurna's shares equalled or exceeded PKF's assessment of fair value for their shares in SAH. 8 Mitsui offered, under the compulsory acquisition notice dated 25 January 2007 concerning the shares of SAH ("Notice"), to pay Hanwha the same amount per share that Mitsui (and Mitsui Australia) paid Akzo under the Share Sale Agreement for its ordinary shares in SAH. Sempurna was offered the same price for its ordinary shares. 9 By the Notice, Mitsui offered to pay a cash amount that was effectively subject to four specified adjustments contained in a summary of the Share Sale Agreement (SSA) between Mitsui and Akzo and attached, as Annexure 'A' to the Notice. The 90% Holder hereby gives notice that it proposes to compulsorily acquire ordinary shares that you hold for the cash amount of $16.1657119780 per share, as calculated in accordance with item (e)(iii)(B) of Annexure A and subject to the further adjustments in items (c), (d) and (e)(ii) of Annexure A. . . At the date of this notice, there has been no adjustment pursuant to this provision. At the date of this notice, there has been no adjustment pursuant to this provision. This adjustment to Hanwha will be calculated by multiplying 0.0347 with any balance amount between the actual liabilities Onslow will incur for the repairs and the amount of the write-down of the fixed assets in the Completion Accounts (as defined in paragraph (e) below), according to the agreed scope of repair work under the SSA. (e) An adjustment is to be made to the Initial Purchase Price in the event that Akzo's interest in the net assets ("Net Assets Amount") of the Company and Onslow (together, the "Group") as at the close of business on 31 July 2006 ("Completion Date") as set out in audited financial statements for the Group ("Completion Accounts") is more or less than the aggregate of Akzo's interest in the net assets as at 31 December 2005 ("Accounts Net Asset Amount") and the estimated amount by which the Accounts Net Asset Amount changed between 31 December 2005 and Completion Date. . . . The Independent Accountant's determination will be final and binding on the parties and the Initial Purchase Price will be adjusted in accordance with that determination. The adjustment may be in accordance with the Completion Accounts as set out in paragraph (i) above, the 90% Holder's dispute notice or Akzo's dispute notice as set out in paragraphs (iii) or (iv) below, or such other amount determined by the Independent Accountant. It is expected that the Independent Accountant's determination will be finalised in February 2007. Sempurna has lodged an objection under s 664E of the Act to the compulsory acquisition of the 2,062,500 A class shares it holds in SAH. 12 By Orders in that proceeding dated 11 April 2007, Nicholson J, under para 2, ordered, relevantly, that Hanwha be entitled to file a statement listing the grounds of and reasons for its objection to the compulsory acquisition of its shares in SAH by Mitsui. 13 Hanwha filed such a statement dated 4 May 2007 entitled "Hanwha's statement pursuant to paragraph 2 of the orders made by Nicholson J on 11 April 2007" (Hanwha's Statement). 15 It also sought an order that the period set out in section 664AA of the Act be extended, pursuant to s 1322(4)(d) of the Act , so that the period ends three months after the date of such an order being made ("Extension of Time Order"). The effect of s 664AA is that the 90% holder may compulsorily acquire the relevant securities only if it lodged the compulsory acquisition notice for the acquisition with ASIC within the period of 6 months after it became a 90% holder. 16 In order to avoid an interlocutory dispute in that proceeding as to whether the Court has power to make the Extension of Time Order, Mitsui instituted the present proceeding, in which to seek the Extension of Time Order. 17 By consent on 25 October 2007, orders were made in the other proceeding relevantly, that ground 1(a) in Hanwaha's Statement be decided as a preliminary issue before trial in that action and to be heard at the same time as the hearing of this application. 19 The preliminary issue has been determined, in effect upholding the Cash Sum Objection ( Mitsui & Co Ltd v Hanwha (HK) Co Ltd [2007] FCA 2070). Mitsui accordingly cannot, without further order of the Court, seek to compulsorily acquire the ordinary shares, as the 6 month period for issuing a notice of compulsory acquisition has ended. The Court now requires to determine Mitsui's application for the Extension of Time Order in this proceeding, to enable it to lodge with ASIC and despatch to Hanwha and Sempurna further compulsory acquisition notices. In the course of the hearing the third affidavit of Hirofumi Matsuyama sworn 9 November 2007 in the other action was , without objection, also read. The procedure took effect from 13 March 2000. 22 Section 664AA of the Act provides that a 90% holder, in relation to a class of securities of a company, may compulsorily acquire securities in that class under s 664A of the Act only if the holder lodges the compulsory acquisition notice for the acquisition with ASIC, under para 664C(2)(a) of the Act , within, relevantly, the period of 6 months after the 90% holder becomes the 90% holder in relation to that class. 23 Section 666A(1) of the Act provides that a person, entitled to acquire securities under, relevantly, s 664A of the Act , must either pay, issue or transfer the consideration to the holder, take a transfer of the securities from the holder and have the company that issued the securities register the transfer; or complete the procedure laid down in s 666B of the Act , by the end of the period which ends 14 days after the later of the end of the objection period or, if an application for approval of the acquisition is made to the Court under s 664F of the Act , in relation to the securities, the application is finally determined. 24 Section 666B of the Act lays down a statutory procedure for completion of the compulsory acquisition under which the documentation and the payment of the consideration is effected through the company. The Government considers that introducing a time limit is a sensible recommendation, which will provide additional certainty for minority shareholders. However, the 6 month time limit may disadvantage existing 90% holders who have to implement a compulsory acquisition within months of the commencement of the legislation or lose that right altogether. In these circumstances, the Government will seek to amend the Bill to provide that existing 90% holders have 12 months from the commencement of the Bill to use the new compulsory acquisition power. A person who becomes a 90% holder after commencement of the Bill will have 6 months of becoming a 90% holder to use the new compulsory acquisition power'. The proposed amendments will implement recommendation 3 of the report into the CLERP Bill by the Parliamentary Joint Committee on Corporations and Securities, with modifications. The Committee recommended that s 664A be amended so that a compulsory acquisition can only occur within 6 months of the proclamation of the legislation or within 6 months of the person seeking to make the acquisition becoming a 90% shareholder (emphasis added). 3.11 The modification is to allow a longer period of 12 months from the proclamation of the legislation for an existing 90% holder to utilise the new compulsory acquisition power. This will effectively allow a transitional period for existing 90% holders who would otherwise be forced to use the compulsory acquisition power within 6 months of commencement of the CLERP Bill or lose that right. The 6 month period will apply to persons who become a 90% holder after commencement" (emphasis added). One consideration was certainty in relation to the period during which minority shareholders were vulnerable to the exercise of the compulsory acquisition power; and certainty in relation to the date by which the consideration had to be paid. 31 Mitsui points to further extrinsic material which it submits is also relevant to understanding the policy considerations underpinning Part 6A.2 of the Act . I have set these out below. These were intended to emphasise that, in part, the policy considerations and legislative objective were to remove the potential of minority shareholders from demanding a price for their securities that is above fair value, a practice commonly described as 'greenmailing': Capricorn Diamonds Investments Pty Ltd v Catto [2002] VSC 105 ; (2002) 5 VR 61 at [28] cited with approval by Steytler P in Batoka Pty Ltd v Conocophillips WA-248 Pty Ltd [2006] WASCA 44 at [40] . Removing tactical litigation and disputes from the courts would lead to a more timely resolution of those matters reducing costs for the parties involved. The presence of a small minority interest can impede the efficient running and profitability of a corporation. This then affects the value of the business to the ultimate owners of the majority shareholder and can also have some effect on Australia's overall economic efficiency [...] provided the minority shareholders receive fair compensation, this extension of the compulsory acquisition provisions is justified (at [3.59]). 38 Section 1322(4)(d) of the Act provides that the Court may make an order, either unconditionally, or subject to such condition as the Court imposes, extending the period for doing any act, matter or thing under the Act and may make such consequential or ancillary orders as the Court thinks fit. 39 Section 1322(4)(d) confers an unfettered discretion upon the Court, subject to the requirement of s 1322(6) of the Act , namely, the Court must not make an order unless it is satisfied that no substantial injustice has been or is likely to be caused to any person. 40 It has been said in a number of cases that s 1322(4) is a remedial provision to be construed liberally: Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427 at [74] ; Re Wave Capital Ltd [2003] FCA 969 at [29] . 41 However, "although s 1322 has been held to be a very wide provision which is to be construed liberally .... there are limits as to what the court can do under it ...." per Young J in Re Infomedia Pty Ltd (2000) 34 ACSR 682 at [9]. 42 Hanwha contends that s 1322(4)(d) is not a relevant source of power for the Court to extend time under s 664AA(b) of the Act . It points to the context of Part 6A.2 Division 1 of the Act , by which a minority shareholder is at risk of having his or her shares compulsorily acquired by a 90% holder. Hanwha submits that the time limit in s 664AA(b) has the effect that, at the end of the period of 6 months, such a person will know whether his or her shares remain at risk of being compulsorily acquired and, if they do, at what price. This, it says, is a perfectly reasonable requirement in a legislative scheme which seeks to balance conflicting commercial interests of this character. It follows, so Hanwha contends, that a 90% holder, who wishes to avail himself of the power to compulsorily acquire, must act within the time period of 6 months set out in s 664AA: cf BP Australia Ltd v Brown (2003) 58 NSWLR 332 per Spigelman CJ in at [115]. 43 A particular application of s 1322(4)(d) was considered by the High Court of Australia in David Grant & Co Pty Ltd v Westpac Banking Corp [1995] HCA 43 ; (1995) 184 CLR 265. In that case the appellant companies had been served with statutory demands but had failed to comply with the demands within 21 days pursuant to s 459E(2)(c). They each also had failed to apply to the Supreme Court of Victoria in accordance with s 459G for an order setting aside the demands. Section 459G(2) provided that an application for such an order "may only be made within 21 days" after review of the demand. The appellants did serve such applications but outside the statutory 21 day period. 44 Gummow J, with whom the other four members of the Court agreed, predicated his reasons by observing that the "difficulty in construction arises, perhaps not so much from the particular text of either s 459G or s 1322 , as from the interrelation between the two provisions in circumstances where the enactment of s 1322 preceded that of s 459G , and the earlier section is general and the later section specific in its operation. 46 Section 1322(4)(d) was found to have no application. The s 459G time limit was held to "define the jurisdiction of the court in respect of an application to set aside a statutory demand" (p 276) and "... attach a limitation or condition upon the authority of the court to set aside the demand" (p 277). An integer or element of the right created by s 459G is its exercise by application made within the time specified. To adapt what was said by Isaacs J in The Crown v McNeil [1922] HCA 33 ; (1922) 31 CLR 76 at 100-1, it is a condition of the gift in subs (1) of s 459G that subs (2) be observed and, unless this is so, the gift can never take effect. The same is true of subs 3. 48 In Newtronics Pty Ltd v Gjergja (2007) 63 ACSR 611, Byrne J in the Supreme Court of Victoria held that s 1322(4)(d) could not be called in aid to extend the 6 year time limit imposed by the then Corporations Act s 1317HD(2) for the commencement of proceedings under that section. [18] His Honour also placed weight on the "surprising" location of the word "only" which might otherwise have been expected to be located immediately before the phrase "within 6 years after". 54 To adapt what was said by Gummow J in David Grant (p 277) in relation to the time limits in s 459G(2) and (3) of the Act , the issue is whether an integer or element of the power created by s 664A is its exercise by lodging the compulsory acquisition notice for the acquisition with ASIC within the time specified. Again, to adapt what was said by Isaacs J in The Crown v McNeil [1922] HCA 33 ; (1922) 31 CLR 76 at 100-101, referred to by Gummow J in David Grant at p 277, is it a condition of the gift in s 664A that the time period in s 664AA be observed and, unless this is so, the gift can never take effect? 55 In Gordon v Tolcher (in his capacity as Liquidator of Senafield Pty Ltd (in liq)) & Anor [2006] HCA 62 ; (2006) 231 ALR 582 at [37] , the High Court saw the relevant distinction, in relation to the time period in s 588FF(3) of the Act , being whether the provision in the section as to time was of the essence of the provision or whether the provision in the section was to be "characterised merely as a time stipulation of a procedural nature". 56 Hanwha submits that, having regard to the legislative background material and the legislative scheme itself, the intention may be discerned that the 90% holder exercise its compulsory acquisition power, or gift, within the relevant 6 month period or 'lose that right' to echo the words of the Parliamentary Joint Committee. I do not agree. The material to which I have referred does not give paramountcy to the interests of minority shareholders. The legislation is a balancing exercise involving a number of competing considerations. Indeed there is an important national economic perspective discernible particularly in the Explanatory Memorandum. Protection of minority shareholders is but one of a number of objects. For example, one primary object in the legislative scheme identified by Steytler P in Batoka [39] was that shares are acquired at fair value. 57 This intention, Hanwha says, is also manifest in the words "only if" and its location within s 664AA , and that to permit s 1322(4)(d) to override the time limit expressed in such emphatic terms in s 644AA is to deny meaning to the word "only". 58 Hanwha submits that in its context, the word "only" has the role of meaning "not otherwise", rather than that of merely providing a non imperative emphasis to the time limit. There is no basis, it contends, for not giving full force and effect to the meaning of the word "only" in circumstances where a fixed time period is prescribed in emphatic terms in relation to the exercise of a statutory power to expropriate shares. 59 However, I do not consider the use of the word "only" to be determinative of the question. I respectfully agree with the observations of Spigelman CJ in BP Australia Ltd. There, the Chief Justice, with whose judgment the other members of the Court agreed, considered the significance of the word "only". ( Texel Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 298 at 300; per Hayne J, in a case under s 459G which was a precursor of David Grant v Westpac ) . However, the use of the word "only" is not of itself determinative. (See eg Emanuele ) . Its force is affected by the relevant statutory scheme considered as a whole, as the analysis in David Grant v Westpac shows. 61 The majority were not persuaded, despite the strength of that language that the failure to comply with the relevant time limit should be rigidly applied. An order nunc pro tunc was made. Re Testro Bros Consolidated Ltd [1965] VR 18 is another case where despite emphatic statutory language: "Except by leave of the Court ... no action or proceeding shall be proceeded with or commenced ...", a nunc pro tunc order was made. 62 Accordingly, the use of the word "only" is but one ingredient in the constructional spectrum: cf Newtronics at [29]. 63 David Grant and the other cases, involving as they did statutory provisions concerning applications to a Court, may be distinguished from cases such as the present, on the basis that conformity with the procedural time limit was a pre-condition to the jurisdiction of the Court from which relief was claimed: David Grant at 276-277; Emanuele at 152 per Kirby J; Newtronics at [25]. 64 However, that distinction does not delineate the limits of the present enquiry. The Law is a case in point. Its complexity and detail is such that it has necessitated, within a short time of its enactment, the passage of the First Corporate Law Simplification Act 1995 (Cth). A number of further stages of simplification are promised. An undue rigidity in insisting upon strict compliance with all of the procedural requirements of the Law could become a mask for injustice and a shield for wrong-doing. Against that risk, courts generally retain the facility to cure slips and to repair oversights in proceedings before them, in appropriate cases where justice requires it. 67 I have concluded that s 664AA(b), despite its strong language, does not operate to exclude the operation of s 1322(4)(d). In so finding, I have been mindful that this new provision postdates the commencement of s 1322(4)(a) and the observations in that respect, generally, of the High Court in David Grant at 275-276. 68 However in that case, in addition to the 'jurisdiction' point of difference, it was also of significance to the result that the legislative scheme established by the new Pt 5.4 itself contained specific provisions conferring upon the court an express power to extend time, firstly in relation to the period for compliance with the statutory demand and secondly in relation to the relevant 6 month period. Other aspects within the statutory regime emphasised the importance of s 459G as an integral part of the particular scheme established by Pt 5.4. In particular insurmountable difficulties would have arisen, were an extension of time available under s 1322(4)(d) in relation to the presumption of insolvency under s 459C(2) and the operation of the definition of the 'period for compliance' with the statutory demand set out in s 459F(2): David Grant at pp 277-278. There are no similar difficulties associated with the compulsory acquisition provisions under Pt 6A.2. 69 Section 669, contained in Chapter 6 of the Act , invests ASIC with wide powers to exempt persons from provisions of the Chapter or to declare that the Chapter applies to a person as if specified provisions were omitted, modified or varied. These powers are expressed widely enough to have enabled ASIC in effect to have removed the time limit under s 664AA(b) or to have extended it. They are not however curial remedies. 70 I accept the following further submissions made by Mitsui. First, the issuance of a compulsory acquisition notice depends upon the appointment of an independent expert, from a panel nominated by ASIC, who must prepare a report to be issued simultaneously with the notice. The completion of the report by the independent third party is a necessary predicate to the issuance of the compulsory acquisition notice: s 664C(2)(b)(ii). 71 The requirement that the independent expert's report accompany the compulsory acquisition notice, places the timing of the issuance of the notice outside the complete control of the compulsory acquirer. In this respect, s 664AA is quite different to ss 459G and 588FF . Under s 459G , the power to apply to set aside a statutory demand rests entirely with the company. Under s 588FF , a long period (3 years) is provided within which all that need happen is that an application is made by a liquidator and that step is not subject to the involvement of any independent third party. 72 Secondly, the 90% holder, as in the present case, may only be able to obtain access to information belonging to the target company at or about the date that it becomes the 90% holder and thus may not be able to commence the process of gathering the relevant material and briefing the independent expert until the time has commenced running under s 664AA. 73 When taken in conjunction with the 90% holder's dependence on the independent expert, it is clear that there may well be circumstances where relief might be sought by a 90% holder as a result of matters beyond its control, either because the briefing of the expert is delayed or the expert himself takes longer than expected to complete his report. Given such circumstances, it is not possible to attribute to Parliament an intention that the 6 month limit be immune to judicial extension under s 1322(4)(d). 74 Thirdly, in BP Australia Ltd, the Court regarded the recognition in the Harmer Report (General Insolvency Inquiry (ALRC 45)) of the considerable commercial uncertainty and inconvenience of "general delays associated with the winding up of insolvent companies" as the policy behind the abridgement of the period within which a transaction may be avoided, and which led to the introduction of the phase "may only be made" in s 588FF(3): at 343-344. In Gordon v Tolcher , the High Court cited the Harmer Report to the same effect in relation to "inordinate delays in commencing proceeding in respect of voidable transactions" (at [38]). No such consideration applies with respect to s 664AA. 75 In Gordon v Tolcher , the Court considered the 3 year period within which to bring applications under s 588FF(3) to be immutable by rule of Court, in part because s 588FF(3)(b) specifically provided a judicial power to extend time: at [41]. The existence of a wider regulatory power to modify Chapter 6 is not a reason for discerning an intention to exclude the applicability of the judicial power under s 1322(4)(d). In the context of a complex piece of legislation such as the Act , there is no reason to assume that a role allocated to the regulator should be the foundation for contracting the scope of an otherwise broadly expressed power given to the Court. 76 On the contrary, the whole point of the power under s 669 is to allow a considerable measure of flexibility in the operation of Chapter 6 and such a fundamental legislative intention entirely supports the continued applicability of s 1322(4)(d) under Chapter 6. 77 The decisions, to which I have referred, which have limited the applicability of s 1322(4)(d) in relation to other provisions of the Act concern provisions that have significantly different legislative purposes to relevant provisions of Chapter 6. They do not concern circumstances where the whole of the relevant Part is subject to amendment by ASIC and where the party seeking an extension of time is dependent upon the conduct of others in order to meet the statutory deadlines. They are therefore not decisive of the applicability of s 1322(4)(d) here. 78 Chapter 6 is not, in my opinion, a self contained and complete code for the resolution of disputes involving the statutory process: cf Emanuele at p 56 per Kirby J; BP Australia Ltd per Spigelman CJ at [79]. 79 It is of significance too, in arriving at this conclusion, that wide curative powers are found in s 1325D(1)(a) of the Act which enables the Court to declare, for example, a document not to be invalid merely because a person contravened a provision of Chapter 6, 6A, 6B or 6C. Pt 6A.2 in which s 664AA(b) sits is within Chapter 6A. This was a matter which was also considered to be significant by Mandie J when the offer period under s 650C(1) of the Act and the period for giving notices under s 650D(1)(c)(ii) of the Act were extended pursuant to s 1322(4)(d). In so concluding, David Grant was distinguished: Pinnacle VRB Ltd v Reliable Powerline [2001] VSC 262 at [17] - [20] . A similar approach was taken by Warren J in Capricorn at [260]. 81 Accordingly, there is power under s 1322(4)(d) to extend time under s 664AA , notwithstanding that the 6 month time limit has run. ... the power conferred by s 1322 must be exercised having regard to the requirements of the purposes of the Corporations Act ... It must also be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with statute law and company constitutions. These events bear on the question of the exercise of the Court's discretion. By operation of s 664AA(b) of the Act , Mitsui had until 31 January 2007 to lodge compulsory acquisition notices with ASIC concerning Hanwha and Sempurna's ordinary (and A class) shares in SAH. 86 In August 2006 Mitsui decided to seek to compulsorily acquire the remaining ordinary (and A class) shares in SAH held by Hanwha and Sempurna. 87 On or about 15 September 2006 Mitsui engaged PKF to prepare the independent expert's report to accompany the Notices. 88 From August 2006 to January 2007 Mitsui sought to obtain, and obtained, an independent expert's report . 89 In September 2006 Mitsui first prepared notices to give to Hanwha and Sempurna. However, Mitsui could not settle the notices until receipt of PKF's independent expert's report. 90 On 19 January 2007 PKF issued to Mitsui its final independent expert's report, in which it concluded that Mitsui was a 90% holder of the ordinary and A class shares in SAH under s 664A(2)(c) of the Act , and that Mitsui's offer to Hanwha and Sempurna under the notices for their ordinary and A class shares in SAH gave a fair value. 91 Mitsui prepared the notices so that the value offered to Hanwha and Sempurna for their ordinary and A class shares in SAH mirrored the price to be paid by Mitsui to Akzo under the Sale Agreement for Akzo's ordinary and A class shares in SAH. 92 On 25 January 2007 Mitsui lodged with ASIC and dispatched to Hanwha and Sempurna compulsory acquisition notices concerning the ordinary and A class shares in SAH held by Hanwha and Sempurna. Sempurna did not object to Mitsui compulsorily acquiring its ordinary shares in SAH under the relevant Notice. 94 By objection forms dated 22 February 2007 Hanwha objected to Mitsui compulsorily acquiring its ordinary and A class shares in SAH on the terms in the relevant notices. 95 In March 2007 Mitsui instructed its solicitors to seek relief from ASIC under s 669(1) of the Act for any possible non-compliance by Mitsui with s 664C(3) of the Act , by reason of difficulties of service. Such application was lodged with ASIC on 23 April 2007. 96 On 11 April 2007 the Court made orders concerning objections to be made by Hanwha and Sempurna. 97 On 4 May 2007 Hanwha provided reasons for its grounds of objections in "Hanwha's Statement Pursuant to Paragraph 2 of the Orders made by Nicholson J on 11 April 2007", filed in Action No. WAD 63 of 2007. 98 In April 2007 the "Cyclone Insurance Payment", the first component of the "Cyclone Adjustment", was determined. 99 In May 2007 the "Completions Account Adjustment" to the "Purchase Price" was determined by Ernst & Young in accordance with the Sale Agreement. 100 On 24 August 2007 Mitsui gave Akzo details of its claimed Repair Liabilities. Accordingly, Akzo had until 7 September 2007 to dispute Mitsui's claimed Repair Liabilities. 101 Akzo requested, and was granted, an extension of the Objection Date to 12 October 2007 and then to the end of October 2007. Akzo requested the extensions on the basis that it required further information, including a site visit, to consider Mitsui's claimed Repair Liabilities. 102 On 12 September 2007, ASIC declined to deal with the applications which had been lodged with it on 23 April 2007 (which application had been undetermined for approximately 5 months) and also declined to deal with the "Three Month Declaration" application lodged on that same date. On 23 February 2007, the plaintiff was informed by the defendant that it objected to the compulsory acquisition notice in relation to the ordinary shares it held in Salt Asia Holdings Pty Ltd (SAH) on the grounds that the notice did not set out the "cash sum" for which the plaintiff proposed to acquire the shares. The defendant was given no notice of that application, in which it clearly had an interest. The defendant first learned of the application to ASIC, dated 23 April 2007, on receipt of Mr Matsuyama's affidavit, sworn on 9 October 2007, in which it was referred to because it was in the interests of the plaintiff to do so. The provisions are detailed, with specific deadlines, which we understand need to be strictly complied with as compulsory acquisition under Part 6A.2 may involve the expropriation of property against the owner's will, albeit for a fair value. The plaintiff gave no notice to the defendant of that determination or how it affected the price offered for the shares. The defendant's solicitors sought a response from the plaintiff to its proposal on 29 June 2007 and 27 July 2007. Again, the plaintiff inexplicably remained idle for a period of approximately 3 months and did not respond to the proposal until 4 September 2007. From that date, until early September 2007, the only step which the plaintiff took in the proceedings was to attend a directions hearing on 11 April 2007 before Nicholson J, at which Orders were made requiring the defendant to file its succinct statement, which it did timeously. 110 The plaintiff will undertake, on condition that it is granted a 3 month extension of the period within which it may issue further compulsory acquisition notices, that it will issue any such notices in a fixed amount not less than the theoretical maximum price, together with simple interest at 10.5% per annum. Indeed, I regard that language in the context of this case as both intemperate and inappropriate. I consider that during the period between when Mitsui acquired its interest in SAH on 31 July 2006, and when it filed its application with ASIC on 12 September 2007, Mitsui sought at each stage to advance the resolution of the compulsory acquisition process. 113 I accept the submissions of Mitsui in this respect, which are reflected below. 114 The plaintiff was active through until 23 April 2007, its activity on that date being an application to ASIC for comfort relief, pursuant to s 669. On 4 September 2007, approximately 4 months from that date, the plaintiff filed a second application to ASIC for relief pursuant to s 669 in relation to, among other things, the "cash sum" requirement in the notices of compulsory acquisition. 115 The plaintiff awaited ASIC's determination of the 23 April 2007 application, which was sought to resolve uncertainties arising from Hanwha not accepting service. It was not until 12 September that ASIC first responded to the plaintiff on either of the applications. Had the application with respect to the "cash sum" question been granted, the present proceedings would have been unnecessary, such that it was prudent to await that determination. 116 Although the compulsory acquisition notices clearly set out that there were events which would further crystallise the offer price, Hanwha did not seek information about those matters. Nor was it necessary to provide that information in a piecemeal fashion. The question whether the offer price offered fair value was not immediately in issue, as the parties had not yet agreed upon a discovery regime appropriate to the commercially sensitive information concerning the operations of SAH. Discovery and the issue of fair value have been deferred pending this application. 117 If Mitsui is granted leave to issue second notices, it will set out a fixed dollar amount per share, together with simple interest at 10.5% per annum. Table at p. 00056. Cyclone Insurance Claim Adjustment +0.65459840 As above Completion Account Adjustment +0.16183371 As above Cyclone Repair Adjustment based on Mitsui's claimed Repair Liabilities -0.78311122 Second Aff. |P153; Third Aff. |P33 Mitsui Anticipated Price 16.19903287 Second Aff. |P167 Adjustment assuming Akzo's claimed Repair Liabilities in full +0.37578075 Third Aff. 119 The plaintiff has informed the Court that it will undertake, on condition that it is granted a 3 month extension of the period within which it may issue further compulsory acquisition notices, that it will issue any such notices in a fixed amount not less than the theoretical maximum price, together with simple interest at 10.5% per annum, from the date that the first notices were lodged. 120 The consequence of this proposal is that Hanwha will not be prejudiced by any change in the business conditions or value between the date of issuance of the first and any second notice. If the value of SAH falls between the date of the first notice and any second notice, Mitsui will have undertaken to offer a price not less than the price proposed under the terms of the first notice (and will, in that circumstance, offer to pay a greater price than the value of the securities). If the value of SAH increases between the date of the first notice and any second notice, Hanwha has the protection of the fair value standard under s 664F(3). In either case, Hanwha (and PT Sempurna Caturguna) will not be adversely affected. Although the compulsory acquisition notices must be issued within 6 months, there is no requirement or assurance that the compulsory acquisition itself will be completed within 6 months. As the plaintiff has proposed interest from the date on which the first notices were lodged, Hanwha will be compensated for delay, as if the compulsory acquisition had occurred instantly. Hanwha has not tendered evidence to support a suggestion that any offer to purchase, or sale of, the securities in SAH has been frustrated or prevented by the compulsory acquisition process. It did not. I accept however that there is a degree of general prejudice arising from uncertainty as to its shareholding in SAH. 124 Furthermore, in this case there is no evidence of a blatant disregard by Mitsui of the requirements of the Act : Re Wave Capital Ltd at [29]. Rather, the need for this application is the consequence of the determination of the preliminary issue in the related proceeding, where I found that the Notice did not contain a "cash sum", for which Mitsui, as a 90% holder, proposed to acquire Hanwha's ordinary shares in SAH, as provided in s 664C(2) of the Act : Mitsui & Co Ltd v Hanwha (HK) Co Ltd [2007] FCA 2070. 125 Accordingly, I am persuaded that relief should be granted as sought in the application. I propose to make orders extending, by 3 months from the dates of these orders, the period set out in s 664AA of the Act for lodging compulsory acquisition notices under s 664C with ASIC, upon conditions that Mitsui give undertakings to the Court in terms of those which are referred to at para [110] above. Mitsui must pay Hanwha's costs. I will invite counsel to bring in a Minute of Orders which will include the relevant undertakings to give effect to these reasons. I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | compulsory acquisition notice ss 664a, 664aa and 664c corporations act 2001 (cth) notice rendered of no effect by judgment of court in separate proceeding application under s 1322(4)(d) by '90% holder' to extend period provided in s 664aa for lodgement of a notice with asic whether power under s 1322(4)(d) to extend the relevant period period extended. corporations |
I also ordered that the respondent pay unpaid entitlements, including interest. Those orders were made by consent. I then stood the matter over for a hearing on penalty. That hearing took place yesterday. 2 The offences occurred between 22 March 2003 and 17 December 2005 in relation to six categories of circumstances. The breaches varied considerably in number and there were differences in distribution as between the various dates. That has some significance because, on 10 August 2004, the maximum penalty for each offence was raised from $10,000 to $33,000. 3 There has been argument as to what the maximum penalty is for each of the offences which have been found. It is not an easy issue because, for the purposes of the declaration, the offences were divided into the period of the week for which the offence took place during each week over that period --- not that there were breaches of every term and condition in every such week. Because it was accepted that, within each category, it was the one course of conduct, one offence was seen to be appropriate. That is all very well, but the maximum penalty was raised during that period. 4 From a practical point of view, it is not a real possibility that the maximum would be exceeded. For comparison purposes, I will assume the maximum penalty to be $22,000 --- a rough average of the amounts before and after the increase --- bearing in mind the number of offences that were involved. In other words, I have not acceded to the proposition that the maximum penalty is that now applicable, nor have I acceded to the proposition that it is the maximum penalty when the period commenced. That argument can be resolved on another day in a case in which it is critical to the result. 5 The parties have agreed on a statement of facts. That has been marked as an exhibit in the proceeding and is available for anybody to read. Although it has not been read publicly, it is a public exhibit. I will not reproduce in this judgment all of those agreed facts. I should, however, mention some of them. 6 The applicant is a workplace inspector. The penalties are sought pursuant to s 178 of the Workplace Relations Act 1996 (Cth) (the Act), as it stood prior to the amendments made in 2005 pursuant to the Workplace Relations Amendment (Work Choices) Act 2005 (Cth). It has been explained to me why that is the case, having in mind the transitional provisions. 7 The parties are agreed that, generally speaking, the matters which might be relevant in cases of this kind were summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 , adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080. The parties have put the submissions on that basis. 8 The respondent was a body corporate subject to the Act, and operated a business trading as "Video Ezy Charnwood" in the Australian Capital Territory. The Employee was born on 10 July 1984. He was employed as a casual shop assistant. The respondent filed an Australian Workplace Agreement (AWA) between the Employee and itself with the Office of Employment Advocate on 16 August 2004 which, of course, was a considerable period after the Employee had been engaged. It is said that that was the result of advice from the previous owner of the business. 9 I need not trace through what subsequently took place in relation to that. It was never assessed as meeting the requirements of the Act, that is, the no disadvantage test. On 26 May 2006 which, of course, is after the end of the employment, the Industrial Relations Commission determined that matter adversely to the respondent, the case having been heard in November 2005. No further AWA was filed and there was no certified agreement applicable to the employment, thus the Award applied at all material times. 10 In April 2006, the Office of Workplace Services received a wages and conditions claim from the Employee against the respondent. Investigations and negotiations followed and it is fair to say that the respondent adopted a recalcitrant attitude at that time. It is said that this attitude was, in part, due to advice received from the ACT and Region Chamber of Commerce and Industry which had been involved in the matter on behalf of the respondent. That organisation is not, of course, before me, and I hesitate to make findings which might be critical of it. The fact of the matter is that the proceeding in this Court was necessary to bring the matter to a head. Ultimately, the orders were made by consent and, further, the orders to pay the unpaid entitlements and interest have been complied with. 11 Turning, then, to the headings of relevant matters, I should say this --- although it is convenient to refer to these headings, the discretion as to the imposition of a penalty is quite unrestrained by the statute. There are no mandatory matters to be taken into account. I would not agree to substituting a judge's checklist for the unrestrained statutory discretion. 12 I have discussed the nature and extent of the breaches and will come back to that in a moment. Insofar as the circumstances under which the conduct took place, it is true that the Employee was a young worker, being 18 years old when he commenced employment. It is said, however, that the directors of the respondent, themselves, were not very much older than the Employee and that they had no tertiary qualifications and little business experience prior to acquiring the suburban video business. It is said that they lacked expertise. They relied upon the advice of an accountant in setting up the business, but did not seek other professional assistance, in particular did not seek advice as to industrial relations. They did, when trouble with the AWA process emerged, seek advice, but it was not, of course, directed to the initial employment of the particular employee concerned here. 13 The underpayment involved, some $9954 plus interest, is by no means an insubstantial amount and was a significant proportion of the overall entitlements of the Employee. There is no prior conduct of this kind although, of course, they were not in business for very long. 14 I have already dealt with the fact that breaches have been assembled under six headings. In one sense, they arose out of the one course of conduct, but, in my opinion, they are not to be looked upon as only one course of conduct for all purposes. 15 The size of the business enterprise involved has led to some debate between the parties. It is clear enough that this is a suburban store of modest proportions in overall terms. However, it is a significant business enterprise and the reality is that many potential breaches of awards will take place by small enterprises. Nonetheless, it seems to me that the size of the undertaking is relevant, because the nature of a penalty, being by way of deterrent, needs to take account of the amount which would be such as to deter the enterprise itself from re-offending. It must be big enough to cause the enterprise not to risk the eventuality of a penalty by breaching awards and then buying their way out. However, as has been put, we are not, here, talking about BHP Billiton or David Jones. 16 As to whether the breaches were deliberate, it is not suggested that the directors set out to deliberately flout the Award and, because of their relative lack of business experience, that may not be surprising. However, the fact is that an AWA was lodged. It was not accepted. A course of conduct was then undertaken which indicated an involvement with the industrial law which makes it surprising and worrying that there was no appreciation of the fact that awards existed. It has been put on behalf of the applicant that ignorance of the law is no excuse. That is true. However, in relation to penalty, it is a matter to be taken into account. 17 There has been some cooperation with the enforcement authorities although, as I have indicated, it was belated and, in effect, forced by the imminence and the existence of this proceeding. Nonetheless, cooperation, both as to the acceptance of liability and as to the agreement as to facts, is a matter to be taken into account in favour of the respondent. 18 As to contrition, although Mr De Marco, a director of the respondent, has expressed regret in the proceeding, that is tempered by what I have said about the lateness of it. Corrective action was taken but, again, only after this proceeding commenced. 19 I take into account the need for specific and general deterrence. I appreciate that the penalty should not be oppressive and that it is not a criminal sanction. There is some evidence that a substantial penalty could have an impact on the viability of the respondent. However that may be, the non-adherence to the Award and the nature and scale of the underpayment here indicates that if the law is breached the business community should not get the idea that they can take the risk of underpaying and then buy their way out of it with a modest penalty. The penalty must be imposed at a meaningful level and, in a sense, the respondent must begin to actually hurt. 20 I have been assisted by looking at the spreadsheet attached to the agreed facts, which sets out the number and distribution of the individual cases of underpayment. I have also received some assistance from a spreadsheet prepared by the solicitor for the respondent, comparing different cases, although that sort of comparison is very difficult because of differing circumstances. The analysis is quite revealing. 21 In assessing penalty I have had regard to scale by the number of the offences and the frequency of offences over the period, and also scale in the sense of comparison, say, between the category of overtime Monday to Saturday with the category of overtime on Sunday --- one is obviously greater than the other. I have also in mind that, although technically all breaches do not arise out of the one set of circumstances, in a broad sense they do. There must be a sense of proportion. I am not sure that the totality principle is correctly identified as applicable in these circumstances, but I think a sense of proportion for the overall conduct should be borne in mind. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | employer concedes failure to pay the minimum rates of pay to a casual employee under the applicable award parties agree to statement of facts consideration of appropriate penalties for breaches industrial law |
In consequence of the Principal Judgment, I subsequently made orders dismissing the proceedings against the Respondents (the News, Foxtel, Fox Sports, PBL, Telstra and Optus parties, together with Mr Philip, ARL, NRL and Austar). (I use the same abbreviations in this judgment as I used in the Principal Judgment. On 26 September 2007, I gave judgment on the application of the Costs Respondents for an award of costs in their favour against Seven on an indemnity basis. I rejected the application, with the result that each of the Costs Respondents became entitled to an order for costs against Seven on the usual party and party basis: Seven Network Ltd v News Ltd [2007] FCA 1489 (' Costs Judgment '). 3 During the argument on indemnity costs, it had been more or less common ground that the case was an appropriate one for the exercise of the Court's power to order that, instead of taxed costs, the successful party should be entitled to a gross sum specified in the order: Federal Court Rules (' FCR '), O 62 r 4(2)(c). The parties adopted this sensible position because a taxation of costs in a case as complex as this would be likely to involve unreasonable delay and expense: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, at 122-123, per von Doussa J; Hadid v Lenfest Communications Inc [2000] FCA 628 , at [24]-[27], per Lehane J. 4 The only unresolved dispute therefore concerned quantification of the gross sums to be awarded to each of the Costs Respondents on a party and party basis. The scope of the costs dispute was further narrowed when PBL and Optus resolved their costs claims by agreement with Seven. Accordingly, the last issue that remains is to determine a gross sum representing the costs that are to be paid by Seven to Telstra on a party and party basis. On this issue Seven and Telstra are a long way apart. 5 Telstra seeks an order for payment of its costs by Seven in the sum of $16 million. This is equivalent to the amount estimated by Ms Alyson Ashe, an experienced costs consultant called by Telstra, as that likely to be recovered by Telstra on a party and party taxation. Ms Ashe initially put forward a figure of $15.8 million in her first report, but amended that figure to $16 million in her second report. She regarded that as ' the lowest reasonably likely outcome for Telstra on a taxation on [a] party and party basis '. That figure took account of existing costs orders adverse to Telstra. 6 An order requiring Seven to pay the sum of $16 million by way of costs would reimburse Telstra 77.24 per cent of the total costs and disbursements incurred by it in the proceedings. That amount is $20,714,476, exclusive of GST. (I have been told that the figures used by the experts and the parties, with immaterial exceptions, are exclusive of GST. This is the amount which, according to the experienced costs consultant called by Seven, Ms E M Harris, is likely to be awarded on a taxation of Telstra's costs on a party and party basis. The sum of $8.69 million represents 41.95 per cent of the total costs and disbursements incurred by Telstra in the proceedings. 8 The parties prepared in advance of the hearing a helpful schedule identifying the major differences between the allowances made by Ms Ashe and Ms Harris in their respective reports. The schedule shows that the major differences relate to the allowances for the professional fees charged by Telstra's solicitors and the allowances for counsel's fees. Ms Ashe allowed $7,904,407 for solicitors' professional fees, while Ms Harris allowed only $3,131,292, a difference of $4,773,115. Similarly, Ms Ashe allowed the sum of $4,823,217 for counsel's fees, while Ms Harris allowed only $2,914,317, a difference of $1,908,900. Prior to the hearing, the parties filed written submissions supporting their respective positions. The parties do not have any significant disagreement as to the principles to be applied on an application for a gross sum costs order. The disagreement is essentially related to the application of those principles to this unusually large and complex litigation. 10 The parties suggested that I should follow the practice adopted by von Doussa J in Beach Petroleum v Johnson (No 2) , where his Honour sat with a Deputy Registrar experienced in conducting taxations of costs for the purpose of making a gross sum costs order pursuant to FCR , O 62 r 4(2)(c). 11 I gratefully adopted the parties' suggestion. In consequence, Deputy District Registrar Tesoriero, who has extensive experience in taxing bills of costs, sat with me at the hearing. The Registrar participated in the hearing, in particular asking questions of the expert witnesses. I have also consulted Registrar Tesoriero about the conclusions I have reached and his assistance has been extremely valuable. It is important to stress, however, that I am responsible for this judgment, the conclusions reached in it and the orders I intend to make. 12 At the hearing, Mr Castle, who appeared with Mr Pike on behalf of Telstra, tendered two reports prepared by Ms Ashe. In addition, Mr Sheahan SC, who appeared with Mr Halley for Seven, tendered Ms Harris' report. 13 By agreement between the parties, Ms Ashe and Ms Harris gave concurrent evidence. Each expert made an opening statement explaining her reasoning and dealing with issues raised in the three reports. Registrar Tesoriero and I asked questions during and after the opening statements. Thereafter Mr Castle put some questions to Ms Harris and Mr Sheahan questioned Ms Ashe. Finally, Ms Ashe and Ms Harris each made brief closing statements. 14 No issue arises as to the credit of either of the expert witnesses. In my view, Ms Ashe displayed a tendency to argue the case on behalf of Telstra, rather than confine herself to her area of expertise. Ms Harris, by contrast, was careful to acknowledge the limitations of the tasks she performed and the uncertainties of the taxation process. Overall, however, the expert evidence was helpful in isolating the points of difference and in explaining the respective approaches to the assessment of costs taken by Ms Ashe and Ms Harris. 15 In addition to Ms Ashe's evidence, Telstra relied on two substantial affidavits sworn by Mr Forbes, the partner of the firm of solicitors acting for Telstra who had carriage of the proceedings on Telstra's behalf. Mr Forbes' affidavits addressed, among other matters, Ms Harris' grounds for suggesting that a taxing officer would be unlikely to allow certain professional costs or disbursements Telstra contends should be incorporated in the gross sum costs award. Mr Sheahan did not seek to cross-examine Mr Forbes. The Court may exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding: FCR , O 62 r 3(1). 17 FCR , O 62 r 4 provides for the Court to make a gross sum costs order. Unless the taxing officer appoints a time for taxation of the bill, it is to be assessed under O 62 r 46. Order 62 r 46 allows the taxing officer, in the absence of the parties and without making a determination of individual items, to make an estimate of the approximate total for which, if the bill were to be taxed, the certificate of taxation would be likely to issue. If no notice of objection is filed, the estimate is taken to be the amount for which a certificate of taxation may be issued: r 46(3)(ca). If an objection is filed, the Registrar proceeds to a provisional taxation of the bill or to a full taxation: r 46(4). Every taxation of costs is subject to review by a Judge: O 62 r 11. 19 FCR , O 62 r 12 provides for a scale of costs. Some of the items are time-based, such as Item 31 which sets out a charge per quarter hour for an ' attendance that requires the attendance of a solicitor '. Others are non-time-based, such as Item 16, which deals with photocopying. The charges specified in Schedule 2 are mostly set at a dollar figure, but certain Items allow for charges ' at the discretion of the taxing officer '. 21 I set out below three examples of items in Schedule 2, including Items 16 and 31, each of which played a part in the argument. (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. 27 Rule 4(2)(c) is, however, located within an Order that makes detailed provision for the assessment of party and party costs. 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. 28 On the other hand, it must be borne in mind that r 4(2)(c) establishes a procedure that applies instead of taxed 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. 29 It is necessary for the Court to have sufficient information to enable it to make a logical, fair and reasonable estimate. 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. 30 Care should be taken, however, to ensure that the process does not take on too many of the characteristics of 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. 31 Given that experts should not undertake a detailed analysis of Schedule 2 of the kind that is required on a taxation of costs, it is virtually inevitable that their opinions as to the appropriate gross sum costs order, at least in relation to lengthy and complex proceedings, will be based on incomplete material or on an incomplete understanding of the nuances of the litigation. 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. 32 A further difficulty, perhaps peculiar to these proceedings, is that neither expert, despite extensive experience as a costs assessor, has had to prepare a bill of costs or to tax costs in proceedings of such complexity and of such dimensions. 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. 33 I was referred to a number of Federal Court cases in order to illustrate the range of gross sum costs orders that have been made. The range, measured by reference to the percentage of total costs and disbursements allowed by the Court, is quite wide. The cases to which I was referred include Beach Petroleum v Johnson (No 2) (a gross sum costs award equivalent to 64.7 per cent of the successful party's total costs and disbursements); Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd (unreported, O'Loughlin J, 23 January 1998) (38.19 per cent of the amount claimed ); Datadot Technology Ltd v Alpha Microtech Pty Ltd [2003] FCA 1449 (59.05 per cent of total costs and disbursements); Williams Advanced Materials Inc v Target Technology Co LLC [2004] FCA 1405 (65 per cent); Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 (67.31 per cent); Sparnon v Apand Pty Ltd [1998] FCA 164 (60.98 per cent); and Sony Entertainment (Australia) Limited v Smith [2005] FCA 228 (40.79 per cent). If these cases are any guide, most awards seem to fall broadly within the range of 60 to 70 per cent of total costs and disbursements, although sometimes the award may amount to less than 40 per cent of total costs and disbursements. As Mr Sheahan pointed out, none of the cases appears to have allowed the proportion of total costs claimed by Telstra in this case (77.24 per cent). 34 In my view, however, costs assessments made in previous cases are of limited assistance in determining an appropriate order in the present case. Each award must depend on the particular circumstances and on the evidence adduced by the parties. Moreover, none of the cases to which I was referred involved costs anywhere near those incurred by Telstra, let alone the many other parties, in these proceedings. I therefore approach the assessment of the gross sum recoverable by Telstra with no particular preconceptions derived from previous cases as to the proposition of total costs and disbursements that would be appropriate. The submissions identify four matters that explain the differences between the quantum of costs suggested by Telstra ($16 million) and the quantum proposed by Seven ($8.69 million). The parties' submissions, following the lead of the experts, start with the amount suggested by Telstra and address what reductions, if any, should be made to that figure by reason of the matters relied on by Mr Harris. I intend to follow much the same approach. In addressing this question, however, I intend to adopt the ' broad brush ' suggested by the authorities, but to do so taking into account the expert evidence and the evidence given by Mr Forbes. She also agreed with Ms Ashe that a taxing officer would allow a loading of 35 per cent on the scale rate pursuant to Item 41 in a case of this complexity, for general care and conduct of the proceedings. 38 However, in Ms Harris' view, a taxing officer would be likely to reduce the total number of hours billed to Telstra by its solicitors (33,325.8) by 50 per cent to take account of a number of matters. Ms Harris considered that this figure for professional costs should be reduced further to take account of the fact that the Item 31 hourly rate applies only to certain kinds of work. In her view, work such as attending counsel (Item 35) or instructing in court (Item 37) would attract lower hourly rates than Item 31, while some work performed by Telstra's solicitors appeared to relate to unskilled attendances. Ms Harris expressed the opinion that a taxing officer, having regard to these additional considerations, would reduce the allowance for professional fees by a further 40 per cent. Ms Ashe adopted the same total hours (33,325.8). She also multiplied these hours by a weighted average of scale rates, but used slightly different figures to those adopted by Ms Harris. For the period before 16 August 2005 (the date of the offer of settlement made by the Respondents), Ms Ashe used an hourly rate of $227. For the period after 16 August 2005, she used an hourly rate of $252. 43 Ms Ashe, like Ms Harris, applied a loading of 35 per cent to the amounts calculated by reference to the scale to allow for the care and conduct of the proceedings. However, Ms Ashe then applied a reduction of only 25 per cent (compared with the successive reductions of 50 per cent and 40 per cent applied by Ms Harris). 46 Ms Ashe justified her approach on the ground that a reduction of only 25 per cent was appropriate in a complex case such as this, particularly giving full effect to the words ' or proper ' in the ' necessary or proper ' test stated in FCR , O 62 r 19 and in the case law reflected in Stanley v Phillips . Ms Ashe took the view, having regard to Mr Forbes' evidence, that Telstra had conducted its defence in ' a relatively efficient and economical manner ', including taking advantage of the electronic database to minimise document-handling costs. 47 In her oral evidence, Ms Ashe noted that under the arrangements between Telstra and its solicitors, no separate charges had been made for photocopying by the solicitors themselves. Ms Ashe said that this was an important factor in limiting the discount that otherwise might apply, particularly as the reimbursement for photocopying tends to be relatively generous. Another factor she identified was that non-time based items under the scale could provide Telstra's solicitors with relatively high levels of reimbursement. In this respect, she pointed to the apparently generous allowances under the scale for ' perusal ' or ' scan[ning] ' of documents (Items 17, 18). Ms Ashe identified other quirks in the scale that, in her view, would counteract some of the matters upon which Ms Harris relied to support the application of cumulative discounts of 50 per cent and 40 per cent. 48 In evaluating the competing views of the experts, a number of matters should be borne in mind. Similarly, neither expert had (or could have had) access to all the material that would be available on a taxation of costs. It is no disrespect to them to observe that by reason of my own involvement in the proceedings, I am in a better position than they to assess whether certain kinds of work undertaken, or expenditure incurred, by Telstra's solicitors were necessary or proper for Telstra's defence. • Ms Harris accepted that her assessment of the appropriate discounts that would be applied to Telstra's professional fees on a taxation of costs necessarily was based on a comparison with less complex cases than the present case. Thus Ms Harris' assessment of the extent to which the work performed by Telstra's solicitors was necessary or proper for its defence rested to some extent on instinct and, in any event, was a task, as she said, of ' great difficulty '. • Ms Harris also accepted that on a taxation of costs, an allowance would be made for the internal photocopying undertaken by Telstra's solicitors notwithstanding that no separate charge was in fact levied for that service. She pointed out, however, that determining the allowance for large scale photocopying involves the exercise of a discretion by a Taxing Officer. • Mr Forbes' uncontradicted evidence explained the approach taken by Telstra's solicitors to the work performed in connection with the case. His evidence addressed some of the issues raised by Ms Harris and sought to establish that the work was necessary or proper for Telstra's defence and was carried out efficiently. I do not think that Mr Forbes' evidence necessarily fully answers all the concerns expressed by Ms Harris (bearing in mind that the disallowance of costs does not imply any wrongdoing or profligacy on the part of Telstra or its solicitors, but only that the charges were not ' necessary or proper ' for the defence or otherwise not permissible under the scale). However, in my opinion, Mr Forbes' evidence suggests that substantially more of the professional services provided by Telstra's solicitors could be regarded as necessary or proper for Telstra's defence than Ms Harris was prepared to accept. In particular, I think that Mr Forbes' evidence demonstrates that, in general terms, the demands of the case justified the general approach taken by the solicitors to the discovery process and to the scanning of documents. • Mr Forbes identified a ' core ' team of two partners (one of whom participated only prior to the hearing), three senior associates and a solicitor who worked on the case. The core team generated costs of $8.3 million, while another 100 or so ' fee earners ' (to use Seven's description) generated costs of about $3.3 million. Seven relies on these matters as indicating that Telstra did not adopt an ' unusually frugal ' approach and that the potential for duplication and inefficiency was ' manifest '. In my view, Seven's criticisms pay insufficient regard to the fact that most of the additional fee earners were paralegals, clerks or other non-legally qualified personnel. Moreover, having regard to the complexity and size of this case, much of which can be laid directly at Seven's door, I do not think that the bare figures necessarily indicate that substantial costs were incurred that were not necessary or proper for the mounting of Telstra's defence. Some allowance should be made for duplication, possible inefficiency and excessive caution, but it should be considerably more modest than the discount suggested by Ms Harris. • Ms Harris correctly pointed out that some items in Schedule 2 provide relatively low allowances for professional services (by comparison with time-based items). This feature of the scale should be taken into account in determining the appropriate allowance for professional fees incurred by Telstra in defending these proceedings. • Ms Ashe's assessment was that work covered by the relatively generous non-time based items in the scale would offset more or less entirely the reductions to the Item 31 rate that would flow from the application of less generous items to certain aspects of the work. This assessment seems to me to be a little optimistic (from Telstra's point of view), but nonetheless to have a good deal of force. • Any analysis of the costs necessarily or properly incurred by Telstra has to take account not only of the nature of the proceedings, but of the fact that Seven chose to rely on and persist with a very large number of allegations. Seven's approach meant that the case not only required a great deal of preparation and continuing work, but also necessitated Telstra (and the other Respondents) addressing an extraordinary range of factual and legal issues, not all of which survived until final submissions. The discounts she suggested also seem to me substantially greater than could be applied on a taxation of Telstra's claim for costs on a party and party basis. Ms Ashe's approach is, I think, somewhat too generous to Telstra. But if attention is focussed only on the professional fees, my view is that the allowance should be closer to Ms Ashe's figure than to Ms Harris'. 50 Apart from the different reductions applied by Ms Ashe and Ms Harris, their calculations differed slightly by reason of the variations in the weighted average hourly rates each adopted. If Ms Ashe's calculations are rounded down, her allowance for professional costs, before any loading or reduction, is $7.8 million. A loading of 35 per cent increases that figure to $10.53 million. A reduction of 35 per cent applied to $10.53 million produces allowable costs of approximately $6.84 million. This figure is some $1,054,000 less than that allowed by Ms Ashe, but about $3.7 million more than allowed by Ms Harris. For the purposes of assessing an appropriate gross sum costs order, the figure of $1,054,000 can conveniently be rounded down to $1 million. In Ms Ashe's view, given the inappropriateness of the scale in relation to this work, an award of $125 per hour would be allowed at taxation on a party and party basis. From the figure so derived ($849,375), Ms Ashe deducted 25 per cent, producing a gross sum of $637,031 in respect of unqualified contributors. 53 In her second report, Ms Ashe argued that Item 50 of Schedule 2 (reproduced at [23] above), which allows a just and reasonable rate for work not provided for in Schedule 2, could be used to justify a reasonable hourly allowance for unqualified contributors. This contention rests on the expression ' managing clerk ', as used in Item 31, being interpreted as inapplicable to most, if not all, of the work performed by unqualified contributors. 54 Ms Harris took an approach less generous to Telstra. She argued that a taxing officer would be bound to apply the Item 31 rate for a ' managing clerk ' when assessing the allowance for work performed by unqualified contributors. She adopted a midpoint hourly rate of $52 for this purpose. Ms Ashe also considered that the total number of hours would be reduced by 40 per cent to take account of factors such as the very low scale rates allowed for certain types of work done by unqualified contributors (even lower than $52 per hour). According to Ms Harris, a reduction of 40 per cent adequately allowed for the countervailing effect of certain items that provide more generously for work done by unqualified contributors. Ms Harris then added the care and conduct loading of 35 per cent. 55 In the result, Ms Harris allowed $143,111 for work performed by unqualified contributors. 56 In my view, it would not be open to a taxing officer simply to ignore Item 31 of Schedule 2 on the ground that the scale allowance is inappropriate to modern litigation. Moreover, as Ms Ashe herself implied, the figure of $125 per hour for unqualified contributors is not grounded in empirical information. 57 On the other hand, the expression ' managing clerk ', which is used in Item 31, is not only outdated, but fraught with ambiguity. The evidence suggests that the expression is given a broad interpretation in practice by taxing officers. Nonetheless, as Ms Harris accepted in her evidence, it is difficult to see how Item 31 would cover most, if not all, of the technological support provided in this case by so-called unqualified contributors. I have in mind particularly the very considerable work done in relation to the establishment and operation of electronic databases and the processing of documents in electronic form. Much of this work, although performed by people without legal qualifications, is likely to have required specialised skills. 58 I think the best that can be done in relation to costs attributable to unqualified contributors is to place the competing considerations into a melting pot. If this were done, the figure of $52 per hour would be increased by the allowance of a substantially higher rate for skilled technological support services and other specialised contributions. It would also be increased by the uplift of 35 per cent allowed for care and conduct of the proceedings. The hourly rate would be decreased to take account of any duplication of work or inefficiencies in the use of paralegals or clerks. Adjustments would have to be made for specific scale items that would have the practical effect of lowering or increasing the hourly rate provided by Item 31, although I suspect that they would tend to cancel each other out. 59 I think that an appropriate allowance for unqualified contributors in the circumstances of this case would be the figure derived by simply multiplying the relevant number of hours (6795) by the adjusted scale rate ($52). The figure so derived is $353,340. This amount is in the order of $300,000 less than that allowed by Ms Ashe. The total fees charged by counsel amounted to approximately $5.9 million, exclusive of GST. A high proportion of this amount, some 80 per cent, related to out of court work. 62 Mr Archibald appeared in court on 50 days. He charged for 236 non-court days. His daily rates, exclusive of GST, ranged from approximately $8800 in 2002-2003 to approximately $11,800 in 2006-2007. Mr Archibald's total fees, exclusive of GST and after deducting travel expenses, amounted to $3,396,060. 63 Since Mr Archibald was based in Melbourne, Telstra incurred travel and accommodation expenses of some $80,000 for Mr Archibald and for solicitors travelling to Melbourne to confer with him. Ms Harris' view was that the expenses for travel and accommodation were unnecessary, as Telstra could have briefed Sydney counsel of the appropriate seniority. Ms Ashe was prepared to allow 50 per cent of the travel and accommodation costs associated with the engagement of Mr Archibald. 64 Ms Ashe allowed Mr Archibald's fees for court work more or less in full (a total of $555,000, being 50 days at $11,100 per day). She calculated Mr Archibald's actual fees for 236 days of out of court work as amounting to $2,501,600. Ms Ashe allowed 75 per cent of that figure, being $1,876,200. Thus her total allowance in respect of Mr Archibald's fees was $2,469,200. 65 Ms Harris, as I followed her reasoning, allowed $8,000 per day in respect of Mr Archibald's 50 days of court work, a total of $400,000. This figure, so she calculated, amounted to 71.37 per cent of Mr Archibald's actual fees. She said that she applied that percentage to the actual fees of $2,841,514 for out of court work. This was said to produce a figure for out of court work of $2,024,447, although on my calculations the correct figure is $2,027,989. (For some reason, Ms Harris took Mr Archibald's actual fees for out of court work to be $2,841,514, while Ms Ashe took the amount to be $2,501,600). 66 Ms Harris then applied a further discount of 55 per cent to the allowance for Mr Archibald's out of court work, on the grounds, among others, that some fees notes did not enable the work performed to be identified with precision and that some of the work was covered by specific costs orders. (That is, Ms Harris allowed only 45 per cent of Mr Archibald's adjusted fees. ) This reduced the allowance for Mr Archibald's out of court work to $910,695 (again my calculations are slightly different, but nothing turns on the difference). 67 The result was that Ms Harris allowed $1,310,695 ($910,695 plus $400,000) in respect of Mr Archibald's fees, or 38.59 per cent of the fees actually charged by him. The difference between Ms Harris' allowance and Ms Ashe's ($2,469,200) is $1,158,505. 68 Mr Castle, the more senior of the two junior counsel, charged fees (on Ms Ashe's calculations) totalling $1,606,012, of which approximately $486,750 represented payment for 118 days of court work. The balance was assessed by Ms Ashe at $1,223,200 (although her figures do not exactly reconcile). Ms Ashe allowed the appearance fees in full and 85 per cent of the charges for out of court work. This produced, on her calculations, a figure of $1,526,470. 69 Ms Harris worked from slightly different figures. She allowed $490,875 for Mr Castle's court work, being her calculations of the total fees charged by Mr Castle for 119 (not 118) days of hearings. However, she allowed only 70 per cent of the actual charges for Mr Castle's out of court work (which she calculated at $1,129,787), being the sum of $790,851. Thus Ms Harris allowed $1,281,726 in all ($490,875 plus $790,851), or $244,744 less than Ms Ashe. 70 Mr Pike charged fees (as both experts agree) totalling $840,225. Ms Ashe allowed 58.5 days of court work at $2,500 per day, amounting to $146,250. She allowed 90 per cent of the balance, which she assessed at $748,000, resulting in an allowance for out of court work of $673,200. The total allowance, on Ms Harris' calculations, was therefore $819,450 ($146,250 plus $673,200). (Again Ms Ashe's figures do not seem to reconcile. She allowed 35 per cent of the actual fees for Mr Pike's out of court work (which she calculated at $566,103), amounting to $198,165. Thus Ms Harris allowed $315,165 in total in respect of Mr Pike's fees ($117,000 plus $198,165), or $504,285 less than that allowed by Ms Ashe. 72 In my view, it was necessary or proper for Telstra's defence of these proceedings for it to engage a senior counsel of Mr Archibald's experience and standing, together with two junior counsel of the experience and standing of Mr Castle and Mr Pike. As I have already noted, not only were the issues in this case complex and the amount of documentation vast, but the complexity and sheer size of the litigation were directly attributable to the manner in which Seven chose to conduct its case. A great amount of work and skill was required to address and answer the allegations made against Telstra. 73 It is quite true that Telstra played a relatively passive role during segments of the trial, but it was not feasible, in my view, for a party in Telstra's position to reduce its representation in court substantially below the levels it in fact had. Mr Archibald was in court for only 50 of the 120 hearing days (although that was partly because he was unavailable for the presentation of final oral submissions) and Mr Pike for under 60 days. In my view, the extent of Telstra's representation in court involved no substantial element of duplication, excessive caution or the like. 74 The extent of out of court work performed by Telstra's counsel was very considerable, amounting to nearly 800 days. However, in assessing this commitment of resources it is necessary to bear in mind the nature and complexity of the case, the vast amount of documentation, the issues of fact and law peculiar to Telstra (including some ultimately not pressed by Seven) and the need for continuity of representation. In these circumstances, the extent of the out of court work performed by counsel does not seem to me to have gone obviously beyond what the necessary or proper defence of the proceedings required. 75 This does not mean that there should be no reductions in the allowances in respect of counsel's fees. In my view, travel expenses connected with Mr Archibald's retainer would not be allowed on a taxation. • Mr Archibald's daily fees, for the purposes of costs recovery, should be capped at about $8,000 (allowing for market considerations and the variations in fees charged over time). • Reductions should be made in the fees charged for out of court work (over and above the capping of the allowance for Mr Archibald's fees). Both experts agreed that reductions were appropriate but they disagreed on the quantum of the reductions. Once again, I consider that Ms Harris' proposed reductions are too great. I think she was influenced by her perception --- which I do not share --- that Telstra's retainer of a very experienced senior counsel and two junior counsel for more or less the entirety of the proceedings was not necessary or proper for its defence. I think that Ms Harris was also unduly influenced by the apparent disparity between the number of days spent in court and the much greater number of days in which counsel undertook work out of court. 77 Reductions should be made, however, to reflect the likelihood that there was some duplication of work among counsel or between counsel and solicitors. No doubt, too, some fees charged by counsel would not be recoverable on a taxation, for example because the work related to the market experts who were not to be called or because recovery would be inconsistent with costs orders made by the Court. Other charges, if scrutinised in the manner required by a taxation, probably would be found to relate to peripheral issues and thus would not be characterised as necessary or proper to Telstra's defence. 78 In my view, these matters would be appropriately recognised if the fees charged by counsel for out of court work (in Mr Archibald's case the fees capped in the manner I have suggested) were reduced by 35 per cent. The difference amounts to approximately $100,000. • Telstra retained three consultants to advise on market issues, none of whom was called as a witness in the proceedings. Ms Ashe allowed 95 per cent of the consultants' fees, while Ms Harris made no allowance for these fees on the ground that a taxing officer would not make an allowance for consultants who were not to be called. The costs incurred by Telstra in engaging the three consultants amounted to approximately $270,000. Each of the experts was called to give evidence by either the News or PBL parties (who apparently paid the other two-thirds of the costs), thus relieving Telstra from the necessity of calling evidence on these issues. Ms Ashe expressed the view that the totality of these costs would be allowed on a taxation. I am not persuaded by Ms Harris' evidence that a taxing officer, in the circumstances of this case, would reduce the actual amounts paid in respect of the experts. 82 Telstra engaged two consultants with expertise in markets, Dr Ergas and Mr Ordover, relatively early in the proceedings. They were engaged in order to advise Telstra on claims that its advisors apparently thought Seven was likely to bring by reference to the markets for internet and telephony services. However, at no time did Telstra plead any such claims. In my view, it was neither necessary nor proper for Telstra to spend over $200,000 on experts whose advice was not ultimately required for Telstra's defence of the proceedings. The prudent course was to defer engaging the experts unless and until Seven pleaded a case based on the markets in relation to which Dr Ergas and Mr Ordover could provide expert advice. 83 The third market expert, Mr Pleatsikas, falls into a different category. He gave advice in order to assist Telstra's senior counsel in the cross-examination of Seven's market experts. It is true that Mr Pleatsikas was not called by Telstra to give evidence, but that does not mean that his advice on market issues was not necessary or proper for Telstra's defence. It would only encourage parties to prolong proceedings if the costs of engaging an expert could be recovered only if the expert gives evidence in Court. I see no reason not to allow Telstra to recover the costs (approximately $60,000) of engaging Mr Pleatsikas. 84 The result is that I think it appropriate to reduce the amounts allowed to Telstra by Ms Ashe in respect of the costs of engaging expert witnesses by about $200,000, in round numbers. This figure represents 62.75 per cent of Telstra's actual costs and disbursements incurred up to the date of the Principal Judgment. 87 If the matter is viewed simply as an assessment by reference to the percentage of total costs and disbursements an award of approximately 63 per cent seems to me well within the appropriate range, taking into account the particular circumstances of this case. 88 As I have explained, the assessment of a gross sum costs order requires a broad brush. I do not wish to create the impression that the exercise is in truth more precise than it is. The figures supported by Ms Ashe and Ms Harris, which I have taken as my starting points, involve matters of evaluation and judgment. I have used those figures as the basis for my analysis because to do so is consistent with the approach taken by the parties. It also has the advantage of concentrating on the narrow range of issues identified by the parties in their submissions. The fact that some of the figures I have used are precise down to the last dollar should not obscure the elements of evaluation and judgment in my own assessment. 89 I propose to make an order pursuant to O 62 r 4(2)(c) that Seven pay Telstra the sum of $13 million in respect of the costs incurred by it in the proceedings. All previous costs orders between Seven and Telstra should be vacated. Any such orders were taken into account by the experts in preparing their reports and have also been taken into account by me in my assessment. 90 Telstra invited me to include in the gross sum an allowance for costs that have been incurred since the delivery of judgment, including the costs incurred in relation to indemnity costs application. I have insufficient material before me to do this. However, my impression is that an order requiring each party to bear its own costs incurred after the date of the Principal Judgment would be a fair and reasonable result, bearing in mind that Telstra's application for indemnity costs did not succeed. In any event, the parties should be able to resolve this issue without further recourse to the Court. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | respondent entitled to costs on a party and party basis application for a gross sum costs order assessment of a gross sum pursuant to federal court rules , o 62 r 4(2)(c) relationship between assessment of a gross sum and principles of taxation costs |
They seek leave under s 411(1) of the Corporations Act 2001 (Cth) to convene meetings of creditors to consider the proposed schemes. The hearing is usually ex parte. But this application raised several important issues of principle that were dealt with at a hearing at which a number of creditors, as well as Australian Securities and Investments Commission (ASIC), appeared. What follows are my reasons for permitting the meetings to be held. OPSL, a stockbroking firm, was a member of the Australian Securities Exchange. It provided institutional and private clients with a range of stockbroking services, predominately in the form of securities lending and equity financing. Leveraged Capital also provided securities lending and equity financing services to its clients. Mostly, they were its employees and employees of OPSL. A broad outline of securities lending is given in Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Limited [2008] FCA 594 ; (2008) 66 ACSR 116. For present purposes a brief summary will suffice. Securities lending is the practice by which securities are transferred from one party (the lender) to another party (the borrower), with the borrower contractually obliged to redeliver to the lender at a later time securities which are equivalent in number and type. The modern securities lending market can be divided into two markets: one that is defined by the motive of the borrower (the "securities driven" market) and the other by the motive of the lender (the "cash driven" market). In the securities driven market the lender transfers securities to the borrower who must return "equivalent securities" to the lender either on demand or on the occurrence of a defined event. The borrower: (a) obtains an outright transfer of title to the securities, which may then be sold or on-lent; (b) pays a fee for the use of the securities, calculated by reference to the value of the lent securities; and (c) provides collateral to the lender in the form of cash, other securities or other assets, title to which passes to the lender. The value of the collateral exceeds the value of the borrowed securities, the difference in percentage terms being referred to as the "margin" (which may need to be "topped up"). At the conclusion of the transaction there is an exchange of "equivalent securities" for "equivalent collateral". In the event of default, provision is made for placing a money value on each party's obligations, setting one off against the other, and, if there is a net balance, for payment of the balance. A securities loan in the cash driven market follows the same structure, but there are some important differences. First, the collateral is always provided in the form of cash. Second, the amount of cash collateral is less than the value of the lent securities. Third, the lender pays a fee, much like interest, calculated by using a discounted interest rate. OPSL and Leveraged Capital entered into "back-to-back" securities lending arrangements with various financiers to obtain the funds needed to finance their clients' share trading. Under the arrangement, OPSL and Leveraged Capital transferred the securities they had received from their clients to financiers. The principal financiers were Australia and New Zealand Banking Group Limited (ANZ) and Merrill Lynch International and Merrill Lynch International (Australia) Limited (collectively Merrill Lynch). Hawkswood's main function was to act as the investment vehicle for directors of OPSL and OPGL. The investments included shares in public and private companies, motor vehicles, real estate, and loans to OPSL directors and their related entities. The remaining corporate plaintiff need be mentioned only briefly. OPGL is the holding company of the group. The stock market crashed in late 2007 both in Australia and around the world. Clients who had lent shares to OPSL and Leveraged Capital were required to "top up" the securities they had lent or return some of the cash they had received. Most did not do so. Many wanted to get back their securities and return the cash they had obtained from OPSL or Leveraged Capital. But, apart from isolated instances, neither OPSL nor Leveraged Capital held the securities they were required to redeliver to their client. Nor did they have the funds to buy the securities on the open market. By March 2008 it was clear that the companies in the Opes group were hopelessly insolvent. So, on 27 March 2008, Messrs Lindholm, Brown and McCluskey of Ferrier Hodgson were appointed joint and several administrators of the companies. On the same day ANZ appointed Messrs Algeri and Campbell of Deloitte Tohmatsu receivers and managers over the assets and undertakings of the companies pursuant to several debenture charges which were said to secure debts totalling around $650 million. In due course the creditors of the companies in administration resolved that each company should be wound up. By virtue of s 499 of the Corporations Act Messrs Lindholm, Brown and McCluskey became the companies' liquidators. The collapse of the Opes group led to a spate of litigation in the Federal Court, in several State Supreme Courts and in the High Court of Hong Kong. In most instances the action was brought against an Opes company (usually OPSL, Leveraged Capital or Green Frog Nominees Pty Ltd (in liq) (Green Frog) - the group's nominee company) as well as ANZ or Merrill Lynch. In each proceeding the plaintiff relies on several causes of action. At the heart of the claim against the Opes company is the allegation that the client was misled when it "lent" its securities. Most clients allege they thought they were providing securities under a mortgage arrangement or a margin lending facility. There are also allegations of breach of trust, breach of fiduciary duty, breach of contract and mistake. The liquidators have estimated that the aggregate amount of client claims is approximately $630 million. As against ANZ and Merrill Lynch, the Opes group's former clients allege the banks received from an Opes company property (the securities) knowing that the transfer was in breach of trust or breach of fiduciary duty or constituted a wrongful disposal of the clients' securities. There are also claims alleging knowing involvement in Opes' misleading conduct. It is not only the Opes group's former clients that have claims against ANZ and Merrill Lynch. The liquidators have foreshadowed a claim relating to a transaction that took place a few days before the Opes group was placed into administration. Pursuant to a "Co-operation Deed" (a) ANZ loaned $95 million to OPGL, OPSL and Leveraged Capital; (b) ANZ released certain securities to OPSL in order for those securities to be re-delivered to a client of Leveraged Capital; (c) an amount of $95 million was retained by ANZ to, in effect, meet a margin call on OPSL; (d) ANZ obtained a fixed and floating charge over all of the assets and undertakings of OPGL, OPSL, Leveraged Capital and Hawkswood; (e) various amendments were made to the terms of the securities lending agreements in place between ANZ on the one hand and OPSL and Leveraged Capital on the other hand; (f) ANZ obtained a cross-guarantee and indemnity from OPGL, OPSL and Leveraged Capital and a guarantee and indemnity from Hawkswood and from the directors of OPSL in respect of the $95 million loan; and (g) ANZ obtained a share mortgage from the directors of OPSL. According to the liquidators this transaction may be an unfair loan under s 588FD , an uncommercial transaction under s 588FB and the floating charges may be void as against the liquidator under s 588FJ. The liquidators estimate that, if established, the claims would bring in somewhere between $210 million and $275 million. However, the liquidators have no funds with which to fund an action against ANZ. They have discussed obtaining funding from a litigation funder, but to date nothing has been agreed. The liquidators have also foreshadowed a claim against Merrill Lynch arising out of an international prime brokerage agreement made on 26 September 2006 pursuant to which Merrill Lynch was granted a charge over OPSL's assets. The charge was not registered until 5 October 2007. On 18 March 2008 the arrangement was "re-papered" and a second charge granted and registered the day following the appointment of administrators. The charge might be void as against the liquidators under s 588FJ , an unfair preference under s 588FA or an uncommercial transaction under s 588FB and thus liable to be set aside. If the charge is set aside the liquidators could recover approximately $500 million. But the claim is not regarded as very strong. ASIC is also concerned about actions that have been taken by the banks. In a press release published on 6 March 2009 ASIC announced it had commenced an investigation into whether the arrangements between OPSL and its clients amounted to an unregistered (and therefore illegal) managed investment scheme in which the banks were knowing participants. The press release also indicated that ASIC was considering the possibility of civil penalty and compensation claims against the directors of OPSL and ANZ respectively for breach of directors' duties. In the light of the existing and potential claims the liquidators entered into mediation with the banks. The mediation was protracted but resulted in settlement being reached on 6 March 2009. The terms of settlement were given effect in an implementation agreement dated 1 May 2009. The key elements of the implementation agreement follow. The liquidators agreed to promote schemes of arrangement for each company along the lines of the presently proposed schemes (more of which later). The banks (ie ANZ and Merrill Lynch) are to contribute $226 million toward a scheme fund, which, together with other money, will under the proposed schemes be distributed between creditors. Certain assets (to the value of approximately $27 million) presently in the possession of the banks' receivers will be returned to the liquidators. The banks, receivers, Green Frog and Green Frog's liquidators (and their related parties) will be released from all claims by the Opes companies, their liquidators and Opes clients. ASIC is to indicate it will not take action against the banks or their officers. 2. The three stages are, the application for meetings, the holding of the meetings and, if agreed by the requisite majority, the application for approval. The issues to be considered are: (a) Do the proposed schemes contain provisions which the court has no jurisdiction to approve; (b) Is more than one meeting of creditors required for each proposed scheme; (c) Is it also necessary to convene a meeting of members; (d) Does a right of appeal exist under s 1321 from a decision concerning a creditor's proof of debt; (e) Are the proposed schemes so unfair they would not be approved even if agreed by the creditors? ; and (f) Should the liquidators be granted leave to act as the scheme administrators? The traditional practice has been for the court not to address most of these issues at the first stage. For example, in England the practice note reported in [1934] WN 142 affirmed that it was for the company to decide whether creditors should be divided into classes for voting purposes, taking the risk that the correct decision was made, which would only be discovered at the approval hearing. In UDL Argos Engineering & Heavy Industries Co Ltd v Li Oi Lin [2001] HKCFA 54 ; [2001] 3 HKLRD 634 Lord Millett, sitting as a non-permanent judge of the Court of Final Appeal in Hong Kong, said this practice was a sound one. It has been applied to other issues relating to jurisdiction. In England, however, this view has been overtaken. The change followed comments by Chadwick LJ in Re Hawk Insurance Co Ltd [2001] EWCA Civ 241 ; [2001] 2 BCLC 480. Chadwick LJ pointed out that the effect of the practice was to require the court when deciding whether to approve a scheme to review the utility of the order it had made convening the scheme meetings. He went on to say that those propounding the scheme were entitled to feel aggrieved if the court then found its first order to have been pointless. A new practice statement was published in [2002] 1 WLR 1345. Under the new practice the applicant for a scheme meeting must draw to the attention of the court as soon as possible any issue that may arise about the constitution of the meetings or which might otherwise affect the conduct of the meetings. If appropriate, notice must be given to any person affected by the proposed scheme so they may apply to be heard at the convening application. I adopted this practice in In the Application of United Medical Protection Limited [2007] FCA 631. The purpose of the new practice is to avoid the waste of costs and court time which would result if it were not until the approval hearing that it was determined that classes were wrongly constituted. In England it has been said that this underlying purpose means that if other issues which go to the jurisdiction of the court to approve a scheme (as in Re Savoy Hotel Ltd [1981] 1 Ch 351) , or issues which would lead the court unquestionably to refuse the scheme, should also be dealt with at the convening application: Re T & N Ltd (No 3) [2006] EWHC 1447 ; [2007] 1 All ER 851 , 862. The liquidators appreciated the proposed schemes raised controversial issues. They brought on a preliminary application asking for directions. Orders were made for the publication on Ferrier Hodgson's website of the proposed schemes, the draft explanatory statement, the affidavits in support of the applications and the liquidators' outline of argument. Creditors wishing to make submissions at the convening application were advised to appear on an earlier date which had been set aside to deal with any application for leave to appear. In the event, several parties sought, and were granted, leave (if leave was necessary) to appear. They included persons who supported the proposed schemes such as ANZ (for whom Mr Archibald QC with Mr Crutchfield and Ms Neskovcin appeared), Merrill Lynch (for whom Mr Hutley SC with Mr O'Bryan appeared), Green Frog (for whom Mr Elliott SC appeared) and an unsecured creditor, Cedarange Pty Ltd (for whom Mr Zwier appeared). There were creditors who opposed the proposed schemes or aspects of them. They were a group of former clients, referred to as the Lavan objectors, who had commenced an action against Opes companies and ANZ (Mr Gleeson SC with Mr Douglas appeared on their behalf); Imobilari Pty Ltd, the plaintiff in a class action (Mr Armstrong appeared on its behalf); a group of more than 80 former clients (for whom Mr Sweeney SC appeared); and a number of other small creditors namely Panopus PLC (represented by Mr Bigmore QC), Danpen Pty Ltd (represented by Mr Wallis) and Mr Mitsius (who appeared unrepresented). The receivers appeared and were represented by Mr Galvin. Mr Sifris SC with Mr Boston and Mr Horan appeared for ASIC. Each party including the plaintiffs, for whom Mr Scerri QC and Mr Strong appeared, was given a fixed time within which to make submissions so as to ensure the hearing would not exceed two days. Everyone kept to their allotted time. Special mention should be made of the role played by the liquidators. The liquidators' obligation is to remain neutral and, usually, the liquidators would not be permitted to appear on this type of application: see the discussion between Lindley LJ and counsel recorded in Re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213 , 233 - 234. Here however the liquidators' central role in bringing about the implementation agreement which led to the schemes being propounded meant they were best suited to assist the court. In any event, what would otherwise have been an undesirable position was made good by there being other proponents and opponents of the opposed schemes. 3. The liquidators will become the scheme administrators to realise and distribute assets in accordance with the provisions of the schemes. This is not to occur on a company by company basis. Instead, the undertaking, assets and liabilities of each scheme company, other than OPGL, are to be transferred to OPGL, in effect "pooling" the assets and liabilities of the companies (with all inter-company debts and claims to be extinguished). Included among the assets to be pooled is the $226 million the banks will pay to the liquidators as well as the property that it has been agreed should be returned by the receivers. The pooled assets (less $11.5 million) will, after payment of the usual costs and expenses, be distributed between the unsecured creditors. The $11.5 million is to be distributed as follows: (a) $1 million to CLF, a litigation funder who is funding the class action commenced by Imobilari Pty Ltd; (b) $2.5 million to IMF, a litigation funder who is funding several proceedings which have been brought against an Opes company or the banks; and (c) $8 million to be placed in a plaintiffs' costs fund to cover, at least proportionately, the legal costs incurred by Opes clients in other actions brought against Opes companies or the banks. The unsecured creditors of the Opes companies comprise, loosely speaking, trade creditors and clients or former clients. A panel of three experts (constituted by one former superior court judge, a senior counsel and a well-known accountant) will rule on any dispute between a creditor and the scheme administrators concerning the existence and value of a creditor's claim. The schemes will also bind creditors who assert a beneficial interest in certain securities still held by a scheme company. As nothing turns on their status, when referring to unsecured creditors this group is included. An essential feature of each scheme is that all unsecured creditors, each scheme company and the liquidators are to release their claims against the banks, Green Frog, the liquidators of Green Frog and the receivers (the released parties). So far as the creditors are concerned this will be achieved by the execution of a formal deed of release and indemnity by the scheme administrators acting on behalf of each scheme creditor. The deed contains a covenant that the creditor will not bring or pursue claims against the released parties. Authority is given to the scheme administrators to take all necessary steps (eg by consenting to orders) to bring to an end any existing action against the banks. 4. The answer depends upon whether a scheme containing such a provision is, within the words of s 411(1) , "a compromise or arrangement .... between a ... [company] and its creditors or any class of them". Putting the matter this way raises two distinct points: (a) What is meant by a compromise or arrangement (neither being a defined term); and (b) If barring a claim amounts to, or may be an aspect of, either a compromise or an arrangement is it a compromise or arrangement between the company and its creditors? When considering these points it is necessary to keep in mind that the words "compromise" or "arrangement" must be construed liberally: Australian Securities Commission v Marlborough Gold Mines Limited [1993] HCA 15 ; (1993) 177 CLR 485 , 501 citing Re International Harvester Co of Australia Pty Ltd [1953] VLR 669. It is also necessary to recall that, however widely the expressions "compromise" or "arrangement" are to be construed, there are differences between them. A compromise involves the resolution of some dispute, for example as to the power to enforce rights or as to what those rights might be: Mercantile Investment & General Trust Company v International Company of Mexico [1893] 1 Ch 491n. There is no such limitation to an arrangement. In other words, an arrangement is not something that is analogous to a compromise: Shaw v Royce Limited [1911] 1 Ch 138 , 148; Re Guardian Assurance Company [1917] 1 Ch 431. What is often said to suffice for an "arrangement" is a transaction that involves some "give and take" or the provision of some "benefit": Re NFU Development Trust Ltd [1972] 1 WLR 1548. In reality "almost any arrangement otherwise legal which touches and concerns the rights and obligations of the company or its members or creditors may be come to under [s 411]": Re International Harvester [1953] VLR at 672 per Lowe ACJ. Of course a scheme cannot authorise something which is contrary to law: Re St James' Court Estate Limited [1944] Ch 6. Nor can a scheme authorise a transaction which is beyond the power of the company ( Re Cooper, Cooper & Johnson, Limited [1902] WN 199; Re Oceanic Steam Navigation Company Limited [1939] 1 Ch 41) , although, nowadays, few acts are ultra vires: see Corporations Act , Pt 2B.1. There are some limitations on the meaning of "arrangement". It would not cover a scheme where a creditor abandons all his claims without a compensating advantage, or a scheme which involves the confiscation of rights: Re Alabama at 243 per Bowen LJ (The court will not sanction "what would be a scheme of confiscation"); Re NFU Development Trust (at 1555) per Brightman J ("Confiscation is not my idea of an arrangement. A member whose rights are expropriated without any compensating advantage is not, in my view, having his rights rearranged in any legitimate sense of that expression"); Isles v The Daily Mail Newspaper Limited [1912] HCA 18 ; (1912) 14 CLR 193 , 197 per Griffith CJ ("Every compromise or arrangement is a bargain, but not every bargain can be fairly described as a compromise or arrangement with creditors --- for instance, a bargain by which creditors would become debtors to the Company instead of creditors"). Mr Gleeson employed the reasoning behind these cases to attack the release clause. First he said the release amounted to a confiscation of creditors' property, at least as regards those creditors who had claims against the banks, and therefore was not an "arrangement" for the purposes of s 411. His second submission was that the release could not be binding because a scheme could not bind a creditor in his capacity as a creditor of a third party. The first submission cannot be accepted. It assumes that creditors will get nothing for the release. That is very far from the truth. When considered from a business point of view, the banks are putting a very large sum of money into the schemes to be rid of claims by the liquidators and the creditors. True it is the money has not been apportioned between the claims and any attempt to do so would face all sorts of difficulties. But what I know from the information before me is that a valuer could apportion a not insignificant proportion of the $226 million toward the present and potential claims against the banks. What is proposed, then, is not a confiscation of property (ie the release of the choses of action) but a true compromise of the claims against the banks. It is, I suppose, possible to view as a confiscation the manner in which it is proposed to distribute what could be attributed to the compromise of the claims against the banks. This is for the reason that the whole amount recovered from the banks is to be divided between all the unsecured creditors of the Opes companies whether or not they have claims against the banks. There is a group, loosely referred to as trade creditors, who do not have claims against the banks. They are recovering more than they should at the expense of those who do have claims against the banks. But their proportion of the total amount of unsecured claims is so small (i.e. 0.80%) that it is a misnomer to speak of a confiscation. The second point raised by Mr Gleeson (whether a scheme under s 411 can release a third party) is a difficult one. It is made all the more difficult because there are conflicting decisions in point. It is, therefore, necessary to look at those decisions in some detail. The only Australian case directly in point is Re Buildmat (Australia) Pty Ltd and the Companies Act (1981) 5 ACLR 689 , an anti-release case. There the petitioning creditor sought to wind up a company on the ground of insolvency. The alleged debt was an amount (rent and outgoings) due under a lease. By the lease the company had covenanted to be jointly and severally liable with the lessee for the payment of money owing under the lease. The company denied it was liable to pay any rent or outgoings. It contended that its liability under the lease had been discharged. It relied upon a scheme of arrangement which the lessee company had entered into with its creditors. The scheme extinguished creditors' claims against the lessee. It also contained a provision that creditors who had the benefit of any guarantee or indemnity given to them by any person in respect of the lessee's indebtedness to them should release and discharge the guarantor or indemnifier. Needham J rejected the company's argument that the scheme released the guarantee. First of all he said (at 692) that, on the basis of authority (he referred to Hill v Anderson Meat Industries Ltd [1972] 2 NSWLR 704 but the cases go back to at least McGrath v Gray [1874] LR 9 CP 216 (a co-debtor case)) "where a creditor's debt has been discharge by the operation of a scheme of arrangement approved by the court, the approval of the scheme does not affect the right of a creditor bound by the scheme to take proceedings for recovery against the guarantor". Needham J then held that the release in the scheme did not discharge the guarantee. His reasoning on the subject is very brief. He said (at 692): "A scheme of arrangement between a company and its creditors affects those creditors only in the capacity as creditors of the company --- cf Bridges v Hershon [1968] 3 NSWR 47 at 55. The right of the petitioner against [the company] is not a right in that capacity and it follows that the provisions of the scheme cannot affect it". The case to which Needham J referred, Bridges v Hershon , should be mentioned because it seems to go against his conclusion. There a scheme was approved which had as an essential element that certain members of the company would sell their shares to other interested parties. The court held that the agreement became binding upon the approval of the scheme. It therefore bound members in their dealings with non-members. The approach in Re Buildmat has not been followed in other jurisdictions. Where the point has been considered, the courts have adopted a pro-release approach. I propose to refer to three cases to which Mr Scerri drew my attention. The first is Re T & N Ltd (No 3) . T & N and a number of its related companies (companies that were in administration) for many years engaged in the manufacture of asbestos-containing products. Many of their employees were exposed to asbestos dust which caused them to suffer certain diseases. Some had commenced action against the companies. Others were likely to do so when they suffered symptoms of the diseases, but that might not occur for some time. T & N and a number of related companies held insurance which they said covered the claims. For their part, the insurers contended that the policies did not cover asbestos claims. If they did, the insurers said the policies could be avoided for non-disclosure or misrepresentation. The T & N companies sued the insurers and were successful. The insurers then appealed. Before the hearing of the appeal the claims were settled. The insurers agreed to pay ₤36.74 million into a fund on the basis that the T & N companies would propound schemes of arrangement to compromise the claims against the companies on the basis that the fund would meet all present and future claims. It was a term of the schemes that neither the T & N companies nor any employee could bring a claim against the insurers. The insurers sought this term because the effect of the Third Parties (Rights Against Insurers) Act 1930 (UK) was that the T & N companies rights against the insurers were transferred to the employees upon the T & N companies entering into administration. When the schemes came before the court for approval one issue the court considered was whether the schemes, which had as a key element the discharge of claims against the insurers, could be characterised as a compromise or arrangement between T & N and its employees. David Richards J held they were arrangements between the companies and their employees. His reasoning went along the following lines. First, he observed ([2007] 1 All Er at 871) that the rights of the employees against the insurers were in no sense unconnected with T & N or the employees' rights against T & N. Second, he noted (at 871) that the settlement of litigation was "in substance and form a tripartite matter" involving T & N, the insurers and the employees. The judge put it this way (at 872): "The scheme of arrangement is an integral part of a single proposal affecting all the parties". Third, he held (at 872) that it was not a necessary element of an arrangement "that it should alter the rights existing between the company and the creditors ... with whom it is made". He said (at 872) that "in most cases it will alter those rights". But he went on (at 872): "[P]rovided that the context and content of the scheme are such as properly to constitute an arrangement between the company and the members or creditors concerned it will fall within s 425" (the equivalent of s 411). Then he said (at 872): "Nor is an arrangement necessarily outside the section, because its effect is to alter the rights of creditors against another party or because such alteration could be achieved by a scheme of arrangement with that other party. " The second pro-release case is Daewoo Singapore Pte Ltd v CEL Tractors Pte Ltd [2002] 2 LRC 66, a decision of the Court of Appeal of Singapore. CEL Tractors proposed a scheme of arrangement between itself and ten creditors, one of whom was Daewoo. All ten creditors held guarantees in respect of debts owed to them by CEL Tractors. Under the proposed scheme the creditors' claims would be satisfied, partly by a payment in cash, and partly by the grant of options to take up fully paid shares. The scheme contained a provision requiring the creditors to release the guarantees. The trial judge sanctioned the scheme and Daewoo appealed. The principal issue before the Court of Appeal was whether a scheme under s 210 of the Companies Act (Cap 50, 1994 Ed) (the equivalent of s 411) could contain a term which had the effect of releasing a third party. The judgment of the Court of Appeal was delivered by Yong Pung How CJ. First, like Needham J in Re Buildmat , he referred to cases which held that a scheme of arrangement which released the debt owed by a company did not affect the creditors rights against a guarantor. Then he considered whether it was permissible to release a guarantee by a provision in a scheme. He said there was no reason why a scheme could not incorporate such a term. He explained (at 78): "After all, a scheme of arrangement or compromise proposed by a company to be made with its creditors or a class of creditors under s 210 of the Companies Act is no more than a proposal to vary or modify its obligations in relation to its debts and liabilities owed to its creditors or a class of creditors on certain terms and conditions. In seeking so to vary or modify its obligations, there is nothing to prevent the company from proposing, as part of a wider scheme, inter alia, a term to the effect that, in consideration of what the company has provided under the scheme, the creditors will, upon implementation of the scheme, discharge not only the debts and liabilities of the company but also the liabilities of the guarantors for the same debts and liabilities of the company". The third pro-release case is Re Metcalfe & Mansfield Alternative Investments II Corp (2008) ONCA 587 , a decision of the Court of Appeal for Ontario. By way of background, in Canada it has for some time been the practice to approve schemes of arrangement that contain a third party release. In only one case ( Re Canadian Airlines Corp (2000) 265 AR 201) has the scheme been opposed. The court approved the scheme but for reasons with which the Court of Appeal did not agree. Hence I will not discuss that decision. The facts in Metcalfe & Mansfield are complex. A brief description will suffice. In August 2007, following defaults on US sub prime mortgages, a liquidity crisis threatened the Canadian market in asset backed commercial paper (ABCP). ABCP is a form of short-term investment that is "asset backed" because the cash used to purchase an ABCP note is converted into a portfolio of financial assets that provide security for the repayment of the notes. The notes, which generate a low interest yield, were sold as a safe investment. By agreement between the major market participants, trade in ABCP was halted pending an attempt to resolve the crisis through a restructuring of the market under the Companies' Creditors Arrangement Act , RSC 1985, c C-36 (CCAA). In essence the plan sought to convert the note holders' paper, which was basically worthless, into a new note that could freely be traded at a discount to its face value. The hope was that a secondary market for the notes would develop. The plan provided for the release of virtually all ABCP market participants from any liability associated with the notes, other than for claims in fraud. The Court of Appeal's focus was directed to the release. Most of the potential claims to be released were in tort: negligence, misrepresentation, failing to act as a prudent adviser and acting in conflict of interest. The released parties were to provide something for the release. Asset providers assumed an increased risk in their credit default swap contracts, sponsors gave up existing contracts and the banks provided below cost financing. Blair JA delivered the judgment of the court. He said (at [43]) that on its proper construction the CCAA "permits the inclusion of third party releases in a plan of compromise or arrangement to be sanctioned by the court where those releases are reasonably connected to the proposed restructuring. " He explained (at [43]) that he was led to this conclusion "by a combination of (a) the open-ended, flexible character of the CCAA itself, (b) the broad nature of the term 'compromise or arrangement' used in the Act, and (c) the express statutory effect of the 'double-majority' vote and the court sanction which render the plan binding on all creditors, including those unwilling to accept certain portions of it. The first of these signals a flexible approach to the application of the Act in new and evolving situations, an active judicial role in its application and interpretation, and a liberal approach to that interpretation. The second provides the entrée to negotiations between the parties affected in the restructuring and furnishes them with the ability to apply the broad scope of their ingenuity in fashioning the proposal. The latter afford necessary protection to unwilling creditors who may be deprived of certain of their civil and property rights as a result of the process. " Blair JA acknowledged that not all third party releases could be provided for in a compromise or arrangement. There had to be some nexus between the release and the creditors' position. He defined the nexus (at [70]) in this way: "[T]here must be a reasonable connection between the third party claim being compromised in the plan and the restructuring achieved by the plan to warrant inclusion of the third party release in the plan". In the case at bar he said that there was a sufficiently close connection. He explained (at [72]): "The tort claims being released arose out of the sale and distribution of the ABCP Notes and their collapse in value, just as do the contractual claims of the creditors against the debtor companies. The purpose of the restructuring is to stabilize and shore up the value of those notes in the long run. The third parties being released are making separate contributions to enable those results to materialize. " The approach evident in the pro-release cases is that the scheme of arrangement provisions are intended to be a flexible instrument and it is that flexibility which gives the provisions their efficacy. When first enacted in England as ss 159 --- 161 of the Companies Act 1862, 25 & 26 Vict, c 89, the provisions were intended to facilitate compromises and arrangements between insolvent companies and their members and creditors as an alternative to liquidation. Now they have a much wider purpose, including allowing businesses to restructure or reorganise their affairs to enable them to go forward in a better condition, or to amalgamate their business so as to reduce expenses and compete with greater effect. It is instructive to look at the position regarding third party releases in the United States. The issue has been considered in some depth under Chapter 11 of the Bankruptcy Code. A useful discussion is found in Joshua Silverstein, 'Hiding in Plain View: A Neglected Supreme Court Decision Resolves the Debate Over Non-Debtor Releases in Chapter 11 Reorganizations' (2006) 23 Emory Bankr Dev J 13. What follows is based substantially on what is said in that article. The policy behind Chapter 11 is to permit the successful reorganisation of a debtor. Section 105(a) provides that the bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title". Section 1123(b)(6) permits a Chapter 11 plan to "include any ... appropriate provision not inconsistent with the applicable provisions of this title". These provisions have given rise to a long-standing debate about the permissibility of including a third party release in a plan of reorganisation or of the issue of an injunction prohibiting the commencement of proceedings against a third party. The anti-release courts (the Ninth and Tenth Circuits) base their opposition on s 524(e) which provides, in effect, that the discharge of a debt of the debtor does not affect the liability of any other entity on such debt. From this the Ninth and Tenth Circuits reason that third party releases are not permissible: see eg Underhill v Royal [1985] USCA9 1518 ; 769 F2d 1426 , 1432 (9 th Cir 1985) ("The bankruptcy court 'has no power to discharge the liabilities of a bankrupt's guarantor'"); American Hardwoods Inc v Deutsche Credit Corporation (In re American Hardwoods) [1989] USCA9 842 ; 885 F2d 621 (9 th Cir 1989); Landsing Diversified Properties-II v The First National Bank and Trust Company of Tulsa (In re Western Real Estate Fund Inc) [1991] USCA10 26 ; 922 F2d 592 , 601-602 (10 th Cir 1990) (Section 524(e) does not permit a court to grant a "permanent injunction that effectively relieves the nondebtor from its own liability to the creditor"). The first of the important pro-release cases is MacArthur Company v Johns-Manville Corp 837 F2d 89 (2d Cir 1988) (strictly a pro-injunction case). When Johns-Manville declared bankruptcy it faced the possibility of suits by tens of thousands asbestos victims, amounting to a potential liability exceeding $2 billion. The company alleged the claims were covered by insurance and the insurers denied liability. The bankruptcy court approved a settlement between the debtor and its insurers. Under the settlement the insurers paid Johns-Manville $770 million and were "relieved of all obligations related to the disputed policies". To effectuate the settlement the court "enjoined all suits against the insurers" concerning the policies. MacArthur, a distributor of Johns-Manville products, argued that the injunction improperly extinguished its rights under the insurance contracts. The Second Circuit found that s 105(a) authorised the injunction. It observed (837 F2d at 93) that the section "has been construed liberally to enjoin suits that might impede the reorganization process". It found (at 93) that direct actions against the insurers "would adversely affect property of the estate and would interfere with reorganization". The second case is Menard-Stanford v Mabey (In re A H Robins Company Incorporated) 880 F2d 694 (4 th Cir 1989). Robins was the manufacturer of the Dalkon Shield. Prior to its bankruptcy it faced over 195,000 tort claims. The proposed reorganisation contained a third party release permanently enjoining claimants from suing any party for their injuries. Robins' directors and attorneys, their insurers and their insurers' attorney were among those benefiting from the release. The court held that there was power to grant the release for two reasons. First, the release was essential to the reorganisation in that any suit against the released party would "affect the bankruptcy reorganization in one way or another such as by way of indemnity or contribution" and "the entire reorganization hinges on the debtor being free from indirect claims such as suits against parties who had indemnity or contribution claims against the debtor": 880 F2d at 701-702. The court went on to say (at 702) that s 524(e) "does not by its specific words preclude the discharge of a guaranty when it has been accepted and confirmed as an integral part of reorganization". Second, the plan provided the claimants with payment in full. In Re Master Mortgage Investment Fund Inc 168 BR 930 (Bkrtcy WDMo 1994) the court set out the criteria widely used in determining whether a third party release should be allowed. The criteria are (a) There must be an "identity of interest between the debtor and the third party, usually an indemnity relationship, such that a suit against the non-debtor is, in essence, a suit against the debtor or will deplete assets of the estate"; (b) The third party must contribute "substantial assets to the reorganization"; (c) The release must be "essential to the reorganization. Without the [release], there is little likelihood of success". (d) "A substantial majority of the creditors agree to [the release]"; and (e) The plan provides for "payment of all, or substantially all, of the claims of the class or classes affected" by the non-debtor release: 168 DR at 935. For a less stringent test see Securities and Exchange Commission v The Drexel Burnham Lambert Group Inc (Re the Drexel Burnham Group Inc) [1992] USCA2 326 ; 960 F2d 285 (2d Cir 1992), which holds that a court may enjoin a creditor from suing a third party provided that the release plays an "important part" in the reorganisation plan. I should make it clear that, at best, the US cases do no more for our purposes than point toward the utility of a broad construction of s 411. They do not throw any light on the proper construction of the section. Accepting that the approach to the construction of s 411 should ensure that the section has a flexible operation, I have no doubt (not with the benefit of the same experience and knowledge as claimed by Lord Romilly, as to which see Re Commercial Bank Corporation of India and the East (1869) 20 LT NS 839, 840) that I should follow the approach in the pro-release cases to which I have referred. In other words, provided there is a sufficient nexus between a release and the relationship between the creditor and the scheme company, the scheme can validly incorporate the release. There is a sufficient nexus here for any number of reasons, including, most importantly, that the creditors' claims against the Opes companies and their claims against the banks largely (and in many cases completely) overlap, the schemes are in settlement of interlocking claims and, in the absence of the release, none of the claims would be compromised. It is interesting to observe how this argument arises. The Corporations Act was enacted using as a source of power s 51(xxxvii) (the reference power). In Re Wakim Ex parte McNally [1999] HCA 27 ; (1999) 198 CLR 511 the High Court had struck down certain provisions of the Corporations Act 1989 (Cth), rendering the whole legislation unworkable. Recognising that in a federation a single statute regulating companies was necessary to maintain a modern economy, the States referred to the Commonwealth the power to enact the Corporations Act . The argument which is now deployed against s 411 is an argument that could not have been maintained if the statute had been enacted by a State. That the argument is able to be maintained at all is the result of the High Court view that, absent a contrary intention, all the legislative powers of the Parliament, whatever their source, must be construed so that they do not authorise the making of a law which can properly be characterised as a law with respect to the acquisition of property for any relevant purpose otherwise than on just terms: Mutual Pools & Staff Pty Limited v Commonwealth [1994] HCA 9 ; (1994) 179 CLR 155 , 169; see also Wurridjal v Commonwealth [2009] HCA 2 ; (2009) 252 ALR 232 The constitutional argument was put by Mr Gleeson. His submission rests on the proposition that a third party release, being the extinguishment of a common law right, is an acquisition of property for the purposes of s 51(xxxi). To bring an acquisition within s 51(xxxi) "there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be": Commonwealth v Tasmania [1983] HCA 21 ; (1983) 158 CLR 1 , 145 per Mason J. The term property is defined broadly and includes a chose in action: Georgiadis v Australian and Overseas Telecommunications Corporation [1994] HCA 6 ; (1994) 179 CLR 297 , 303-304. It follows that the phrase "acquisition of property" in s 51(xxxi) "extends to the extinguishment of a vested cause of action, at least where the extinguishment results in a direct benefit or financial gain (which, of course, includes liabilities being brought to an end without payment or other satisfaction) and the cause of action is one that arises under the general law": Georgiadis at 305. This is not, however, sufficient for Mr Gleeson to make good his point. Before s 51(xxxi) is attracted, the impugned law must properly be characterised as a law with respect to the acquisition of property. In Mutual Pools Brennan J explained (at 179) that s 51(xxxi) does not bring within its reach a provision which is "appropriate and adapted to the achievement of an objective falling within another head of power where the acquisition of property without just terms is a necessary or characteristic feature of the means proscribed". According to Brennan J (at 180): "What is critical to validity is whether the means selected, involving an acquisition of property without just terms, are appropriate and adapted to the achievement of the objective. The absence of just terms is relevant to that question, but not conclusive". Likewise in Nintendo Co Ltd v Centronics Systems Pty Ltd [1994] HCA 27 ; (1994) 181 CLR 134 , 161 the plurality said that: "[A] law which is not directed to the acquisition of property as such but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area or activity is unlikely to be susceptible of legitimate characterisation as a law with respect to the acquisition of property for the purposes of s 51 of the Constitution ... [Such a law would therefore be] beyond the reach of s 51(xxxi) 's guarantee of just terms". See also Wurridjal at 259. Section 411 and its predecessors play an important role in corporate life. Companies are frequently required to rearrange their capital structure, for example, by converting debentures into shares or for adjusting the rights of different classes of shareholders, or to reorganise their affairs, or to give those with a stake in the company the opportunity to salvage intangible assets. If in financial difficulty a company may wish to enter into arrangements with some or all of its creditors. To accomplish these arrangements members or creditors often have to give up some right in order to keep the company going or to remedy some deficiency in its structure. If under such an arrangement "property" is acquired, that acquisition is merely an incident of the regulation of conduct that is in the common interest. Neither the schemes, nor the statute which gives them effect, can be characterised as dealing with, or with respect to, the acquisition of property for purposes of s 51(xxxi). In any event to succeed the creditor must show that the relevant acquisition has been on unjust terms. In Nelungaloo Pty Ltd v Commonwealth (1952) 85 CLR 545, 600 Kitto J said: "The standard of justice postulated by the expression 'just terms' is one of fair dealing between the Australian nation and an Australian State or individual in relation to the acquisition of property for a purpose within the national legislative competence". In the present context the creditors who are required to give up claims against third parties will necessarily be treated fairly. That is the consequence of the scheme procedure which only permits the court to approve a scheme of arrangement, and thereby bind dissentients, if the scheme is "fair and reasonable": Re Alabama [1891] 1 Ch at 247. 6. On the other hand several of the opposing creditors argue that there should be separate meetings for what they say are separate classes. The approach to be adopted to the composition of classes has been considered in many cases. The leading English case is Sovereign Life Assurance Company v Dodd [1892] 2 QB 573. There Bowen LJ said (at 583), in a passage which has often been cited with approval: "It seems plain that we must give such a meaning to the term 'class' as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest". What this passage makes clear, and what later cases confirm, is that there is a distinction between a creditor's interest and his rights. It is the difference in rights, not interests, that are relevant to determining whether or not separate classes exist, and it is the extent of the difference that will determine whether separate classes are required. Lord Millett in UDL [2001] 3 HKLRD at [27] analysed the relevant authorities across a range of jurisdictions, including Australian cases. Persons whose rights are sufficiently similar that they can consult together with a view to their common interest should be summoned to a single meeting. The fact that individuals may hold divergent views based on their private interests not derived from their legal rights against the company is not a ground for calling separate meetings. Once those differences are identified the question whether they form separate classes must be assessed with the following factors in mind. First, when creditors are broken up into classes, each class is given power to veto the scheme and that is a process that undermines the basic approach of decision by majority: Nordic Bank Plc v International Harvester Australia Ltd [1983] 2 VR 298 , 301. Second, there is a built-in safeguard against majority oppression in that the court is not bound by the decision of the meeting. Thus, it is necessary to ensure that there is no oppression by the minority. Third, practical considerations are relevant. If a judge is too assiduous in identifying classes, it is possible to end up with any number of classes. In the end, schemes of arrangement are propounded in a business context. The judge should adopt a practical business-like approach to the issue, as would the creditors if they were to decide the matter. Here the proposed schemes, according to their terms, operate in the same way with respect to all creditors. But, in reality, creditors are affected differently. Some (for convenience I will refer to them as the client creditors) are deprived of the ability to pursue causes of action which, if successful, have the potential to provide them with full indemnity for the losses they have suffered as a result of their dealings with an Opes company. Instead of being allowed to pursue those claims, client creditors will receive, out of the fund which is to be established, approximately 37 cents in the dollar. Thus, when it comes to consider the schemes the client creditors will have to choose between chasing 100 cents in the dollar in risky litigation or giving up uncertain claims in exchange for a significant, but substantially lower, amount. The position of the trade creditors is very different. The proposed release will not deprive them of any right, potential or otherwise, against the banks because they have none. Indeed, so far as the proposed schemes are concerned, if the trade creditors act rationally they must vote in favour of the schemes. If the schemes do not go ahead they will probably get nothing. If the schemes are approved they will recover 37 cents in the dollar. When one compares the position of the client creditors with that of the trade creditors it is clear that the two groups could not consult together to reach a view on their common interest. They do not have sufficient rights in common. It was suggested by some counsel that the creditors should be broken down into more classes. For example, Mr Gleeson said that those who had issued proceedings against the banks should form a separate class. Mr Sweeney suggested a separate class for institutional clients who "must be taken to have been aware of the effect of the contractual arrangements" entered into with the Opes companies. Mr Wallis said his client, Danpen, is in a separate class for the reason that its dealings with OPSL are said to be akin to that of a traditional client/broker relationship. Mr Bigmore said that: "Panapous and other creditors who have similar claims have a dissimilarity of rights and interests from those unsecured creditors who have claims solely against Opes Prime, as well as those unsecured creditors who have claims against the ANZ Bank for loss and damage". I do not regard these groups as forming separate classes. If they did, I could probably find quite a few more. It is possible (but exceedingly unlikely) that these creditors have different economic interests from the others. But, even if they did, the existence of separate commercial or other interests is not relevant to the class issue. This is not to suggest that different interests are irrelevant. The existence of different interests may be a factor that can be taken into account if the court comes to decide whether it should approve the schemes. 7. Having regard to the wide variety of possible schemes that may be implemented under s 411, it has been necessary to provide the court with wide powers to facilitate schemes. The powers are found in s 413. The heading to s 413 states the section contains "Provisions for facilitating reconstructions and amalgamations of [companies]". The section provides that where a compromise or arrangement has been proposed "for the purposes of, or in connection with, a scheme for the reconstruction of a [company] ... or the amalgamation of two or more [companies] ... the Court may, either by order approving the compromise or arrangement or by later order" provide for, among other things, "the transfer to the transferee company of the whole or a part of the undertaking and of the property or liabilities of the transferor body": s 413(1)(a). The words "amalgamation" and "reconstruction" are not defined. Neither is a term with a precise meaning. I have examined several old books (including Lindley on Companies (5 th ed, 1889); Buckley on Companies (9 th ed 1909); Hamilton's Manuel of Company Law (1891)) and cases (including Hooper v Western and Counties and South Wales Telephone Co (Limited) (1892) 41 WR 84; Re South African Supply and Cold Storage [1904] 2 Ch 268 and Simpson v Palace Theatre Limited (1893) 69 LTR 70) which contain commentary that cast some light on how those expressions were understood when the scheme provisions were first enacted. It appears that a reconstruction refers to a transfer by a company where the transfer comprises the undertaking, but not necessarily all the assets or liabilities, of the company and such transfer is made by one company to a new company which is formed for the purpose of taking such transfer and which is practically the same company as the transferring company with some alterations in its constitution, in consideration of the allotment of shares in the new company, to the members of the transferring company. The term "amalgamation" may be taken to mean a transfer by one or more than one company of substantially the whole of its or their undertaking or undertakings and assets to an already existing company or the transfer by two or more companies of substantially the whole of their undertakings and assets to a new company formed to take such a transfer, the consideration for such transfer in each case being the allotment of shares in the purchasing company to members of the transferring company. Based on the foregoing meanings, both an amalgamation and a reconstruction directly affect members and their rights in the company. Hence a scheme of arrangement which brings about an amalgamation or reconstruction of a company must be put to the members. That is the view that I took in Application of United Medical Protection Limited . What is proposed here is not, strictly, an amalgamation or reconstruction, in the sense that the members' rights are not being altered. What is proposed is the transfer of assets and liabilities of several companies to another without an issue of new shares. Such an arrangement may affect members if their financial stake in the transferring company is diminished. In that event their consent would be required. Here, however, the members have no interest in what is proposed because these companies are in the process of being wound up and their assets are insufficient to satisfy its creditors in full: Re Tea Corporation Ltd [1904] 1 Ch 12. Hence it is permissible to pool the assets and liabilities of the Opes group into OPGL without a meeting of members. 8. It will be recalled the panel's role is to resolve disputes about the existence and amount of a creditors' claim. In this connection, the panel is to act as a body of experts, in the hope that their decision can only be challenged on limited grounds: As to the ability to challenge a decision of an expert see Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 , affirmed in A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1986) 66 ALR 70. There are good reasons for the liquidators' attempt to limit appeals from the panel. The panel is comprised of eminent people. Its procedures are streamlined. If disputes arise they will be dealt with quickly and cheaply. The panel will soon build up knowledge and experience that it will apply to other cases. The efficiency of the panel process may be contrasted with the resources (both in time and money) that would be expended should a dissatisfied creditor take his case to court. Still, what the liquidators propose is impermissible. First, it has been held that the right to appeal, if it exists, cannot be excluded by the provisions of a deed of company arrangement entered into under Pt 5.3A: Derwinto Pty Ltd (in liq) v Lewis [2002] NSWSC 731 ; (2002) 42 ACSR 645. For like reasons a right of appeal cannot be excluded by a scheme under s 411. Second, s 1321 provides for an appeal from, among others, "a person administering a compromise, arrangement or scheme referred to in Part 5.1 ". The panel, so it seems to me, is administering part of the schemes. On this aspect it is instructive to look at cl 2.2 of the proposed schemes where the schemes' purposes are found. In Re HIH Casualty and General Insurance Ltd [2005] NSWSC 1180 ; (2005) 56 ACSR 295 Barrett J considered whether the decision of so called scheme adjudicators to assess and quantify claims of scheme creditors was subject to appeal under s 1321. However, I am persuaded that they will have that character, particularly in light of the provisions of the scheme which reads in part as follows: 'The Australian Scheme shall be administered by the Scheme Administrators and the Scheme Adjudicators according to the respective powers and functions assigned to them by the provisions of the Australian scheme...' This makes it clear that the functions of the adjudicators are regarded by the scheme itself as part of the overall functions of administering the scheme. The tasks the scheme adjudicators perform will form part of the overall administration of the scheme. I should indicate, however, that while, like Barrett J, I have drawn attention to how the schemes themselves characterise the function of the panel, I base my decision on a characterisation of the function of the panel, not just on how that function is described in the documents. 9. The justification for establishing the fund is that the claims brought against the banks contributed to the banks' decision to put up $226 million and return to the liquidators the assets still in the possession of the receivers. It is also suggested that by paying the fees, the creditors who have commenced proceedings will be put into the same position as other creditors. There are difficulties with each proposition. Perhaps the existence of the claims contributed to the banks' decision to pay a large amount to compromise both existing and potential claims. So also might the litigation threatened by the liquidators and the threat by ASIC to take action. In any event the payment of fees incurred by some creditors will only bring them in line with creditors who have not paid any legal fees. It is not likely there are many creditors who have not consulted lawyers. Putting aside the justification for the payments, the effect of the proposal is that money in the possession of the scheme administrators will not be distributed pari passu . Some creditors will be advantaged at the expense of others. This is a departure from the method of distribution for an insolvent company established by s 556. This is troubling. An analogous issue was considered in Re Anglo American Insurance Ltd [2001] 1 BCLC 755. There the court was asked to sanction a scheme proposed for an insolvent company the terms of which excluded the insolvency provisions dealing with mutual credits and set-off. Neuberger J said there was power to sanction such a scheme but the power should be very rarely exercised. This is not the occasion upon which to consider this aspect of the merits of the schemes, in particular whether it is fair to divide assets unevenly. That will be considered at the approval hearing if the schemes are agreed by the statutory majority of creditors. 10. They proffered many suggested changes. Some of the criticisms and suggested changes were adopted by the liquidators. Others were not. I do not propose to say anything about those issues. This is for the reason that I do not regard it as the role of the court to adjudicate upon the form of a proposed scheme and explanatory statement except to the extent that change is required to ensure the scheme is capable of being approved and the explanatory statement is not misleading. It is for the person who propounds the scheme to decide what form it should take. The scheme in that form may or may not be attractive to members or creditors. That is a matter for them. Save for the limited extent I have identified, it is not the business of the court to interfere. 11. "Officer" is defined in s 9 to include an administrator or a liquidator. The liquidators wish to be appointed scheme administrators and therefore require leave. Ordinarily, pragmatism and common sense would favour the appointment of the liquidators as scheme administrators. If one were to appoint as scheme administrators persons familiar with the company, its assets and its affairs there would be a considerable saving of costs. In the case of a large concern the saving would be correspondingly large. Mr Gleeson, however, raised two key objections to the appointment of the liquidators as the scheme administrators. The first is that the liquidators have a material interest in the schemes. The second is that the liquidators in the implementation agreement with the banks have contracted to assure themselves the office of scheme administrators and have offered to use their best endeavours to procure the extinguishment of the rights of client creditors, without first consulting them. Other objections were raised, but they were not substantial. The basis of the first objection is this. The liquidators are currently out of pocket by about $8.3 million and if the schemes are approved they will recover their money. This, so it was said, put them in a conflict of duty and interest. Mr Scerri, however, said, and I accept, the true position is that the liquidators believe they will recover their outstanding fees whether or not the schemes proceed. The second objection is based on two clauses in the implementation agreement. The first clause provides that it is a condition precedent to payment of the $226 million by the banks that the court or ASIC grant leave for the liquidators to be appointed as scheme administrators. The second clause gives the Liquidators the exclusive right to permit other persons to act in their place as scheme administrators. Mr Scerri said that the clauses were inserted as a result of the negotiations with the banks and that in any event they would be waived. It is regrettable that the liquidators agreed to a condition that they be appointed as scheme administrators. And it is quite proper that have procured the waiver of this condition. The creditors are entitled to choose the scheme administrator and should not have anyone foist upon them. Still, I do not accept that as a result of what might be bad judgment the liquidators should be disqualified from performing the role of scheme administrator. 12. If the explanatory statement satisfies the statutory requirements, it is the practice in Victoria for the court to approve the statement. An explanatory statement was prepared by the liquidators. The statement is a substantial document, comprising some 336 pages. It contains a wealth of information. Some of the information is quite technical and difficult to understand. The cost of preparation is likely to have been many many tens of thousand of dollars, perhaps more than a hundred thousand dollars. The liquidators cannot be blamed for having spent so much money on the preparation of the explanatory statement. What they have spent is simply the cost of complying with the statute and the regulations. Although so much has been spent to satisfy the law, the result is a document which, I am certain, will not be read in full by any creditor and will probably not in all aspects, be fully understood by any creditor. I have on several occasions fought my way through the document and confess to having had difficulty with many of its paragraphs. It is time that consideration is given to whether all members and creditors need so much information regardless of the type of scheme being proposed. My own view is that they do not and that the provisions should be reformed. Be that as it may, in this case I told the liquidators that they should prepare and send to creditors a short summary (it turned out to 17 pages) of the key features of the schemes. I told the liquidators that I would make directions which relieved them from the obligation of sending to each creditor a copy of the explanatory statement, but that the statement should instead be published on Ferrier Hodgson's website and only given to a creditor on request. It would be interesting to know how many requests were made. The explanatory statement has been carefully examined by ASIC, and has been gone over by numerous counsel. I myself suggested changes. I am satisfied that the statement complies with s 412. 13. There was a question whether all the creditors of all the companies could be present at each meeting. I thought it best to leave that issue to be resolved by the meetings themselves. Thus, while separate meetings must take place, the creditors at any one meeting may resolve whether anyone else, including other classes of creditors, could be present at their meeting. It may be important to know what takes place at the meetings for purposes of the approval hearing, if the requisite majorities approve the schemes. For that purpose, there should be an audio recording of the meetings. 14. Thus it is necessary for a court to be alive to any difficulties that may arise if in due course it may be asked to approve the scheme: see Marlborough Gold Mines Limited at 504. I am satisfied that the schemes should be put for consideration by the proposed meetings. 15. The creditors who appeared to oppose the schemes or parts of the schemes seek to have their costs paid on an indemnity basis. In Re NRMA Insurance Ltd No 5132 of 1999 [2000] NSWSC 82 ; (2000) 33 ACSR 595 at [45] , Santow J examined many of the cases on the subject and set out the principles to be taken into account. (ii) However, this is subject to the objections not being frivolous or without substance but rather such as to be properly and justifiably advanced, even if unsuccessfully. I would add that even sensible objections should be capable of being advanced with reasonable economy of time, consistent with the summary nature of a s 411(1) application. The remaining creditors, whose contribution was less, should have one half of their taxed costs. Each parties' costs shall be paid out of the assets of OPGL with the same priority as prescribed by s 556(1)(df). I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein . | extinguishment of claims in scheme of arrangement whether scheme amounts to an acquisition on unjust terms scheme of arrangement compromise with creditors scheme to bar claims against third parties whether scheme effective as an arrangement classes whether creditors whose claims are barred constitute a separate class procedure determination of jurisdictional issues at convening hearing amalgamation whether creditors must approve panel established to assess claims by creditors whether right to appeal under s 1321 whether liquidators are disqualified from acting as scheme administrators arrangement compromise amalgamation reconstruction constitutional law corporations words and phrases |
This case concerns Estore Pty Limited (in liquidation). 3 On 3 October 2001, Mr Purchas and Mr Dean-Willcocks were appointed as administrators of Estore pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act). 4 On 8 November 2001, a Deed of Company Arrangement (the DOCA) was executed pursuant to a resolution of the creditors in accordance with s 439C(a) of the Act at the meeting convened under s 439A of the Act . 5 The Administration Fund under the DOCA was constituted by cl 5 of the DOCA which provided for Estore to pay certain funds to the Administrators at certain times. Pursuant to cl 5.3 of the DOCA, the Retained Cash in the administration account as at the date of execution of the DOCA also formed part of the Administration Fund. The DOCA provided for the fixed sum of $334 367.00 to be paid to the participating creditors (with a likely dividend of 16 cents in the dollar). 8 The administrators received the sum of $289 471.25 by way of contribution from Estore in partial compliance with the DOCA. 9 The administrators did not make any payments by way of dividend to Participating Creditors under the DOCA. 10 On 9 April 2003, the creditors passed a resolution at a meeting convened pursuant to s 445F of the Act that the DOCA be terminated and Estore be wound up. The administrators were appointed as liquidators. 11 The current balance of the Administration Fund is the sum of $84 813.00. The likely dividend to participating deed creditors, if the Administration Fund is distributed to them on the terms set out in the DOCA, is estimated at approximately 4.08 cents in the dollar. In this event, if the balance of the liquidation fund is then distributed to ordinary unsecured creditors (including the shortfall on Deed creditors' claims) the anticipated dividend to ordinary creditors is estimated at approximately 8.15 cents in the dollar. If the Administration Fund is included as an asset available for distribution to all creditors of Estore, the anticipated dividend to ordinary creditors is approximately 10.35 cents in the dollar. (2) A declaration that, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Administration Fund is to be distributed to the Participating Creditors on the terms set out in the Deed of Company Arrangement entered into by the defendant dated 8 November 2001. (3) Alternatively, a declaration, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Administration Fund is available for distribution as part of the property of the defendant in the due course of the winding up of the defendant in accordance with the relevant provisions of Pt 5.6 of the Act. However, there are no other parties to the proceedings. In particular, there are no parties representing the different interests involved. There is no contradictor. In my opinion, the proceeding is not constituted appropriately for the making of a declaration of right. The limits of the exercise of that jurisdiction in circumstances such as the present have been explained in Mentha v GE Capital Limited (1997) 154 ALR 565 at 571---575 (cf Gidley Re Aliance Motor Body Pty Ltd [2006] FCA 102 ; (2006) 150 FCR 345 at 347; Shepard v Sports Mondial of Australia Pty Ltd (in liq) (2005) 53 ACSR 746, [2005] NSWSC 432 at [18] ---[19]). However, those authorities establish that it is appropriate that the liquidators be given directions pursuant to s 511 of the Act as to the manner in which they can act in relation to the Administration Fund. The decisions of Austin J in Dean-Willcocks v ACG Engineering Pty Ltd (in liq) (2003) 45 ACSR 290; (2003) 21 ACLC 1226; [2003] NSWSC 353 and Campbell J in Sports Mondial favour the conclusion that the fund is held on trust for the deed creditors. After those decisions, Finkelstein J, in Commonwealth of Australia v Rocklea Spinning Mills Pty Ltd [2005] FCA 902 ; (2005) 145 FCR 220, drew attention to the possibility of an inconsistency between them and the earlier decision of Davies J in Federal Commissioner of Taxation v All Suburbs Car Repairs Pty Ltd (1994) 14 ACSR 753; (1994) 94 ATC 4712; (1994) 29 ATR 329. Davies J held that payments to the administrator were payments to him in his capacity as the agent of the company and consequently the sums received were the property of that company. 15 Barrett J needed to consider the differences in the reasoning in those authorities in Lombe v Wagga Leagues Club Ltd (2006) 56 ACSR 387; (2006) 24 ACLC 298; [2006] NSWSC 3 at [53] ---[77]. In circumstances which I cannot distinguish in substance from the present facts, Barrett J in a careful and reasoned decision applied the reasoning of Davies J. It is appropriate to follow the decision of Barrett J unless I am satisfied that it is clearly wrong. Consistency of decision in relation to the Act is desirable. As I am not satisfied that the decision of Barrett J is clearly wrong, I propose to follow it and give directions accordingly. 16 It is unnecessary for me to independently consider the alternative ground of the decision in Lombe , namely, the effect of termination of the deed of company arrangement. It was held that immediately after termination of the deed of company arrangement, the fund in question was the property of the Club no longer affected by any provision of that deed. It was, accordingly, applicable by the liquidator in the due course of winding up of the Club. 17 The application is properly brought by the plaintiffs as liquidators. They should have their costs out of the assets of the company as an expense of the winding up but on the basis that this proceeding has been heard together with two others. | whether funds held pursuant to terminated deed of company arrangement are held for the benefit of deed creditors or property of the company in liquidation direction that the funds be administered as the property of the company in liquidation corporations law |
In respect of part of one document, document 24 in Exhibit CM1, I gave the parties leave to file further submissions. I did so because the second page of the document appeared to involve the disclosure of legal advice to the respondents rather than the State of NSW. The respondents, however, had made no claim for privilege over that document. The categories of privilege on which the State relied also did not appear to be engaged. The State of NSW and the applicant, Betfair Pty Limited ( Betfair ), took the opportunity to make further submissions. The respondents (which I refer to collectively as Racing NSW ) did not. The State submitted that it had the benefit of legal professional privilege over the second page of the email. The State submitted that as I was satisfied that the response to the questions on the first page of the email was privileged (see Betfair (No 7) at [63]) I should also be satisfied that the questions are privileged; that the client's question incorporates or refers to a communication over which another person may have a privilege does not deprive the client of his or her privilege. Betfair submitted that to reach this conclusion I would have to be satisfied that the communication into which the legal advice to Racing NSW had been incorporated was for the dominant purpose of the State obtaining its own legal advice (citing Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501). The State's submission, on analysis, is consistent with the proposition Betfair puts about the relevance of Propend . The State's submission is that in circumstances where I have found that Parliamentary Counsel gave legal advice to the State it must follow that the questions put to Parliamentary Counsel were for the requisite dominant purpose of obtaining legal advice. The fact that those questions include a disclosure of legal advice to another entity, Racing NSW, does not affect their status as questions for the required dominant purpose as a communication between the State (as the client) and Parliamentary Counsel (as the lawyer). The logic of the State's submissions is compelling. I am thus satisfied that the State (via Mr Marzic) sought legal advice from the Parliamentary Counsel's Office on the second page of document 24 in Exhibit CM1. It follows that I need to vary the order I made on 8 October 2009 to exclude from the requirement for production in order 1 the reference to the parts highlighted pink on document 24 in Exhibit CM1. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | whether one party can claim legal professional privilege over a document that discloses a communication over which another party may have privilege privilege |
The Tribunal in that decision affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs, made on 26 March 2002, to refuse the appellant's application for a Protection (Class XA) Visa ('a Protection Visa'). 2 The background to this appeal is summarised in the written outline of submissions by the first respondent. The appellant is a 30 year old citizen of Bangladesh. He entered Australia on 1 October 2001, travelling on a visitor's visa. He submitted an application for a Protection (Class XA) Visa on 30 October 2001. The appellant claimed a well founded fear of persecution on the grounds of political opinion. After the Minister's delegate refused the application for a protection visa on 26 March 2002, on 14 April 2002 the appellant applied to the Tribunal for a review of the delegate's decision. The appellant's advisor provided further material to the Tribunal by letters dated 8 February 2003, 15 May 2003, and 19 May 2003. The Tribunal made a decision in the matter on 23 June 2003 which was handed down on 17 July 2003. This decision of the Tribunal was quashed by order of the Federal Magistrates Court on 13 May 2005, and the matter was remitted to the Tribunal for re-determination according to law. On 31 July 2005 the appellant's advisor made a lengthy written submission to the Tribunal. The appellant attended a hearing before the second Tribunal on 2 August 2005. On 5 August 2005, following the hearing, the Tribunal sent to the appellant a section 424A letter. The appellant's advisor responded to that letter on 17 August 2005. The Tribunal made its decision on 13 October 2005, and handed it down on 20 October 2005, affirming the decision not to grant a protection visa. The appellant claimed to be an Awami League member and official who feared persecution from members and supporters of the Bangladesh Nationalist Party ('BNP'). He claimed an extensive connection with the Awami League. He claimed that his father had been active in politics since an early age, and from an early age he had helped his father in relation to political matters. The appellant claimed to have worked during the 1996 election for a candidate for the Awami League. He claimed that he was elected in 1998 as organising secretary of the Belabo Thana Awami League, and was, in 2000, elected as the vice-president of the Belabo Thana Awami Committee. He claimed that he led a procession during the election in support of an Awami League candidate, and the procession was attacked by BNP hoodlums, injuring the appellant and killing one of his political affiliates. 4 In a written submission of 19 May 2003, the appellant's advisor claimed that he was ' a leading activist of the Bangladesh Awami League '. The [appellant] was a leading activist of the Bangladesh Awami League, who entered into politics during my early stage of life. In 1998 the [appellant] became the general secretary of the Bangladesh Awami League Belabo Thana committee. In 2000 the [appellant] became the President of the above-mentioned Thana committee. A number of false cases was filed against the [appellant] . He has been subject to past harm, namely: (a) death threats following a meeting in July 2001, if he refused to abandon the AL and its processions, (b) death threats if he did not join the BNP, (c) false charges orchestrated by the BNP and (d) beatings at a number of processions. This past harm (including the ongoing nature of the false charges), his continued interest in AL matters and current independent information concerning the treatment of AL activists in Bangladesh all lead the Applicant to fear further persecution for reason of his political opinion if he returns to Bangladesh. The appellant claimed in his Protection Visa application that he had been employed by the Organisation of Development Program for the Underprivileged ('ODPUP') in Dhaka. He claimed that this information was obtained to assist him to obtain a Visitors' Visa for Australia. In fact, according to the appellant, he had never worked for the ODPUP. 8 At the conclusion of the second hearing, the Tribunal with the appellant's consent, and in his presence, telephoned ODPUP to inquire about the appellant's employment status with that organisation. I'm just going to ask if they know you and if they can tell me if you've worked for them. That's all. So I'm not going to compromise any of your privacy. Do you know [the appellant]?'. After some questioning, the Member asked, ' I would like to know if he once worked with you '. And later, the Tribunal Member said, ' I think he was once working with ODPUP. I'd like to know can you confirm that for me? '. And then, after some questioning, the Member asked, ' No, no, no, when was he working there before, was it? '. ODPUP answered, ' Two years before '. The Member said, ' Okay, and for how long, sir? Was he working one year? '. ODPUP replied, 'Yes'. Subsequent to the second hearing, he forwarded a letter from the current Executive Director of ODPUP, in which the author claims that he had known the appellant since 1995, and confirms that the appellant had never worked there. 11 The question of employment by ODPUP is relevant because of the unlikelihood of employment by a Non Government Organisation ('a NGO') in Dhaka of a person who is at the claimed level of involvement in the Awami League, namely a 'leading activist', and is described by the appellant himself as being engaged in full-time activities for the Awami League. As the Tribunal noted, it also may have a relevance to the appellant's credibility generally. 12 The Tribunal wrote to the solicitor for the appellant on 5 August 2005, three days after the Tribunal hearing. With respect to your past employment, you wrote on that application form "12/09-07/01: ODPUP --- North Badda, Gulsun, Dhaka --- Community Counsellor --- Tk 4,000 (monthly salary)". With your consent and in your presence, it telephoned the Dhaka Office of ODPUP on the following telephone number: +880-2-9883470. It obtained this telephone number from the Care Bangladesh website (http://www.carebd.org/pngo.html) which lists partner organisations, and which gives three telephone numbers for ODPUP. As you will be aware, a person on that telephone line confirmed in English that he worked for ODPUP. On checking, he advised that you no longer worked there, but that you did previously (perhaps two years ago) and that you had worked there for a period of perhaps one year. Your comments are to be in writing and in English. They are to be received at the Tribunal by close of business on 19 August 2005. In accordance with section 424A of the Act, the Tribunal is now inviting you to comment in writing on the information above by 19 August 2005. You may, if you wish, provide information on other relevant matters in your response to this letter (on or before 19 August 2005). However, the [appellant's] replication of this information in his protection visa application (when it no longer served the purpose of securing a visitors visa) and the Tribunal's recent confirmation of his employment at ODPUP in an unsolicited telephone enquiry lead the Tribunal to conclude that he did in fact work there for at least some significant period in the past. The Tribunal is not satisfied that he has suffered past harm as a result of such political interests. The [appellant] is free to continue his support for the AL if he returns to Bangladesh, and faces no more than a remote and insubstantial possibility --- hence, no real chance --- of persecutory or other harm should [he] wish to pursue his political interests. The material before the Tribunal does not indicate any other grounds for refugee claims. The Tribunal therefore concludes that he does not have a well-founded fear of Convention-related persecution. He is not a refugee. That application set out five grounds of review. 18 At the hearing in the Federal Magistrates Court, the appellant was represented by counsel, who, effectively, abandoned those grounds, and sought to rely only upon grounds raised in the written submissions by counsel. He raised concerns about the Tribunal's findings of the extent of the [appellant's] knowledge of the Awami League and illustrated that by reference to the transcript of the hearing. He referred also to the [appellant's] answers to the questions asked of him about the false charges issue, and took issue with the method used by the Tribunal for asking questions about this issue in a speculative way. The difficulty with asking speculative questions, to summarise his argument, is that it produces speculative answers. And if a person in reply to a speculative question provides a speculative answer, it can hardly be a criticism because that is what the [appellant] was asked. It is noteworthy that the Tribunal did accept the [appellant's] involvement with the Awami League, but did not accept the fact that he had engaged in an increasing level of political activity on behalf of the League, which culminated in his election as vice president of a particular committee in the year 2000, the year before he came to Australia. The question of credibility, as I said, is a factual question. In my view, it was open to the Tribunal to make a finding that the [appellant's] seniority in the League or his involvement in the League, or the extent of his work as an activist with the League was not as great as the [appellant] put it. To my mind, this is, ... a merits review question and it is not a matter that is therefore susceptible to judicial review. The Federal Magistrate made a mistake in finding that there was no error in the decision of the Tribunal. The Federal Magistrate failed to find that the Tribunal denied me natural justice. The Federal Magistrate failed to find that the Tribunal's s424A letter contained incorrect information. The Tribunal made some mistakes when it assessed my claims. The Tribunal used wrong information in it's s424A letter dated 5 August 2005. On that date the Tribunal wrote that the Tribunal received information via telephone from ODPUP that I worked in that organization two years ago for one year. The Tribunal gave that information to me in writing and informed that it was reason or part of the reason to affirm the decision that is under review. I responded to that letter on 17 August 2005 and attached a letter from the Director of ODPUP. Both my letter and the letter from the Director of ODPUP confirmed that I did not work for ODPUP. I believe that the Tribunal erred in determining that the information it relied on in deciding my credibility was not correct. The Tribunal claimed that it received information that I worked for ODPUP two years ago for at least one year. However, the Tribunal also had information that I arrived in Australia on 1 October 2001, applied for a protection visa on 30 October 2001, and the Tribunal made that phone call to ODPUP on 2 August 2005, some three years ten months and one day after my arrival in Australia. There was no evidence before the Tribunal that I departed Australia since my arrival in 2001. Therefore, it was impossible for me to work for that organization two years ago when I was not present in that country. The Tribunal had a duty to judge its own information before it decides to send a s424A notice, which the Tribunal failed to perform. I strongly protested to the Tribunal that I did not work for ODPUP during the hearing and also after the hearing by sending letters. I provided a letter from the Executive Director of ODPUP which the Tribunal did not accept. However, the Tribunal did not inform me that it was not willing to accept that letter from the Executive Director of ODPUP. I believe that if the tribunal informed about it's stand in relation to that letter, I could have done more to prove my credibility. However, that did not occur and it was a denial of natural justice from the side of the Tribunal. The Federal Magistrate failed to find that there was a significant denial of natural justice by the Tribunal in not giving me an opportunity to know that it did not accept the letter from the Executive Director of ODPUP. The Federal Magistrate also erred in not observing that the S424A letter from the Tribunal was plainly incorrect, based on which the entire credibility issue was decided. I believe that the Honourable Federal Magistrate also denied me natural justice and the decision was not correct. 27 Concerning the first aspect of this complaint, the Tribunal determined that the appellant had given inconsistent accounts of whether he had been employed by ODPUP. The Tribunal found as a fact that, contrary to his later protestations, he had in fact been employed by ODPUP. This, in the Tribunals' view, was a telling circumstance against his claims concerning his level of his involvement with the Awami League. This is a finding of fact open to the Tribunal on the material before it. There is no error of law in making a wrong finding of fact: Waterford v Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510, per Brennan J at 77. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone. Not only is this impermissible merits review, but it exhibits a misunderstanding of the significance of the information contained in the telephone call. The Tribunal does not appear to have accepted that the employment of the appellant by ODPUP was for a period of one year, and occurred two years before the telephone call. The significance of the conversation, from the Tribunal's point of view, appears to be that it indicates that the appellant had been employed by ODPUP, as he had claimed in his application for a visa, and which he later denied. The fact of that employment brought into serious question the claimed fear of persecution for political opinion. 30 The appellant, in his written submissions, referred to Waco v Minister Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 171 ; (2003) 131 FCR 511 (' Waco '). Both letters corroborated a critical element of his claim. The Tribunal found that the letters were false documents. However, at no time did the Tribunal give any indication to the appellant that it doubted the genuineness of the letters, and the appellant was, at no time, invited to comment on the authenticity of the documents. 32 The issue in Waco was the authenticity of the letters. In this case, there was no issue as to the authenticity of the letter supplied by the appellant to the Tribunal. What the Tribunal did was reject the correctness of the statement in the letter, having regard to the other evidence that was before it. There was no obligation on the Tribunal to inform the appellant that it disputed the correctness of the statement made in the letter supplied by the appellant to the Tribunal. 33 As to the second aspect of the complaint contained in the letter (set out in par 24 above), namely, that the Tribunal was under an obligation to inform the appellant that it was not willing to ' accept the letter from the Executive Director of ODPUP ', the short answer is that the Tribunal was not under any such obligation. 34 A Tribunal is not required to tell the appellant its thought processes or conclusions before it makes adverse findings. Section 424A(1) of the Act requires the Tribunal to disclose 'information' of a certain kind. In this context, the word has been taken as referring to knowledge of relevant facts or circumstances communicated to, or received by, the Tribunal: Tin v Minister for Immigration and Multicultural Affairs [2000] FCA 1109 at [3] , approved in [VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471 ] at [24] or knowledge which has come to, or has been gained by, the Tribunal: [Paul v Minister for Immigration and Multicultural Affairs [2001] FCA 1196 ; (2001) 113 FCR 396] at [95] . 37 The appellant has not demonstrated any error in the decision of Scarlett FM, or, indirectly, any error in the decision of the Tribunal. Consequently, the appellant is not entitled to any relief. 38 The appeal is dismissed with costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. | appeals protection visa status of findings of fact of refugee review tribunal impermissible merits review whether tribunal required to communicate prospective findings as to the correctness of statements made in letters supplied to the tribunal migration |
The respondent has discriminated against the applicant within the meaning of s 6 and s 9(1)(f) Disability Discrimination Act 1992 (Cth). 2. The conduct of the respondent was unlawful within the meaning of s 23(1)(a) , 23 (1)(b), 24 (1)(a) and 24 (1)(b) Disability Discrimination Act 1992 (Cth). 3 On 28 June 2007, I ordered that the parties file and serve submissions as to remedies and other dispositive orders and at the hearing on Thursday 9 August 2007 the parties made oral submissions in this regard. The respondent must not continue or repeat such unlawful discrimination found to have been engaged in by the respondent. 2. The respondent provide to the applicant a written apology for the unlawful discrimination. 3. The respondent pay to the applicant damages by way of compensation in the sum of $40,000 for the loss and damage caused by the said unlawful contravention of the Disability Discrimination Act 1992 ("DD Act"). 4. The respondent pay interest on such damages. 5. The respondent pay the applicant's costs of and incidental to these proceedings, to be taxed if not agreed. The courts have ordered apologies to be made in appropriate circumstances. 2. Damages should be compensatory and not punitive. Damages in this case should be decided in a manner akin to general principles laid down in Haines v Bendall [1991] HCA 15 ; (1991) 172 CLR 60 and Hall v Sheiban Pty Ltd (1989) 20 FCR 217. 3. In particular, the Court may order a respondent to pay damages by way of compensation for hurt feelings, humiliation and embarrassment suffered by the applicant as a result of unlawful discriminatory behaviour on the part of the respondent. Although each case turns on its own facts, a case such as Clarke v Catholic Education Offic e (2003) 202 ALR 340 is of some guidance. It is pointless forcing an apology, hence no order should be made in this respect. 2. The authorities relied on by the applicant do not support the award of an amount as high as $40,000, and the majority of the cases relied upon by the applicant can be distinguished because, for example, in this case there is no suggestion of any personal injury, nor was the respondent's conduct malicious. Relevant comparators are Sheehan v Tin Can Bay Country Club [2002] FMCA 95 , Grovenor v Eldridge [2000] FCA 1574 and McNamara v Golonaise Pty Ltd [2006] QADT 7. 4. The evidence does not support a finding that the applicant was "publicly humiliated", particularly in relation to events at Smithfield Community Health Centre. 5. Given the bona fides of the respondent, the comparatively minimal impact upon the applicant and the number and nature of the events that comprise the complaints, general damages should be in the amount of $5,000 in total. Such an order could be made pursuant to s 46PO(4)(b) HREOC Act . The issue is whether it is appropriate for an order to be made in the circumstances of this case. 12 Mr O'Gorman SC for the applicant submitted that it would be appropriate for the Queensland Minister of Health, as Minister responsible for the respondent and the implementation of the respondent's relevant policies, to apologise to the applicant, and that while a public apology was not necessary the applicant sought a written apology from the Minister on behalf of the respondent. 13 While courts in human rights cases have sometimes ordered that apologies be made (for example, De Simone v Bevacqua (unreported, Supreme Court of Victoria, McDonald J, 15 September 1994), Zheng v Beamish [2004] FMCA 61 , Oberoi v Human Rights and Equal Opportunity Commission [2001] FMCA 34) , like many other judges before me, I consider that a court-ordered apology serves little purpose: Jones on behalf of the Executive Council of Australian Jewry v The Bible Believers' Church [2007] FCA 55 at [65] , Rawcliffe v Northern Sydney Central Coast Area Health Service [2007] FMCA 931 at [101] , Jones v Toben [2002] FCA 1150 at [106] , Jones v Scully [2001] FCA 879 ; (2001) 113 FCR 343. 14 Accordingly, I am not prepared to make an order that anyone on behalf of the respondent apologise to the applicant, or to make any observations as to whether an apology should be made in these circumstances. As Lockhart J pointed out in Hall v Sheiban at 239 damages awarded should be based on a comparison of the position that the applicant would have been in if he had not been subjected to the discriminatory acts of the respondent, with the position he is in as a result of those acts. 16 In this case, the submission of the applicant is that the damage caused to the applicant was in the form of hurt feelings, humiliation and embarrassment suffered as a result of the unlawful discriminatory behaviour on the part of the respondent. Both Mr O'Gorman SC and Mr Murdoch have referred me in this respect to comments of May LJ in Alexander v Home Office [1988] 2 All ER 118 at 122. Where the discrimination has caused actual pecuniary loss such as the refusal of a job, then the damages referable to this can be readily calculated. For the injury to feelings, however, for the humiliation, for the insult, it is impossible to say what is restitution and the answer must depend on the experience and good sense of the judge and his assessors. Awards should not be minimal, because this would tend to trivialise or diminish respect for the public policy to which the [Act] gives effect. On the other hand, just because it is impossible to assess the monetary value of injured feelings, awards should be restrained. To award sums which are generally felt to be excessive does almost as much harm to the policy and the results which it seeks to achieve as do nominal awards. Further injury to feelings, which is likely to be of a relatively short duration, is less serious than physical injury to the body or the mind which may persist for months, and in many cases for life. Indeed, a review of cases where damages have been awarded in respect of discriminatory conduct reveal a considerable variance in the sums awarded. Madgwick J was of the view that the child would have been distressed and confused by the events, and viewed the respondent's conduct as hurtful, but that the harm to the child was likely to have been transient and not extreme. In my view, this claim is excessive. However, in my view the public humiliation and embarrassment occasioned to the applicant was clearly more patent than in either Grovenor [2000] FCA 95 or Haar 184 ALR 83. I consider the sum of $5,000 appropriate compensation, and order that interest at the annual rate of 5% be payable on this sum pursuant to s 51A(1)(a) Federal Court of Australia Act 1976 (Cth) to be calculated from 16 November 2004 when the cause of action arose. Further, I note that the applicant is seeking an inclusive sum for all incidents of which complaint was made in QUD522/2005. 23 In respect of this proceeding, the applicant seeks damages of $25,000. In my view, this claim is excessive. Other than this, there is no evidence of any damage or loss to the applicant, either physical or psychiatric. I consider that the sum of $3,000 is proper compensation in these circumstances. Further, in light of the proximity in time of the occurrence of the five incidents the subject of complaint, I order that interest at the annual rate of 5% be payable on this sum pursuant to s 51A(1)(a) Federal Court of Australia Act 1976 (Cth) to be calculated from 19 November 2004 when the cause of action first arose in these proceedings. The respondent is to pay the applicant damages in the sum of $5,000. 2. The respondent is to pay interest on damages of $5,000 at an annual rate of 5% to be calculated from 16 November 2004 pursuant to s 51A(1)(a) Federal Court of Australia Act 1976 (Cth). The respondent is to pay the applicant damages in the sum of $3,000. 2. The respondent is to pay interest on damages of $3,000 at an annual rate of 5% to be calculated from 19 November 2004 pursuant to s 51A(1)(a) Federal Court of Australia Act 1976 (Cth). The respondent is to pay the applicant's costs in QUD324 of 2005 and QUD522 of 2005 other than the applicant's costs associated with the Notice of Motion to exclude the evidence of Dr Unwin, to be taxed if not agreed. 2. The applicant is to pay the respondent's costs of the Notice of Motion to exclude the evidence of Dr Unwin, to be taxed if not agreed. 3. The applicant is to pay the respondent's costs that relate solely to the respondent's costs in QUD211 of 2006, to be taxed if not agreed. | damages finding of unlawful discrimination within the meaning of s 6 and s 9(1)(f) disability discrimination act 1992 (cth) whether an order for an apology from the minister for health is appropriate in the circumstances quantum of damages payable interest discrimination |
Each is an appeal from a judgment of the Federal Magistrates Court of Australia. Both judgments were delivered on 3 April 2008. In what I will call the first appeal, the appellants are a couple. In the second appeal, the appellant is the son of that couple. 2 All three appellants are citizens of Lebanon. All are of the Jehovah's Witnesses faith. The family arrived in Australia on 22 January 2007. The parents applied for protection visas on 2 March 2007. The son applied on 5 March 2007. On 16 March 2007, a delegate of the first respondent, the Minister for Immigration and Citizenship ("the Minister") decided to refuse to grant a protection visa to either of the parents. On 19 March 2007, the same delegate of the Minister decided to refuse to grant a protection visa to the son. The appellants then applied to the Refugee Review Tribunal ("the Tribunal"), the second respondent, seeking merits review of the decisions of the Minister's delegate. The Tribunal conducted a hearing at which the appellants gave evidence, as did another witness, and the appellants made submissions through a migration agent. The Tribunal's reasons for decision were dated 25 May 2007, and delivered or sent to the appellants on 7 June 2007. 3 By s 36 of the Migration Act 1958 (Cth) ("the Migration Act "), there is a class of visas to be known as protection visas. A criterion 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 . It is convenient to call those two instruments taken together, the "Convention". By s 91R(1)(b) , the Convention does not apply unless the persecution alleged involves "serious harm" to the person. Subsection (2) of s 91R gives a number of examples of serious harm. 5 In the present case, the appellants claimed that, in Lebanon, they would be in danger. They had a well-founded fear of being persecuted on the ground of their religion, and also because of imputed political opinion. Their case was that, because Jehovah's Witnesses are not a recognised religion in Lebanon, the authorities attribute to members of Jehovah's Witnesses a political opinion and that they are understood to be pro Israeli. 6 Their claims were supported by a statutory declaration of the father and another of the son. Substantially those are in the same terms, with some minor differences. According to the father's statutory declaration, he became an elder at the age of 27 and continued in that position until 2002, when he chose not to continue holding that position because of increasing threats to his safety, and restrictions on his religious practice which made his position as an elder untenable. As an elder, he was expected to lead prayer meetings, engage in door-to-door preaching, distribute religious material, and conduct home visits to members of the congregation. The appellants allege that they had been threatened on numerous occasions by neighbours and other inhabitants of their village, and treated as outcasts. They allege criticism from Christian clergy in the village and increased hostility over the four years before the statutory declaration was made. They said that relocating to another village was not a viable option, because they would face the same degree of hostility. 7 The father appellant claimed that he was sacked from his job as a laundry manager on the basis that customers were not willing to deal with him because he was a Jehovah's Witness. Such restrictions are made in an effort to protect myself and members of my family from the continuous threat of physical violence. This degree of restriction means that we cannot practice [sic] our faith in a manner which is required by our faith. Adherence to our faith is not possible if we are to continue to curtail core religious activities such as preaching and refraining from participating [sic] in religious meetings. 8 The statutory declaration goes on to say that even practising the faith in a covert manner would be exposing the appellants to the real risk of harm; their only viable option to guarantee safety was to refrain altogether from practising the faith. They also asserted that they could not rely on the authorities for protection because the government was hostile to members of the faith. 9 In addition, the son said that, if he were to return to Lebanon, he could not continue to complete his university education, because of increasing hostility from fellow students and teachers. He had opted not to re-enrol during the semester in which his statutory declaration was made, because he could no longer cope with the verbal and physical abuse that he had been suffering at university. 10 In the hearing before the Tribunal, the appellants expanded on the case. The Tribunal relied upon a substantial amount of information from sources other than the appellants. As part of its researches, the Tribunal consulted the Jehovah's Witnesses' Worldwide 2005 Report web site. This is a Jehovah's Witnesses' web site providing detailed and current information on countries in which Jehovah's Witnesses face harm and repression. The site did not list Lebanon as such a country. Other information indicated that Jehovah's Witnesses in Southern Lebanon were numerous and practised their religion and also attempted to proselytise. 11 In its findings and reasons, the Tribunal characterised the appellants' claims as follows. The applicants claim that as Jehovah [sic] Witnesses they face discrimination from the Lebanese government, hostility from the Lebanese population and fear that should they be threatened with actual harm, they could not expect protection from the Lebanese authorities. The father applicant further claims to have suffered discriminatory treatment in terms of his employment and the applicant son claims that the hostile environment where he was studying effectively prevented him from continuing his studies. They have further claimed that both through general perceptions, and by reason of the applicant father's name, they are identified with Israel and are accused of siding with Zionism. They claim that the increased tensions in Lebanon arising from recent political events have resulted in them facing increasing risk of harm. It accepted that Jehovah's Witnesses in Lebanon face discrimination in certain areas of life, arising from the fact that their religion is not accepted constitutionally. It accepted that Jehovah's Witnesses face considerable hostility from both Christians and Muslims in Lebanon. Indeed, Jehovah's Witnesses have 70 congregations in Lebanon with a membership of some three and a half thousand and, as was cited above, DFAT has advised that "In practice. . .the JWS are left in peace to assemble and worship. Relying on the father's own evidence that he had always been able to find other employment, even responsible managerial positions, the Tribunal found that any discrimination the father faced in employment was not of such seriousness or severity as to constitute persecution. Nor was there a real chance that he would suffer persecution in that respect in the future. 14 The Tribunal also considered the son's claim that the hostility he faced led him to feel isolated and unable to continue his university studies. The Tribunal did not consider any harm arising from not being able to complete tertiary studies, to be of such magnitude as to constitute serious harm. The Tribunal finds that their religious duty of witnessing their faith requires them, of necessity, to come into constant contact with people who may well resent, and indeed feel hostile, towards the applicants' endeavours to convert them. However, even with the religious tensions that exist in Lebanon, the Tribunal finds significant that there are no reports of serious harm coming to Jehovah [sic] Witnesses as they practise their faith. The Tribunal accepts that there are reports of occasional local instances of opposition, but there is no evidence that any such difficulties are so widespread as to prevent them from practising their faith or constitute a real chance that serious harm might befall the applicants in the foreseeable future. 16 The Tribunal then considered the claims that the appellants may be associated with Israel and with Zionism, but found that there was no evidence to support a finding that there was a real chance that any such identification would lead to the appellants suffering serious harm in the foreseeable future. The Tribunal discussed previous Tribunal decisions, pointing out that there was a division between the Tribunal decisions that granted protection visas to Jehovah's Witnesses from Lebanon and those that rejected their applications. The Tribunal considered whether the discrimination faced by Jehovah's Witnesses in Lebanon might, when considered cumulatively, amount to serious harm, but found that the evidence did not sustain such a finding. Accordingly, the Tribunal dismissed the applications for review of the Minister's delegate's decision and affirmed the decision not to grant a protection visa. 17 The appellants applied to the Federal Magistrates Court. Their amended application raised a number of grounds, some of which are relevant on appeal. At [13], her Honour rejected the submission that the Tribunal ignored the issue of distribution and dissemination of literature, and referred to what the Tribunal had said in the passages I have quoted above. At [14], her Honour noted that the Tribunal dealt with the issue of distribution and dissemination of literature by dealing expressly with the religious duty of witnessing. At [15], her Honour dealt with a submission that the Tribunal had equated serious harm with physical harm, and rejected that submission on the ground that there is nothing in the Tribunal's reasons for decision to indicate that it did so. Her Honour pointed out that the Tribunal, in its reasons for decision, set out a statement of the meaning of serious harm, including examples listed in s 91R(2) of the Migration Act . At [18], her Honour pointed out that the Tribunal set out fully the claims made by the appellants, including claims that the appellants had restricted the practice of their faith due to the continuous threat of physical violence. At [19], her Honour pointed out that the Tribunal clearly did not accept this claim. Rather, the Tribunal considered that the resentment and hostility that the applicants' practice of their faith might generate would constitute something less than persecution. That is, the resentment and hostility would not lead to physical harm or anything else that could properly be described as serious harm. 19 At [20], her Honour referred to relevant authorities to which I shall make reference later. Rather, the Tribunal considered that the applicants had a well founded fear of discrimination, resentment and hostility. These things, in the Tribunal's view, do not amount to persecution. That conclusion was open to the Tribunal. 20 Her Honour was not persuaded that the appellants had identified a jurisdictional error in the Tribunal's reasons for decision. Her Honour delivered separate reasons for judgment in the son's application, but those separate reasons for judgment refer to the reasons for judgment in the parents' application. 21 The notices of appeal in these two appeals express six grounds. In reality, each amounts to another way of saying the same thing. The argument on the appeal was summarised by counsel for the appellants as depending upon a failure of the Tribunal to deal with an "essential integer", or an aspect, of the appellants' claim. That aspect is the adoption of self-imposed restrictions on religious practice because of the threat of harm. In particular, the relevant restrictions are those on proselytising, distribution of religious material and public preaching. 22 Counsel for the appellants referred to the line of authority of which Farajvand v Minister for Immigration and Multicultural Affairs [2001] FCA 795 and Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 (2003) 216 CLR 473 are part. In effect, counsel for the appellants argued that the need, or perceived need, to be seen to restrict activities can itself amount to serious harm. That is not the basis on which those authorities turn. It is abundantly clear, particularly from the passages in [29] and [33] of Allsop J's reasons for judgment in Farajvand , as well as from the judgments in S395 itself, that a person will only be seen to have a well-founded fear of persecution if there is a need, or a perceived need, to curtail activities in order to avoid persecution. Given that s 91R of the Migration Act equates serious harm with persecution for this purpose, it will be necessary to show that a person must adopt, or perceives the need to adopt, restrictions on that person's activities in order to avoid serious harm. The imposition of restrictions on activities simply to avoid threats, or simply to avoid harm that does not amount to serious harm, will not itself become a form of serious harm. This position is confirmed by the very recent judgment of Dowsett J in SZDTM v Minister for Immigration and Citizenship [2008] FCA 1258 , especially at 74. 23 In its reasons for decision, in a passage which I have quoted above at [15], the Tribunal made clear its finding that, if the appellants were to return to Lebanon and to practise the full range of their religious duties and activities, including the duty of witnessing, there would not be a real chance that serious harm might befall them in the foreseeable future. In other words, the appellants need not impose on themselves the sorts of restrictions on their religious activities that they had adopted before coming to Australia in order to avoid persecution in the form of serious harm. 24 Having made that finding, the Tribunal had determined the essential question that it was obliged to determine. That question was whether the appellants had a well-founded fear of persecution if they should return to Lebanon. The Tribunal found that the appellants had no well-founded fear of persecution, because there was not a real chance that persecution in the form of serious harm would occur to them if they were to conduct the full range of their religious activities. It was unnecessary for the Tribunal to address in the context of that reasoning what might happen to the appellants by reason of their adoption of self-imposed restrictions on their activities. The Tribunal found that the self-imposed restrictions were not necessary in order to avoid serious harm and, therefore, were of no significance. As the federal magistrate found, the Tribunal had certainly not ignored the appellants' claims that they had adopted restrictions on their activities. It had set out in full those claims in its reasons for decision. It simply found that such restrictions were unnecessary, in the context of the material on which it relied as to the conditions under which Jehovah's Witnesses practise their religion in Lebanon. 25 Counsel for the appellants also made an attempt to argue that the Tribunal equated serious harm with physical harm. He referred to passages in the transcript of the Tribunal hearing in an endeavour to indicate this. In order to determine what are the reasons of a Tribunal member, it is necessary to look to what the Tribunal member says are the reasons. There is serious danger in resorting to passages in the transcript of a hearing and seeking to convert what a decision-maker might say in the course of a hearing into reasons for the ultimate decision. Very often, decision-makers will advance propositions for the purpose of testing them, and very often they will put questions or propositions to people and be persuaded to the contrary. Members of the Refugee Review Tribunal are professional decision-makers, and the courts and the public are entitled to expect that what they express in their reasons for decision are, in fact, their reasons for decision. In my view it is wrong, in principle, to go outside those reasons for decision, looking for underlying or concealed reasons for reaching a particular conclusion. 26 When the Tribunal's reasons for decision are examined it is abundantly clear that the Tribunal did not restrict its view of serious harm to physical harm. The fact that it dealt expressly with the claims that the father had faced discrimination in employment and that the son claimed he felt unable to continue his studies is a clear indication that the Tribunal had a conception of serious harm going far beyond physical harm. The Tribunal had also made specific reference to s 91R of the Migration Act in its reasons for decision. 27 Accordingly, it is clear that there was no jurisdictional error on the part of the Tribunal of the kind advanced by the appellants in this case. There was no error by the federal magistrate in failing to make a finding of such jurisdictional error. Both appeals must be dismissed. Counsel for the Minister has sought costs from the appellants and that application has not been resisted. There is no reason that appears to me why the usual rule that costs follow the event should not be complied. Accordingly, I will order that each of the appeals be dismissed, and that the appellants in one case, and the appellant in the other, pay the Minister's costs of the appeal. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | protection visa jehovah's witnesses in lebanon whether tribunal failed to deal with essential aspect of claim whether adoption of self-imposed restrictions on religious practice because of threat of harm amounts to persecution tribunal found no real chance of serious harm even if restrictions not adopted whether tribunal equated serious harm with physical harm no jurisdictional error migration |
The respondent is unrepresented. This proceeding has involved numerous interlocutory applications which have delayed the proceeding from coming to trial. It is important, before addressing the merits of the respondent's application, that I outline some of the rather complicated procedural history in the proceeding that has culminated in this application. 2 The applicants' statement of claim was filed on 26 May 2006. On 6 March 2007 the respondent filed a notice of motion seeking better and further particulars. On 5 April 2007 an amended statement of claim was filed. The notice of motion of 6 March 2007 eventually was heard on 17 December 2007. During the hearing the respondent indicated that a number of the particulars he sought in the notice of motion were no longer pressed. I reserved my decision on the application for those further and better particulars that the respondent indicated he continued to seek. I also granted leave for the applicants to file a further amended statement of claim. On 1 April 2008 a second amended statement of claim was filed by the applicants. 3 On 8 April 2008 the respondent filed a further notice of motion seeking further and better particulars of the second amended statement of claim. 4 On 2 September 2008 this notice of motion was heard. At this hearing the respondent indicated that in accordance with pro bono legal advice he had received since the filing of the notice of motion of 8 April 2008, he no longer wished to pursue the application for further and better particulars. Instead, he wished to press the notice of motion of 6 March 2007 and, specifically, to those requests for particulars he had identified in the hearing on 17 December 2007. Accordingly, I dismissed the respondent's notice of motion of 8 April 2008. 5 Before I turn to consider the request for further and better particulars contained in the respondent's notice of motion of 6 March 2007 which were pressed by the respondent in the hearing of 17 December 2007, it would be as well to outline the applicants' claim. 6 The first and third applicants are the registered owners of trademarks. The second and third applicants are subsidiaries of the first applicant which is in turn a subsidiary of Metcash Ltd, a public company limited by shares and listed on the Australian Stock Exchange (ASX). Prior to 16 January 2006 the first applicant itself had been listed on the ASX. 7 The applicants operate a grocery and liquor wholesale business throughout Australia. As part of their business they on-supply grocery stock and liquor products to supermarket operators and liquor retailers. 8 The respondent was, at the relevant times, the proprietor, sole director and secretary of Chadmar Enterprises Pty Ltd (in liquidation) (Chadmar) and the sole shareholder of Kayso Pty Ltd (in liquidation) (Kayso). 9 Chadmar operated supermarkets in the Australian Capital Territory (the ACT). Kayso operated a single supermarket in the ACT which was in due course sold to Chadmar. 10 Between 1997 and 2004 the applicants were suppliers of goods on credit to the supermarkets operated by Chadmar and Kayso. 11 On 7 September 2004 the second applicant issued a statutory demand directed to Chadmar in relation to a debt in the sum of $1,275,425.66. 12 The applicants' claim that the respondent has established a number of websites on the internet and, between 20 September 2005 and 10 May 2006, published a number of articles on those websites usually, but not always, in the form of a letter. It is the applicants' case that the letters which were published on the websites were intended to be read by creditors, suppliers, customers and shareholders of the applicants. It is also the applicants' case that the respondent has posted further materials on the websites and continued to make publications until about 3 October 2006. 13 The applicants' first cause of action is that the respondent threatened to disclose confidential information which had come into his possession, notwithstanding that the respondent knew the information to be confidential and subject to confidentiality obligations that prohibited the disclosure of the contents of the information. It is the applicants' case that on or around 20 February 2006 the respondent threatened to publish contracts between the applicants and their customers which were confidential. 14 The applicants' second cause of action against the respondent is that the respondent has induced suppliers and customers of the applicants to breach contractual arrangements between the applicants and themselves by breaching confidentiality agreements. 15 The third cause of action is under the Trademarks Act 1995 (Cth) (the Trademarks Act) and the applicants assert that the respondent has infringed the trademarks registered in the names of the first and third applicants. 16 Fourthly, the applicants complain that the various publications to which reference has been made were defamatory of the applicants. 17 Next, the applicants assert that the various publications constituted an injurious falsehood which has caused the applicants actual damage. 18 Lastly, the applicants complain that the respondent has contravened s 52 of the Trade Practices Act 1974 (Cth) (the Trade Practices Act ) and s 56 of the Fair Trading Act 1987 (SA) (the Fair Trading Act ). 19 The applicants seek damages and an injunction restraining the respondent from further publishing statements of the kind about which objection is taken in the statement of claim. 20 The respondent's notice of motion seeking particulars which was considered on 17 December 2007 was directed to the applicants' previous statement of claim. However, the paragraphs which were under consideration in the previous statement of claim have been replicated in the statement of claim filed on 1 April 2008. In those circumstances, I shall identify the request by reference to the paragraph number in the statement of claim filed on 26 May 2006, together with the paragraph number in brackets of the statement of claim filed on 1 April 2008. 21 The applicants responded to the respondent's request in a letter dated 2 May 2007. That letter provided some particulars. Annexed to the letter was a schedule. I will have regard to the letter and schedule in considering this application. 22 A pleading must be as brief as the nature of the case allows and contain only a statement of the material facts on which the party relies: O 11 r 3 and O 11 r 2 of the Federal Court Rules (the Rules). It should not contain the evidence by which those material facts are to be proved: O 11 r 2. A party, however, must include in the pleading or in some other document the particulars of the party's claim or defence: O 12 r 1. The object of requiring a party to give particulars is to limit the generality of the pleadings so as to inform the party's opponent of the nature of the case which he or she has to meet and to prevent the opponent from being taken by surprise at the trial: Spedding v Fitzpatrick (1887) 38 Ch D 410. The provision of appropriate particulars should mean that unnecessary expense to the parties will be avoided. Particulars, like material facts, should not include the evidence which the party intends to prove his or her case. Nor should particulars be used as statements of material fact because particulars are not pleaded to by the opposing party: Pinson v Lloyds and National Provincial Foreign Bank Limited [1941] 2 KB 72. 23 I will set out the request for particulars in full. With one exception it is not necessary to set out the pleading to which the request relates in full. 26 In paragraph 33 it is asserted that the respondent knew, at least from 3 February 2006, that the contracts referred to by the respondent embodied express and written confidentiality obligations which prohibited the disclosure of the contents of the contracts without the prior written consent of the applicants. 27 As to the first part of the request for particulars seeking further particularity of the contracts, this request should be refused for three reasons. First, because paragraph 33 identifies the contracts with sufficient particularity, being those contracts which the respondent referred to in his email to the solicitors for the applicants on 15 February 2006. The respondent must know to which contracts he was referring when he sent that email. This is one of those circumstances that the party's own knowledge means that the request for particulars should be refused: Lawson v Perpetual Trustee Co Ltd (1959) 76 WN (NSW) 367. Secondly, the contracts are in fact identified in paragraph 7 of the statement of claim. Thirdly, the contracts which are referred to in the email of 15 February 2006 apparently have not been discovered by the respondent. In that case, the respondent cannot seek further particularity of documents to which he referred in his email and which he has neglected to discover in this proceeding. His failure to discover the documents makes it impossible for the applicants to better identify them. 28 As to the request for particularity of the respondent's knowledge, that request must also be refused. (2) In subrule (1) "condition of mind" includes any disorder or disability of mind, any malice and any fraudulent intention, but does not include knowledge. There is no obligation on the applicants to give particulars of the actual knowledge of the respondent. That is because the respondent either did or did not have the knowledge. If as alleged he had that knowledge then, that must be proved by admissible evidence. Particulars are not required. The purpose of this page is to provide a full copy of all contracts that Metcash and its units (I.G-D; A.L.M., ETC.) require its customers to execute so as to obtain supply ... It appears there could be numerous editions of each contract ... so if you have an agreement that is either not provided or is different to those on the site please contact me confidentially and I will post your copy. 32 The respondent complained at the hearing that the document to which the applicants referred does not amount to a solicitation. That may or may not be so. That, however, is the document upon which the applicants rely for the purpose of the plea. The identification of that document as the document referred to in the plea is sufficient response to the request for particulars. In any event, the respondent is not entitled to any further particulars. Order 11 rule 4 provides that where any document is referred to in a pleading it is permissible to state the effect of the document without setting out the precise terms thereof. The applicants have complied either in the pleading or in the response to the request for particulars. 34 The applicants identify in paragraph 46 the imputations which they say arise both in the natural and ordinary meaning of the words complained of and by way of actual innuendo. 35 It is necessary to say something about the structure of the statement of claim to understand the request for particulars and the contentions put by the applicants' counsel in opposition to the request. 36 In paragraph 18 of the statement of claim the applicants identify 17 separate documents which the applicants say they received from the respondent between 20 September 2005 and 10 May 2006. Each of those documents is annexed to the statement of claim. 37 In paragraph 20 of the statement of claim the applicants plead that each of the separate documents referred to in paragraph 18 were published by the respondent to persons other than the applicants. Such a plea is necessary because publication to the applicants would not of itself have given rise to a cause of action for defamation whatever the content of the communication. Paragraph 20 identifies a number of different persons and groups of persons who are said to have received the 17 separate communications. 38 Paragraph 21 identifies the dates upon which it is said that those separate communications of the separate documents were made. 39 In paragraphs 22 and 23 the applicants identify three separate documents which they say were published on the respondent's website on 20 February 2006. In paragraph 23 the applicants identified two further documents which they say were published on the respondent's website on 21 February 2006. 40 The documents referred to in paragraphs 22 and 23 are also annexed to the statement of claim. 41 Paragraphs 25-28 appear under the heading in the statement of claim "Subsequent Publications". In each of paragraphs 25, 26, 27 and 28, the applicants identify a document which was sent to different persons on different dates between 3 October 2006 and 4 December 2006. The four separate documents are also annexed to the statement of claim. 42 The pleading in the statement of claim devoted to defamation commences at paragraph 40. 43 In paragraph 45 the applicants contend that publications in each of paragraphs 20, 22, 23 and 25-28 refer to and were understood to refer to the applicants. 44 It is paragraph 46 of the current statement of claim to which the request relates. No other imputations apart from those in paragraph 46 are pleaded. In paragraph 48 the applicants roll up their earlier pleas by pleading that by reason of paragraphs 20, 21, 22, 25, 45, 46 and 47 the applicants have been injured in their trading reputation. 46 The publications in paragraph 23, 26, 27 and 28 are not relied on for the pleaded imputations. I thought that there might be a typographical error in paragraph 46 and that the pleading intended to rely on paragraphs 20 and 22 in paragraph 46.1, and on paragraph 23 in paragraph 46.2. 47 Paragraphs 25, 26, 27 and 28 are all pleaded under the heading of "Subsequent Publications". It would seem to be odd that the applicants would rely on one paragraph which refers to a subsequent publication and omit reference to one paragraph which refers to contemporary publications: paragraph 23. However, I think a reading of the publications and the imputations relied upon shows that the pleader was addressing paragraph 25. The end result is that there is no plea for defamation which relies on the publications in paragraph 23 of the statement of claim which is an odd result. Moreover, the publication in paragraph 25, which is said to be a subsequent publication, supports the imputations in paragraph 46.2. 48 As I have said, paragraph 46 identifies the imputations which are said to arise in both the natural and ordinary meaning of the words, and by way of a true innuendo. It is necessary to give particulars of the facts and circumstances which are said to support a claim of libel which relies upon the true innuendo. The applicants have given particulars of those facts and circumstances, and there is no complaint about those particulars. There was no obligation at common law to plead particular imputations where the cause of action relies upon the natural and ordinary meaning of the words. However, in New South Wales there was an obligation to plead such imputations under the Defamation Act (1974) (NSW): s 9(2). More recently, it has become the practice in this State and other States in Australia to plead the imputations which are said to arise out of publication, even if those imputations are said to arise in the natural and ordinary meaning of the words: Chapman v Australian Broadcasting Corporation (2000) 77 SASR 181. 49 In response to the respondent's request, the applicants provided a schedule which identified the particular documents in each of the paragraphs either for the plea that the imputation arises in the natural and ordinary meaning of the words or for the plea that the imputation arises by way of innuendo. 50 The applicants resist giving any further particulars as requested by the respondent on the ground that the whole of the article is defamatory and no further particulars need be given. The applicants contended that where a party asserts that the whole of an article is claimed to be defamatory of a plaintiff, the plaintiff need not give any further particulars of the words relied on for any imputation pleaded. The applicants relied upon a decision of Menhennett J in A v Ipec Australia Ltd & Crew [1973] VR 39. In my opinion, that was a special case and does not indicate the usual rule as to pleading an imputation arising out of an article where the whole of the article is clearly not defamatory of the plaintiff. 51 The usual rule is that the respondent is entitled to particulars which require the applicants to identify the part or parts of the article which are alleged to be defamatory and which support the imputation pleaded: DDSA Pharmaceuticals Ltd v Times Newspapers Ltd [1973] 1 QB 21 at 26. Some of the article is not defamatory of anyone at all. It describes only the method of importing drugs. Other parts of the article are defamatory of some unnamed chemists, but not of the plaintiffs at all. Yet other parts may be defamatory of the plaintiffs. To throw an article of that kind at the defendants and indeed at the court, without picking out the particular passages, is high embarrassing. There is a tremendous amount of the article which is not defamatory of your clients. You must pick out the particular bits and rely on the rest as extrinsic or surrounding facts giving a defamatory meaning to the words. The plaintiffs must specify the particular parts defamatory of them. For instance, in this particular case there is a reference to a "London-based operation. " If the plaintiffs say that it means the plaintiffs, they should say so. They should insert "(meaning thereby the plaintiffs). " There is a reference to "the largest single network operating from a London suburb. " Do they say that means the plaintiffs? If they do, they should put in "(meaning thereby the plaintiffs). " Such an exercise will be a great advantage to the plaintiffs themselves. It will make them clear their minds: and it will help the defendants too. 52 That has been the recognised pleading practice for many years: Ron Hodgson v Belvedere Motors [1971] 1 NSWLR 472; Gatley on Libel and Slander (10th ed, 2004) (P Milmo and WVH Rogers, eds) para 26.12. It may be appropriate to plead the whole article in order to claim that certain passages or libellous statements take their meaning from the article as a whole, but in order to focus the dispute it is important that the allegedly defamatory passages be sufficiently identified. 54 Indeed, so much was recognised by Menhennett J in a later decision in Kerney v Optimus Holdings Pty Ltd [1976] VR 399 at 401. 55 For the reasons which follow, in my opinion, the respondent is entitled to further particulars in respect to the plea in paragraph 46.1 but not of the plea in paragraph 46.2. 56 Six imputations are said to arise out of the publications in paragraphs 20 and 22. One of these imputations consists of four parts. It is not clear whether the pleader means that that imputation consists of all four parts or those parts are alternatives. But that is not an issue at present. The point is that six separate imputations are said to arise out of the 17 separate publications in paragraph 18 (which are incorporated into paragraph 20) and the three separate publications in paragraph 22. The 17 separate publications in paragraph 20 total 52 pages. The three separate publications in paragraph 22 consist of three pages. The Court and the respondent, at present, have to trawl through 55 pages of material to identify the six discrete imputations pleaded in paragraph 46.1. 57 The applicants have, as I have said, provided a schedule. That schedule identifies the separate publications which are said to support the pleaded imputations by first identifying the pleaded imputation and then by referring to the publications in paragraphs 18 and 22. It then discriminates between those publications which are said in the natural and ordinary meaning of the words to give rise to the imputation, and those imputations which arise by way of innuendo. In my opinion the applicants should identify the part or parts of each publication which are relied upon for each imputation. 59 The schedule addresses the imputations which arise by way of innuendo by describing the publication as "innuendo --- prior publications". This shorthand description refers to the particulars given in paragraph 46.1(b)(ii). There is no plea in paragraph 46.2 of an innuendo relying on prior publication. In paragraph 46.2 the pleaded innuendo is particularised by reference to the first and third applicants' conduct. 60 The schedule does not identify the prior publications of which the reader was aware at the time of reading the subsequent publication. In those circumstances, the reader of this pleading could not know, even with the assistance of the schedule, which prior publications allowed the reader of the subsequent publication to understand the subsequent publication as pleaded in the imputation. Whilst, of course, it must be understood that the imputation arises out of the subsequent publication because the plea is said to arise out of a true innuendo, there must be something in the prior publication which would allow the reader to read the subsequent publication in the manner described in the imputation. The respondent is entitled to know which prior publications have informed the reader and the manner in which the reader has been informed. The respondent is entitled to know the words in the subsequent publication which are said, with the reader's previously obtained knowledge, to give rise to the imputation. 61 The applicants plead in paragraph 46.2 that three separate imputations arise out of the publication of the separate publication in paragraph 25, again, in the natural and ordinary meaning of the words and, again, by reason of an innuendo. The publication in paragraph 25 is a document of two pages which consists of an introduction, a question asked of Mr Andrew Reitzer and his answer. The publication then makes a number of short points in relation to Mr Reitzer's answer. 62 There is no need for any further particularity in respect of this plea. The publication speaks for itself. Insofar as the pleading relies upon the publication in paragraph 25 of the statement of claim for the imputation which is said to arise in the natural and ordinary meaning of the words or by way of the pleaded innuendo, no further particularity is required. 63 In respect of paragraph 46.2, as I have said, the innuendo is particularised by reference to what the first and third applicants have done and by reason of the applicants' disclosure obligations under the ASX Listing Rules, and ss 674 and 675 of the Corporations Act 2001 (Cth): paragraph 46.2(b). 64 The schedule addresses paragraph 46.2 and identifies paragraph 25 as the publication which is relied upon for the imputation arising in the natural and ordinary meaning of the words. 65 The schedule does not identify any publication as being relied on for the imputation arising by innuendo. If that is correct, the plea in the innuendo should be struck out. However, I think the schedule to be in error. I think that the applicants are intending to rely upon paragraph 25 for the imputation which arises by way of innuendo. If I am wrong about that, the applicants can correct me. The applicants accept that it is necessary that they give particulars of the injury to their trading reputation. In their response the applicants' solicitors wrote, "[t]his is still being investigated and the Applicants will provide particulars of this in due course. In those circumstances, there should be an order that the applicants give those particulars. Particulars are given. In paragraph 49.1 the applicants plead that the respondent knew or ought to have known that the imputations referred to in paragraph 46 were untrue. 69 The applicants contend that no further particulars are required because particulars of the falsity of the imputations and particulars of the respondent's malice relied upon by the applicants are contained in the pleadings in paragraphs 52.2 and 52.3. 70 In paragraph 52.2 the applicants plead the particulars of the falsity of the imputation. In paragraph 52.3 the applicants plead that the respondent made the publications maliciously and with the deliberate intention of causing loss and damage to the applicant. In paragraph 52.5 a further allegation that the respondent published the words knowingly or recklessly is made. 71 In my opinion, the particulars in paragraphs 52.2 and 52.3 do not address the issue raised in the request for further particulars. The specific request is for particulars of the knowledge or the constructive knowledge of the respondent that the imputations were untrue. The later pleas that the imputations were false and that they were published maliciously does not directly address the claim in 49.1.1 that the respondent knew or ought to have known that the imputations were false. 72 However, I would not order the applicants to give all of the particulars sought. 73 I have already referred to O 12 r 3 of the Rules which specifically relieves a party from the need to give particulars of knowledge and for the reason I mentioned. In those circumstances, there is no obligation upon the applicants to give particulars of knowledge. 74 However, the applicants should be required to give particulars of the constructive knowledge which it is claimed the respondent had: Fox v H Wood (Harrow) Ltd [1963] 2 QB 601. 75 The claim that a party ought to have known something must depend upon objective facts and circumstances from which it may be concluded that the party should have acquired the knowledge alleged. The allegation that a party ought to have known something carries with it the claim that, notwithstanding the proven facts and circumstances, the party did not acquire that knowledge. A claim such as is made in this pleading that the respondent knew or ought to have known that the imputations were false means that the respondent either knew that the imputations were false or, by reason of the surrounding facts and circumstances, should have known that the imputations were false. 76 There will be an order therefore that the applicants give particulars of the facts and circumstances which allow it to be said that the respondent ought to have known that the imputations referred to in paragraph 46 of the statement of claim were untrue. Paragraph 49.1 contains particulars of aggravated damages. It may be the claim for aggravated damages includes any publication after the first publication pleaded in paragraph 20. 79 The plea in paragraph 49.1.3.2 simply refers to the four subsequent publications identified in paragraphs 25, 26, 27 and 28. The applicants not only do not identify the particular words which are said to give rise to the defamatory statements, they do not identify the imputations which are said to arise. 80 The respondent is entitled to know the part or parts of the article which are alleged to be defamatory and the imputations which are said to arise. 81 The plea in paragraph 49.1.3.3 is far too general. The applicants have not identified where and to whom the publications were made except as being publications in "respect of which the applicants have made their concerns known to the respondent". They have not identified the part or parts of the articles which are said to be defamatory of the applicants. They have not particularised the imputations which are said to arise. The applicants must identify the publications by reference to the date upon which they were made, in what medium they were made and the persons to whom the publications were made. They must identify the part or parts of each publication which they say is defamatory of the applicants and the imputations which arise and if by way of true innuendo give particulars of the innuendo. We also refer you to paragraph 4.2 of the amended statement of claim where it is pleaded that you were at all material times, the proprietor, sole director and secretary of Chadmar and to ASIC records discovered by the applicants at item 69 of their List of Documents. 84 The reply to the request does not seem to address the particulars sought in the request. I understand the respondent's application to be for particulars of anything done or said by him that would allow the plea to be made. 85 The applicants reply is to "repeat the particulars pleaded which are entirely adequate". That is not right because there are no particulars pleaded in paragraph 55 of how the respondent is acting and/or purporting to act on behalf of Chadmar or in the commercial interests of Chadmar. 86 The applicants otherwise rely on paragraph 4.2. I assume that they are the particulars relied upon. 87 If the applicants are content to confine themselves to the particulars in paragraph 4.2, that is a matter for them. I will not order any further particulars in relation to this request upon the understanding that the applicants simply rely upon the particulars in paragraph 4.2. If that understanding is wrong, the applicants should correct it. In reply to the request for particulars they said, "[t]his is still being investigated and the applicants will provide particulars of this in due course. Paragraphs 1.4, 1.7 and 1.22 of the respondent's notice of motion filed on 6 March 2007 be dismissed. | interlocutory application pleadings application for further and better particulars respondent had knowledge of contracts he sought particulars of respondent had not discovered relevant documents no obligation to give particulars of actual knowledge of respondent. pleadings necessary to give particulars of facts and circumstances said to support a claim of libel which relies upon a true innuendo common to plead imputations said to arise out of publication in the natural and ordinary meaning of the words particulars are required of words relied on for any imputation pleaded where party asserts that whole of article is defamatory necessary to give particulars of prior publications and subsequent publications where imputation by true innuendo by reference to prior publication is pleaded necessary to give particulars of facts and circumstances where applicant claims the respondent ought to have known that imputations pleaded were untrue. practice and procedure defamation |
The rejection of his claim by the respondent Repatriation Commission and the Veterans' Review Board was affirmed by the Administrative Appeals Tribunal: Patterson and Repatriation Commission [2005] AATA 758. Mr Patterson now appeals to this Court. 2 The relevant Statement of Principles (SoP) concerning hypertension for the purposes of s 120A(3) of the Act, No 35 of 2003, provides by cl 4 that at least one of the factors in cl 5 "must be related to any relevant service rendered". His clinical onset of hypertension occurred in 1978. 4 Mr Patterson contended that the material before the Tribunal raised three hypotheses for the purposes of s 120(3) of the Act. 5 In its reasons for decision the Tribunal found that the obesity hypothesis was a reasonable one raised by the material before it (s 120(3)) but that it was satisfied beyond reasonable doubt that there was no sufficient ground for making a determination that Mr Patterson's hypertension was war-caused (s 120(1)). It found that the alcohol and salt hypotheses were not reasonable (s 120(3)) because they were not upheld by the SoP (s 120A(3)). 7 His hypertension was diagnosed in 1978. Prior to this he had no idea that his blood pressure was elevated. During his service in Vietnam he started eating potato chips, salted peanuts and salted cashews in the canteen initially as an accompaniment to a glass of beer but later as a snack away from the canteen. Before his service in Vietnam he had eaten such salty snack foods only infrequently but by the time of his discharge they were a regular part of his diet. 8 Before his army service he was a light social drinker. During his service in Vietnam he began to drink regularly. When he was not on duty he consumed alcohol (one to two small cans of full strength beer) and salty snack foods daily. After his discharge he continued to consume beer virtually daily, at a hotel with lunch on one or two days weekly and in the evenings. 9 At the time of his discharge his weight was almost the same as on enlistment. However his weight increased after army service and by 1978 he considered himself to be obese (105 kg) which he attributed to his consumption of alcohol and salty snack foods. He said that his service in Vietnam contributed to his weight gain because his diet and exercise were otherwise fairly similar to pre-enlistment levels. He estimated his consumption of beer after his discharge until the time of diagnosis to be more than 20 standard drinks of alcohol per week on average. 10 Following his Vietnam service he began to add salt to his meals because the food tasted bland without it. He estimated that he was consuming at least 12 grams of salt per day at the time of diagnosis of hypertension in 1978. 11 In Vietnam his role was to calculate the settings on artillery to support infantry in the field. This was a precise and stressful task. The stress and tension, plus the hot and humid climate caused him to sweat profusely which contributed to his increased beer consumption. In the field there was no access to alcohol but he spent most of the time in Nui Dat and Vang Tau where there was ready access to beer. In the 1980s he changed his lifestyle and took up sailing which helped to reduce his weight. He changed to light beer and began to exercise regularly. 14 The Tribunal quoted from evidence of a Consultant and Occupational Psychiatrist Dr Nigel Strauss who was called on behalf of the Commission. I am not satisfied that his alcohol consumption was 200 grams per week or more than that, while he was in the Australian Army at any stage. He agreed that Mr Patterson could not be described as a heavy drinker. 17 The Tribunal referred to another witness called by the Commission, Dr Ruth English, a nutrition consultant. She noted that Mr Patterson's weight on enlistment was the same as on discharge. She said that the salty snack foods identified by Mr Patterson as being responsible for his obesity were food choices that were purchased in the canteen and consumed by him away from the mess setting and therefore were not part of the service diet. 18 Dr English noted that Mr Patterson had not provided detailed dietary intake data to substantiate his claim of consuming 200 grams of alcohol per week, had not completed an alcohol questionnaire and had given non-specific information on the quality and quantities of beer consumed. 19 She said that foods such as salted nuts, cashews and potato chips were not covered by the definition of "salt supplements" in the SoP. She said that "any personal recall of salt intake lacks scientific credibility, especially as no validation check can be applied as with general dietary recall". She concluded that based on the findings in the scientific literature relating to the complexity of factors that shape an individual's food choices and habits, Mr Patterson's stated consumption of peanuts and other salted snack foods and his taste for salt before the diagnosis of hypertension, are not as a result of his operational service. 20 In oral evidence Dr English said that Mr Patterson's salt intake appeared to be a lifetime habit. She questioned the accuracy of his estimate that one teaspoon of salt weighed 6g and questioned his estimate of the amount of salt added to his food because of the uncertainty about the volume of liquid involved. She doubted his salt supplement amounted to 12 grams per day on the average and emphasised that he consumed snack foods in Vietnam in addition to prescribed meals. She said that hot weather and sweating by Mr Patterson in Vietnam would not necessarily lead to a greater salt intake because the body adapted to salt loss in different ways. Use was fairly minimal, and I would say what would be described as normal for most families. Salt was added to the cooking, but only in small amounts. Salted cashews and peanuts and other like foodstuffs were eaten rarely on special occasions, such as at Christmas family gatherings. She said that she and Mr Patterson met in 1972 and were married the following year, after his army service. Even adding more salt than I was generally accustomed to would still not be enough, as David would invariably still add salt at the table. The amount of salt added would vary from about one teaspoon for each pot of vegetables to a very large amount for the vegetable broth that David liked very much...David would still add salt to the bowl to get the taste he liked. He used to drink one large bottle of beer each night and on Fridays when he was working for the Country Roads Board he drank at a hotel with his colleagues after work. He changed to light beer in about 1985. He tried to loose weight in the mid 1980s and she assisted by cooking different foods. 24 The Tribunal referred to a report by Dr Justin Kenardy on the psychological and physiological effects that determine salt consumption. He stated that the over consumption of salt following a pattern of high salt diet cannot be construed as having an underlying mechanism of addiction. It is not an addictive process. 25 There was evidence from a military historian estimating that Mr Patterson could have spent between 114 and 146 days in Vietnam in conditions which allowed access to a canteen. 26 The Tribunal referred to an article in the Lancet which found that only 20 to 36 per cent of salt added during cooking is recovered in fresh vegetables, the rest being discarded in the cooking water. The Tribunal noted that there was no dispute that Mr Patterson suffered from hypertension. The Tribunal must consider all the material which is before it and determine whether that material points to a hypothesis connecting the injury, disease or death with the circumstances of the particular service rendered by the person. No question of fact finding arises at this stage . If no such hypothesis arises, the application must fail. If the material does raise such a hypothesis, the Tribunal must then ascertain whether there is in force an SoP determined by the Authority under s 196B(2) or (11). If no such SoP is in force, the hypothesis will be taken not to be reasonable and, in consequence, the application must fail. If an SoP is in force, the Tribunal must then form the opinion whether the hypothesis raised is a reasonable one. It will do so if the hypothesis fits, that is to say, is consistent with the 'template' to be found in the SoP. The hypothesis raised before it must thus contain one or more of the factors which the Authority has determined to be the minimum which must exist, and be related to the person's service (as required by ss 196B(2)(d) and (e)). If the hypothesis does contain these factors, it could neither be said to be contrary to proved or known scientific facts, nor otherwise fanciful. If the hypothesis fails to fit within the template, it will be deemed not to be 'reasonable' and the claim will fail. The Tribunal must then proceed to consider under s 120(1) whether it is satisfied beyond reasonable doubt that the death was not war-caused, or in the case of a claim for incapacity, that the incapacity did not arise from a war-caused injury. If not so satisfied, the claim must succeed. If the Tribunal is so satisfied, the claim must fail. It is only at this stage of the process that the Tribunal will be required to find facts from the material before it . In so doing, no question of onus of proof or the application of any presumption will be involved. Although not explicitly stated at this stage, it would seem that the Tribunal had in mind the obesity hypothesis. 31 In relation to the second step the Tribunal noted there was no dispute that the SoP concerning hypertension was in force. 32 In respect of the third step, the Tribunal accepted that Mr Patterson was obese (as defined in the SoP) at the time of the clinical onset of hypertension. There was "material or evidence pointing to the hypothesis being a reasonable one, and it (was) consistent with the template in the SoP". Thus Mr Patterson satisfied the third step in relation to the obesity hypothesis. In respect of the third step from Deledio , in relation to factor 5(b) of the SoP, the Tribunal takes into account the estimates given by the applicant, in Exhibit 6, of his alcohol consumption in 1978. The Tribunal takes into account the evidence from Dr Strauss, who described the applicant's alcohol consumption before and after service and concluded that the applicant was not a heavy drinker, and that the applicant's post-service consumption was mainly beer consumed with counter lunches once or twice per week and in the evenings. The Tribunal also notes Dr English's evidence that the applicant did not provide dietary intake data to substantiate his claim that he consumed 200 gm of alcohol per week in 1978, and her comments that he has not completed an alcohol questionnaire to substantiate his claim . The Tribunal further notes the applicant's evidence that after Vietnam his alcohol consumption increased. The Tribunal finally notes that the applicant told Dr Strauss that after leaving the army his alcohol consumption was never an issue for him or those around him. The Tribunal accepts the submission from Ms McCulloch [counsel for the Commission] that the estimates provided by the applicant in Exhibit A6 are unreliable and are not supported by objective evidence. For these reasons the Tribunal concludes that the applicant was not consuming at least 200 gm (20 standard drinks) per week on average at the time of the clinica l onset of hypertension in 1978 . As a result there is no material or evidence pointing to the hypothesis being a reasonable one, and it is not consistent with the template in the SoP concerning hypertension ( Hill ). Therefore, the applicant does not satisfy the third step from Deledio in relation to factor 5(b). In respect of the third step from Deledio , in relation to factor 5(c) of the SoP, the Tribunal takes into account the estimates given by the applicant in Exhibit A6 and the assumptions underlying the figures provided by him, and the research conducted by Dr Kennedy (sic) and the James study about salt ingestion, plus research cited by Dr English. The Tribunal accepts Ms McCulloch's submission that the term salt supplements as defined in the SoP is confined to salt added to food when cooking or eating, and salt tablets. On this basis the Tribunal does not accept that salt used in packaged snack foods fits within the definition. The Tribunal agrees with Ms McCulloch that the estimates of his salt consumption by the applicant are speculative . The Tribunal also agrees that the figures given in Exhibit A6, as a re-construction of events that took place many years ago, are unreliable and inaccurate , and the amounts listed for salt contained in potato chips, Twisties and soy sauce should be disregarded. For these reasons the Tribunal finds that the applicant did not ingest at least 12 gm of salt supplements per day on average, at least 6 months immediately before the clinical onset of hypertension. In the circumstances there is no material or evidence pointing to the hypothesis being a reasonable one, and it is not consistent with the template in the SoP concerning hypertension ( Hill ). The applicant does not satisfy the third step from Deledio in relation to factor 5(c) of the SoP. It then returned to the obesity hypothesis to apply the fourth step, that is to say whether it was satisfied beyond reasonable doubt that Mr Patterson's hypertension was not war-caused. Relating to factor 5(a) of the SoP, in respect of the fourth step from Deledio , concerning whether the Tribunal is satisfied beyond reasonable doubt that the evidence before it demonstrates that the hypothesis cannot be sustained, the Tribunal is called upon to make findings of fact. The Tribunal accepts the evidence that, although the applicant increased his alcohol consumption after service, his weight on enlistment and discharge was almost the same, despite his evidence of developing a liking for salty snack foods in Vietnam. The Tribunal accepts the submission from Ms McCulloch that the applicant's gradual increase in weight was consistent with factors noted by Dr Strauss such as being far less active and having a sedentary job. The Tribunal also agrees with Ms McCulloch that factors such as family responsibilities contributed to his weight gain. The applicant admitted to feeling fitter at the time of his discharge than before or during service. He started eating high-fat snack foods such as Chiko Rolls and having counter lunches at a hotel about twice each week. Therefore, there was no causal connection between the applicant's obesity and the development of hypertension. For these reasons, the Tribunal is satisfied beyond reasonable doubt that there is no causal connection between the applicant's obesity and operational service during the relevant period, and that the hypothesis cannot be sustained. Therefore, the Tribunal finds that the fourth step from Deledio is not satisfied, and the claim does not succeed. The connection between Mr Patterson's obesity and his hypertension, at the time of clinical onset, was not in dispute. The issue at this stage was the connection between that obesity and his war service. However, there is no need to cite well known authority for the proposition that decisions of administrative decision-makers should not be read over-strictly. Some looseness of language may be allowed. In the present case, [47] and [48] read as a whole indicate that the Tribunal understood its task at that stage, the fourth of the four-step Deledio process. It engaged in an assessment of the evidence and reached a conclusion that the connection between obesity and war service was disproved beyond reasonable doubt. Whether this Court would have reached the same conclusion is not to the point. No error of law is shown. Yet it is clear this is what the Tribunal did at [43] and [44]. The reference to Dr English's criticism of "lack of dietary intake data" suggests not only fact finding but the imposition of an onus of proof on Mr Patterson, something excluded by s 120(6). The Tribunal reached a conclusion as to what in fact Mr Patterson's alcohol consumption was rather than enquiring whether his hypothesis was consistent with the SoP. The Byrnes [ v Repatriation Commission [1993] HCA 51 ; (1993) 177 CLR 564] methodology is applied. Do the facts raised by the claimant give rise to a reasonable hypothesis? Proof of facts is not in issue at this point. If one of the disputed facts happens to be a component of an SoP then the Commission must disprove that fact beyond reasonable doubt, just like any other relevant fact. The Tribunal made a qualitative assessment of Mr Patterson's evidence and accepted criticism of it as "speculative", "unreliable" and "inaccurate". This is the discourse of fact finding. 41 If the Act, like most statutes conferring pensions and similar benefits, simply required Mr Patterson to establish that his hypertension was due to war service, then the Tribunal's approach would disclose no error of law. However, for the historical and political reasons which underlie repatriation legislation in Australia, as discussed in Deledio and East v Repatriation Commission (1987) 16 FCR 517, the Act mandates a unique decision-making process. The Tribunal failed to apply that process. In an appeal limited to questions of law ( Administrative Appeals Tribunal Act 1975 (Cth ) s 44(1)) it would not be appropriate to conduct in effect a rehearing of the case before the Tribunal. Mr Patterson was entitled to have his claim considered on its merits by the Tribunal in accordance with the Act. The determination of the Tribunal made on 9 August 2005 is set aside. Mr Patterson's claim is remitted for consideration by the Tribunal differently constituted. The Commission is to pay Mr Patterson's costs of the appeal, including reserved costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey . | veterans' entitlements claim for hypertension arising out of eligible war service in vietnam held : administrative appeals tribunal erred in making findings of fact as to factors prescribed by statement of principles and placing onus of proof on applicant defence and war |
On that day, I ordered that the ONA produce to the Court by no later than 25 September 2009 the 15 redacted reports used by Commissioner TRH Cole QC as the basis for the findings made by him in par 30.112 of Vol 4 of his Report of the Inquiry into Certain Australian Companies in relation to the UN Oil-for-Food Programme ( the 15 reports ) and all documents in the possession, custody, control or power of the ONA which show or tend to show to whom in the Department of Foreign Affairs and Trade each of the 15 reports was sent and when each such report was sent to such persons ( the distribution list ). I also directed that, by 25 September 2009, the ONA and the Commonwealth make any further submissions in support of their application that no access be granted to those reports. In accordance with the Orders which I made on 17 September 2009, the ONA and the Commonwealth produced to the Court the 15 reports and also made further submissions in writing. Some of the reports are copies and some are originals. A further document has also been produced in response to the orders which I made on 17 September 2009. The ONA and the Commonwealth continue to submit that no access should be granted to the documents which have been produced to the Court. As a fallback position, those parties submit that, should access be granted, there should be further masking of the 15 reports. They have provided to me copies of those reports with additional portions masked in order to give effect to this submission. The additional masking leaves very little of the text of the reports open for inspection. They also submit that access should be restricted to a small number of persons and that those persons should be required to give appropriate undertakings to the Court. At [49]---[67] of AWB No 2 [2009] FCA 1047 , I explained my reasons for making the orders which I did on 17 September 2009. At [66] of AWB No 2 [2009] FCA 1047 I reserved for further consideration the question of whether the ONA's claim that the documents produced in response to the orders which I made on 17 September 2009 should nonetheless be protected from disclosure on public interest immunity grounds. I have inspected all of the documents produced to me. I have also considered the proposals advanced by the ONA and the Commonwealth as to the further masking which they submit is required should access be granted. As I am now considering what should be done at the second stage of the process, I am required to undertake the balancing exercise to which I referred at [54]---[62] of AWB No 2 [2009] FCA 1047. That exercise involves weighing up the requirements of the due administration of justice, having regard to the circumstances of the present case, against the public interest in protecting the documents from disclosure. That public interest in the present circumstances involves the protection of the national interest and matters of national security. At [39]---[44] in AWB No 2 [2009] FCA 1047 , I discussed the forensic purpose to which AWB asserted that it would put the documents were they made available to it. I will not repeat what I said in AWB No 2 [2009] FCA 1047 concerning that matter. However, it is the forensic purpose to which I have made reference in those paragraphs which I am weighing in the balance when considering the exigencies of the administration of justice in the present case. In essence, Counsel for AWB submitted that the 15 reports would constitute a body of evidence which might establish or which might tend to establish that the Department of Foreign Affairs and Trade ( DFAT ) knew of the payments which AWB stands accused of concealing from it. In particular, it was submitted that, because the Cole Distillation was not admissible in evidence, AWB needed access to the documents from which that Distillation was derived in order to be able to tender those documents at the trial in its own case as business records. Whilst the tender of the 15 reports, or one or more of them, was an important part of the submissions made on behalf of AWB, Counsel did not suggest or accept in his submissions that the tender of the documents in AWB's case was the only use to which the documents might be put. Having inspected the 15 reports and having read them carefully, I am firmly of the view that none of them could be tendered in evidence pursuant to s 69 of the Evidence Act 1995 (Cth) ( the Evidence Act ). Whilst AWB may well be able to satisfy some of the requirements of s 69 in respect of the 15 reports, it will not be able to satisfy the personal knowledge requirements laid down in subs (2) and (5) of that section. None of the reports is signed. Although some of the reports, in their unredacted form, clearly refer to sources of information, it is not possible to attribute to any particular statement in the reports any particular source, let alone come to a view as to whether that source had the requisite personal knowledge of the relevant facts. It would thus be impossible for the Court, when confronted with the tender of these documents, to be satisfied that the requirement of personal knowledge has been made out. The capacity to draw inferences pursuant to s 183 of the Evidence Act would not ameliorate this difficulty. In addition, there is a very real and substantial question as to whether any of the contents of the 15 reports would be held to be sufficiently relevant to justify the tender of those reports. As I pointed out in AWB No 2 [2009] FCA 1047 , AWB is not mentioned in any of the reports, only one document refers to any Australian company or entity and none of the documents specifies the wheat trade, with one exception. That exception was a November 2003 report which suggested that most large companies had refused to pay Iraqi imposed surcharges, citing, as an example, wheat imports from Australia. It is highly unlikely that AWB would wish to tender the November 2003 report to which I just referred. It is also unlikely that the contents of any of the 15 reports would, in any event, be regarded at trial as being sufficiently relevant to justify their tender, even if they were prima facie admissible under s 69 of the Evidence Act . There is also the problem which the existing masking presents for any tender. Although the masking, on its own, may not prevent the tender of at least some of the documents, it would probably do so in some cases. I have exercised my mind as to whether, notwithstanding that the documents would not be able to be tendered, they might provide a useful source of material for the cross-examination of witnesses intended to be called in the applicants' case or might provide a basis for an appropriate train of enquiry which could lead to a real benefit to AWB in the conduct of its own case. As matters presently stand, the only witnesses who might be cross-examined about the contents of the 15 reports are Mr Othman, who was the General Manager of Alia Corporation, and the former Foreign Minister, Mr Downer. It is always difficult for a Judge in advance of a trial to comment upon or anticipate the utility of documents in cross-examination. Counsel briefed in the proceedings are almost always better placed to form views about matters such as that than the Judge would be. However, in the present context, I think that I should at least consider whether the 15 reports could conceivably be of any use in cross-examining the two witnesses whom I have mentioned in respect of the issues raised in the proceedings which are said to justify the production of the 15 reports and the granting of access by the parties to them. There is nothing in the 15 reports which could directly assist AWB in its cross-examination of those two witnesses. Further, it is extremely difficult to discern any more subtle and less direct cross-examination that would be appropriately served by AWB having access to the 15 reports. Further, I do not think that the 15 reports will provide any useful train of enquiry in respect of the alleged knowledge on the part of DFAT of the relevant payments. Consistent with what I said at [64] of AWB No 2 [2009] FCA 1047 , the mosaic analysis argument is the only argument which continues to find favour with me for resisting AWB's application for access to the 15 reports. It is extremely difficult for a Judge to second guess clear evidence to the effect that any disclosure of the contents of the 15 reports might lead to that sort of analysis being undertaken by persons who represent a threat to Australia's national interest. In AWB No 2 [2009] FCA 1047 , I said that I did not accept that this argument carried much weight at the time I delivered those Reasons. That is why I ordered that the 15 reports be produced to the Court. Now that I have inspected the reports and considered them carefully, I still tend to think that the mosaic analysis argument does not carry a great deal of weight in the present case. However, for the reasons which I have discussed at [9]---[17] above, I am quite firmly of the view that the 15 reports will be of very little or no use to AWB in the pursuit of its defence to the allegations of concealment contained in pars 26, 27(a) and 28 of the current Statement of Claim. In the end, I think that the risk of harm to the national interest does outweigh the needs of AWB in the present proceedings and I propose to order that access not be granted to any person to the 15 reports which have been produced pursuant to the orders which I made on 17 September 2009. Several of the 15 reports bear no particular mark or indication as to whom (if anyone) at DFAT the reports were sent. However, the ONA and the Commonwealth have produced in response to the orders which I made on 17 September 2009, a Statutory Declaration made in 2006 for the purposes of the Cole Inquiry. At par 37 of that Statutory Declaration, the declarant has made certain statements concerning the identity of the persons within DFAT to whom each of seven of the reports was sent. I think that the Statutory Declaration, redacted as proposed by the ONA and the Commonwealth, should be produced for inspection by the legal representatives of the applicants and AWB. The redacted version of that document will provide the names of persons within DFAT who might conceivably have some knowledge of matters relevant to the present proceedings. I think that the parties are entitled to consider whether they wish to take steps to interview those persons or involve those persons in some way in the present proceedings. I will make orders accordingly. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | consideration of public interest immunity claims at the second stage requirement to consider and balance the requirements of the due administration of justice against the national interest and the interests of national security access to most documents refused privilege |
2 I note that the appellant on 26 September 2005 lodged an application with the Refugee Review Tribunal ('the RRT') who invited him to appear at a hearing on 30 November 2005. The appellant did not respond to the invitation and did not attend the RRT on the nominated hearing date. The RRT then proceeded to review the matter without a hearing, pursuant to s 426A of the Migration Act 1958 (Cth) ('the Act') and concluded that it was not able to reach the required level of satisfaction in relation to the applicant's claims as they were scant and lacking in detail. 3 Before the Federal Magistrates Court, the appellant claimed as his only ground that he was denied an opportunity to present his case at the hearing as the RRT sent all the correspondence to the applicant's previous address, after the applicant had notified the Tribunal of his change of address. Scarlett FM referred to the fact that there was no evidence that the appellant had changed his address for service or notified the RRT of this fact. His Honour carefully reviewed the material before the Court and dismissed the appeal. In particular his Honour found that there was nothing to suggest that the RRT had breached the requirements of s 425A of the Act, or to suggest that it had failed to exercise its power under s 426A in a proper way. 4 I have looked at the notice of appeal filed on 8 June 2006 and have read the appeal papers. This appeal will be dismissed pursuant to s 25(2B)(bb)(ii) of the Federal Court of Australia Act 1976 (Cth) for the appellant's failure to attend. I note that the Registrar of the Court wrote to both parties in September and those letters were not returned unclaimed. Further, I am told that the Australian Government Solicitor wrote to the appellant on 26 September and 31 October 2006 and I am told that neither of those letters was returned unclaimed. 5 Having regard to the history of the matter and in particular the appellant's non-appearance on several occasions, this is a clear case where the appellant is not pursuing his appeal, and the appeal will be dismissed. I should note however that I have independently considered the material and there is no injustice in making those orders. 6 The appeal is dismissed with costs. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender . | no point of principle migration |
(ii) A decision dated 8 October 2003 in which the Authority refused the respondent's application for repeat registration pursuant to s 290(1) of the Act as it was satisfied that the respondent was not a person of integrity and was otherwise not a fit and proper person to give immigration assistance (s 290(1)(a) and (b)) ('the first refusal decision'). On review in the Tribunal the proceedings related to this decision were numbered N2003/1596 and on appeal to this Court NSD 1857 of 2005. (iii) A decision dated 20 April 2004 in which the Authority suspended the respondent's registration pursuant to s 303(1)(b) of the Act as it was satisfied that the respondent had not complied with the Code of Conduct prescribed under s 314 --- see s 303(1)(h) ('the suspension decision'). On review in the Tribunal the proceedings related to this decision were numbered N2004/475 and on appeal to this Court NSD 1856 of 2005. (iv) A decision dated 16 August 2004 in which the Authority refused the respondent's second application for repeat registration pursuant to s 290 of the Act on the same grounds as the first refusal decision ('the second refusal decision'). On review in the Tribunal the proceedings related to this decision were numbered N2004/1079 and on appeal to this Court NSD 1855 of 2005. 4 The Tribunal split its decision-making process, first by making findings of fact on the respondent's alleged breaches of the Code of Conduct prescribed by s 314 of the Act --- finding 51 such breaches, of which 47 related to protection visa cases ('the 6 April 2005 findings') --- and then, after receiving submissions on those findings, publishing its decision and reasons for decision on 2 September 2005, making findings on whether the respondent was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance pursuant to s 303(1)(f) of the Act ('the 2 September 2005 reasons'). It was, therefore, unnecessary to decide whether the applications made were 'grossly unfounded' so as to breach cl 2.17 of the Code as it stood prior to 1 July 1999 (at [46]). However, it found that the respondent's handling of these applications was relevant to other alleged breaches of the Code and to a determination pursuant to s 303(1)(f). (2) The respondent was unaware of the requirement in cl 2.17 of the Code, introduced in 1999, that he obtain written acknowledgement of advice from his client where his advice had been that the visa application was grossly unfounded but the client, nevertheless, wished to lodge the application (at [67]). The Tribunal characterised this as a 'very serious breach' of cl 2.3 of the Code (concerning a sound working knowledge of the Act and Regulations) and a consequential breach of cl 2.1 of the Code (concerning a requirement to act in accordance with the law and competently and diligently) (at [68]). (3) The respondent did not have a sound working knowledge of the Act and Regulations and was not diligent if he was unaware of provisions of the Code so long after they came into force (until they were brought to his attention in the course of investigations as to whether his registration should be cancelled in 2002) (at [69]). (4) The respondent conceded that a number of the applications he had lodged had no hope of success (at [66], [84] and [106]). The Tribunal found that he had made one application that was grossly unfounded (at [107]). (5) The Tribunal found that the respondent had on many occasions breached cl 6.1 of the Code, which requires file notes to be taken of all substantive and material communications between client and agent (at [75], [79], [80], [92], [99], [108], [113], [116], [119] and [215]). The Tribunal considered the massive failure in this regard to be serious (at [130]). The respondent ultimately conceded that he had a systemic problem with keeping adequate file notes and that he had undoubtedly breached cl 6.1 (at [162]). (6) The Tribunal noted instances where the respondent altered his evidence as he became aware of material which contradicted what he had previously said (at [77], [87], [129] and [146]). (7) The Tribunal also criticised aspects of the respondent's evidence as being speculative and unconvincing explanations proffered when he simply did not know what had occurred in relation to particular clients (at [81], [82], [89], [108], [109] and [141]). It also found many instances where the respondent's evidence was designed to excuse his poor handling of an application or file-keeping (at [85], [88], [173] and [222]). These and other defects led to aspects of his evidence not being accepted by the Tribunal on the basis of his credit (at [90], [93], [97], [103], [120] and [167]). (8) Ultimately, the Tribunal 'did not find Mr Shi a reliable witness. His evidence changed on numerous occasions so as to reduce his responsibility for various breaches of the Code or other failures within his practice' (at [232]). (9) The Tribunal found that the respondent had failed to sufficiently address matters required by visa applications, which constituted a breach of cl 2.1 and 2.19 (at [78], [87], [96] and [113]). The Tribunal also noted that the respondent's applications under s 417 were defective in that they did not address the relevant criteria, which the Tribunal found as relevant to his fitness to be a migration agent (at [110]). (10) The Tribunal was critical of the respondent's approach that it was his job to state the facts and for the Department to link the facts to the law. It considered that it was part of his job to know the relevant criteria (at [88]). (11) The Tribunal found that the respondent had repeatedly breached cl 2.8 of the Code by failing to keep his clients informed of the progress of their matters and outcomes in writing (at [89], [92], [101], [137] and [215]). (12) The Tribunal found that the respondent had systemically failed to comply with Part 7 of the Code, which required documentation of amounts of money paid (at [111] and [168]). Moreover, it found that he had chosen not to comply with trust arrangements to save his own compliance costs (at [179]). (13) The Tribunal set out evidence about the respondent's inadequate supervision of his staff in relation to protection visa applications. He allowed cutting and pasting of personal claims (at [115], [118], [140], [142] and [193]). This constituted breaches of cl 8.1 and 8.2 of the Code (at [194]). (14) The respondent conceded and the Tribunal found that the respondent had repeatedly breached cl 5.2 of the Code, which required agents to obtain written acceptance of the terms of service as soon as possible after receiving instructions (at [159]). The Tribunal further found that his failure to comply with this requirement 'reinforce[ed] [its] view that he [had] paid scant attention to the Code at all. He ran his business in his own way. If a practice satisfied the Code, that was coincidental rather than intentional' (at [160]). (15) The respondent conceded that his lodging review applications for three clients in the Tribunal (which had no jurisdiction in relation to the relevant decision) constituted breaches of cl 2.1(b), 2.3, 2.5(a)(iii) and cl 4.1 of the Code (at [197]). (16) The Tribunal noted an instance where the respondent did not appreciate the appropriate procedure. What he had done was inappropriate. He had no idea what needed to be done (at [229]). Because what the respondent had done did not amount to the making of an 'application', it did not breach the Code but it was still relevant to his fitness. The Tribunal found that this case revealed that the respondent 'did not possess a sound knowledge of the Act and Regulations as they related to the circumstances of his client' (at [230]). The Tribunal made orders setting aside the four decisions under review (at [28] --- [31]). The cancellation decision was substituted with a decision that the respondent be issued with a caution pursuant to s 303(1)(c) , to be lifted after three years provided that the respondent be supervised and not provide immigration assistance with respect to protection visas (see s 304A). The first refusal decision was substituted with a decision that the respondent's repeat registration be approved. The suspension decision was substituted with a decision that the respondent's registration not be suspended. The second refusal decision was substituted with a decision to renew the respondent's repeat registration. (3) The breaches found by the Tribunal, considered as a whole, indicate that the respondent did not appreciate his obligation to know what the Code required and to comply with its terms as they existed from time to time (at [12]), and that if his practice satisfied the requirements of the Code, that was coincidental rather than intentional (at [13]). (4) The Tribunal noted the respondent's contention that 94 per cent of the breaches found related to protection visas (an area in which he had ceased to practise) and occurred over four years ago (at [14]). (5) The Tribunal noted the respondent's argument that his 'current practice' was most relevant when considering issues of public protection and maintenance of proper standards. The Tribunal characterised this factor as a relevant consideration (at [15] --- [16]). (6) The respondent also sought to rely upon his 'current success rate', a factor which the Tribunal accepted to be relevant (at [17]). (7) The Tribunal found that, in relation to his making s 417 and review applications in the Tribunal, the respondent's actions reflected a lack of understanding of the relevant law and, more importantly, a lack of judgment on his part. 'He seemed to just keep doing something to seek review of a decision, whether or not there was any real chance of success' (at [19]). (8) The Tribunal gave some weight to its adverse findings on the respondent's credit (at [20]). (9) As mentioned above, having considered all the evidence, the Tribunal was not satisfied that the respondent was not a person of integrity or otherwise not a fit and proper person to give immigration assistance within the meaning of s 303(1)(f) (at [24]). (10) The Tribunal took into account that the respondent had had a supervising migration agent for over two years who was a knowledgeable and experienced migration agent and who held the respondent in high regard. It also gave weight to the fact that there had been no breaches since the cancellation decision was made and the respondent's rate of success had been very high in recent years (at [24]). (11) The Tribunal concluded that cancellation was not appropriate in relation to the respondent's breaches of the Code (s 303(1)(h)). It considered that the appropriate decision was to issue a caution subject to conditions (at [25] --- [26]). 3) 1992 (Cth). The scheme was substantially amended by the Migration Legislation Amendment (Migration Agents Integrity Measures) Act 2004 (Cth), the relevant parts of which took effect on 21 April 2004 and 1 July 2004. It was common ground that in relation to the review of the decision to cancel the respondent's registration, the question for the Tribunal was whether that decision was the correct or preferable decision: Drake v Minister for Immigration & Ethnic Affairs (1979) 46 FLR 409 at 419 per Bowen CJ and Deane J; that is, whether it was the correct or preferable decision to conclude that the respondent was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance. The Authority submitted that the Tribunal did not consider whether, on 14 July 2003 --- the date of the Authority's decision --- the correct or preferable decision was to cancel the respondent's registration; rather, the question which the Tribunal asked itself was whether, on 2 September 2005 --- the date of the Tribunal's decision --- the respondent was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance. 18 The Authority submitted that there is a clear line of authority that in cancellation cases, such as the present, a review Tribunal is required to have regard to the circumstances at the time of the decision and not those that followed it: Freeman v Secretary, Department of Social Security (1988) 19 FCR 342; Hospital Benefit Fund of WA v Minister for Health, Housing and Community Services (1992) 39 FCR 225; Nong v Minister for Immigration and Multicultural Affairs [2000] FCA 1575 ; (2000) 106 FCR 257; Minister for Immigration and Multicultural Affairs v Sharma [1999] FCA 31 ; (1999) 90 FCR 513; and Aged Care Standards and Accreditation Agency Ltd v Kenna Investments Pty Ltd [2004] FCA 843 ; (2004) 138 FCR 428. 19 This is not to suggest, the Authority submitted, that the Tribunal was limited to the material that was before the Authority when it made its decision. It could have regard to other material but the question to be addressed by the Tribunal was the same question in fact addressed by the Authority --- was the respondent not a person of integrity or otherwise not a fit and proper person to give immigration assistance at that time. Any new material needed to be relevant to whether the decision made by the Authority was the correct or preferable decision. 20 The Authority submitted that a conclusion that the Tribunal did not ask itself the correct question is clear from the fact that the Tribunal had regard to, and took into account, matters that did not pertain to the relevant question. This was a course encouraged by the respondent and exhibited by his reliance upon his 'current practice' and his 'current success rate'. (b) '[Counsel for the respondent] emphasised that Mr Shi's current practice was most relevant ...' (at [15]). (c) '... he is now complying ...' (at [15]). (d) 'That Mr Shi is complying with requirements of the Code is ... a relevant consideration' (at [16]). (e) '... success rate ... in the years 2003 and 2004' (at [17]). (f) 'I am not satisfied that Mr Shi is not a person of integrity or otherwise not a fit and proper person ...' (at [24]). (g) 'I take into account that he has had a supervising migration agent for over two years ...' (at [24]). (h) '... no evidence of breaches since the first decision was made in 2003' ( at [24]). So much is implicit in the respondent's primary submission that: 'A proper interpretation of Part 3 of the Migration Act puts the "point in time" for a decision under s 303(1)(f) as the date of the Tribunal's decision'. 23 The Authority submitted that the decisions of the Tribunal in relation to the other matters is equally affected by this error. In addition, had the Tribunal addressed the correct question in relation to the cancellation and affirmed the decision, re-registration would not be permissible under s 292 of the Act. The question of suspension would be moot. 25 The respondent analysed the reasoning of the Court in Freeman . That case, it was said, is commonly cited as authority for the proposition that the relevant point in time at which the Tribunal is to determine a person's entitlement will differ, depending upon whether the decision under review was a decision refusing to grant an entitlement or whether it was one cancelling an existing entitlement. Where the decision is to refuse an entitlement, the point in time is the date of the Tribunal's decision, and where the decision is to cancel an entitlement, the Tribunal is limited to considering the state of affairs as it existed on the date of the decision under review. 26 The respondent submitted that critical to the Court's reasoning in Freeman was that in that case the Tribunal had affirmed the decision under review to cancel the applicant's pension. This meant that 'no further matter [remained] for the Tribunal's consideration' (at 345) and any entitlement of the applicant for a further pension would only 'revive' when a fresh application for a pension had been made (at 345, 346). 27 The respondent submitted that Freeman should not be taken as authority for any general principle that administrative decisions may be categorized either as 'cancellation' decisions or 'refusal' decisions, to which vastly different regimes of review are applicable. If it does, then it was respectfully submitted that it was wrong and should not be followed. It was submitted that any attempt to apply such a universal categorisation to 'cancellations' and 'refusals' merely distracts from the primary question, which is to identify the issues required under the particular legislation. 28 The question here, according to the respondent, should therefore focus on whether s 303(1)(f) itself 'fixes a point in time'. 29 The respondent submitted that there is nothing in s 303(1)(f) of the Act to suggest that the point in time for the determination of the fitness and integrity issue is to be limited to the date of the Authority's decision, and that the Tribunal is not entitled to take account of developments which have occurred up until the date of the Tribunal's decision. The respondent said: 'Indeed, a consideration of the provision suggests that the point in time should be the situation as it has developed by the time of the Tribunal's decision. It also recognises the fact that many of those who are likely to seek the assistance of agents are among the most vulnerable in our society, sometimes having a poor grasp of English, fear of authority or meagre financial resources. ' (G. Hand, Second Reading, Migration Amendment Bill (No. 3) 1992, House of Representatives Hansard, 27 May 1992, p. 2937. It would be inimical to this if the Tribunal was prevented from considering relevant information going to the issue of fitness to practice because the information had arisen after the decision under review. There was nothing, the respondent submitted, to suggest that the scheme would be promoted by restricting the Tribunal's consideration of an agent's integrity and fitness to practise to the earlier date of the decision under review, and to ignore the agent's current integrity and fitness to practise. 34 The respondent pointed out that the present case was, of course, factually different from Freeman, in that here the Tribunal set aside the Authority's decision to cancel the respondent's registration and substituted it with a decision to caution the respondent subject to conditions, whereas in Freeman the Tribunal had affirmed the decision to cancel the applicant's pension, so that 'no further matter [remained] for the Tribunal's consideration' . In Freeman, therefore, any entitlement of the applicant for a further pension would 'revive' only when a fresh application for a pension had been made. Here the decision had been set aside ab initio , so that the parties were placed in the position that they would have occupied had the decision never been made, so that the respondent had the benefit of the extant decision granting him registration: See Secretary, Department of Social Security v O'Connell (1992) 38 FCR 540, 549 --- 550. The Tribunal therefore remained a part of the 'continuum' of the administrative decision-making process, and there was no impediment to it determining what were the appropriate orders to be made, as at the date of the Tribunal's decision. 35 The respondent submitted that the only specific complaint made by the Authority as to 'irrelevant' evidence taken into account by the Tribunal, related to the respondent's 'current practice' and his 'current success rate'. When considered in the context of all the evidence before the Tribunal, both of these pieces of evidence were relevant either because they related to events that occurred before the cancellation decision, or they were after-acquired evidence. The respondent submitted that, on any view of s 303(1)(f) , the Tribunal was therefore entitled to take account of the evidence referred to as the respondent's 'current practice' and his 'current success rate' in relation to the cancellation decision. 36 In addition, the respondent submitted that whether or not the Tribunal was entitled to take the after-acquired evidence into account in relation to the cancellation decision, it was undoubtedly required to take it into account in relation to the suspension decision and the two refusal decisions. On the Authority's case and the authority of Freeman , the point in time for those decisions would have been the date of the Tribunal's decision. Given that the Tribunal gave a joint decision on all four decisions under review, it was not possible for the Authority to establish with any degree of probability that the evidence of the respondent's 'current practice' and his 'current success rate' was necessarily taken into account in relation to the cancellation decision. 37 The respondent noted that at no time during the Tribunal's hearing did the Authority object to the reception of the evidence relating to respondent's 'current practice' and his 'current success rate'. It was put that this may be relevant to the issue of costs should the Authority succeed in this appeal. The Authority submitted that that is the same in this case. The question for the Tribunal was whether its cancellation decision in July 2003 was the correct or preferable decision, not whether the respondent might be eligible to be registered in September 2005. 39 In Freeman , Davies J indicated that it is important to have regard to the nature of the decision. The distinction his Honour saw as critical was between: a decision to refuse to grant a pension or benefit where there was an ongoing entitlement, which can be seen as part of a continuum; and a decision to cancel a pension made on a particular date. A decision of this kind has no ongoing nature, once made it is spent. 40 Davies J noted that, under the Social Security Act 1947 (Cth), once a benefit is cancelled it may only be paid again following a fresh application. That is also the position in the present legislative context. Where a migration agent has had his registration cancelled, he would need to apply for registration afresh and cannot make such an application for five years (s 292). In this sense, the present case is even stronger than that considered by Davies J in Freeman . 41 Davies J noted that a further distinction between entitlement decisions and cancellation decisions is that in the former case but not the latter the Tribunal can decide entitlement throughout the relevant continuum up to its decision. This is not possible in cancellation cases because if the cancellation decision was correct or preferable, there is no further step. That is also the position here (and probably in all cancellation cases). 42 The Authority noted that the respondent had sought to distinguish this case on the basis that the legislation is different. However, the Authority argued, no material difference was identified. The only difference is the one noted above and it tends to show that this case is even more clear cut than that in Freeman . 43 It was also observed that the power to cancel pensions in the Social Security Act was not restricted to being exercised at some point in time. This, it was said, was not part of Davies J's analysis, contrary to the respondent's submissions. 44 The Authority noted that the Full Court in Hospital Benefit Fund of WA v Minister for Health, Housing and Community Affairs approved the analysis of Davies J in Freeman (at 234.5). In that case, the legislation tied the primary decision-maker to a small period of time after certain rule changes were notified. The Court found that the Tribunal faced the same question as the primary decision-maker, which required it to look at the time the original decision should have been made. The legislation in that case is different from that in the present. However, the Authority submitted, the core principle is that the Tribunal must answer the same question as was answered by the primary decision-maker. For the reasons given by Davies J in Freeman , in a cancellation case, that involves whether the decision to cancel on the actual date of the cancellation was the correct or preferable decision. Rather, it was concerned with the issue whether Mr Nong had or had not been in compliance with condition 8202 on 30 March 1999, the date of the delegate's decision: see, for example, the discussion of the nature of the review function of the MRT's predecessor in Minister for Immigration and Multicultural Affairs v Sharma [1999] FCA 31 ; (1999) 90 FCR 513 at 524-526 [61] - [63] (Weinberg J). (Emphasis added. 47 The Authority observed that in Aged Care Standards and Accreditation Agency , Branson J considered that only limited assistance was gained from categorising decisions as cancellation decisions or entitlements decisions (at [26]). Her Honour considered that it was necessary to consider the nature of the decision involved. In that case, the Tribunal was to review a decision to vary the period of accreditation for an aged care provider (this decision did not fit readily into the cancellation entitlement dichotomy). Her Honour considered that, in the legislation before her, the fact that a decision could be made only after an audit report was obtained and only within 14 days of receipt of that report was important. However, her Honour also applied the reasoning of Davies J in Freeman in concluding that the decision was not part of an administrative continuum. In my view, the Tribunal would be undertaking a quite different process from that which the Principles required the accreditation body to undertake were it to review a decision made under s 3.24 by reference to factual material remote in time from the review audit report. In particular, I consider that on review of a decision made under s 3.24 it is not open to the approved provider to seek to undermine the significance of the review audit report, and the recommendations included in it, by calling evidence of improvements in its practice and procedure implemented after the date of the decision and in response to the review audit report and recommendations. This is not to say that the Tribunal cannot receive evidence of facts that occurred after the date of the decision under review. However, to be relevant to the Tribunal's decision, that evidence must, in my view, bear on the merits of the decision as at the time that it was required to be made. (2) Where a decision is made to cancel, say because an agent does not have the necessary ambit of knowledge of migration procedures at the time of the decision (as shown by a track record of failings in this regard), a review applicant cannot show that that was not the correct or preferable decision by acquiring the relevant knowledge thereafter. If the person has become eligible, he or she may then be able to apply for registration afresh. (3) Similarly, where a decision is made to cancel because of massive and serious violations of the Code of Conduct, it would be absurd if a review applicant could seek to rely upon compliance with the Code after the date of the decision. Compliance achieved by enforcement proceedings is not what the legislation is designed to achieve. Agents are required to comply with the legislation when registered. (4) For these reasons and the reasons outlined above, this Court should follow Freeman and the cases that have applied it and conclude that the question before the Tribunal, in relation to the cancellation decision, was whether the decision to cancel on 14 July 2003 was the correct or preferable decision having regard to the circumstances pertaining up to that time. (5) The respondent argued that it would be against the policy of the Act if the Tribunal were not permitted to have regard to events following the cancellation decision. He suggests there is no reason why the Tribunal should not find that it has become satisfied of s 303(1)(e) if an agent becomes bankrupt during the review processes. The Authority says that this reasoning is flawed and not necessary. A later bankruptcy does not indicate that any earlier decision to cancel because of lack of integrity was the correct or preferable decision. It is irrelevant to that question (or without more would be). The Authority could, of course, cancel the registration afresh on the basis of the bankruptcy when it becomes aware that that has happened. A person whose registration was wrongfully cancelled should not have it affirmed simply because a reason to cancel it subsequently arises. There is also a fresh power to cancel when a proper reason arises. Likewise, a person whose cancellation was correct or preferable should not be able to avoid that proper consequence because of actions taken after the decision to rectify perceived deficiencies. (6) Contrary to the respondent's submission, no part of the Authority's argument requires the notion of fitness or character to be narrowly construed. However, success rates in late 2003 and 2004 simply have no bearing on the respondent's fitness before that time; nor does any absence of subsequent breaches of the Code. So, for example, evidence that a person has lied or not been frank in their evidence after the date of the decision would be relevant not directly as breaches of a rule requiring honesty but as an indicia of a person's enduring moral qualities. An inference would be available that an adult prepared to lie to or mislead the Tribunal (or just not be frank) at its hearing had the same moral qualities at the time of the decision. However, this reasoning does not mean that evidence relating to every criteria post the cancellation decision is relevant. For example, evidence that an agent has knowledge in 2004 simply does not show that he had that knowledge in 2003. (8) The respondent's reliance upon Peko-Wallsend is misconceived. The Authority does not say that the Tribunal may not have regard to the most up to date evidence at hand. However, it has to be evidence that is relevant to the question at hand; the position in July 2003. (9) Contrary to the respondent's submission, the absence of a time limit for the making of a decision to cancel does not have the result that the Tribunal is required to make its decision on the basis of all evidence up to the time of its decision: Freeman ; Nong . It is said that his construction is consistent with the object stated in the passage quoted. However, without conceding that this is a proper use of extrinsic materials, it may be answered by noting that the Authority's construction is also consistent with that object. The Authority would be having regard to such conduct and is ideally placed to take appropriate action even if a review is pending in relation to an earlier decision (indeed this happened in this very case, when the respondent's registration was suspended while the cancellation review was pending). A system of this kind is less likely to be effective in ensuring that agents comply at all times if there is a perception that (the consequences of) breaches can be avoided. They did not turn upon the fact that the Tribunal had affirmed the cancellation decision but upon the nature of the decision under review. The respondent's argument is some kind of bootstraps argument. The Tribunal's decision is being challenged because it failed to appreciate the nature of its task. That task does not have a different nature according to the conclusion it reaches at the end of the task. This is said to support a futility argument. This Court should not accept the proposition that the Tribunal's error (it is implicitly admitted by the respondent that it did answer the question as at September 2005 and, on the Authority's submissions as to law this would be an error of law) could not have made a difference. . --- Yes, yes. The Court should remit the matter to the Tribunal if it finds that the Tribunal misunderstood its task. (17) As the Tribunal dealt with all four review decisions together, the Court cannot be sure that the Tribunal did not have regard to the later evidence only in relation to the decisions of later dates. The point is, however, that the Tribunal dealt with them all together when it needed to separate the decision according to their nature and the evidence that was relevant to each. The fact that it did not do this proves the Authority's case rather than the reverse. The Tribunal did not expressly mention this factor in its reasons and, in particular, in that part of its reasons where it makes a finding on the respondent's integrity and fitness (at [24]). The inference is that it did not consider this to be a material factor for this purpose. This reveals jurisdictional error. 50 The Tribunal apparently came to the view that the respondent's integrity and fitness were sufficiently lacking that his work needed to be supervised for a further period of three years and he may not undertake work relating to protection visas. The Tribunal's order or decision, which contains these conditions, clearly indicates that the Tribunal entertained serious concerns about the respondent's ability to carry on a practice as a migration agent. 51 The Authority submitted that if a person is unfit to give immigration assistance in relation to protection visas they are not fit to be migration agents. A migration agent needs to have the knowledge and ability to help clients whatever kind of immigration assistance is required. The Tribunal misconstrued the statutory notions of fitness in considering that it was sufficient that the respondent could be fit for part of the work done by migration agents. This is clearly a misconstruction of the Act and a jurisdictional error. 52 The Act requires that migration agents be persons of integrity and capable for the duties involved (s 290). There are mandatory periods of exclusion for persons shown not to be of integrity or not to be capable (s 291 and s 292). 56 Alternatively, the Authority observed that these negative factors were offset only by factors concerning the respondent's conduct after the cancellation, which as noted above, are not relevant considerations in the present context. 58 The respondent contended that there was no doubt that the Tribunal was aware that, in determining the respondent's integrity and fitness, it was required to consider his knowledge of migration procedures. The Tribunal, at [8] of its 2 September 2005 reasons, specifically adopted the principles set out in Lilienthal v Migration Agents Registration Authority [2001] AATA 797 ; (2001) 66 ALD 249 at [18] --- [25], where Deputy President Purvis, citing Hughes and Vale Pty Ltd & Anor v the State of New South Wales & Ors (No. The migration agent should therefore be a person who has a good knowledge of the migration laws, is able to prepare applications competently and should be a person of such reputation and ability that officers of the relevant Department may proceed upon the footing that the applications lodged by the agent have been prepared honestly and competently. 61 First, the respondent's lack of knowledge of migration procedures was prominent in the 6 April 2005 findings, where he was found to have failed to comply with the Code. In the 2 September 2005 reasons, this was dealt with under the heading 'Finding relating to non-compliance with the Code' (at [12] --- [13]). The most obvious instance of this was the Tribunal's numerous findings that the respondent had breached cl 2.3 of the Code, which expressly requires that an agent have a 'sound working knowledge' of the relevant legislation (at [67] --- [69], [87], [94] --- [96], [113], [197] --- [198] of the 6 April 2005 findings). 62 Secondly, where the respondent's lack of knowledge of migration procedures did not amount to a breach of the Code, it was still expressly considered by the Tribunal in both the 6 April 2005 findings and the 2 September 2005 reasons. This can be seen particularly in the Tribunal's findings that the respondent did not have the requisite knowledge of the correct procedures for making a s 417 application (at [74], [103], [110], [112], [229] --- [230]). This could not amount to a breach of the Code because such requests were found by the Tribunal to fall outside the definition of 'immigration assistance' in s 276 of the Act (at [29] --- [37]). However the Tribunal still considered the respondent's conduct to be relevant to the issue of '...whether I am satisfied that pursuant to s 303(1)(f) of the Act [the respondent] is not a person of integrity or is otherwise not a fit or proper person to give immigration assistance ...' (at [34]), and this was in turn expressly referred to in the 2 September 2005 reasons (at [19]). 63 The respondent observed that in relation to the Tribunal's order on the cancellation decision, that the respondent's caution be lifted after three years provided that he not give immigration assistance on protection visas, the Authority submitted that this 'view' of the Tribunal should inevitably have led to a finding that the respondent was unfit to practice as a migration agent. This, the respondent submitted, is really an invitation to the Court to undertake merits review of the Tribunal's decision. The Tribunal was entitled to take into account the respondent's poor performance on protection visas cases, and to weigh this with the other more favourable evidence before coming to a conclusion as to whether he was a fit and proper person. Moreover, the Tribunal's order did no more than to extend the terms of the stay order which had already been in effect for some two and a half years and had not been the subject of any objection, complaint or appeal by the Authority. And finally, the Code itself recognises and supports the reality that some agents may be competent in some areas and not in others. If the agent is unsure, he or she must seek the appropriate advice or assistance, or refer the matter to another registered migration agent. 65 Nowhere did the Tribunal say that it had 'serious concerns' about the respondent's ability to carry on a practice as a migration agent, as contended by the Authority. Having weighed the evidence for and against cancellation and suspension, the Tribunal considered that 'there is another course which protects the public interest sufficiently but will allow Mr Shi to continue to practice with appropriate constraints' (at [25]). The Tribunal was entitled by s 304A of the Act to impose such a constraint by applying conditions on the lifting of its caution. It understood what it was doing, and it did so in accordance with the legislation. 66 In this respect, the Authority's submissions are no more than a further invitation to the Court to reconsider the merits of the Tribunal's decision and should be rejected. 68 The Authority's case was that it was not open on the facts found by the Tribunal (see the Authority's principal submissions at [53] supra) to conclude otherwise than that the respondent was not a fit and proper person. 69 Another way of identifying the same error was said to be highlighted by the respondent's submissions. The respondent was made subject to a supervisory obligation during the stay orders. This required him not to do protection visa work and to be supervised by another migration agent. This order is appropriate in circumstances where the Authority considered that the person is not fit and should be cancelled or suspended but a stay is put in place while the correctness of that decision is being reviewed. If however the Authority's decision to cancel or suspend was not correct, this must be because the person was fit and proper. On this conclusion, it was argued, no further supervision or restrictions would be appropriate. 70 The Authority submitted that the very fact that the Tribunal considered that the public interest required the respondent to be supervised and to have his areas of work limited reveals that the Tribunal did not yet think he was fit and proper to be a migration agent. That is how the Court can readily conclude that the Tribunal has erred in its application of the law to the facts in this case. 71 The Authority then turned to address the respondent's submission that the Act and the Code envisage that an agent who is not competent in certain areas of practice as a migration agent can nevertheless be fit to be an agent. Support for that proposition was said to be found in cl 4.1 and 4.2 of the Code. 72 The Authority submitted that neither of those aspects of the Code accept a lack of competence. It envisages that agents may choose not regularly to practice in certain areas, which may lead an agent to be 'unsure' of what is appropriate. Rather than spend time and money looking this up, an agent can refer the matter to another who does work regularly in the field. This does not warrant the notion that migration agents can be fit and proper if they cannot be trusted or are otherwise unable to work in certain areas of practice. 74 I am of the view that the Tribunal did not ask itself this question. Rather, it asked itself whether, at the time of its decision, the respondent was not a person of integrity or was otherwise not a fit and proper person to give immigration assistance. 75 I am impelled to the view that the Tribunal asked itself the wrong question by reference to the Tribunal's 2 September 2005 reasons, in particular at [14], [15] --- [17] and [24]: See the particular passages at [21] supra. 76 Not only did the Tribunal ask itself the wrong question, not surprisingly it seems to be common ground that, as noted at [22] supra, it answered that question. 77 In my view, the Tribunal's error constitutes an error of law and a jurisdictional error in two respects: The Tribunal asked itself the wrong question; and the Tribunal had regard to matters it was bound not to consider. 78 The respondent submitted that, notwithstanding these findings, the Court should exercise its discretion to decline to grant the appeal because it would be futile to remit the matter for re-determination. The basis for this submission was that all of the matters taken into account by the Tribunal were open for it to consider, either because they pre-dated the decision under review or because they were after-acquired evidence. As such, any technical error in identifying the correct point in time would not have materially affected the Tribunal's decision: Lu v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 340 ; (2004) 141 FCR 346 at [62] --- [64] per Sackville J. 79 I cannot agree with this submission. First, I do not accept that all the evidence relied upon by the Tribunal in addressing the question it answered (as at September 2005) would have been available if it had asked the correct question (as at July 2003). Some of the evidence was not relevant to 14 July 2003. Examples of that are to be found at [47(15)] supra. In any event, as the Authority submitted ([47(16)] supra), even if the evidence was all relevant, it may have been weighted differently if the correct question were asked. 80 Second, as Sackville J observed in Lu (at [64]), the correct approach is that stated in Stead v State Government Insurance Commission [1986] HCA 54 ; (1986) 161 CLR 141 at 147 and adopted in Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 --- the test is whether the applicant could have been deprived of the possibility of a successful outcome by the decision-maker's failure to observe the requirements of the statute: 'If so, the jurisdictional error could have had a bearing on the outcome and the applicant is not to be denied relief on the basis that the error was insignificant ... The question is not whether the decision-maker would probably have realised the same result even if the ... consideration had [not] been taken into account'. 82 First, the Tribunal did not expressly mention this factor --- the extent of the respondent's knowledge of migration procedure --- in its reasons and, in particular, in that part of its reasons where it makes a finding on the respondent's integrity and fitness (at [14] of the 2 September 2005 reasons). The inference, the Authority submitted, is that the Tribunal did not consider this to be a material factor for this purpose but, because it is mandated to be taken into account (s 290(2)(a)), this reveals jurisdictional error. 83 Second, the fact that the Tribunal considered that the public interest required the respondent to be supervised for a period of three years and to have his areas of work limited so that he could not undertake work relating to protection visas during the same period, should have led the Tribunal to the view that the respondent was not a fit and proper person to give immigration assistance and, insofar as it did not do so, there was a misconstruction of the Act to the facts as found and a jurisdictional error. 84 I am not persuaded that the first of these streams of contention is made out for the reasons advanced by the respondent and referred to at [57] to [66] supra. 85 So far as the second stream is concerned, the correct analysis is, I think, more complex. Section 304A provides that the Authority may set one or more conditions for the lifting of a caution it gives to a registered migration agent. Section 304A has to be construed, in the first instance, in context in its wider sense: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; [1995] 187 CLR 384 at 408. The context here is Division 3 of Part 3 of the Act including, as it does, s 290. This limits, in my view, the conditions that may be set for the lifting of a caution to conditions which are consistent with the migration agent's registration. In other words, the conditions which may be set for the lifting of a caution must be predicated upon the migration agent's registration as such, including his entitlement to provide immigration assistance. 86 Division 3 of Part 3 of the Act does not contemplate registration of an individual as a migration agent on a conditional basis --- for example, on condition that the work is supervised by a third party or that he not provide immigration assistance with respect to particular kinds of visas. Following discussion, both parties accepted that this is not the case, and in my opinion that is quite clear on the face of s 303. In my view, the conditions imposed in the present case fall into that category. 88 Such a view does not render s 304A nugatory. Conditions, having nothing to do with a migration agent's registration, can be set for the lifting of a caution such as effluxion of time, compliance with the Code of Conduct prescribed under s 314, indeed any condition which does not impose on the agent a condition which impacts his entitlement to provide immigration assistance by reason of his registration as a migration agent --- s 280(1). 89 In my view, s 304A did not entitle the Tribunal to set the conditions it set for the lifting of the caution and this involves jurisdictional error. The fact that a caution, devoid of such conditions, with or without permissible conditions may not be seen as an appropriate penalty, is a matter for the determination of the Tribunal on remitter. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal be set aside. 3. The matter be remitted to the Administrative Appeals Tribunal, as previously constituted, to be determined according to law. I will hear the parties on the matter of costs. | migration agents registration of cancellation, suspension and caution whether on review of a decision of the migration agents registration authority the administrative appeals tribunal is to consider whether the decision was the correct and preferable one at the time of its making by the authority or at the time of the tribunal's decision whether conditions, which could not be imposed upon an agent's registration, could be set for the lifting of a caution imposed pursuant to s 303(1)(c) of the migration act 1958 (cth) immigration |
In the course of the interlocutory hearing on that day, Mr Smark, who appeared with Ms McBride for the applicant (' SRSC '), asked me to ' recuse ' myself as the trial Judge. After hearing Mr Smark, I declined to accede to the request. I indicated that I would provide brief reasons for my decision in due course. These are the reasons. The defendants in the defamation proceedings included HSV Channel 7 Pty Ltd and Amalgamated Television Services Pty Ltd (together ' Channel 7 '). 3 On 18 March 2004, Studdert J awarded SRSC damages totalling $844,624 in the defamation proceedings. His Honour reserved leave to SRSC to apply for additional damages if it was liable to include in its assessable income a net capital gain pursuant to the relevant provisions of the Income Tax Assessment Act 1997 (Cth). It appears that SRSC received the sum of $844,624 from Channel 7 during the taxation year ended 30 June 2004. 4 In September 2004, SRSC, presumably at the request of Channel 7, applied to the respondent in the present proceedings (' Commissioner ') for a private binding ruling, pursuant to which SRSC would be entitled to disregard the damages received by it when returning its assessable income for the year ended 30 June 2004. The Commissioner declined to make such a ruling. 5 SRSC then lodged a tax return for the year ended 30 June 2004 which included in its assessable income the bulk of the amount it received by way of damages as a capital gain. This resulted in SRSC incurring a tax liability for the year of $244,449.90 in respect of the capital gain. 6 SRSC subsequently objected to the assessment. The Commissioner disallowed the objection. By application dated 18 December 2006, SRSC appealed to the Federal Court against the Commissioner's objection decision. The matter was allocated to my docket in the usual way. I refer to the matter as the ' taxation proceedings '. The applicants in the C7 Case are Seven Network Ltd and C7 Pty Ltd (together ' Seven '). Although I have not been told of the precise relationship between Channel 7 and Seven, I assume the corporations are related. 8 I held directions hearings in the taxation proceedings on 8 February 2007 and 24 May 2007. No reference was made by either party at those directions hearings to my role in the C7 Case , in which I had reserved judgment on 5 October 2006. 9 A further directions hearing in the taxation proceedings was held on 26 July 2007. At that time, the C7 Case had been listed for judgment the following day, 27 July 2007. 10 I enquired of Ms McBride, who appeared on 26 July 2007 for SRSC in the taxation proceedings, whether Seven was effectively a party to the proceedings or had an interest in it. Ms McBride informed me that Seven had indemnified the taxation proceedings. I then asked whether Seven was giving instructions in the proceedings ' because it may [make a] difference [as] to who actually hears the case '. I was told that Seven was behind the litigation. Are there any factual issues? Evidentiary dispute? The parties were notified shortly after the directions hearing that the hearing would take place before me on 20 September 2007, that being a date convenient to both parties. 13 On 27 July 2007, I delivered judgment in the C7 Case : Seven Network Ltd v News Ltd [2007] FCA 1062 (' C7 Judgment '). In the C7 Judgment, I indicated that I would dismiss Seven's application. I also made findings of fact adverse to the credit of some of Seven's witnesses and made certain criticisms of Seven for the manner in which it had conducted the proceedings. Adverse factual findings and criticisms of the manner in which the case had been conducted were not confined to Seven. The letter asked me to disqualify myself from hearing the taxation proceedings. As to the first, at [58]-[61] of the summary, and [67]-[74] of the main judgment, his Honour reflected upon the possibility of an appeal by Seven. That reflection produced a public response by Seven which apparently led to the issue of a statement on 3 August 2007 by the Director, Public Information, Federal Court of Australia. A fair-minded bystander would infer that his Honour had some role to play in the issuing of that statement. Again, the matter did not stop with the reasons for judgment: at the Supreme Court of New South Wales Annual Conference, his Honour delivered a paper entitled "Mega-Litigation: Towards a new approach", in which the C7 litigation featured heavily, and in which his Honour implicitly revisited some of his criticisms of Seven: see at [5], [16], [18], [26]. However, it is Seven's contention that against the background of all these matters, a fair-minded lay observer might reasonably apprehend that his Honour might not bring an impartial and unprejudiced mind to the resolution of the questions in the present proceedings, so soon after the C7 case'. The first matter of concern to [Channel 7] raised in your letter relates to what are said to be reflections in the C7 judgment on the "possibility of an appeal by Seven". It is not clear whether the concern is the substance of the comments made in the Judgment (including the Summary) or what is said to be the issue of a statement on 3 August 2007 by the Court's Director, Public Information, or both. The assumption is incorrect. Neither his Honour nor the Court has made, or intends to make, any response to comments that may have been made by or on behalf of Seven in relation to the Judgment. The sending of the letters was not prompted by any public statement by Seven, but by the fact that both newspapers had published inaccurate reports, quite independently of any reference to comments made by or on behalf of Seven, to the effect that his Honour had urged Seven not to appeal. The letters were sent following consultations between his Honour and the Chief Justice and their terms were settled by the Chief Justice. One letter, in slightly edited form, was published. The other was not. As to the second matter, his Honour notes that the particular paragraphs of the Summary identified in your letter seem to relate to the cost of the litigation and to certain findings of fact. In these respects, the Judgment speaks for itself. The paper to which your letter refers appears to carry the matter no further. According to the applicant's counsel, the current appeal involves purely a question of law, and presumably gives rise to no procedural complexities. At that time, the respondent will also have the opportunity to make known its views on the issue, should it wish to do so. I indicated to Mr Smark that I was content to follow the course he suggested. 17 Mr Smark did not file any written submissions, but made brief oral submissions on behalf of Channel 7 in support of the disqualification application. I should record that Mr Smark advanced the oral submissions in the interests of his client in an entirely appropriate manner. The Commissioner made no submissions in relation to the application. 18 Mr Smark accepted that, in view of the contents of the letter of 11 September 2007, the publication in the Australian Financial Review of the letter from the Court's Director of Public Information took on ' a very subsidiary role in [the disqualification] application '. 19 Mr Smark confirmed that the taxation proceedings would not involve any questions of credit and that there would be no dispute as to primary facts. However, he submitted that because of the criticisms made of Seven in the C7 Judgment, a hypothetical reasonable observer would harbour a concern that I would be ' annoyed at Channel 7 ' and that this might cause me to prejudge the issues in the taxation proceedings. ' (Emphasis added. It is based upon the need for public confidence in the administration of justice. "If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision". The hypothetical reasonable observer of the judge's conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial"'. (Citations omitted. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason or prejudgment and this must be "firmly established". 22 It is true that in the C7 Judgment I found against Seven on all the causes of action upon which it relied. I also criticised the manner in which Seven presented important aspects of its case and expressed disapproval of what I regarded as the disproportionately large amount of costs incurred by the parties although, as I have noted, my criticisms were by no means confined to Seven. 23 A fair-minded observer, however, in considering whether there is a reasonable apprehension that I might bring an impartial and unprejudiced mind to the resolution of the particular questions that arise in the taxation proceedings, would take into account a number of factors. There is no dispute as to the primary facts and no issues as to credit arise. (As Mr Smark pointed out, if there were any issues of credit, they would not involve officers of Channel 7. ) Channel 7 accepts that the adverse findings as to the credit of certain officers of Seven made in the C7 Judgment are of no great significance in assessing whether there is a reasonable apprehension of bias in the taxation proceedings. • The legal issues (and the factual issues, if any) in the taxation proceedings have no relationship whatsoever to those addressed in the C7 Case . If it matters, there is no suggestion of any procedural problems or costs issues in the taxation proceedings of the kind that attracted attention in the C7 Judgment. None of the conclusions reached in the C7 Judgment, or opinions expressed, has any relevance to the issues that arise in the taxation proceedings. There is no basis for a reasonable observer to conclude from the reasoning in the C7 Judgment that I would be likely to prefer one view of the law (or facts) over another in the taxation proceedings. • As I understood Mr Smark, the only substantial basis for suggesting that there would be a reasonable apprehension of bias in the taxation proceedings, is that what was said to be my ' annoyance ' at Seven's conduct of the C7 Case would detract from the necessary appearance of impartiality and want of prejudice. I doubt that a fair-minded observer would read the C7 Judgment as exhibiting judicial ' annoyance ' at Seven, as distinct from understanding the judgment to record the considered views of a trial Judge, even if strongly expressed at times, on matters of importance arising from the manner in which the proceedings were conducted. In any event, the hypothetical fair-minded observer would regard it as significant that any ' annoyance ' had been expressed in a judgment delivered in an entirely separate case. None of the matters raised by Channel 7 seems to me sufficient to lead a fair-minded lay observer reasonably to apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the particular questions presented by the taxation proceedings. 25 It was for these reasons that I declined the application to disqualify myself. I certify that the preceding twenty-five (25) numbered Paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | reasonable apprehension of bias whether criticisms of a litigant in a previous decision are a basis for disqualification in separate proceedings courts and judges |
Her parents' application for protection visas under s 36 of the Migration Act 1958 (Cth) ("the Act ") had been refused by a delegate of the Minister on 1 November 2000 and, on review, by the Refugee Review Tribunal ("the Tribunal") on 26 March 2002. 2 On 22 March 2006 an application for a protection visa naming SZJXW as the applicant was completed. It purports to be supported by a statement made by SZJXW. I was born in Australia less than two months ago. My parents are from Ukraine originally. They have been persecuted there for reasons of my father's ethnicity and his political opinion. It seeks to challenge the decision of the Tribunal, of which judicial review was not sought, that SZJXW's father does not have a well-founded fear of persecution for a Convention reason if he returns to Ukraine. SZJXW's mother did not assert any independent claims of her own before the Tribunal. Second, I will be persecuted as a person of Caucasian ethnicity and because I am a member of political opponent's family. If I had to apply for travel document to go to Ukraine I will have to give detailed explanation as to why I am without a valid ID and it inevitably would result in my persecutions. Please refer to my parents' application for protection visa for detailed summary of their claims. These applications were rejected by the Department of Immigration and Multicultural Affairs on the basis that their claims to be entitled to protection visas had already been determined adversely to them. 6 In Al Raied v Minister for Immigration and Multicultural Affairs [2000] FCA 1357 at [6] I deprecated the artificiality of a statement such as that purportedly made by SZJXW in this matter. I endorse the observation subsequently made by Madgwick J in SBAH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 426 ; (2002) 126 FCR 552 at [9] . It is presumably for this reason that officers of the Department of Immigration and Multicultural and Indigenous Affairs engaged in correspondence with SZJXW, addressed to her care of her parents, and officers of the Refugee Review Tribunal engaged in correspondence with her directly, including extending to her an invitation to attend a hearing. It would, I respectfully suggest, be in everyone's interest if provision could be made for a more sensible way of dealing with a claim for protection advanced on behalf of an infant. Order 43 rule 5(2) provides that a tutor (which term is defined by O 1 r 4 to include a next friend) must act by a solicitor. The tutor must not have an interest in the proceeding adverse to the infant (O 43 r 4(3)). This requirement might ordinarily be expected, in any case on which the Minister is the guardian of the infant pursuant to the Immigration (Guardianship of Children) Act 1946 (Cth), to disqualify the Minister from assuming the role of next friend. I do not thereby imply that the Minister is the guardian of SZJXW. No submissions were advanced to the Court on that question. 9 In SBAH the Full Court, after considering the provisions of O 43 of the Federal Court Rules , took the view that an appeal instituted on behalf of an infant by her mother, who had not complied with the requirements of O 43 r 4, was not a nullity but that the mother's want of authority meant that the outcome of the appeal would not bind the infant. 10 In Akpata v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1619 Mansfield J referred to the judgment of the Full Court in SBAH and to other authorities concerning the situation of a child on whose behalf, and for whose benefit, an adult had commenced a proceeding. Having done so, his Honour dispensed with compliance with the "formal steps" by which such an appointment is ordinarily made and appointed the father of the child applicant in that case as her next friend. It would appear that the dispensation granted by his Honour extended to compliance with O 43 r 5(2). 11 Counsel for the Minister did not oppose my adopting a similar course in this case. SZJXW's parents wished to be appointed jointly as SZJXW's next friend. I considered it appropriate to respect their wishes in this regard. At the hearing of the appeal I ordered that they be appointed jointly as SZJXW's next friend for the purpose of this appeal and that the formal requirements of O 43, including the requirement of r 5 (2) that a tutor must act by a solicitor, be dispensed with. However, the delegate concluded that her fear is not well-founded. 13 An application was made on SZJXW's behalf to the Tribunal for review of the decision of the Minister's delegate. SZJXW's parents gave evidence before the Tribunal. 14 The reasons for decision of the Tribunal record that no specific Convention claims were made on SZJXW's behalf beyond those relating to her parents and her family membership. 15 The Tribunal did not accept SZJXW's father as a witness of truth; it was satisfied that he had created his claim, on behalf of his daughter, in order to obtain the visa sought. The Tribunal noted that he claimed that he and his daughter were dark skinned but that he had not earlier advanced that claim when seeking a protection visa in his own right. But I do not accept the father or the applicant have the appearance of a person of African or Asian or Caucasian or Chechen heritage. Even giving the father the benefit of the doubt and accepting that some persons may perceive him to be of dark skin and being imputed to be a Chechen or a Caucasian or Tartar or other dark skinned person, his claim of suffering ongoing harm for many years because of his dark skin does not ring true...I am of the view it is a late invention made to bolster his daughter's claim. Whilst the police and the judiciary suffer from inefficiency and corruption, all citizens are affected. I have no information before me that the Ukrainian police are unwilling or unable to protect ethnic Armenians or Russians or Greeks or Armenian/Greeks or Ukrainians married to Armenian/Greeks or children of mixed Armenian/Greek/Ukrainian ethnicity in the Ukraine. I am of the view that were the situation that a child of Ukrainian/Greek/Armenian ethnicity targeted for ethnicity in Ukraine it would be known to the independent sources such as Helsinki, US State Department, UK Home Office, Amnesty or DFAT. The applicant also claims that as her parents did not return to Ukraine in time, they applied for protection visas and if they went back to Ukraine they will be questioned about their overstaying their visas and it would be clear that they made an application for Protection. If she had to apply for travel document to go to Ukraine she will have to give a detailed explanation as to why she is without a valid ID and would result in her persecutions. I have no information before me to suggest that children born to Ukrainian citizens whilst abroad would have to explain why they do not have a valid ID or would suffer persecution. I am of the view that the Ukrainian Embassy in Australia, established on 3 March 2003 in Canberra, would issue relevant travel documentation for a child born in Australia of parents who are citizens of the Ukraine in accordance with 'The Law of Ukraine on Citizenship of Ukraine'. 18 The Federal Magistrates Court dismissed an application for judicial review filed in that court on SZJXW's behalf. (ii) His Honour should have concluded that the Tribunal failed to consider the issue of state protection properly. (iii) His Honour should have concluded that the Tribunal failed to comply with obligations under s. 424A(1) of the Migration Act . For this reason the question of whether Ukrainians regard Caucasians as "dark" irrespective of the colour of their skin, as SZJXW's parents assert, is not material. In any event, no attempt was made to demonstrate that any relevant evidence on this issue was placed before the Tribunal or even that the Tribunal member was placed on notice that SZJXW's father's claim to be "dark skinned" should not have been understood literally. Before this Court a challenge was sought to be made to the merits of the Tribunal's decision in this regard by the identification of material before the Tribunal in which it is asserted that Ukrainian police had been involved in discriminatory policing. The police routinely detained dark-skinned persons for arbitrary document checks, whereas document checks of light-skinned individuals were rate. Although the authorities disciplined police who engaged in this harassment when incidents were brought to their attention, such behaviour remained common. There were multiple reports of racially motivated violence against persons of African and Asian heritage by skinheads. Representatives of minority groups claimed that police officials routinely ignored, and sometimes abetted, violence against them. The Tribunal rightly concentrated on the characterisation of SZJXW and her family in concluding that state protection would be available to them. 22 This ground of appeal also fails. His Honour relied on SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 at [18] in concluding that the Tribunal's observations were not "information" within the meaning of s 424A. His Honour was, I consider, right to do so. In any event, as indicated above, the Tribunal rejected for other reasons the claim that SZJXW's father had suffered harm because he had the appearance of a Caucasian. In the circumstances it would be inappropriate to grant the appellant any relief in respect of a breach of s 424A of the Act even if it be assumed that there was such a breach. 24 Ground III also fails. I will hear the parties as to 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 Branson. | child appellant appointment of next friend or tutor for minor where next friend is appellant's parents waive compliance with o 43 federal court rules appeal from decision of federal magistrates court alleged failure to properly consider information before the court alleged breach of s 424a no reason to conclude that material was overlooked tribunal's observations not "information" within s 424a held: appeal dismissed. practice & procedure migration |
I have reserved judgment because I wish to draw the attention of the Minister for Immigration and Citizenship ("the Minister") to what I consider to be wholly inadequate reasoning of the Refugee Review Tribunal ("the Tribunal") in the exercise of its fact-finding function. As fact-finding is a matter for the Tribunal, it is not possible for me to allow the appeal on the basis of the Tribunal's inadequate process of reasoning. I wish merely to draw the attention of the Minister, and those advising him, to my view that the appellant has not had his claims for a protection visa considered properly. 2 The appellant is a citizen of India. He arrived in Australia on 18 June 2006 in possession of a business visa, which bore a false name. On 14 July 2006, he made an application for a protection visa. A delegate of the Minister's predecessor, the Minister for Immigration and Multicultural Affairs, decided to refuse to grant the visa on 12 September 2006. The appellant applied to the Tribunal for review of the delegate's decision. On 29 December 2006, the Tribunal affirmed the decision not to grant a protection visa. The appellant applied to the Federal Magistrates Court for remedies that would have had the effect of setting aside the Tribunal's decision and causing the Tribunal to re-determine his application for review of the delegate's decision. Before his application was heard, he filed in the Federal Magistrates Court an amended application. On 12 November 2007, the Federal Magistrates Court dismissed the application and the amended application, and ordered the appellant to pay the Minister's costs of $5,000. The orders and reasons for judgment of the Federal Magistrates Court are published as SZKCU v Minister for Immigration & Anor [2007] FMCA 1926. The appellant then filed in this Court a notice of appeal, together with an affidavit, sworn by him on 28 November 2007. 3 The notice of appeal named only the Minister as the respondent. A notice of appearance was filed on behalf of the Minister. After the notice of appearance was filed, the Minister's legal representatives began filing documents in which the Minister is designated as the first respondent and the Tribunal is named as the second respondent. As far as I am aware, no order was made joining the Tribunal as a party, or amending the title to the proceeding. The Tribunal was a party to the proceeding in the Federal Magistrates Court. As the decision-maker, it would be the party to which orders would be directed, particularly an order for mandamus, if the appeal were allowed. It is therefore necessary that the Tribunal be bound by the judgment of the Court. It is clear that the Tribunal should be a party. An order should be made, joining the Tribunal as the second respondent, and amending the title to the proceeding accordingly. 4 By s 36 of the Migration Act 1958 (Cth) ("the Migration Act "), there is a class of visas to be known as protection visas. A criterion for a protection visa is that the person applying for it be a non-citizen in Australia to whom the Minister is satisfied that Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. The terms "Refugees Convention" and "Refugees Protocol" are defined in s 5(1) of the Migration Act to mean respectively the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and the Protocol relating to the Status of Refugees done at New York on 31 January 1967. It is convenient to refer to these two documents, taken together as the "Convention". Hence, his claims could be taken to raise both the membership of a particular social group and political opinion grounds in the Convention. He was teased verbally and physically by forward caste teachers and by students. He organised a group on behalf of the RSU (Radical Students Union) to seek scholarships for the economically poor students and to fight against the ill treatment of the upper caste teachers. He studied at A.V. College and he became a member of the Radical Students Unit, and then secretary of the RSU. After completing his college studies he became a member of the Radical Youth League (RYL) and he started involving himself in social and political activity such as boycotting the elections and protesting against corruption and inequality through demonstrations and processions. During 2003, the applicant was arrested by the police in connection with the protests, and he was questioned and tortured by the local police and then the DIG (District Inspector General of Police) office at Hyderabad and then the Federal Intelligence bureau. He was then put in prison for three months. He was released on conditional bail with twice-a-day reporting conditions for one month. The police also arrested him and charged him with false cases 'for erupting communal violence' and he was placed in prison for thirty days and was released on bail. He was also arrested for pasting a poster against the Federal government, in buses. He was sentenced by the court under National Security Act (NSU) and was remanded to judicial custody for three months. The court denied bail and he was transferred to a central gaol. His brother was injured when he went to give a mercy petition to the Minister to release the applicant from gaol. The applicant was released from the central gaol. He started to fast and a few rowdies from the Telugu Desam Party, with the help of the police, tried to force him to stop fasting, and he was attacked and his head was injured. The local police arrested and tortured him and framed charges against him as if he had attacked the Telugu Desam party men with a knife and dagger. He was brought before the court and was released on bail. He was later detained during the state and federal elections, and when he tried to participate in the demonstration of a communist leader in Hyderabad, the police arrested him and recorded his fingerprints and put him in gaol for several months, whereupon he was released on bail. Every time he was arrested he was tortured and abused by the police and the inhumane treatment in gaol. The applicant states he did not instigate any violent activities. He is scared of communal clashes between Muslims and Hindus in India. He stated the Indian politicians and police are totally corrupt, so if he went back to India they would try to kill him. It also set out: the terms of a letter dated 17 November 2006 from the Tribunal to the appellant, requesting pursuant to s 424 of the Migration Act that he provide information; the terms of a letter dated 17 November 2006 from the Tribunal to the appellant, informing him of information it had and requesting comments, pursuant to s 424A of the Migration Act ; a summary of the response of the appellant on 28 November 2006; the terms of a further letter dated 4 December 2006 from the Tribunal to the appellant pursuant to s 424A ; a summary of the response of the appellant; and a summary of the appellant's evidence, given at a hearing conducted by the Tribunal on 15 December 2006. The Tribunal also set out a considerable quantity of information it had acquired from sources other than the appellant, which it regarded as relevant to his claims. 7 The Tribunal made a detailed comparison between what the appellant had said in his application for a protection visa and what he had said in his earlier application for a business visa. It drew attention to inconsistencies between those two applications in the information provided. It referred to the appellant's explanation for this, which was that the information provided in his application for a business visa had been provided by an agent; the appellant signed the application but did not check the information in it. Because of the threat to his life, and his fear, he did whatever the agent told him. The Tribunal concluded that it was not satisfied that documents provided in support of the application for a business visa contained correct information. It expressed the view that "the documentation in relation to the Application for a Business visa is unreliable and little weight can be placed on it. On the other hand, he argued that the information contained in the Application for a Protection visa is correct, and that it was provided with his full knowledge. However, there is no evidence to support the applicant's claims with regard to his Protection visa application and subsequent claims, other than his own verbal evidence and a photo of the applicant with a bandage on his head. The Tribunal places little evidence [sic] on that photo as it only shows a bandage, and no wound. The applicant stated at the hearing that he had a scar which he could show the Tribunal. However, this again would not be conclusive of what the applicant claimed as the cause, as it may relate to some other injury, and the Tribunal makes that finding. Having found that the applicant's signature attached to his Application for a Business visa was of little weight, the Tribunal must look closely at the applicant's claims in his Application for a Protection visa and in his subsequent evidence, despite it being sworn as correct, both on the document, and at the hearing. In this regard, the applicant was unable to state at the hearing that the peace talks in 2004 between the Andhra Pradesh government and the Naxalites were only possible because the government had lifted the ban on the Naxalites in order to enable the peace talks to occur (The Hindu 22 July 2004). The Tribunal finds that this indicates that the applicant does not have the political knowledge which one would expect from a person making his claims. The Tribunal finds the applicant's claims are not credible in this regard. The applicant's family name was referred to as 'Pulluri' in his Application for a Business (short stay) visa. On the Application for a Protection visa, there was no surname provided, and on his passport, his surname is shown as 'P'. The Tribunal finds that the evidence in relation to his name is inconsistent. The Tribunal finds the applicant's evidence is not credible in this regard. Even if the surname 'Pulluri' was created by the applicant's agent, nevertheless his passport and Application for a Protection visa are still inconsistent. The Tribunal finds that his explanations for these differences was not convincing. Having regard to its findings, the Tribunal finds that the applicant cannot be believed and it is not prepared to accept that any of his claims in relation to scheduled caste, political activities, arrests, imprisonment, torture, attacks on him, and false charges against him, are true. Further, the Tribunal does not accept that the applicant fears violence on religious grounds between Hindus and Muslims. 8 The Tribunal did not accept the appellant's claims that he had suffered persecution in India. As a result, it was not satisfied that the appellant faced a real chance of persecution if he should return to India, at that time or in the foreseeable future. The Tribunal was therefore not satisfied that the appellant had a well-founded fear of persecution for any Convention-related reason. For reasons that he gave, which it is unnecessary to recite in detail, the federal magistrate rejected each of those grounds. Some contained no ground for judicial review at all, others were not particularised or supported by submissions, and some merely sought to take issue with the Tribunal's findings of fact, on which the federal magistrate could not adjudicate. I have read the reasons for judgment of the federal magistrate carefully, and am unable to detect any error in them. This last-mentioned allegation is the only proposition that would answer the description of a ground of appeal in the notice of appeal. It is not one of those advanced in the Federal Magistrates Court. The member did not believe of my problems in India. I strongly and firmly believe that I have legitimate claims for a protection visa. I do believe that if I am compelled to go back to my country I will be persecuted. The RRT did not account [sic] that fear of persecution and made decision without Considering [sic] this issue in his decision. I ask the Honourable court to substitute the Decision and make orders in accordance with my application. 11 The appellant appeared without legal representation at the hearing of the appeal. He was assisted by an interpreter. He did not make any submissions about any of the grounds advanced to the Federal Magistrates Court, about the ground raised in his notice of appeal and his affidavit in this Court, or about any other ground. He asserted that, at the Tribunal hearing, the Tribunal member had not asked him any questions. It is clear from the matters on which the appellant relied in the Federal Magistrates Court, in his notice of appeal and affidavit in this Court, and in his oral argument, that he wishes to agitate matters of fact that were found against him by the Tribunal. Neither the Federal Magistrates Court nor this Court has any power to overturn any finding of fact made by the Tribunal in the exercise of its power to review the decision of the Minister's delegate. The appellant was not able to make any serious attempt to allege jurisdictional error on the part of the Tribunal, or error on the part of the federal magistrate. His assertion that the Tribunal member did not ask him any questions is obviously untrue, in the light of the summary in the Tribunal's reasons for decision of the course that the Tribunal hearing took. It is clear from that summary that the Tribunal member asked the appellant a number of questions. The reality is that the appellant simply did not like the questions that the Tribunal member was putting to him. He would have preferred the Tribunal member to ask questions that did not challenge his account of events, and to make findings of fact that accorded with that account. This is not a ground on which the Federal Magistrates Court, or this Court, could interfere with the Tribunal's decision. 13 All that can be said is that the fact that the appellant takes issue with the factual conclusions of the Tribunal, and seems to be prepared to grasp any possible proposition that might give him a basis for overturning that decision, appears to be consistent with his claim that he fears returning to India. 14 The appeal must be dismissed. No reason was advanced, and none appears, why the usual principle, that costs follow the event, should not be applied. The appellant should be ordered to pay the Minister's costs of the appeal. " As appears from the passage from the Tribunal's reasons set out at [7] above, the foundation for the chain of reasoning that led to the Tribunal's refusal to give any credit to the appellant's evidence is the proposition that the finding that little weight was to be attached to the appellant's signature on his application for a business visa required the Tribunal to look closely at his claims in his application for a protection visa and in his subsequent evidence. The second of these propositions does not follow from the first, as a matter of logic. It was the appellant's own evidence that what appeared in his application for a business visa should not be accepted, as he had procured an agent to obtain that visa, and the agent had provided the information, which the appellant had signed without looking at it. The appellant was inviting the Tribunal to accept that the information in his application for a business visa was untrue, and to accept that the information in his application for a protection visa was true. 16 As a matter of logic, if the Tribunal had accepted as true the information in the application for a business visa, it would have had to regard much of what the appellant said in his application for a protection visa as untrue, because of the inconsistencies between the two. On the other hand, if the Tribunal accepted that the information in the business visa application was untrue, as a matter of logic, there was a further alternative open to it. Either it could conclude that the information in the protection visa application was also untrue, or it could accept that the information in the protection visa application was true. It was not bound to do either of these things. The Tribunal member appears to have thought that he was bound to take the first course. 17 The next step in the chain of reasoning on the appellant's credit was the proposition that the appellant had been unable to state at the hearing that a certain event was only possible because of another event. The applicant stated that in 2004 there were peace talks between the Naxalites and the government but the talks stopped. Several Naxalite people have been killed since then. The Tribunal asked what action the government took to facilitate these peace talks. The applicant stated both parties had made demands, and discussions took place, but they couldn't agree. The applicant stated that the government invited the Naxalite leaders to the peace table. The government couldn't kill the Naxalites at that meeting as it would become an issue. Some of the Naxalites at the meeting were killed in the forest and the government said they had been killed in an encounter with the police. He stated, however, that none of the police officers were ever killed in any of these 'encounters. ' The Tribunal indicated to the applicant that the issue it was attempting to elicit from the applicant was that the government of Rajashekhar Reddy had lifted the ban on the Naxalites in order to enable the peace talks to occur. The applicant stated that as long as there was a ban, there were no talks. 18 If this summary is accurate, it might be taken to indicate that the appellant did not give the answer that the Tribunal member expected, or wanted him to give, to a question that the Tribunal member put. It is a considerable step from the failure to give the expected, or desired, answer to the finding that the appellant was "unable" to give that answer. The passage in the Tribunal's reasons describing what happened in the course of the appellant's evidence does not suggest that the appellant was entirely ignorant about the matters the Tribunal was asking about. It leaves open the possibility that the appellant did not understand fully what the Tribunal member was asking, or had an interpretation of the events that was different from that which commended itself to the Tribunal. For the Tribunal member to expect some orthodoxy in answering the questions is difficult enough to accept. When the orthodox answer is not given, for the Tribunal member to reach the conclusion that it was not given because the appellant was unable to give it is considerably more difficult. The Tribunal's conclusion that the appellant did not have the political knowledge that could be expected from a person making his claims is based on false reasoning. 19 The next element in the chain of reasoning concerned inconsistencies in the appellant's evidence in relation to his surname. The Tribunal was entitled to take into account these inconsistencies. Whether it was entitled to demand "convincing" explanations for the differences might be questioned, but it is unnecessary to go further in relation to this. 20 The Tribunal's conclusion that the appellant could not be believed about any of his claims is therefore based on a chain of reasoning in which at least two out of the three elements are themselves falsely reasoned. The fact that the Tribunal member has rejected altogether everything that the appellant said about his claims on such a flimsy basis is what causes me concern about the Tribunal's decision. I recognise that fact-finding is a matter for the Tribunal. I feel bound to draw the case to the attention of the Minister, and those advising him, when the fact-finding process is so flawed as to cause me to doubt that the appellant has had a fair opportunity of having his claims assessed. The appellant claimed to fear death if he should return to India. He claimed that he would be killed for reasons that would make him a person to whom Australia has protection obligations in terms of the Convention. If the Tribunal's decision is wrong, and the appellant is right, the consequences to the appellant are potentially drastic. It is my view that, if possible, the appellant should be afforded another opportunity to have his claims considered and dealt with by a properly reasoned process of fact-finding. The solicitor representing the Minister then informed me that she had instructions not to seek an order for costs of the proceeding. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | visa protection visa no ground for quashing decision of refugee review tribunal faulty reasoning of tribunal member concern that appellant has not had his claims considered properly migration |
Because of the volatility of oil prices it had at all times in place an oil risk management policy under which it entered into hedging transactions with respect to certain percentages of anticipated production and sales from the project. The company's profits from the project are taxed under the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) (the PRRTAA). The company suffered substantial losses associated with its hedging transactions in the years ended 30 June 2000 to 30 June 2002 inclusive. 2 The company was assessed for petroleum resource rent tax for the year ended 30 June 2002 on the basis that its taxable profit was calculated without regard to losses which it had incurred in connection with its hedging transactions. The company filed its return and paid the assessment on the basis that the losses were not to be deducted as it did not wish to expose itself to substantial penalties. However it lodged an objection to the assessment which issued. It did so on the basis that its taxable profit for the year ended 30 June 2002 should be reduced by hedging losses referable to that year and losses transferred under specific provisions of the PRRTAA for the two preceding years. The losses were respectively $148 million for the year ended 30 June 2000, $299 million for the year ended 30 June 2001 and $106 million for the year ended 30 June 2002. 3 The Commissioner of Taxation (the Commissioner) disallowed the objection. Woodside Energy contended that its taxable profit should have been reduced by reference to the hedging losses. One of the components of "taxable profit" explained in the PRRTAA is "assessable petroleum receipts" defined in s 24 so as to exclude expenses in relation to the sales of marketable petroleum commodities. Woodside Energy says that its hedging losses were expenses of that kind. 4 In my opinion, on its proper construction, the expenses to which s 24 referred are expenses directly related to particular sales in a way that hedging losses are not. In so finding I had regard to the fact that the Act has extensive separate provisions relating to deductible expenditures which do not include such losses. A reference to "expenses" in s 24 was included as an amendment to the Bill to meet specific concerns about such things as freight, insurance and demurrage costs connected with particular sales. To give it the broad construction for which Woodside Energy contends would, in my opinion, undercut the essential scheme of the legislation and its specific provision for deductible expenditures. 5 In the course of the hearing evidence was received from an economist, Professor Garnaut, about the model for taxing economic rent which he first proposed in 1975. In his opinion losses on hedging transactions designed to minimise risk of price fluctuations associated with sales of a commodity can properly be treated, in the taxation of economic rent, as an expense in relation to sales. While not doubting the correctness of that opinion within the framework of the model which Professor Garnaut proposed, it turned upon an assumption, which he was asked to make, that the petroleum resource rent tax was intended to be a tax on "economic rent". The Court, however, is constrained by the language of the Act. Having regard to the language of s 24 , its context in the overall scheme of the Act and its drafting history in the Parliament, it cannot accommodate hedging losses as expenses of sale as the economic rent model would allow. 6 The application is dismissed. Woodside Energy will have to pay the Commissioner's costs of the application. Furthermore, the objective of the oil price risk management ("OPRM") hedging policy is to contain the potential for financial loss arising from unfavourable movements in oil prices. ... Speculative positions are not permitted. 10 Tax is payable by the company in respect of the project under the provisions of the Petroleum Resource Rent Tax Act 1987 (Cth) (PRRTA) and the PRRTAA. The two production licences in which it has an interest are treated by the Commissioner, pursuant to a Ministerial Certificate, as sufficiently related to be regarded as a single petroleum project. The PRRTAA imposes tax in respect of the taxable profit of a person in the year of tax in relation to a petroleum project. The company did not have a taxable profit for the years ended 30 June 2000 and 2001 in relation to the Laminaria Project and no assessment under the Act was issued in either of those years. 11 Woodside Energy lodged a Petroleum Resource Rent Tax Return for the year ended 30 June 2002. An assessment was issued on 26 September 2002 in which the taxable profit was assessed at $429,825,898 and tax assessed at $171,930,359. On 21 November 2002 the company lodged a Notice of Objection to the assessment which, as its public officer indicated in a covering letter, related '... principally to a claim by Woodside Energy Limited ... to deduct expenses incurred on hedges undertaken in relation to sales from the Laminaria Project as 'expenses incurred in relation to the sale' under section 24 of the PRRTA. ' An amended assessment was issued on 24 December 2003. This showed a lower taxable profit figure of $371,202,675 and tax assessed at $148,481,070. 12 In a letter dated 15 October 2004 to Woodside Energy a Deputy Commissioner of Taxation informed the company that claims in its objection dated 21 November 2002 in relation to hedge expenses had been disallowed. Claims in the objection in relation to non-hedge matters were finalised by notices of adjustment for the 2000 and 2001 years of tax and by notice of amended assessment for the 2002 year of tax, all of which were issued on 24 December 2003. Woodside Energy lodged an application in the original jurisdiction of this Court on 10 December 2004 appealing against the Commissioner's decision of 15 October 2004 disallowing its objection dated 21 November 2002 against the Petroleum Resource Rent Tax Assessments issued on 26 September 2002 for the year of income ended 30 June 2002. On a proper construction of the PRRT Act the hedging losses incurred by Woodside Energy in relation to the Laminaria Project in the 2002 PRRT year in the sum $106,399,732 were "expenses payable" by Woodside Energy in relation to sale of a marketable petroleum commodity (being stabilised crude oil) from the Laminaria Project within the meaning of s 24 of the PRRT Act. 26. Alternatively, under s 24 of the PRRT Act the calculation of "consideration receivable" by Woodside in relation to the sale of a marketable petroleum commodity from the Laminaria Project in the 2002 PRRT year required that the hedging losses incurred by Woodside Energy in relation to the Laminaria Project in the 2002 PRRT year be taken into account by deducting such amount from gross receipts. 27. Alternatively, the hedging losses incurred by Woodside Energy in relation to the Laminaria Project in the 2002 PRRT year in the sum of $106,399,732 are to be taken into account in calculating Woodside Energy's class 2 augmented bond rate general expenditure being general project expenditure within the meaning of s 38 of the PRRT Act. 28. Further, the hedging losses incurred in relation to the Laminaria Project in the 2000 PRRT year and the 2001 PRRT year ought to be taken into account in ascertaining Woodside Energy's taxable profit in relation to the Laminaria Project for the 2002 PRRT year. The Commissioner takes issue with each of the alternative contentions. The debate in the end turned on the construction and application of s 24 of the PRRTAA. I have also considered the application of s 38 as it was formally before the Court, although not the subject of any substantial argument. Robert Carroll who was, until his retirement in July 2002, Chief Financial Officer for Woodside Petroleum. 2. John Richards. Mr Richards is the General Manager, Marketing and Commercial Services with Woodside Energy (UK) Limited (Woodside Energy (UK)). Between April 1996 and June 2000 he was Woodside Energy's Oil Marketing and Shipping Manager. From June 2000 until May 2002 he was its Manager, Marketing and Commercial Services within the Australian Oil Division of the group. Between April 1996 and June 2000 he worked closely with the Laminaria Project team to ensure that Laminaria crude oil was introduced smoothly into the market. 3. Alan Miller. Mr Miller is a Director of Basis Risk Ltd (Basis Risk) who provided expert opinion evidence about the alternative and best forms of risk management for Woodside Energy in relation to the volatility of crude oil prices. 4. Laurel Jean Rapinet. Ms Rapinet is the Assistant Treasurer Corporate for Woodside Energy's Treasury Department. In November 2001 she was Treasury Accountant for Woodside Petroleum. In 2003 she became a funding analyst and was appointed an insurance advisor for about a year before being promoted to her current position in September 2006. 5. Ross Garnaut. Professor Garnaut is Professor of Economics at the Australian National University. He gave expert opinion evidence, received subject to an objection as to relevance, as to the underlying rationale of resource rent tax (RRT). 6. Robert Graham Walker. Professor Walker is Professor of Accounting at the University of Sydney. He gave expert opinion evidence, subject to objection as to relevance, relating to the accounting treatment of hedging transactions. 16 I accepted the evidence of all witnesses so far as it related to primary facts. As to them there was little, if any, dispute. The identification of corporate and individual purposes, the characterisation of hedging policy and transactions formed the bulk of the factual contest. (ii) The formation and content of the Woodside intragroup Agency Deed. (iii) The process of assessment leading to the decision to commit to the Laminaria Project. (iv) The approval of a scheme of arrangement affecting the structure of the Group. (v) The nature of the market for crude oil as described by Mr Richards. (vii) The process leading to the variation of the hedging policy in relation to the Laminaria Project as described by Mr Carroll. (viii) The administrative arrangements within the Woodside Group for implementing and recording hedging arrangements as described by Mr Carroll, Mr Richards and Ms Rapinet. (ix) The classes of hedging transaction used with respect to Laminaria oil production as described by Mr Carroll. (x) The oil production and sales from the Laminaria Project for the period 1999 to 2004. (xi) The use of term contracts and production forecasts in relation to sales of Woodside Energy's crude oil as described by Mr Richards. (xii) The practical operation of the Woodside Group's hedging arrangements as described by Mr Carroll in a sample period from July to September 2001. (xiii) The way in which the Woodside Group used strategic hedging as described by Mr Carroll. (xiv) The use of cargo specific hedges as described by Mr Richards. (xv) The nature and use of futures contracts as described by Mr Richards. (xvi) The nature of basis risk as described by Mr Carroll and the way in which the Woodside Group dealt with it. (xvii) The recording of strategic hedges as described by Mr Carroll. (xviii) The Highlander transaction as described by Mr Carroll and the way in which hedges relevant to it were applied to the Laminaria Project. It was incorporated in 1954 as Woodside (Lakes Entrance) Oil NL to explore for oil in the Gippsland region of Victoria. In 1963 it acquired petroleum exploration permits over an area of 367,000 square km off the north west coast of Western Australia. It entered into what became known as the North West Shelf Joint Venture, initially with Burmah Oil and Shell, to secure funding for the exploration and for ongoing development costs. In the 1970s it discovered significant hydrocarbon resources primarily in the form of gas and condensate fields. The North West Shelf Joint Venture today produces, through its projects, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and natural gas. It produces condensate as a by-product of gas production. Condensate is a light oil used as a refinery feedstock. The North West Shelf Joint Venture also produces crude oil. 18 Woodside Energy's first sales were effected in the 1980s under contracts with the State Energy Commission of Western Australia for the supply of natural gas to the domestic Western Australian market. In 1985 it signed long term contracts with eight Japanese power and gas utility companies for the supply of LNG over a 20 year period. The first shipments commenced in 1989. The contracts incorporated an element of price risk sharing. They contained price "caps" and "floors" limiting the fluctuation ranges of the sale prices. The potential upside attributable to significant price rises was limited as was the potential downside attributable to falls. There however remained a risk that the price of LNG would fluctuate between the caps and the floors. From 1989 Woodside Energy tried to "insure" against that risk by hedging. 19 The Woodside Group expanded its operations into crude oil production in late 1995 with the Cossack and Wanea oil fields. The participants in that project were the North West Shelf Joint Venturers. The Group was small by comparison with other oil and gas production companies around the world and could not take significant financial risks in relation to any project. Hedging contracts were entered into in relation to a proportion of the sales of crude oil made from the Cossack project to ensure that revenue was underpinned and to mitigate loss of revenue in the event of a decline in world oil prices. Under the deed Woodside Petroleum had the responsibility for entering into certain classes of transaction on behalf of members of the Group. It was defined in the deed as the "Agent". Woodside Petroleum Development Pty Ltd (Woodside Petroleum Development), Woodside Oil Limited (Woodside Oil) and Mid-Eastern Oil Limited (Mid-Eastern Oil) were defined as the "Principals". Woodside Oil was then the name of Woodside Energy. The Deed recited that the Agent was the beneficial owner of all the shares held or was the beneficial owner of all the shares in the capital of the Principals. The Principals produce and sell in Australia and overseas petroleum in a gaseous and liquid state and in connection with that business enter into marketing and shipping transactions and related investment, interest, currency and product hedging transactions. C. In relation to transactions referred to in recital B entered into or to be entered into by the Principals, the Principals have requested the Agent to act as the agent of the Principals and to enter into such transactions on their behalf. 25 By cl 5 each of the Principals agreed with the Agent that it would have authority to do and perform all acts and things required of, or allocated to, the Principals for which they are entitled to do or perform under the terms and conditions of any business transaction. The Agent was authorised to do all further acts and execute all further agreements and documents as should be reasonably required in order to perform and carry out its duties. Each of the Principals agreed to indemnify the Agent against a proportion, equal to its participating percentage, of any loss, damage, claim or liability resulting from the acts or omissions of the Agent (cl 5(c)). Each Principal also agreed to pay promptly to the Agent when requested a proportion, equal to its participating percentage, of all costs, expenses, fees, duties, charges and liabilities reasonably incurred by the Agent pursuant to a business transaction or the Agency Deed. 26 Having regard to the Agency Deed and the evidence, referred to later in these reasons about the accountancy records relating to the hedge transactions in issue, I accept that they were properly attributed to Woodside Energy. In 1991 three Woodside Group companies, Woodside Petroleum Development and Mid-Eastern Oil and Woodside Energy, then Woodside Oil, together with Shell Development (Australia) Proprietary Limited (Shell Development (Australia), BHP Petroleum (North West Shelf) Pty Ltd (BHP) and BP Petroleum Development Australia Limited (BP Petroleum), acquired exploration permit AC/P8 which largely covered the Laminaria field. In 1992 the three Woodside participants in the Laminaria field entered the Agency Deed referred to above. 28 Mr Carroll described the discovery of the Laminaria oil field and the adjacent Corallina oil field as significant in the history of the Woodside Group. They were the first discoveries in respect of which the Group was the principal participant with a 50% share prior to unitisation. The size of the reserve is known to be in excess of 300 million barrels of economically recoverable oil. It was inevitable, he said, that a significant capital commitment would be required to develop the project. 29 The process leading to the decision to go ahead with production on the Laminaria field involved extensive testing and appraisal and modelling of various kinds of design for the development of a profitable petroleum producing project. The use of a floating, production, storage and off-loading (FPSO) vessel was identified as the best way to exploit the field. Following that decision, which was taken in early 1996, production forecasts were prepared of the volumes of crude oil to be produced and sold from the project. Mr Carroll said that production forecasts generally become more accurate as a project is defined and developed and more information becomes available about the reserve. They were updated and revised throughout the life of the project from testing and appraisal to the final investment decision and through project development to the point when "first oil" is produced and thereafter. 30 The Woodside Group's Northern Business Unit, later renamed the Australian Oil Division, used production forecasts to produce predicted balance sheet, profit and loss and financial data for the Laminaria Project. These formed the basis for the Business Proposal. Woodside Energy used the production forecasts to prepare "lifting schedules". The schedules set out on a monthly basis when the FPSO was required to have product available for collection by tankers to be taken to customer refineries. They were prepared by Woodside Energy in its capacity as "Off-take Coordinator" of the joint venture facility on behalf of all joint venture parties so as to enable allocation of cargoes between the joint venturers in accordance with an Off-take Agreement between them. 31 One of the significant price risks associated with the Laminaria Project was price volatility which is a feature of the market for crude oil. Long term contracts are not generally used in that market. Another significant risk was that the project production profile anticipated high volumes of production taking place over a short time. 32 A Business Proposal for the project was prepared in October 1996. It appears to have been prepared by Woodside Offshore Petroleum Pty Ltd (Woodside Offshore Petroleum). Base case NPV 10% of the development is A$318 million (RT '96), with a Real Terms Earning Power (RTEP) of some 27% and Value/Investment Ratio VIR (10%) of 0.39. The development is economically robust over a range of sensitivities to oil price, production, capex, opex, RFSU date and reserves. In the event of a low reserves outcome and shortened field life, the residual value of the FPSO provides significant protection against low or negative NPV. 33 The economic analysis of the proposed development was carried out using project economic assumptions (PEAs) set out in Table 5.1 of the Proposal. 34 The project economics were tested to sensitivities. Their effects on project NPV were set out in Table 5.4. The covering letter sought what was called the "Prime Scope Approval". Mr Carroll called it "the go ahead" from the other joint venture participants. 36 Mr Carroll discussed the project economic assumptions used in the Business Proposal. One was that the West Texas Intermediate (WTI) price of US$17 per barrel would hold for 1996 with prices in real terms in 1996 dollars of US$16.50, US$16.32 , US$16.22 and US$16.11 for each of the years 1997 to 2000. An assumed price of US$16.08 was adopted for the year 2001. The assumption of declining oil prices reflected the fact that oil futures markets set prices for periods closer in time higher than for periods later in time. The sensitivity analyses showed a base case net present value (NPV) of the project as a whole, assessed on the basis of a 10% discount rate, as A$318 million after tax. A 20% decline in oil price would have seen a 54% decline in the net present value of the project from A$318 million to A$145 million. Mr Carroll said that this demonstrated the extent to which the project was highly sensitive to changes in the oil price. 37 The final decision on whether the Woodside Group would go ahead with the Laminaria Project was taken by the board of Woodside Petroleum at a meeting held on 6 November 1996. The other joint venturers also decided to proceed. 38 In 1997 the Woodside Group and its joint venture partners entered into contracts for the construction of the Northern Endeavour which was to be the FPSO vessel for the production of oil from the field. Total capital expenditure on the development of the project and the construction of the Northern Endeavour was ultimately in excess of A$1.35 billion, of which the Woodside Group's contribution was 50%. This expenditure exceeded the base case estimated costs set out in the Business Proposal by approximately 25%. It represented a major commitment. 39 Mr Carroll agreed in cross-examination that the decision to invest in the Laminaria Project was based upon the assumption that the initial price of oil sold from the project would be US$17 per barrel and that it would decline to US$16.08 by 2001. The Business Proposal considered the extreme case of a 20% decline in oil prices. Mr Carroll, rightly I think, did not accept that this meant the project would have been regarded as viable even in that extreme event. That was not the way in which, on the face of it, the Business Proposal was presented. The extreme case was a risk to be weighed up in deciding whether to proceed. Mr Carroll accepted that the Business Proposal said nothing about the need to implement hedging to protect against the risk of oil price volatility. Nor was hedging mentioned in the minutes of the board meeting which approved the Project. It was not a condition of board approval. The hedging of Laminaria oil sales was first raised at the Finance Committee meeting in July 1997, eight months after the final investment decision was taken. This was relevant to a line of argument advanced by the Commissioner that the hedging arrangements the subject of these proceedings, were not related to risk management on particular sales of oil. Following that reorganisation hedging transactions entered into by Woodside Petroleum under the Agency Deed were said, by Mr Carroll, to have been entered into by it as agent for Woodside Energy. It was Mr Carroll's evidence that all of the revenue earned from the Laminaria Project (which did not start producing until late 1999) was earned by Woodside Energy. All of the hedge expenses, the subject of the present proceedings, were paid by Woodside Energy. Payments and receipts arising upon the settlement of the hedging transactions were recorded in the accounting records of Woodside Energy rather than in the books of Woodside Petroleum. They were brought to account as part of Woodside Energy's sales revenue. The recording of hedge expenses as part of Woodside Energy's accounts in its general ledger as items 6350H and 6350SH. Crude oil is generally priced by reference to one of a number of benchmark grades. Prices of benchmark grades for crude oil are published at varying intervals. WTI futures contracts are traded on the New York Mercantile Exchange (the NYMEX). (b) Brent crude, which is heavier than WTI and is produced in the North Sea. The principal market for exchange traded Brent crude oil derivatives is the International Petroleum Exchange based in London. (c) Tapis crude is produced in Malaysia and traded in Singapore. The Tapis price is a regional benchmark in the Asia Pacific. It is based on the Asian Petroleum Price Index published daily in newspapers or other media. During the time that Mr Richards was responsible for what he described as the Laminaria "cargo specific" hedging program, there were no exchange traded derivatives operating by reference to Tapis. Crude oil is fungible and can be blended if necessary and economical to do so at a particular plant. (b) Refineries are unlikely to obtain all of their crude from one source. Because crude oil is relatively easy to transport, buyers shop around. (c) Demand fluctuates according to seasonal and economic factors --- eg a mild winter in North America could lead to a decrease in the use of heating oil which would be reflected in a decline in crude oil prices. (d) Supply fluctuates because of a variety of factors such as the discovery or development of new fields and the imposition and periodic adjustment of production quotas by the Organisation of Petroleum Exporting Countries (OPEC). So Woodside Energy might agree to sell a cargo of Laminaria crude oil for a price of "Tapis plus 10 cents per barrel". 43 Laminaria crude oil was never sold on the basis of a fixed dollar price per barrel. During the time that Mr Richards was responsible for marketing all Laminaria sales were undertaken by reference to one or another of the benchmark grades of crude oil, usually Tapis or WTI. This did not extend to oil sold to Shell International Eastern Trading Company (SIETCO) under a term contract which was entered into and ran from May 2000 until May 2003. In the area relevant to his function as Chief Financial Officer for the Group, I take them to be statements of reasons and purposes which he adopted or treated as his own. Given his senior position and subject to challenges to specific elements of such testimony in cross-examination, I accept that his statement of purposes and reasons can be regarded in this respect as those of Woodside Petroleum and Woodside Energy. Much of what he had to say in this respect was reflected in documentary evidence setting out the relevant policies and practices of the Woodside Group concerning risk management and hedging. 45 Mr Carroll's evidence was that, as a crude oil producer, Woodside Energy's reasons for entering hedging transactions differed from those of other actors in that field such as traders or speculators. As a producer it was concerned about falls in the price of oil and entered into hedging transactions in respect of anticipated oil production and sales to ensure that its revenue in relation to the hedged proportion of anticipated production and sales was guaranteed at an amount determined by reference to a "forward oil price curve". The oil price curve was produced by plotting the future prices for WTI contracts traded on the NYMEX. That curve was based on information about the market's expectation of future oil prices. 46 It was Mr Carroll's evidence that because Woodside Energy was exposed to a price risk arising from specific underlying sales of crude oil it accounted for hedging "losses" or "gains" by offsetting them against gross revenue derived from the sale of crude oil. The "net" revenue amount after allowing for such gains or losses was reported as sales revenue in Woodside Energy's accounts in accordance with "hedge accounting" principles. Woodside Energy had always accounted for hedging transactions in that manner. Its approach was later recommended by the Australian Accounting Standards Board in its Urgent Issues Group Paper produced in May 2000 entitled "Abstract 33: Hedges of Anticipated Purchases and Sales". That approach was made mandatory in the 2001 calendar year when Accounting Standard AASB 1033 was introduced. The accounting treatment differed from that which would have applied if Woodside Energy had entered into hedges for speculative purposes, that is to say, where there was no underlying sale. 47 The Woodside Group was small (by world standards) compared to other major oil producing companies such as Shell. The size and extent of productive assets and reserves held by major companies provided them with a natural hedge as did their vertical integration into the market for the sale of petroleum. At the end of 1996 Woodside Energy had relatively few "proven" and viable reserves. Its only producing assets were in the North West Shelf area. 48 The hedging of projected sales within the Woodside Group was implemented before 1996 under the direction of the Oil Marketing Department which was monitored by the Treasury Department. The Treasury Department then became responsible for implementing "strategic" hedges. The Oil Marketing Department retained responsibility for cargo specific hedges. Strategic hedges were long term hedges placed as much as three years in advance of anticipated production and sale of crude oil from a particular project. Cargo specific hedges were short term hedges intended to manage the risk of prices decreasing between the time of ascertaining a lifting schedule by which cargoes were allocated to the joint venturers and the time that oil was actually sold to a customer. 49 Mr Carroll produced a document, current as at April 1996, called the "Finance Register". It set out Woodside Petroleum's hedging policy at that time. In a section headed "Risk Management Overview" it stated that Woodside Petroleum had a policy of "active management" of its exposures to oil price inter alia. Management was subject to the guidelines approved by the Board of Directors. Hedging transactions are only undertaken against an identified underlying exposure. There is no speculative trading. It would not be offset against sales revenue at the time of an underlying sale. Losses attributable to such hedges do not form part of Woodside's claimed deduction. 50 In 1997, Mr Carroll developed a Treasury Policies Manual. This set out the basis for the hedging transactions which gave rise to the losses the subject of this proceeding. It was formally approved by the board of Woodside Petroleum at a meeting on 3 September 1997. The document began with a statement of Treasury Policy Objectives. This is an essential component of Woodside's corporate governance. The policies also state the parameters within which these financial risks are to be managed. Woodside's Petroleum approach was said to be one of "risk mitigation". Hedging transactions are only undertaken against an identified underlying exposure. Protection of net profit and cashflow through the active management of Woodside's exposures is achieved, which is crucial to the Group's long term stability and the achievement of a competitive return on shareholders' funds. Furthermore, the objective of the oil price risk management ("OPRM") hedging policy is to contain the potential for financial loss arising from unfavourable movements in oil prices. Oil price hedging can only be undertaken in respect of identified barrel of oil equivalent (BOE) exposures, taking into consideration known and forecast product sales. Speculative positions are not permitted. Writing of options is permitted only when premium income is used to offset the cost of purchasing option cover or otherwise applied in reducing the cost of cover. Writing of exposed option positions for the sole purpose of generating premium income or mismatching the timing of bought and sold option positions is not permitted. . The maximum duration for an oil price hedge is 3 years. . Three people, including one from the Commercial Division, were required to form a quorum. Minutes were to be kept of those meetings. 55 Mr Carroll said that the aim of the hedging policy set out in the manual was borne out in 1998 as explained in the Managing Director's report to shareholders for that year contained in the Woodside Petroleum 1998 Annual Report. A record profit by Woodside for that year of A$300.2 million was obtained despite a drastic decline in oil prices. Woodside Petroleum's management and its board considered it desirable from the outset to implement a level of hedging in respect of anticipated sales from the Laminaria Project to help protect against falls in the oil price. This consideration did not appear anywhere in the Business Proposal. However the minutes of a meeting of the Finance Committee of Woodside Petroleum held on 15 July 1997 recorded that the Managing Director, Mr Akehurst, proposed that an exercise be carried out to quantify the benefits of hedging half of Woodside's Laminaria sales volume in the period 1999-2001 when the output from the project was at its peak. It also supported the recommendation that current cover be increased to maximum levels at prices above US$19.00. 57 A Ms Del Vescovo presented a hedging analysis to the meeting which confirmed previous results. The minutes record her as saying that the company could meet peak commitments over the following three years even with oil prices down to US$12 with the existing loan facility and hedge cover in place. 58 In his evidence-in-chief Mr Carroll described the expected production profile for the Laminaria Project as "peaky" with an anticipated spike in production and sales shortly after the first oil of some 18 months duration. Production and sales would peak followed by a decline in sales over the remaining life of the project. This was illustrated by the project cashflow projections in the Business Proposal. With many oil projects production typically has a steady increase to a peak which may be several years after production begins. Given that Laminaria was especially "peaky" it was highly desirable that the sale price should meet the PEAs as set out in the Business Proposal in the early years and, in particular, during the 18 month peak when a significant proportion of the reserves were to be extracted. In Mr Carroll's opinion if the PEAs were not fulfilled the project might have been unviable. 59 Mr Carroll said that hedging was more important for Laminaria than for the North West Shelf project because the production profile in respect of the North West Shelf development was relatively flat and the project life expected to be in excess of 20 years. Peaks and troughs in oil prices could be ridden out over the life of the project. The Laminaria Project on the other hand had an 18 month window in which production was expected to peak. 60 It was put to Mr Carroll in cross-examination that the Finance Committee, at its meeting in July 1997, was concerned about the opportunity that production of Laminaria oil would afford in terms of achieving the Group's corporate objectives. He said that the Committee's consideration was "based on the achievement of certain levels of cash flow". He said that the reason for hedging in the first place was "to make sure we can protect cash flow [sic] and maintain the business in a healthy basis to achieve our long term objectives to shareholders". The Finance Committee discussion about Laminaria on 15 July 1997 took place, Mr Carroll agreed, in a context in which Woodside Petroleum had a prudent level of cover in place and that it could meet its current commitments, that the Laminaria exercise was considered. 61 As a result of Mr Akehurst's request, Mr Carroll undertook an analysis of a specific hedging policy for Laminaria. He said in cross-examination that a specific hedging policy for Laminaria would lock in revenues "... to allow the company to be robust to meet all sorts of situations, including any possible growth opportunities". The presentation was about the benefits of a specific hedging policy for the project. He accepted in cross-examination that the purpose of the proposed hedging policy for Laminaria was to provide cash flow certainty in light of the spike in oil production and to position Woodside Energy for business opportunities should the oil price drop significantly. He agreed that his focus was on locking in oil prices above PEAs of US$18.50 "for the purpose of making sure that the Woodside group could exploit business opportunities in the future. " He added that it was primarily "to ensure that Laminaria's cash flows were available for us to do that". Mr Carroll accepted that if his proposal had not gone forward existing hedging policies would have adequately covered hedging arrangements with respect to Laminaria. It was put to Mr Carroll that the hedging he proposed above US$19.00 per barrel was not essential. I mean Woodside is a public company, its objective was to maximise value to shareholders and to pay dividends. He stated in the memorandum that oil price hedging policy had been reviewed in the light of the significant increases in oil production which the company would experience upon the start up of Laminaria in the first quarter of 1999. Increase the approved maximum hedge percentages. While this could be argued to remove the previous justification for defensive hedging, requirements for additional capital expenditure are expected to be firmed up as a result of exploration success and the definition of other new business opportunities. It is also expected that the years immediately following the start-up of Laminaria will provide a key opportunity for a corporate acquisition, particularly if oil prices are low. His first recommendation was that the approved maximum hedge percentage remain at 50% for year one of the project. His second recommendation was that the minimum hedge price should be increased to US$19/bbl. It is also recommended to increase the flexibility to achieve longer term hedges in the 24 and 36 month periods at or above this higher minimum hedge price. At that time they were 25% and 10%. 66 Mr Carroll agreed in cross-examination that his reference to "defensive hedging" was a reference to the risk minimisation which he called "the low end of your hedging profile". Two key elements in moving away from defensive hedging were the Group's additional capital expenditure requirements that would be firmed up as a result of exploration success and the identification of new business opportunities. 67 The Finance Committee met on 2 September 1997 and considered Mr Carroll's recommendations. The minutes recorded two views. Mr JL Stitt reminded the Committee that the current hedging policy involved the management of financial exposure. Hitherto, the hedging policy had been based on risk management linked to identified commitments such as bank loans, capital expenditure and dividends. He expressed concern that the proposal represented a significant change in the raison d'être for hedging and was driven by desire to lock in future revenues unrelated to underlying commitments. The level of hedging proposed was based on a view of market prices and increased the potential for hedging at a time when Woodside's financial position was strengthening. Other committee members were said to have supported the recommended approach which they saw "... as an appropriate way to provide certainty in planning investments and to lock in profit expectations". 68 The Finance Committee's recommendation was considered by the board of Woodside Petroleum on 3 September 1997. The minutes recorded an extended discussion with all directors expressing their views. Most were supportive, recognising the need to protect planned revenues in order to achieve the company's future growth targets. Mr Stitt maintained his opposition to what he regarded as a fundamental shift in hedging policy. Mr Carroll accepted that the existing hedging policy was "... based upon risk management linked to identified commitments such as bank loans, capital expenditure and dividends". The proposals contained in his memorandum were adopted. Late in 1998 Woodside Petroleum retained Westpac to report on Woodside Petroleum's Treasury function. Westpac prepared a report which was circulated to members of the Finance Committee on 4 February 1999. Management's response was sent to the Committee with a covering memorandum from Mr Carroll on 10 February. A Mr Gunston from Westpac made a presentation to the Committee about the review on 17 February. 70 Westpac recommended adoption of a "proactive hedging philosophy". This would allow percentage cover limits to be varied from time to time based on a strategic approach to exposure and associated cover. Management saw the recommendation as consistent with its view of the Woodside Group as a mature group with strong and steady cashflow. It proposed "a more proactive approach in seeking to add value in executing its risk management transactions". It accepted that such a "fundamental change" could only be implemented after Treasury had developed the requisite competency. 71 Mr Carroll said that the board endorsed the adoption of a more proactive approach but "... within the confines of active management as defined in the policy". He said that in reality there was no shift to a more proactive practice. Treasury remained within the overall policy guidelines and simply finetuned their wording. The same principles continued to be applied. Hedging was done within pre-approved limits having regard to underlying exposures with the objective of protecting cashflow. In this context he defined "active management" as "the ability to place or lift hedges within existing policy guidelines at the most opportune time, because we've got experienced and skilled treasury people to implement that outside of finance committee approval". 72 In June 1999, Westpac was undertaking a further review of the oil price hedging policy with respect to maximum and minimum levels of cover. Mr Nelson, who was by then the Treasurer, made a presentation to the Finance Committee at its meeting on 15 June 1999 He reported on a recent upward trend in oil prices which had been affected, inter alia, by high compliance with OPEC agreed production cutbacks. He reported on recent oil swap deals and the current status of the oil price hedging portfolio. In relation to the Westpac review he told the Finance Committee that because of the recent recovery in oil price the company profile had changed significantly since 1997 and it was time to review oil price hedging philosophy. 73 The Finance Committee recommended to the board an interim portfolio balance in circumstances in which oil prices exceeded US$17 per barrel of 50:35:30 swaps and 12:12:12 options in years 1, 2 and 3 respectively. This meant that in year one Treasury staff would be able to effect swap transactions up to a maximum level of 50% plus option transactions up to a maximum of 12% for an overall maximum hedging level of 62%. The board adopted the Finance Committee recommendation at a meeting held on 15 and 16 June 1999. 74 A statement of "Treasury Risk Management Objectives" was attached to the minutes of the Finance Committee meeting. Mr Carroll identified the attachment in cross-examination as produced by Westpac to say where it thought Woodside sat in terms of Treasury risk management. As such hedging transactions may only be undertaken against clearly identified underlying exposures. 75 On 20 July 1999 the Finance Committee approved a level of year 4 cover hedging above US$17.50 in increments of 0.5 million barrels was recommended. That approval was noted by the board at its meeting held on 20 and 21 July 1999. On 17 August 1999 the Finance Committee resolved that, pending a review by Westpac of the year 4 hedging level approved at the July meeting, the level would be revised. The minimum hedge price target would be lowered to US$17 per barrel with cover to be placed in small tranches of no more than 0.5 million barrels. The change was noted at the meeting of the board held on 17 and 18 August 1999. Those limits remained in place until March 2001. 76 The second Westpac review was completed in September 1999. Westpac recommended setting hedge parameters for all of Woodside Petroleum's price risks including commodity prices, foreign exchange and interest rate risks. As a result of the review, Mr Carroll prepared a memorandum dated 2 September 1999 for the Finance Committee. He recommended that hedge parameters should be set with minimum and maximum levels within which Treasury, with Finance Committee approval, would have the flexibility to increase or decrease cover as appropriate. Treasury also wanted to identify performance measures at benchmarks and manage and report currency exposure in US dollars. The proposal was not approved by the Finance Committee. Earnings volatility management, not absolute earnings growth, is the risk management focus. 78 Further into his presentation Mr Carroll observed that, as Laminaria production reduced, Woodside Petroleum would be proportionately less influenced by oil and currency changes. He also noted that, in undertaking any analysis of hedging, oil price risk could not be divorced from exchange rate risk. They were looking at "a corporate plan". He accepted that the discussion in his presentation went well beyond issues relating to Laminaria. The Committee did not accept the recommendation that maximum hedge cover limits in year 1 be lifted to 70%. It recommended that management review the wording of the Group's hedging philosophy. Mr Carroll rejected the suggestion in cross-examination that there had already been a shift in hedging policy. Rather there had been a shift in the risk profile of the business. In answer to the proposition that Woodside Petroleum was managing its hedge portfolio more actively within the specified parameters, he said that the staff were much more experienced and adept in their ability to implement hedges. The authority extended to place, lift, adjust and reallocate hedges. There was a price risk involved every day. 80 In cross-examination Mr Carroll explained that "placing" a hedge referred to entering the market to buy a contract. "Lifting" referred to negotiating with the bank to cancel a hedge. "Early lifting" was a term used to describe a change in the timing of a hedge. The term "closing a hedge" was used to refer to settlement by expiry or renegotiation of the hedge to close it out early. He initially denied that reallocation of hedges between projects occurred. He then accepted that there had been a reallocation to the Laminaria Project of hedges placed in relation to an abortive acquisition (referred to below as "Highlander"). Reallocation in that case was just an administrative process of identifying certain hedges with the Laminaria Project. These matters were discussed at a meeting held on 7 December 2000 which was not attended by Mr Carroll. At about this time BHP had announced that it intended to cease hedging. 82 On 10 February 2001 a memorandum on the 2001 oil hedging strategy for members of the Finance Committee was prepared over Mr Carroll's name. limited additional hedge cover to be placed in 2004 and 2005. the strategy to be reviewed periodically or whenever a significant acquisition or development is contemplated which could significantly increase the company's exposure to oil prices or has the potential to push gearing above the 60% level. In that presentation Mr Carroll made the point that there was little market risk or need to mitigate risk under current forecasts but hedging could not be ceased as Woodside Energy was not diversifying. Small amounts of hedging in 2004/2005 would protect the company's future financial security, reduce risk, increase financial flexibility and support growth targets. Value could be added by opportunistically reducing cover in 2001/2002. Committed hedges could be rolled into uncommitted hedges wherever possible. Basis risks should be covered opportunistically and advantage taken of anomalies in the oil curve. 84 At its meeting on 20 February 2001 the paper from Mr Carroll was presented by Mr Hill of the Treasury Department and the recommended hedging strategy for 2001 was approved. Mr Carroll said in cross-examination that the Group had successfully risk managed the peak of the Laminaria cashflows in the first two years of high production. He agreed that as a result the review had been carried out to determine whether or not a revised hedging strategy reflected the increased capacity to withstand risk while continuing to support corporate growth objectives. It set out further revised hedging limits. It was approved by the Finance Committee at its meeting on 26 March 2001 subject to minor modifications. A draft was presented to the board on 27 March 2001 with advice that a final paper would be presented for review. The revised policy was presented by the chairman of the Finance Committee, Mr Vines, at the board meeting held on 3 May 2001. The board agreed to adopt that policy on the basis that the company's hedging philosophy would be reviewed again in October 2001. No new oil price hedges could be entered into until the fundamentals of the philosophy had been reviewed and agreed upon. Uncommitted hedge cover referred to the case in which the Group member had been granted the right to exercise a hedge but had no contractual or financial obligation to do so. 88 By July 2001 PricewaterhouseCoopers had been engaged to assist management to undertake a philosophical and fundamental review of risk management. The PricewaterhouseCoopers' team included Mr Alan Miller who was called as an expert witness in these proceedings. Macquarie Bank was also engaged to review risk management operational areas. These matters were discussed at a meeting of the Finance Committee held on 17 July 2001. The Finance Committee also considered a paper entitled "2001 Oil Hedging Strategy Update" which presented a review of Woodside's crude oil risk mitigation strategy in relation to risk profile and the internal outlook for crude oil prices. Mr Hill outlined progress to that point in ensuring that the methodology used to determine exposure recognition criteria for hedging was as accurate as possible. He attached to it a paper outlining the results of the PricewaterhouseCoopers' review. At the current time, no increase is required in Woodside's oil price, currency or interest rate hedging (modelling supporting this conclusion will be demonstrated at the Finance Committee meeting of 16 October). To what extent should hedging activities be directed toward managing accounting profit? What is the company's attitude toward risk leveraging (ie profit motivated) hedging activities, such as position taking, trading etc? He accepted in cross-examination that the hedging strategy at that time also included a small element of "risk leverage". Risk mitigation did not preclude risk leverage. Individual discretion could be used to place and lift hedges. ", Mr Carroll said that the role of risk leverage could include strategic position taking, tactical trading, operation of hedging and enhanced customer contracts, optimising execution and optimising investment and production profiles. It was put to him that each of those things was done under the existing strategy at the time in managing the portfolio. The minutes noted that while future policy or guidelines would be drafted to ensure that recommendations were consistent with the Committee's consensus, Mr Akehurst, the Managing Director, recommended that in the meantime Woodside Petroleum should begin to test the proposed hedging model against its current activities in order better to understand any issues associated with its application. 92 At the same meeting management recommended that the existing strategy of a phased approach to reducing hedges be continued and accelerated. Directors supported the recommendation. A report prepared by Macquarie Bank was taken and noted as read. further investment in Treasury systems and experienced staff for the purposes of moving to, and the implementation of, active management in a prudent and effective manner. 93 The Macquarie Bank report made the point that in practice because active management involved both the implementation or removal of strategic hedges as well as undertaking specific active hedges, it was sometimes difficult to clearly establish what was an active decision and what was not. In many cases Chief Financial Officer approvals did not differentiate between the strategic and active hedges. Mr Carroll said in cross-examination that he disagreed with that statement. Our view was that for a start hedging was all strategic and that active was just fundamentally how you implemented your hedges based on approvals. These issues are all within policy and within the treasury staff lifting or implementing hedges using their own industry experience and expertise and doing it probably at the most optimal level. It was put to him that the active management approach was based on profit motivation rather than risk management. He denied that proposition. 95 Counsel for the Commissioner pressed Mr Carroll with the proposition that risk leveraging was an element of Woodside Petroleum's hedging policy in the way described in his memorandum to the board in October. We were always a treasury cost centre and we were only looking at optimising the placement of hedges, under an approval from either the finance committee, or within policy and nothing more than that. He also accepted in cross-examination that management acknowledged that the current draft of the policy was inadequate and did not accurately reflect the current operational structure of Treasury. He requested that the Committee approve the policy amendment proposal which involved the removal of limits governing minimum hedge cover and uncommitted hedge cover and the removal of specific maximum limits on uncommitted cover. His paper was generally endorsed at a meeting of the Finance Committee held on 10 December 2001 but further amendments were required. The recommended hedge levels were incorporated into a revised financial risk management policy which he circulated to the Finance Committee under an explanatory note entitled "Interim Financial Risk Management Policy". At its meeting on 19 February 2002 the Committee approved the revised policy without amendment as an interim measure until a revised comprehensive treasury policy was adopted. The hedge levels referred to in that policy remained in place until Mr Carroll retired in May 2002. The revised treasury policy was completed in December 2002. 98 According to Mr Carroll despite the fact that maximum permissible hedge limits changed over time, it was never the case that the maximum permissible limits could exceed BOE exposures. If, in practice, at any time it became apparent that the hedge levels were expected to exceed sales volumes for a period a proportion of any hedge loss or gain attributable to the excess hedges was immediately brought to account as a loss or gain in Woodside's profit or loss account as an ineffective hedge rather than being offset against sales revenue at the time of an underlying sale. 99 Mr Carroll agreed in cross-examination that there was to be no fixed minimum hedge cover level from the implementation of the PricewaterhouseCoopers' report. Targets were to be determined based on the company's position. There were to be maximum levels but no minimum levels. Despite the fact that there had been reviews consistent with what had gone on over the five years from 1997 through to 2002, there were still issues about what was to happen in the 2002 year in relation to hedging policy. Ultimately the decision was taken that there would be very little hedging. Woodside Petroleum's new approach to financial risk management diverged from the recommendations contained in the Westpac review which had begun from the premise that an aim of financial risk management was to reduce the volatility of operating results, including profit. The new philosophy was to focus primarily on ensuring sufficient cashflow to secure strategic aims. This was because the company was more mature. By hedging the Laminaria spike they had fundamentally brought the company through its riskest period. He agreed that by the term "more mature" he meant that people in the company were smarter and its asset base had broadened. It was financially stronger so that the elements impacting on its financial risk had changed. He attended almost all of the relevant meetings by invitation in his capacity as Treasurer and later as Chief Financial Officer. The Committee usually met monthly and monitored and received reports from Treasury staff about Woodside's oil hedging program. Mr Carroll himself oversaw strategic oil hedging activities which were implemented by other Treasury staff who reported to him and who placed hedge cover after negotiating with counterparties in "layers". The parameters for the "layers" were recorded in s 4.3.1 of the Treasury Policies Manual. Before the manual was introduced, the approach had been recorded in the Finance Register. Between two and one years in advance of production and sale, up to 25% was permitted to be hedged, again with only 5% to be hedged at any one time. From one year onwards until production and sale actually took place, up to 50% of production was permitted to be hedged. 102 By way of numerical example if at 1 January 1997 Woodside had forecast production for the 2000 calendar year (year 1) of 120,000 barrels from Laminaria, Treasury could hedge 10% of that expected production, namely 12,000 barrels, during the 1997 year, with only 5%, that is 6,000 barrels, being permitted to be placed at any one time. Generally swaps would be placed to expire on a month by month basis with volumes commensurate with anticipated sales for that month as ascertained by reference to the production forecast data. So if the production profile for 2000 was expected to be "flat" with 10,000 barrels produced each month, swaps in respect of 500 barrels would be entered into for each month in order to place a 5% layer. Mr Carroll said the policy was, in effect, implemented on a rolling year basis, initially by way of quarterly tranches and later monthly. In practice, he and Treasury staff responsible for implementing hedge transactions would monitor market conditions and report to the Finance Committee, and the Committee would then set a "target price" for hedges to be placed. If target prices could not be achieved the hedges would not normally be placed. 103 The Finance Committee monitored hedging activity which was also overseen by Mr Carroll. He received monthly Treasury reports showing the view of staff about anticipated oil prices and hedge transactions which were in place. Monthly updates in relation to hedging and the Treasury view on oil prices was given to the Finance Committee. 104 Neither Mr Carroll nor his department had responsibility for the marketing of the oil products from the Laminaria Project. That was a matter for Woodside Energy's Sales and Marketing Department. Mr Carroll and Treasury were concerned with the overall financial position of the Woodside Group. He agreed in cross-examination that one of the tools he used to manage the Group's overall financial position and its financial risk management position was hedge contracts. The performance of Treasury staff within the Group was measured by reference to outcomes set by the Finance Committee and the board. He did not agree that they were focussed on financial gains to the Group from their activities. Woodside Energy could have entered into a swap on 1 January 1997 with a counterparty with an expiry date of 31 January 2000 for 500 barrels at a fixed price of US$18.50 per barrel. If the average prevailing price of that class of oil for the month of January 2000 was US$19 per barrel, Woodside would be obliged to pay the counterparty US$0.50 per barrel for each of the 500 barrels, ie US$250. On the other hand if the prevailing price were US$18 per barrel Woodside would receive US$250. The effect of the swap would be to "lock in" a predetermined amount of US$18.50 per barrel on the 500 barrels hedged regardless of fluctuations in the oil price between the time of entering into the swap and its expiry date. 106 Woodside entered into hedging contracts priced by reference to the WTI pricing benchmark. However it sold most of its Laminaria crude oil by reference to Tapis and GPW pricing benchmarks. The Tapis benchmark is a South East Asian crude oil price which is published regularly. The GPW price was that determined by a term contract between Woodside and SIETCO under which Woodside sold a substantial amount of its Laminaria crude oil between 2000 and 2003. The WTI price was the most suitable price to use for hedging contracts because of the liquidity of the market for WTI crude oil contracts traded on the NYMEX. There was a risk of variations in the difference between GPW and Tapis pricing benchmarks and the WTI price. Mr Carroll referred to this as basis risk. Woodside entered into hedging transactions to protect against that risk. In addition to the swap contracts Woodside entered into a relatively small number of hedging transactions known as options and collars. 107 It was put to Mr Carroll in cross-examination and he agreed that, at the time at which each of the hedge contracts the subject of these proceedings was entered into, the oil to which it related had not actually been produced. He accepted that it was possible that, at that time, it might not be produced. He seems thereby to have acknowledged the obvious proposition that the production forecasts on which hedging arrangements were based were estimates only. Production was subject, inter alia, to process interruptions, unexpected geological abnormalities and bad weather. Actual start-up production on the Laminaria Project had been delayed by 10 months. It did not come on line until November or December 1999. Mr Carroll also accepted that the actual production fell short of forecasts. By way of example, the forecast production for July to September 2001 was 5.14 million barrels. Actual production for the period was 4.6 million barrels. 108 Mr Carroll further accepted that the contracts for the sale of oil the subject of these proceedings were not in existence at the time the hedge contracts were entered into. That concession was not strictly accurate as there were cargo specific hedges that were entered into after the contracts to which they related had been made. That point having been made by counsel for Woodside Energy, Mr Carroll did accept that the timing of the entry by Woodside into a sale contract was not dependent in any way upon the pre-existence of a hedge contract. He agreed. He agreed also that it was never the case that three years out Woodside Energy had specific contracts that it sought to hedge. A combination certificate was issued to the participants in the project under s 20 of the PRRTA on 11 October 1999. 110 In March 1999 following extensive analysis of the Laminaria reservoir a unitisation agreement called "The Laminaria Unit Operating Agreement" was entered into between the joint venturers. The parties to the agreement were Woodside Energy, BHP and Shell Development (Australia). Its effect was that Woodside Energy had a 44.925% overall share of the resource. BHP Billiton Petroleum (North West Shelf) Pty Ltd had 32.6125% and Shell Development (Australia) had 22.4625%. 111 A tariff arrangement operated to ensure that Woodside Energy was remunerated appropriately to allow for the fact that it had met 50% of the capital cost of the project. This was set out in a "tie in agreement" called the "Laminaria Tie-in Agreement" made on 16 March 1999. Schedule 5 to the Tie-in Agreement incorporated production forecasts in existence at that time which, as Mr Carroll said, illustrated the anticipated "peakiness" of the production. It showed a forecast production of 154,710 barrels per day for the first 14 months of production followed by a decline. This was on the assumption that the Northern Endeavour would have been in operation for 91% of the time. 112 Revenue earned by Woodside Energy on the sale of oil produced from the Laminaria Project for the calendar years ended 31 December 1999 through to 31 December 2004 were set out in annual accounts. They reflected the early production spike associated with Laminaria. They are generally priced by reference to a premium or a discount to a benchmark grade of crude oil. The premium or discount is usually fixed for the duration of the contract but the actual price may fluctuate over the life of the contract depending upon increases and decreases in the chosen benchmark price. 114 A number of factors specific to Laminaria militated in favour of term contracts in relation to a portion of the Laminaria production. Due to the physical properties of Laminaria oil which has a relatively high Naphtha component, relatively few refineries around the world would be prepared to pay high premiums on spot sales to purchase Laminaria crude for use as refinery feedstock. Most refineries serve markets which primarily demand gasoline. Splitting Laminaria crude would have yielded some gasoline and jet fuel and production rates in respect of those products would have been lower than obtainable from other grades of crude oil. Consequently other grades of crude oil could have been more attractive from the point of view of refinery economics. 2. Very high volumes of Laminaria crude oil were to be produced particularly in the early years of the project. The anticipated production was 170,000 barrels per day in the early phases. Mr Richards was of the view that it would have been difficult to sell all of the anticipated production by way of spot sales for an acceptable price. Laminaria oil was an untried product. He regarded this as particularly important in the then prevailing economic environment which, from late 1997, had seen significant falls in the price of crude oil as a consequence of the "Asian financial crisis". A number of term contracts were entered into but he identified two as particularly significant to Laminaria sales. The first of these was a contract with Nova Chemicals Ltd (Nova Chemicals). The second was the contract with SIETCO. 116 Mr Richards negotiated the sale of oil to Nova Chemicals in 1998. Nova Chemicals is a North American petrochemical company which has a refinery in Ontario suited to the splitting of Laminaria crude. It had access to crude oil by way of pipelines running from Portland, Maine in the United States. Mr Richards' rationale for the term contract expressed in a memorandum of 7 October 1998 was that, absent such contracts, the marginal volume of Laminaria crude produced at the time of peak production had the potential to depress the value of the bulk of the volume sold. The contract with Nova Chemicals was made on 23 March 1999. Because crude oil could take up to 40 days to transport to Portland and as the price was to be determined at delivery, Woodside Energy was subject to oil price risk from the time that lifting schedules were prepared to the time of discharge. 117 The Nova Chemicals' contract did not yield the best price for Laminaria oil. It was a contract for 4.2 million barrels or 11.5 thousand barrels/day (calculated over 12 months). According to a memorandum dated 24 May 1999 from Mr Richards, Nova Chemicals was the only customer prepared to purchase well ahead of RFSU. The contract was for a 15 month term (1 October 1999-31 December 2000). It allowed that the first shipment might not be loaded until 15 December. Each cargo was subject to a two to three month loading window. The contract provided for flexibility in the grades of oil delivered. According to Mr Richards it gave Woodside Energy "significant control of shipping, scheduling and pricing basis exposure". 118 The SIETCO contract arose because the Shell Group had a large shareholding in the Petrochemical Corporation of Singapore Pte Ltd which required Naphtha as a raw material for petrochemical production. SIETCO was considering building a new splitting unit at its refinery at Pulau Bukom in Singapore. One application of the splitter was to produce Naphtha for supply to PCS. This provided an opportunity for Woodside Energy to enter into a term contract for the sale of a significant proportion of its Laminaria crude entitlement. The pricing arrangement with SIETCO was based on Gross Product Worth (GPW). This arrangement was intended to provide SIETCO with an incentive to build the splitter by reducing its exposure to refining margins and ensuring that the price it paid for Laminaria crude oil would be determined on the same basis as the prices which it received from the sales of the products of that crude. The SIETCO contract was entered into on 11 May 1999. It was for a three year term to commence after Laminaria production had begun and after the splitter had been built at the Bukom refinery. The contract ultimately ran from May 2000 to May 2003. SIETCO purchased, on a GPW pricing basis, approximately 60% of Woodside's entitlement to crude during that period. 119 The GPW formula sought to price crude oil by reference to prevailing prices for refined petroleum products in Singapore weighted according to the proportion of the products which could be produced from Laminaria crude. As Naphtha was the predominant component of Laminaria crude, the price was influenced by the price of Naphtha. Under a "net back" arrangement the price arrived at by applying the GPW formula would be reduced to allow for shipping costs to be borne by SIETCO as well as fixed and variable refining costs. It would also allow SIETCO a margin on the capital cost of constructing the splitter. 120 The GPW formula, which appears in cl 9 of the SIETCO contract, was determined by reference to a published LPG price for the month after the bill of lading and by reference to the average prices for Naphtha, jet fuel and other products quoted by Platts and Argus during the 15 days around the bill of lading date for which prices were quoted. Sales made pursuant to the SIETCO contract were priced by reference to a 15 day period in the case of the non-LPG constituents of the crude oil and by reference to a month long period in the case of LPG constituent components. Mr Richards described SIETCO as a "virtual joint venturer" in the Laminaria Project. 121 Mr Richards had expected at the time of negotiating the SIETCO contract and at the time of placing cargo specific hedges that there would be a good correlation between GPW and the crude oil price as determined by reference to Tapis and WTI. Nevertheless, the Woodside Group continued to monitor variations between GPW and Tapis prices. Mr Richards was continually aware of the differential between the two benchmarks. 122 Other term contracts for the sales of Laminaria crude oil between one and four cargoes were entered into with a number of customers between 1999 and 2002. Pricing was determined by reference to either the monthly average price for Tapis for the month of the bill of lading less US$0.27 per barrel or, at the buyer's option, the average price for Tapis for the three week period surrounding the bill of lading date less US$0.27 per barrel. (b) Mobil Oil Australia, which entered into a term contract on 29 September 1999 to purchase three cargoes of 650,000 barrels (plus/minus 5%). Pricing was determined by reference to the average price of North West Shelf condensate published by the Asia Petroleum Price Index for the three week period surrounding the bill of lading plus US$0.03 per barrel plus freight. (c) Marubeni Petroleum Company Ltd, which entered into a term contract on 21 October 1999 for a 12 month period from March 2000 to February 2001 for the purchase of one 650,000 barrel (plus/minus 5%) cargo per quarter. Pricing was determined by reference to the average Tapis price for the three weeks surrounding the bill of lading date, minus US$0.15 per barrel. The benchmark was usually Tapis. 124 Mr Richards' strategy overall involved entering into a diversity of contractual arrangements that would enable Woodside Energy to meet its key business objectives which included operational control of shipping and protection of the Project against production curtailment. Mr Richards produced a spreadsheet giving a summary of each of the cargoes lifted, the purchaser of the cargo, the volume and the basis of pricing. Cargoes shown in the list as "Bukom" were sold to SIETCO under the SIETCO contract. As noted, about 60% of Woodside Energy's entitlement was allocated to SIETCO. 126 Each of the joint venture participants was entitled to an equity share of the oil produced. Woodside Energy was the operator of the joint venture. Rather than each joint venture participant taking a share of each cargo they accrued individual entitlements to a quantity of oil and each would lift separate cargoes to reduce those entitlements. Each participant arranged for the sale of its own share of the production. 127 An offtake coordinator was provided with production forecasts by the Operations Group. These were used approximately three months before the expected date of production and loading to prepare lifting schedules which identified the quantities of oil available for lifting by each joint venturer participant. The Bukom refinery was treated as if it were a separate or virtual joint venture for the purpose of preparing the schedules. The schedules identified likely dates on which cargoes could be lifted and the quantity available. Each lifting schedule received by Woodside Energy gave details of the quantity of Laminaria oil which it would be able to lift over the following three months and the expected date range within which each lift was expected to be made. 128 Terms and conditions governing the spot sales undertaken by Woodside Energy of Laminaria oil were usually set out in correspondence between Woodside Energy and the purchaser. General terms and conditions usually incorporated in such contracts provided that sales made FOB were subject to Woodside Energy's general provisions for spot FOB crude oil or condensate sales. His sample comprised swap transactions said to have been entered into in relation to sales made from July to September 2001. He exhibited a spreadsheet showing sales and the price obtained for each cargo sold for the period from the end of the 1999 calendar year until the beginning of the 2005 calendar year. The spreadsheet was a copy of a business record kept by the Oil Marketing Department and updated regularly to record sales information from the project. It recorded the "counterparty" or purchaser details, the name of the vessel which lifted the oil from the Northern Endeavour, the loading date range within which the oil was scheduled for lifting and the date of the bill of lading issued when lifting was completed. A ninth column was headed "Price marker" and recorded the benchmark used to determine the price of each particular sale. A table was prepared from the spreadsheet setting out 12 cargoes of Laminaria crude oil lifted on behalf of Woodside Energy from the Northern Endeavour during the period July to September 2001. Another sale was to Nova Chemicals. There were two spot sales mentioned, one to SK Energy Asia Pte Limited and another to SIETCO. The prices obtained for each of the cargoes was shown in the thirteenth column of the spreadsheet headed "Realised Marker". For the 11 July 2001 transaction the marker estimate was US$24.50/bbl. The realised marker was US$23.001/bbl. For the 17 July 2001 the marker estimate was US$26.50/bbl and the realised marker US$26.056/bbl. The volumes of Laminaria oil sold from July to September 2001 had been the subject of production forecasts made several years before. The hedges placed in relation to those sales were implemented over a period of several years in advance. 132 The Woodside Group's Treasury staff had a Microsoft Excel spreadsheet designated as the "Oil Cover Model". It facilitated monitoring of the level of hedges in place and allowed production of reports used by Treasury staff, the Treasurer and Mr Carroll to monitor the level of hedges in place and to place additional hedges if circumstances so required. Production forecasts for each of the Woodside Group's petroleum projects was fed into the Oil Cover Model. Laminaria Project forecasts were received from the Northern Business Unit. The information in the model was used by Treasury staff to ascertain what levels of "strategic hedging cover" shall be put in place and to record on a project by project basis and on a company wide basis what hedging cover was being placed. It was also used to assist in monitoring hedging cover levels to ensure that the levels in place were appropriate given the target prices set by the Finance Committee. Regard had to be paid to hedging parameters which could not be exceeded. 133 The Oil Cover Model allowed Woodside to track its hedge performance against forecast oil prices as demonstrated by the prices at which light sweet crude oil futures contracts were traded on the NYMEX for a variety of different closing dates. Details of prices at which futures contracts for various closing dates were traded on the NYMEX were regularly downloaded from the NYMEX or another data service provider into the Oil Cover Model. On the basis of this data Woodside Energy would produce a Woodside oil price curve used to determine the target price at which the company would be prepared to enter into oil price swaps and as a basis for negotiating the price of oil price swaps with counterparties. 134 The primary accounting and management tool used by Woodside Energy to record hedging transactions was a computerised Treasury accounting system known as the "Quantum" system. Entries in relation to individual strategic hedge transactions were made in the Quantum system at the time of placing hedges and again when they expired or were settled. Upon expiry of a strategic hedge the Treasury Department put in the settlement rate for the transaction by entering a separate but offsetting transaction in relation to the settlement or expiry of the hedge. Mr Carroll set out a table showing strategic oil price swap transactions in relation to Laminaria sales for the months of July, August and September 2001. Mr Richards regularly met with Mr Carroll, usually on a weekly basis, to discuss Woodside Energy's exposure to a decline in oil prices in respect of its production from the Northern Endeavour and other facilities. They discussed price risks and agreed on recommendations about how strategic hedges would be placed. 137 On 10 August 1999 the Treasurer asked for an approval numbered 177 to place strategic oil swap transactions in relation to a number of projects including Laminaria. 138 The Oil Cover Model report prepared by Treasury staff as at August 1999 showed that Woodside Energy's anticipated sales of Laminaria oil for the period July to September 2001 was 5,124,000 barrels. On p 5 of Approval 177 under the heading "Group I" the Treasurer requested approval to place oil swap transactions against 256,000 barrels of Laminaria oil at a price above US$17 per barrel which represented 5% of the anticipated sales of 5,124,000 barrels. Five per cent represented the maximum layer or maximum percentage of anticipated sales which could be hedged in a single transaction. On the first page of the document marked "LINK-SWAPCOVER --- OIL --- APP177" was a spreadsheet which recorded hedges placed following the approval. It only included swaps and futures. A second spreadsheet with the reference "LINK-WPCOVER --- OIL --- APP177" set out hedges in the form of swaps, futures and options and showed total hedge cover for projected production and sales as at August 1999. 139 It was Mr Carroll's normal practice, before signing an approval, to review the oil hedge program attached to the approval and to meet with the Treasurer, the person responsible for the transaction in Treasury and the Treasury Dealer. During discussions with Treasury staff and the Treasurer he would seek to ensure that oil price swaps proposed accorded with the Manual and any guidance given and the prices at which it was proposed oil price swaps be placed were appropriate given the Woodside oil price curve and expectations about future oil prices. 140 Pursuant to Approval 177 Woodside Petroleum and Morgan Stanley Capital Group Inc (Morgan Stanley) entered into oil swap transaction 3500 on 12 August 1999 in respect of 256,000 barrels of Laminaria oil. The fixed rate was US$17.690. The period hedged was a three month period between July and September 2001. Mr Carroll exhibited copies of the confirmations between Woodside Petroleum and Morgan Stanley relating to this transaction. Under its terms, Morgan Stanley agreed to pay Woodside Petroleum US$17.690 per barrel as of 30 September 2001 and Woodside Petroleum agreed to pay Morgan Stanley the floating price which was defined as the average of the daily settlement closing prices of the second nearby month "Oil WTI-NYMEX" futures contract. At settlement the two amounts were set off against each other. The effect was that Woodside Petroleum had to pay the difference, if any, between the agreed fixed price and the floating price over the three month period to 30 September 2001. 141 Woodside Energy initially entered into hedges for three month periods. However starting in about August 2000 it was decided that it would be preferable to enter into hedge contracts for one month periods. As a result each of the three month hedges was converted into three one month hedges. This was consistent with pre-existing accounting treatment. On 22 August 2000 Woodside Petroleum wrote to Morgan Stanley requesting that deal 3500 be converted into three one month deals. It confirmed that the new oil swap 6555 was for 85,334 barrels (one third of the original deal) at the same strike price of US$17.690. The new effective date was 4 September 2001 and the expiry date was 28 September 2001. A copy of the Woodside Petroleum confirmation was exhibited to Mr Carroll's affidavit. 142 The floating price as at 28 September 2001 was US$26.755. This meant Woodside Petroleum had to pay Morgan Stanley US$9.065 per barrel, being the difference between US$26.755 and the agreed strike price. Assuming that the oil actually produced was sold at the floating price, the hedging transaction would have guaranteed to Woodside Petroleum a net revenue per barrel of US$17.690 in relation to the proportion of the anticipated production which was hedged. Woodside Petroleum overall was required to pay the sum of US$773,552.71 to Morgan Stanley, representing US$9.065 multiplied by 85,334 barrels. 143 The final settlement rate which was the average of the second WTI for the month of the pricing period was entered into Quantum by Woodside Petroleum's Treasury Department at the end of the month, which in this case was September. After entering the data Woodside Petroleum sent a settlement confirmation to Morgan Stanley and received a confirmation confirming the amount payable. Copies of the confirmations showing the close out of the hedge of 85,334 barrels attributable to Laminaria oil on 28 September 2001 in respect of deal number 6555 were exhibited to Mr Carroll's affidavit. Responsibility for all cargo specific hedging was shifted to Treasury from the beginning of January 2000. The reason for the shift, according to Mr Richards, was that it provided a more effective use of manpower. 145 Cargo specific hedges differed from strategic hedges in that they were usually only placed after a lifting schedule had been prepared and cargo volumes were known. They were intended to have the effect of fixing or locking in the price obtainable on the sale of all or part of a particular cargo to the extent that such portion had not already been hedged by the longer term strategic hedges. Mr Richards said that cargo specific hedges were placed if it was thought that there was a risk of decline in the price between the time at which a lifting schedule became available and the time at which the price was determined under the relevant contract. The period could be as long as five months although it was typically about three months. Cargo specific hedges could be entered into up to six months in advance of sales. They were designed to protect Woodside Energy against declines in the price of oil during the period, after receipt of the lifting schedule, in which the crude oil was being produced, stored, loaded, transported, delivered and sold. 146 It was possible to estimate Woodside Energy's cargo entitlements with a high degree of accuracy during any given six month period, at least in the initial stages of the project. When production was approaching its peak it was consistently at or around 170,000 barrels per day. 147 Mr Richards referred to the policy guidelines for entering into hedge transactions. He observed that futures contracts and collars were two of the authorised financial instruments and that to the best of his recollection the WTI futures contract was the only instrument used to place cargo specific hedges. Other sales of Laminaria crude were priced by reference to various benchmark rates of crude oil. Despite this there were what Mr Richards described as "very sound reasons" for entering into hedging contracts priced by reference to WTI. 149 Mr Richards referred to the good long term correlation between the different pricing bases. There was no market for exchange traded futures in Tapis or in GPW. Oil futures contracts were traded on the NYMEX and the London-based International Petroleum Exchange (the IPE). Mr Richards regarded these as the two principal markets for all oil futures in the world. He described the NYMEX WTI futures contract. It was introduced in 1983. It is one of the world's most actively traded futures contracts based on an underlying physical commodity. 150 A party entering into a NYMEX WTI futures contract commits to either make or accept delivery of a specified quantity of WTI crude during a specific month. Contracts are traded in lots of 1,000 barrels and delivery is required to be made at Cushing, Oklahoma or at certain pipeline delivery locations in North America. The contracts can be entered into in relation to 30 consecutive months as well as "long dated" futures initially listed at 36, 48, 60, 72 and 84 months prior to delivery. A contract to make delivery is a "sell" contract. A contract to take delivery is a "buy" contract. 151 In practice NYMEX contracts are rarely settled by physical delivery of WTI crude. Both sellers and purchasers of crude and refined petroleum products use the futures market as a means of managing price risk even though they may not be selling or purchasing WTI. Rather than physical delivery, producers such as Woodside Energy who enter into sell contracts typically buy back their contracts before the contract expiry date and therefore before the delivery under the sell contracts is required. This is done by purchasing contracts requiring the producer to accept delivery of an equivalent volume of crude oil thereby offsetting or "closing out" the delivery obligation. 152 Against the increasing oil price scenario is the detriment to the producer caused by a decline in the benchmark price between the time of entering into the futures contract and the time for sale of the physical commodity. This can be offset by the net gain which the producer makes by closing out the futures contract, ie the buy back exercise. Contracts to take delivery of crude could be bought for less than the value of the sell contracts already held. The intended outcome from the producer's point of view is to ensure a stable predetermined amount of revenue as a consequence of the sale of the commodity notwithstanding fluctuations in price. 153 Mr Richards could determine from lifting schedules which cargoes were to be allocated to Woodside Energy over the coming three months as well as their expected loading date ranges. He used this information to allocate cargoes to term contracts and also to some extent to allocate cargoes between term and spot sales. As well as being used to plan sales, the lifting schedule information was used as an integral part of the cargo specific hedging program. The Oil Cover Model was also used for cargo specific hedging. He regularly received reports of the Oil Cover Model which enabled him to ascertain how much long term hedging was already in place in relation to sales of Laminaria crude to be made in any given month. 154 In practice Mr Richards would decide whether cargo specific hedges should be put in place in relation to Laminaria sales. He would do so after attending a weekly meeting with Treasury personnel including Mr Carroll at which hedge levels, both strategic and cargo specific, were discussed as well as a range of economic factors. 155 Mr Richards prepared a spreadsheet entitled "Exposure Phasing of Hedges" in or around September 1999. This showed the calculations he had made in order to determine the futures contracts to be entered into at that time. His object in preparing the spreadsheet was to identify the particular periods over which Woodside was exposed to oil price risk. Where 650,000 barrels of Laminaria crude oil were to be delivered in the period 20 to 24 December with a pricing period over three weeks, the spreadsheet divided the quantity of 650,000 barrels in three and allocated one third to each of the week of the bill of lading. Using this mechanism, Mr Richards defined the quantity of oil for which Woodside was exposed to oil price risk week by week. The weekly quantities were totalled to create the information shown at the bottom of the table in the row entitled "Physical exposure (phased by week of pricing)". The total was compared with the total of strategic oil price swaps for the same period. As cargo specific futures were placed, the quantity placed was incorporated within the report. By way of example, in the period ending 19 December, the spreadsheet indicated that 478,000 barrels were covered by cargo specific hedges and 738,000 barrels covered by strategic oil swaps. 156 Mr Richards would buy back the futures contracts as and when the underlying physical oil price exposure fell away as the cargo was priced. He would buy the contracts back rateably over the period during which the price for the relevant cargo was being determined. For example, where a cargo of 100,000 barrels was being priced over a four week period, he would buy back 25,000 barrels (or 25 lots) each week for four weeks. Its hedging contracts, however, were priced by reference to the WTI pricing benchmark. WTI futures contracts are traded on the NYMEX in a very liquid market. The WTI price is therefore a suitable basis for "over the counter" derivatives entered into with counterparties such as banks. Woodside Energy could not price its hedge contracts by reference to GPW or Tapis prices. GPW was a specific pricing basis used for the SIETCO contract and the market for Tapis was relatively illiquid. 158 In 2000, it appeared to Mr Carroll that the differences between the pricing bases was adversely affecting Woodside Energy. While there was a high correlation between GPW and WTI bases over the long term, there was a lower correlation over shorter periods. He exhibited PowerPoint slides from a presentation made in November 2000 by one of the staff which summarised the results of the correlation analysis conducted by Woodside into the basis risk between GPW and WTI. The two pricing benchmarks were highly correlated beyond 12 months with an acceptable basis risk beyond that period. Hedge the three predominant products. 2. Hedge based on a 50.43% Gasoil & 40.41% Jet/Kero basis. 3. Hedge using a single product as a proxy hedge. Woodside has a basis risk between WTI and GPW. 2. This basis risk is only in the near term. 3. Woodside does not need to close existing WTI hedges. Woodside can close the basis risk by entering into a spread lock between WTI and the constituents of the basket. The suggested hedging alternative satisfied lots FAS 133 requirements. The three predominant products Naphtha, Jet5/Kero & Gasoil. 2. A basket on a 50.43% Gasoil & 40.41% Jet/kero Basis. 3. A single product being the Jet Crack Spread. In early 2001 Woodside Energy began taking active steps to manage basis risk by entering into these hedges. He made his own presentation about basis risk hedges to the Finance Committee in October 2001. The printout recorded individual swap transactions entered into by Woodside Energy which gave rise to gains or losses between 1 January 1999 and 31 December 2002. The total losses for swap transactions referable to Laminaria during that period amounted to US$257,649,774.61. 161 The details of each basis risk hedge were entered into Woodside's Quantum accounting system at the time of entering into the transaction and was updated at the time of settlement. The report also recorded losses and gains in respect of option hedges referable to Laminaria production and sales. These losses for the period 1 January 1999 to 31 December 2002 came to US$51,121,922.29. 162 Mr Carroll explained that sales revenue from the sale of Laminaria oil was recognised at the time that it was earned. This was usually the time of delivery unloading from the FPSO into the buyer's vessel. Delivery occurred once all the lifting from the FPSO had been completed and the bill of lading issued. 163 Gains or losses on strategic hedge transactions for anticipated sales in a particular month were brought to account as part of sales revenue in Woodside Energy's accounts at the end of the month in which those sales occurred. The amounts entered into the accounts at the end of each month were originally entered using the Australian/US dollar hedge settlement rate average, published by Reuters on the last date of the month. The settlement of the strategic oil price swaps was usually effected on the fifth business day of the following month. The actual amount paid or received in US dollars was able to be converted at that time to Australian dollars using the HSRA rate. An adjustment was made to the amount of the gain or loss reflected in Woodside's accounts to reflect any movement in the HSRA rate during the period from the end of the previous month to the date of settlement. Towards the end of 1999, Woodside Energy commenced negotiations and then bid for an interest in an oil project in the Gulf of Mexico, known as the Angus project. The asset was owned by an American company, Marathon Oil. The bidding process, within Woodside, was code named the "Highlander Project". Had it succeeded the bid would have resulted in Woodside Energy having increased exposure to oil price risk from the date of the bid. Before it was known whether the bid would be successful there was a period during which Marathon Oil's joint venture partners were entitled to exercise pre-emptive rights to acquire Marathon's interest in preference to Woodside Energy. 165 In order to protect the exposure which would have resulted had the Highlander bid been successful, Woodside Energy entered into hedging contracts between 10 and 17 November 1999. These were approved by Approval 183 which was exhibited to Mr Carroll's principal affidavit. 166 In the event, Woodside Energy was pre-empted by another party in late December 1999. Its bid did not succeed. When the hedges to cover the Highlander bid were placed, not all of the expected Laminaria production which could have been hedged with the parameters of the Treasury Policies Manual had been hedged. In order to account for these they were referred to in the Quantum system as "LAS" transactions. Instead of doing this it closed out hedges in relation to about two million barrels and treated the balance of the hedges as referable to expected production and sales from the Laminaria Project. This was an internal administrative reallocation. The same approach was adopted with respect to subsequent returns. 168 It is the tax assessable for the financial year ended 30 June 2002 that is in issue in this case. In its return for that year Woodside Energy declared total assessable petroleum receipts of $685,444,870. Transferable exploration expenditures totalling $174,572,256 were transferred under ss 45A and 45B of the PRRTAA, leaving taxable profit of $429,825,898. An assessment issued on 26 September 2002 on the basis of the taxable profit declared assessing tax at $171,930,359. 169 On 21 November 2002, Woodside Energy lodged a notice of objection against its assessment for the year of tax ended 30 June 2002. Alternatively, the assessable petroleum receipts it derived from the Laminaria Project should be taken not to have included amounts equal to the amount of hedge expenses incurred in each of those years. 172 The objection also sought amendments relating to non-hedging costs by way of freight costs and feasibility expenses and exploration expenditure in the years ended 30 June 2000 to 30 June 2002 inclusive. 173 On 24 December 2003 the Commissioner issued an amended notice of assessment. The taxable profit for the year of tax ended 30 June 2002 was reduced to $371,202,675 and the tax assessed was $148,481,070. An adjustment sheet showed that additional deductions were accepted in relation to transferred exploration expenditure resulting from adjustments made to earlier years totalling $54,538,692 and transferred exploration expenditure resulting from the cost of feasibility studies totalling $4,084,531. As is apparent from the amended assessment, the objection in relation to the deductibility of hedge expenses was disallowed. In 2003, Ms Rapinet reviewed the PRRT objection which the company had lodged and conducted a reconciliation and an inspection of the company's accounting records to validate the amounts claimed in the objection in respect of the three tax years to 30 June 2002. 175 In her first affidavit, Ms Rapinet referred to a computerised Treasury system called "Quantum" which records, monitors and accounts for hedging transactions. She exhibited a summary, in an Excel spreadsheet form, of the losses claimed in each relevant PRRT year ending 30 June. The amounts claimed in the objection had been taken from general ledger accounts. The amounts recorded in her spreadsheet under the column 6350H which came from the general ledger recorded losses and gains from all hedges said to relate to Laminaria sales except cargo specific hedges which were recorded separately under column 6350SH. 176 In a second affidavit Ms Rapinet explained that the general ledger is the primary accounting record maintained by Woodside Energy to record its financial transactions. It is used and relied on each year as a financial record to help prepare financial statements for the Group. Those statements are audited and reported in the Annual Reports of Woodside Petroleum. Within the general ledger many underlying accounts are maintained. Each records particular types of transactions by specific journal entries. Until 31 March 2002 the general ledger was maintained using an accounting computer program called "SUN". The designation "6350H" in her summary referred to an account by that number within the SUN system which was used to record losses and gains from hedges in respect of Laminaria sales except for cargo specific hedges. The latter, as noted above, were recorded in that system under the account number 6350SH which is another column heading in her summary. From April 2002, Woodside Energy's general ledger has been maintained by using a different accounting computer program called "Ibis". Losses and gains from all hedges in respect of Laminaria sales were recorded under account 5003101 in the Ibis system. 177 Ms Rapinet explained that journal entries in the general ledger accounts are made by Woodside Energy's accounting staff on the basis of their knowledge of the transactions reflected in those entries or on the basis of information supplied by persons with the relevant knowledge. In the case of hedging transactions, the relevant information was provided by Treasury staff responsible for administering the hedge transactions. She exhibited to her second affidavit a printout showing entries recorded in the SUN system in account 6350H for the period December 1999 to March 2002. Another printout showed entries recorded in that system in account 6350SH for the period November 1999 to December 2001. A further printout showed entries recorded in the Ibis system in account 5003101 for the period April 2002 until June 2002. She described each of the exhibits as a printout of records kept by Woodside Energy in the ordinary course of its business, unlike the summary which she specifically prepared for the review of the PRRT objection. She agreed in cross-examination that the Ibis system records did not contain information about the month in which the hedges to which it referred were entered into nor information about the class of hedge or the period to which it related. She said that the SAP general ledger contained in the Ibis system reflected cash payments and cash receipts in respect of hedges. It recorded the time at which the relevant amount accrued in the accounts. 178 Ms Rapinet's summary table showed how each of the monthly entries in the two general ledger accounts had been derived. They were principally extracted from the Quantum system which separately recorded losses and gains for swap and option hedge transactions in respect of Laminaria as well as basis risk hedges. The amounts in the Quantum system were recorded in US dollars but had been converted to Australian dollars for the purpose of the table. 179 Ms Rapinet said that the losses and gains recorded in the Quantum system did not reconcile entirely with the amount shown in the general ledger. In examining the relevant journal entries she identified general ledger journals which related to transactions not included in the Quantum system. They were set out in two separate columns headed "Sundry" and "Futures Closeouts". She said in cross-examination that she had extracted the journals from archives. The futures closeouts all sat under 6350SH. Sundries came under 6350H. 180 Based on journal details the March 2001 Sundry amount of $32,863.92 related to a payment adjustment to Morgan Guarantee, a hedging counterparty. In October 2001, an amount of $34,509.62 related to an exchange adjustment on oil closeouts was posted in the general ledger. Amounts in the column headed "Futures Closeouts --- 6350SH" represented losses referable to cargo specific hedges recorded in the general ledger account maintained in relation to Laminaria. Ms Rapinet said that the table contained a reference to a figure of $71,416 in the 6350SH column for December 2001. That amount was initially posted (in debit to the expense) in October 2000 and subsequently reversed (in credit to the expense) in December 2001. A column headed "Laminaria Write-off" showed figures totalling $3,537,643 for the months January 2002 to April 2002 inclusive. Ms Rapinet explained that as Treasury Accountant she would review hedge transactions each month by reference to underlying exposures or sale exposures. The purpose of the review was to ensure that Woodside Energy was not over-hedging the underlying sales. If hedging exceeded underlying sales exposure then the hedging was considered ineffective to that extent. In her review in December 2001 she determined that for the months of January to April 2002 inclusive the total of the hedges exceeded sale exposure. A decision was taken to write off the profit or loss in the hedges so that they did not go into the general ledger account 6350H. The actual decision was evidently taken by Mr Williams, the manager of the Group accounting area who was responsible for the statutory accounting of the company. 181 Ms Rapinet's general ledger reconciliations recognised postings at journal dates. However the amount described in the objection as hedge expenses referable to the year ended 30 June 2001 excluded the initial posting in October 2000 and as such there was no need for a reversal in the following tax year. The amount of hedge expenses described in the objection for the end of the 2001 year was determined by taking the sum of $299,665,126, the amount listed in the general ledger for the 2000/2001 tax year and subtracting the sum of $71,416. The amount described in the objection as hedge expenses referable to the year ended 30 June 2002 was determined similarly. 182 I accept Ms Rapinet's evidence generally. Specifically, I accept the accuracy of the figures set out in her spreadsheet as reflecting hedge expenses for each of the relevant years. I also accept the breakdown of the totals for each of the relevant years into hedge classes and the entries relating to them under the headings "Sundry" and "Futures Closeouts". I accept her description of her practice of reviewing hedge transactions monthly by reference to underlying exposures and treating as ineffective hedges which exceeded those underlying exposures. By a letter dated 7 October 2005 he was requested by the solicitors for Woodside Energy to provide his expert opinion in relation to a dispute concerning the appropriate treatment of hedge expenses under the PRRTAA. He produced a report, responsive to a number of questions put to him by the solicitors. The report was exhibited to his affidavit of 28 March 2006. Professor Garnaut's evidence was the subject of a ruling as to admissibility in an interlocutory decision published on 4 October 2006: Woodside Energy Ltd v Commissioner of Taxation (2006)155 FCR 357. Under the terms of that ruling it was received subject to relevance. 184 Professor Garnaut served as Principal Economic Advisor to the Prime Minister, Mr RJL Hawke, from 1983 to 1985. From 1985 to 1988 he was Australian Ambassador to the People's Republic of China. He did not occupy any economic advisory role with respect to government when the PRRTAA was enacted in 1987. It appears also that he had no part in the preparation of drafting instructions in relation to the legislation. 185 The questions posed for consideration by Professor Garnaut began by asking for an 'economic perspective' on what is conveyed by the description of a tax as a 'resource rent tax'. He was asked to identify 'from an economic perspective' the features and objectives of such a tax distinguishing it from royalty or excise regimes. He was asked about the relationship between the term 'economic rent' and the profit of a particular resource project in respect of which RRT is payable. Against the background of those questions there were then five specific questions put relating to the hedging losses claimed by Woodside Energy. On the assumption that PRRT is intended to be a tax on "economic rent", would an economist make allowance for amounts received and expenses incurred on the hedging activities undertaken by Woodside in relation to the Laminaria project (as described in the Woodside affidavits) in measuring the amount upon which PRRT is to be levied in relation to the Laminaria project? 6. Would an economist regard the expenses incurred by Woodside in relation to the hedging transactions described in the Woodside affidavits as expenses payable in relation to the sale of petroleum produced from the Laminaria project? 7. Is there any reason why an economist would treat hedging expenses differently from interest paid in respect of monies borrowed for the purposes of assessing economic rent or the amount upon which to levy PRRT? 8. In your opinion, can the hedge expenses incurred by Woodside in relation to the Laminaria project (as described in the Woodside affidavits) be described from an economic point of view as marginal costs associated with the Laminaria project? You should explain what is meant by the description of a cost as a "marginal cost". 9. If one failed to take into account the hedge expenses incurred by Woodside in relation to the Laminaria project (as described in the Woodside affidavits) in measuring the economic rent or the amount upon which to levy PRRT, what would be the consequences of such a failure in terms of meeting or failing to meet the objectives of a resource rent tax? ' He attached to his statement a paper published in The Economic Journal of June 1975 entitled "Uncertainty, Risk Aversion and the Taxing of Natural Resource Projects". He and Professor Clunies Ross also jointly wrote a book on the topic entitled Taxation of Mineral Rents published by Clarendon Press in Oxford in 1983. 187 The substantive part of the statement began with an explanation of the concept of "mineral rent" in a mining or petroleum project. This term was defined as the excess of total revenue derived from the project over the sum of the supply prices of all capital, labour and other "sacrificial" inputs necessary to undertake it. By sacrificial inputs Professor Garnaut meant inputs that have value in alternative uses and whose allocation to the mining project involves an opportunity cost of not applying them to those alternative uses. He then described an "RRT" as a tax imposed on a mineral rent and not the inputs necessary to generate it. Such a tax is applied to economic rent because if appropriately designed and applied it will be economically "neutral". That is to say, it will not cause decisions to apply labour, capital and other resources to the project that differ in any way from the decisions that would be taken in the absence of taxation. He described the aim of the RRT as the generation of revenue "without distorting business decisions on the amount or composition of investment or production". 188 Professor Garnaut went on to say that the RRT is assessed only on the revenue earned in the mineral project that exceeds the total cost of all the inputs essential to production, including the supply price of investments. He compared this system with the royalty which is typically applied to volume or value of production whether or not the project in question is generating revenues in excess of the amount required to cover in full the supply prices of all inputs into production. An RRT does not place a burden on the extraction of minerals or petroleum from parts of the ore body or petroleum field where the extraction costs absorb the whole or nearly the whole of the value of production from that part of the resource. A royalty on the other hand will place some burden on such high cost production even if the costs are nearly equal to the value of production. An RRT will therefore not deter investment in resource deposits which are expected to yield only a small surplus above the costs of all inputs into production. A royalty will deter such investment. An excise, like a royalty, is applied to the value or volume of production. 189 Professor Garnaut described the economic rationale for applying RRTs rather than conventional royalties or excises. The RRT would support the development of all resource deposits for which the expected economic benefit of development would exceed the economic costs of development. An RRT will support the generation of the maximum amount of economic value that can be generated from mineral resources. He discussed "economic rent" which he called "the economist's concept of profit". He contrasted it with accounting profit or taxable income which are approximations of "pure profit". They are constrained by conventions and legal definitions that have emerged from the practical application of the idea of "profit" over time. He then set out various consequences of applying an RRT, including the immediate deductibility of expenditures on the project and the deduction from income of the full opportunity costs of all capital provided to the project. 190 In brief oral evidence-in-chief Professor Garnaut said, by way of clarification of terms, that he used the term "mineral or resource rent" as a particular application of the concept of economic rent in the minerals industry. Revenue for resource rent tax should be defined to include any losses or gains from forward contracts or hedging contracts that are part of the sales process. It is irrelevant conceptually whether the hedging process leads to higher or lower prices than, in the event, would have been achieved from spot market sales. They are used to offset the risks in a market for a tangible commodity. The market for the instrument and the market for the tangible commodity are different markets. 193 It was put to Professor Garnaut that when an investment in hedging instruments "goes sour" it has the potential of depressing net cash receipts from a project. He did not accept the appropriateness of the term "going sour". If it makes a loss on the financial instrument, it will be making a corresponding increased gain on the commodity. And it will still get the price that it expected to get. So, it is not going sour. It is the hedge of the commodity sale working. At the same time, an economist would regard any profits generated from such hedging transactions to be part of the revenues from sales. The one doubtful set of transactions relates to the hedges put in place as part of the preparation for the Highlander project and then transferred to the Laminaria project. Here an economist would seek to apply the principles defined in 5(v) above to the facts of the Highlander-Laminaria transactions. On my reading of the facts, at least part of the expenses incurred by Woodside in relation to the Highlander-Laminaria hedging transactions would be expenses payable in relation to sales from the Laminaria project. The hedging transactions were effected by reference to projected production and sales. If as part of the sale of oil the company was entering into a hedging arrangement to in effect create a forward sale at a definite price for that oil, then it would seem to fall within the requirements of net assessable receipts for resource rent tax. If on the other hand the company was engaging in hedging transactions that were not related to the sale of the commodity, then that would create different circumstances that would require its exclusion and so everything comes back to a question of fact. Hedging transactions that were not part of the sale process should not be included in net assessable receipts for RRT purposes. He accepted also that the position was less clear where a company did not hedge against a project but hedged at a corporate level. He said he had very clearly in mind the practice of some companies to hedge independently of the specific price risk of particular parts of their production. 196 The question of the distinction between hedging transactions related to sales and transactions not so related was revisited in re-examination. Professor Garnaut said the exception he had in mind was the Highlander transaction. Asked whether he was conscious, in making his comments, about the distinction between strategic hedging and cargo specific hedging arrangements he said he was aware those terms were sometimes used but would not say that they were germane to the issues upon which he was commenting. The question whether the hedging was part of the sales process or not was a question of characterisation. By that he meant characterisation from an economic point of view. 197 As to the comparison between hedging losses and deductions of interest related to investment in the project, Professor Garnaut said that the losses or gains from hedging against the risk that prices at the time of sale will fall below the prices available in current forward markets is one of the things determining net revenue from sales. He spoke of resulting distortions to investment and production in the resource industries which would be antithetical to the objectives of the RRT. 199 Professor Garnaut agreed with the proposition that he regarded hedge expenses as deductible in calculation of a RRT because without deducting them from receipts a true profit could not be calculated. And selling the gold forward is conceptually simply related to the resource rent tax. And I am saying the use of derivative instruments to create that same result is relatively straight forward. His published works had drawn a distinction between profit as defined for the purposes of corporate income tax and the economic concept of economic rent. He regarded true profit as the surplus of revenue after the deduction of the true costs of all inputs into production. 201 I accept Professor Garnaut's evidence as an account of his model of a tax on economic rent in a particular application to profits from resource projects. I accept that consistently with that model hedging transactions would be regarded as indistinguishable in economic terms from forward sales. I accept that a tax on project profits giving effect to that model and consistently with its underlying theory, would include profit net of hedging expenses which could properly be said to be related to sales giving rise to that profit . The assumption upon which his evidence was based was that the PRRT is intended to be a tax on "economic rent". That is a very broadly stated assumption which is capable of encompassing a range of statutes which might differ in detail. In the context of this case, the assumption appears to be that the PRRT was intended to be a tax on economic rent applying the model proposed by Professor Garnaut in his writings on the topic dating back to 1975. 203 An assumption that legislation which uses economic terms or concepts related to a particular economic theory or model, thereby applies the theory or model, whether it be for the purpose of regulation or tax collection, is an assumption which requires close scrutiny. Particular statutes may be based upon or inspired by economic theories or models. Their precise terms, however, may reflect policy choices or political compromises inconsistent with a complete acceptance or application of the theory or model concerned. Counsel for Woodside Energy properly accepted in closing argument that the exposition given by Professor Garnaut of a tax on economic rent could encompass a wide variety of statutory models and that the political process did not always produce models of intellectual coherence. 204 Debates about the application and purpose of s 46 of the Trade Practices Act 1974 (Cth) concerning abuse of market power, illustrate the point. On one view the proper purpose of s 46 as enacted was to protect competition rather than competitors: Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13 ; (2001) 205 CLR 1 at 13; Boral Besser Masonry Ltd v Australian Competition and Consumer Commission [2003] HCA 5 ; (2003) 215 CLR 374. Nevertheless the section has been subject to amendment designed to protect the interests of small business rather than the competitive process. The High Court has observed that statutes sometimes embody responses to "shifting and contradictory positions" taken by a range of interest holders in legislative outcomes and expressing "an inarticulate (or at least not publicly disclosed) compromise": Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at [32]. There is nothing to suggest that taxing Acts have higher standards of logical and normative consistency than any other class of statute. That fact is not, however, a reliable guide to its construction. The construction of the Act must, as always, begin with the ordinary meaning of the words taken in their context and having regard to the apparent statutory objectives. The relevant context in this case includes particular provisions of the Act relating to assessable receipts and deductible expenditure. 206 In my opinion, and with no disrespect to an economist of high reputation, the evidence of Professor Garnaut, which was admitted subject to relevance, has limited utility in these proceedings. It establishes that expenses associated with hedging transactions related to sales may, consistently with the concept of a tax on profit able to be regarded as a species of economic rent, be taken into account in the calculation of that profit. His evidence would therefore support a proposition that hedging expenses may be expenses payable in relation to the sale of petroleum if the proper construction of s 24 of the PRRTAA is capable of accommodating such expenses. The prior question however is, what is the proper construction of the section. To answer it is a task which, in my opinion, cannot be assisted by reference to Professor Garnaut's evidence. 207 There is insufficient evidence in the extrinsic materials to suggest that the terms of the PRRTAA were drafted to give effect to Professor Garnaut's model. Had there been an explicit statement in the Second Reading Speech that the legislation was designed to give effect to that model and its underlying theory, then what Professor Garnaut had said about the model and the theory might have had a bearing upon the construction of the statute. On the evidence, however, the connection between the economic rent model which he proposed in 1975 and the language of the statute is insufficient to allow his evidence to be a reliable guide to, or influence upon, its construction. His evidence, like that of Professor Garnaut, was admitted, pursuant to the ruling made on 4 October 2006, subject to relevance. The solicitors for Woodside Energy posed three questions for his opinion in a letter dated 7 October 2005. From an accounting perspective, if one was to calculate the "profit" of a particular resource project such as the Laminaria project, how would that profit be calculated and in particular, would an accountant make allowance for amounts received and expenses incurred on the hedging activities undertaken by Woodside in relation to the Laminaria project (as described in the Woodside affidavits) in measuring the "profit" generated by the Laminaria project? Would an accountant regard the hedge expenses incurred by Woodside in relation to the Laminaria project (as described in the Woodside affidavits) as expenses payable in relation to the sale of petroleum from the Laminaria project, or are the expenses amounts which ought for accounting purposes to be dealt with upon some other basis (and if so, on what basis)? Are there any circumstances in which an accountant would not regard amounts received and expenses incurred in relation to commodity hedges entered into by a commodity producer as expenses incurred in relation to the sale of the commodity being produced? If so, from an accounting perspective, what are the significant features of the hedging activities undertaken by Woodside (as described in the Woodside affidavits) which cause them, in your opinion, to be regarded as expenses payable in relation to the sale of petroleum from the Laminaria project or as expenses which are not payable in relation to the sale of petroleum from the Laminaria project, as the case may be? He set out a list of assumptions which he had made for the purposes of preparing his report and which it is not necessary to reproduce here. 209 In answering the first question, Professor Walker distinguished between the profit of an entity and the contribution to an entity's profit derived from a particular project or undertaking. He noted that profit calculations may differ between those adopted for Woodside Energy as an individual entity and those adopted for the Woodside Petroleum Group as a consolidated entity. He referred to a relevant accounting standard, AASB 1006, entitled "Interests in Joint Venture". An alternative description is that accountants would look at the overall commercial effect of a series of linked or associated transactions. Hence the practices known as 'hedge accounting' involve having regard to the overall 'substance' of several transactions (rather than the 'form' of individual transactions --- here, a hedging deal and contracts for the sale of petroleum products). He noted that Australian accounting standards did not address the accounting treatment of hedging transactions until the issue of AASB 1012 "Foreign Currency Translation" (2000). He discussed AASB 1012 which, as its title suggested, focused upon foreign currency transactions although it also referred to transactions involving financial instruments which incorporate foreign currencies. He referred to the extension of the approach to hedge accounting outlined in AASB 1012 to other types of transactions in two statements issued by the accounting professions Urgent Issues Group (UIG), namely UIG Abstract 32 and UIG Abstract 33 "Hedges of Anticipated Purchases and Sales" (May 2000). He pointed out that UIG 33 sets out the conditions under which transactions entered into to hedge anticipated purchases or sales are to be recorded using 'hedge accounting'. For accounting purposes the gains or losses on hedges would be added to, or deducted from, those sales revenues for reporting purposes. They would certainly be regarded as attributable to the sale of petroleum products in the period sales are made. 211 Professor Walker was cross-examined about UIG33. He agreed that it specified criteria to be satisfied before transactions entered into to hedge anticipated purchases or sales could be accounted for as hedges of those purchases or sales. He rejected the proposition that to be accounted for in relation to a sale the hedging instrument must be specifically identified along with the anticipated sale or purchase to which it relates. He regarded UIG33 as referring globally to anticipated purchases or sales, rather than to specific transactions. He accepted, however, that there must be sufficient specificity so that the relevant sales could be identified. 213 Professor Walker made the point that the identification of a hedged anticipated purchase or sale might refer to transactions over a particular period such as a quarter or a period of four months. He accepted that it was not sufficient to identify hedges as a percentage of projected sales over a forthcoming period. Provided the volumes and period of production were indicated in the documentation of the hedge approval that would be sufficient. Merely recording that 75% of anticipated sales in the next six month period would be hedged would not be adequate. That would not quantify the value of the expected sales. He rejected the proposition that it was necessary to match up particular sales with particular hedges. 214 Asked about the status of the UIG document, Professor Walker said it was not of itself an accounting standard. Indeed UIG33 had probably been overtaken by the release of AAS139 which was not in force at the relevant time. There was evidently no relevant standard in existence between 1986 and 2000. He said there were some accounting standards issued by the Financial Accounting Standards Board on hedge accounting which he had not looked at in relation to commodities. 215 In answer to the second question, Professor Walker said that if Woodside Energy were a reporting entity obliged to prepare 'segment reports' in terms of AASB 1005, then the Laminaria hedge expenses would properly be regarded as expenses incurred in relation to the sale of petroleum products from its petroleum business, or expenses incurred in relation to the sale of petroleum products in a geographic area. As Woodside Petroleum Group is a reporting entity, the hedge expenses would properly be regarded as expenses incurred in its petroleum business. If they arose from speculative dealings they would not be attributed to the petroleum business. He went on at some length to explain these propositions. He maintained that the distinction was artificial from an economic or commercial perspective. He explained that proposition. He concluded by acknowledging that the interpretation of whether hedging expenses were incurred or payable in connection with the sale of petroleum products, is a matter for the Court to determine. Nevertheless he expressed his opinion that in a commercial context both cargo insurance expenses and hedging expenses are expenses incurred to mitigate risks from the sale of petroleum products. It would be anomalous if expenditure on cargo insurance were recognised as an expense incurred in relation to the sale of such products, while hedge expenses were not. 218 I accept Professor Walker's evidence so far as it describes accounting practice and the way in which an accountant might treat hedging expenses. Like the evidence of Professor Garnaut however, his evidence does not affect the proper construction of the PRRTAA. Rather, in the event that, on its proper construction the Act is capable of accommodating hedging expenses in the calculation of profit then his testimony may be relevant to determining whether, in the circumstances of this case, such expenses should be taken into account in that calculation. Mr Miller has a BsC in Metallurgy from Strathclyde University, Glasgow and an MBA from London Business School. He is a Certified Member of the Finance and Treasurers Association and a Fellow of the Australian Institute of Energy. He has 20 years experience in the international oil and gas industry in which he has mainly been concerned with supply trading and financial risk management. He spent 12 years in a variety of roles at British Petroleum, including 9 years in commodity trading and operational risk management. In 1997 he joined PricewaterhouseCoopers where he was concerned primarily with the area of corporate treasury. He is based in Perth and provides financial risk management advice to commodity traders and corporate treasurers. 220 He has had previously dealings with Woodside Energy. In 2001 he was part of a PricewaterhouseCoopers' team engaged by Woodside Energy to advise in relation to its hedging activities. He has been a director of Basis Risk from 1998 until the present day. 221 Mr Miller was asked by the solicitors for Woodside Energy to provide his expert opinion in relation to three questions. The following outline of his evidence is taken from an executive summary contained in his report to those solicitors. 222 The first question asked about the ways in which a commodity producer, including a producer of crude oil such as Woodside Energy, could protect or insure against future adverse movements in commodity prices. On the other hand ETDs and OTCs are popular and practical techniques for oil producers to protect against adverse price movements. The choice between ETD and OTC hedge contracts involves a balance between lower credit risk and the higher liquidity of ETDs on the one hand and the greater flexibility, convenience and custom fit of OTCs on the other. Mr Miller said that the incorporation of price risk management in strategic decisions is an important tool at the initial investment stage. It is not a practical tool for managing commodity price risk on an ongoing basis mainly because these are one off decisions that cannot easily be reversed. 224 The second question he was asked was about the practical options available between 1996 and 2002 to protect or insure against adverse movements in the price of crude oil of the type produced by the Laminaria Project. Mr Miller reiterated his answer to the first question, namely that the most practical options for oil producers were to hedge with either ETD or OTC contracts. Between 1996 and 2002 producers who wished to hedge up to two or three years into the future were limited to ETD or OTC contracts based on the WTI benchmark. The most common WTI hedge contracts were OTC contracts known as WTI swaps and WTI collars or ETD contracts known as WTI futures. Option strategies known as "collars" were also a popular form of OTC contract used by producers at that time. Collars would allow the producer to maintain some upside against a rise in the price of oil, while setting a minimum level for the price of crude and minimising the working capital requirements. Mr Miller said that the Tapis swap market was a viable alternative to WTI for hedging exposures of less than 12 months into the future. Producers seeking to hedge very large volumes might have found, however, that there was insufficient depth and liquidity to effectively hedge even up to 12 months forward. The decision for the producer in that case would be a trade-off between the greater depth and liquidity of WTI futures and swaps market against the lower basis risk of the local Tapis swaps market. Finally, producers could use Asian product swaps contracts to hedge netback contracts. Again, this was a trade-off between the low basis risk of the Asian swaps against the high liquidity of WTI. 225 The third question asked Mr Miller about the differences, from a practical risk management perspective, of the various methods of risk management referred to in his response to the first question. His opinion was that hedging with ETDs and OTCs were the most practical methods of protecting or ensuring against commodity price risk. . The separation of these activities facilitates clear accountability and transparent reporting. . Vertical integration was one form of diversification but there were others. 227 Mr Miller also agreed in cross-examination that he had prepared a report entitled "Review of Financial Risk Management Philosophy" which formed part of a set of papers submitted by Mr Carroll to the Finance Committee on 9 October 2001. The PRRTA imposes tax "... in respect of the taxable profit of a person of a year of tax in relation to a petroleum project". The rate of tax imposed is 40% (s 5). Part V deals with "Liability to Taxation". It refers to total receipts of specified kinds whether of a capital or revenue nature. 232 The term relevant for present purposes is "assessable petroleum receipts". It relates to marketable petroleum commodities which become excluded commodities otherwise than by virtue of being sold, treated, processed or moved. 233 Division 3 of Pt V deals with "Deductible expenditure". On 27 June 1984 the then treasurer, the Hon PJ Keating and the Minister for Resources and Energy, Senator Walsh, published a joint press release entitled "Resource Rent Tax on "Greenfields" Offshore Petroleum Projects". They stated in the introduction to the statement that the intention to enact an RRT in respect of mineral based activities had been part of the policy platform of the Australian Labor Party since 1977. It stated the Government's belief that an RRT regime related to achieved profits would be the most efficient mechanism for deriving for the community an appropriate share of the large returns that can be associated with the development of particularly rich mineral deposits. Secondary taxing regimes such as excises and royalties were often based on production and could discourage the commencement of marginal projects and bring about the early termination of others. 237 The statement set out the salient features of the proposed RRT. It was intended, at that time, that the regime would apply with effect from 1 July 1984 in offshore areas where the Commonwealth's Petroleum (Submerged Lands) Act 1967 applied other than in specified areas which would continue to be subject to excise and royalty arrangements. The RRT would apply in respect of income from the recovery of all petroleum, including crude oil, condensate, natural gas, LPG and ethane. The tax base of the proposed tax was described as "profits which exceed the specified threshold level". Profitability would be determined by reference to "actual expenditures". 238 The RRT would be assessed on a project basis. The basic principles for determination of a project for the RRT would be that the project would represent an integrated investment and could include a number of proximate fields. The boundaries of an integrated investment would comprise a production licence area and treatment and other facilities and operations outside that area integral to the production of a "marketable" petroleum product. 239 The scope of project expenditure and income to be taken into account would encompass certain infrastructure where this was integral to the production of a "marketable product" including social infrastructure provided principally for employees of the project and their dependents and office buildings situated at or proximate to the site of the operations. Expenses not directly related to the project would be excluded. Where an entity had diverse interests only one of which was a project assessable for RRT, only those costs incurred at its head office solely attributable to the RRT project would be deductible for RRT purposes. 240 An attachment to the press statement gave additional detail in relation to the treatment for RRT purposes of certain receipts and expenditure items. Capital and current expenditures directly related to a project assessable for RRT purposes would be deductible in the year of payment. These related to physical infrastructure including production platforms, drilling plant and equipment, pipelines and other facilities, plant for use in treatment processes, land and buildings dedicated to the project and expenditure on providing water, light, power, access and communication facilities. They also covered insurance premiums on building and plant, licence fees and like costs related to obtaining a production licence and the cost of feasibility studies and environmental impact studies related to the project. Depreciation charges and income tax would also be non-deductible. 243 The major features of the proposed Act were also set out in an address by Senator Walsh to the Economics Society of Australia on 15 August 1984. In that address, Senator Walsh acknowledged that academic debate in Australia on the concept and feasibility of rent taxation was initiated by the 1975 article in The Economic Journal by Garnaut and Clunies Ross. In the Second Reading Speech in the House of Representatives on 28 November 1986: Parl Deb H of R 28/11/1986 3942-3944, the Minister described the Bill as the first in a package of four to give effect to the Government's decision to introduce a petroleum resource rent tax on profits from certain offshore petroleum projects. This compounding of expenditure that remains undeducted at the end of a financial year will be determined according to when it was expended. Any excess of deductible expenditure, other than closing-down expenditure, over assessable receipts at the end of a year will be compounded forward for deduction against receipts in future years. He listed exploration expenditure, general project expenditure and closing-down expenditure, subject to the exclusion of specific items. He discussed the elements of exploration expenditure. It includes relevant expenditure on storage and processing facilities and employee amenities. 247 Debate on the Bill resumed on 23 March 1987. The Bill was passed by the House of Representatives and was before the Senate when Parliament was dissolved for the 1987 Federal election. 248 Significantly the Bill was amended on the motion of the Treasurer on 25 March 1987. Prior to the amendment paragraphs (a) and (b) of the proposed s 24, defining "assessable petroleum receipts", ended with the words "the consideration received by the person for the sale". After the amendment each paragraph ended with the words "the consideration received, less any expenses payable, by the person in relation to the sale". 249 The only deductions in the Bill as first presented to the Parliament were those set out in Div 3. Government received submissions on that matter from the petroleum industry. Letters were tendered from BHP Petroleum and the Australian Petroleum Exploration Association Ltd (APEA) to the Federal Government in February 1987 which asked that the Bill be amended to allow deductions for costs incurred in selling marketable petroleum products post production. However, prior to the assessable receipts being received from the sale of the product, other costs, such as those mentioned above, depending on the term of sale, may be incurred. Under the general application of petroleum resource rent tax in the Explanatory Memorandum, it is stated the tax is to apply to profits from the recovery of petroleum. As the tax is a profit based tax, certain expenditures incurred after the production of a marketable commodity which relate directly to the receipt from the sale of the product should be deductible. It recommended acceptance of the submissions and amendment of the Draft Bill. In their submissions, APEA and BHP are concerned to ensure that assessable petroleum receipts will be net of costs such as marketing fees, freight and demurrage. It was intended that costs in the nature of those outlined above and directly related to obtaining assessable petroleum receipts would be taken into account in arriving at the amount of the assessable receipt. However, in certain cases where a marketable petroleum commodity is sold at its point of production, the legislation in its present form would not provide deductibility of such costs. 20. OPC agrees that an amendment of the Bill is necessary to ensure that the costs in question are deductible and amendment is recommended. The issues raised by BHPP and APEA under this heading follow on form those discussed under the immediately previous heading. Deductions are sought for the cost of storage facilities and for other costs associated with selling a marketable petroleum commodity. Costs associated with initial storage at the site of production of the marketable petroleum commodity should qualify for deduction. Similarly, costs involved in effecting the sale of a marketable petroleum commodity should be deductible against assessable receipts. OPC is of the opinion that amendments, which are recommended , are necessary to achieve these results. The Bill presently brings to account the value of a marketable petroleum commodity when it passes the point at which it is produced. In addition, expenditure incurred on on-site storage facilities and in selling a marketable petroleum commodity is to qualify for deductibility. I marked them at the time, "MFI "D", "C" and "E"" respectively. In my opinion, they are relevant to the construction of s 24(a) and (b) as explaining the amendment to the Bill which led to the present form of those paragraphs. They are materials not forming part of the Act which bear upon the purpose of the words "expenses payable ... in relation to the sale" which are otherwise ambiguous as to the range of connections to which they apply. The materials should be received in evidence. They will be marked as exhibits "27", "28" and "29" respectively. Parl Deb, H of R, 25/3/1987 p 1521. The Second Reading Speech was largely identical to the Second Reading Speech for the 1986 Bill. The Bill passed the House of Representatives and was agreed to by the Senate on 15 December 1987. The Explanatory Memorandum for the four 1987 Bills described the general application of petroleum resource rent tax. expenditure for the year in closing down the project. ... Deductible expenditure is of 3 types --- exploration expenditure, general project expenditure and closing-down expenditure. These included interest payments, dividend payments and other classes of payments set out in the Bill itself. Paragraph 24(a) includes as an assessable petroleum receipt consideration receivable, less any expenses payable, in relation to the sale of processed or unprocessed petroleum (or a constituent of petroleum) before the production from it of any marketable petroleum commodity (as defined in clause 2). Expenses payable in relation to the sale would include, for example, freight charges, marketing costs and demurrage. A number of amendments were made in 1991 by the Petroleum Resource Rent Legislation Amendment Act 1991 No 80 of 1991 and the Taxation Laws Amendment Act (No 3) 1991 No 216 of 1991. The evidence of the Woodside Energy witnesses is accepted in that regard. It is desirable, however, to identify certain important factual conclusions which emerge from the evidence. The commercial viability of the Laminaria Project as assessed by the Woodside Group in 1997 did not depend upon the existence or non-existence of hedging arrangements. 2. The decision of the board of Woodside Petroleum to proceed with the Laminaria Project did not depend upon, and was not in terms conditioned upon, the application of hedging arrangements in relation to sales of oil from the project. 3. At all material times crude oil cargoes in the world market for crude oil were sold by reference to volatile pricing bases. 4. Crude oil produced by the Laminaria Project, save for oil sold under the SIETCO contract, was sold by reference to a benchmark guide usually WTI or Tapis. The price for SIETCO oil was based upon GPW, which was related to prices for refined petroleum products in Singapore. 5. At all material times from 1996 Woodside Petroleum and the Woodside Group had in place a risk management policy involving the use of hedging transactions to minimise risks associated with fluctuations in oil prices, interest rates and foreign exchange rates. 6. The Woodside hedging expressly prohibited the use of hedging for speculative purposes. The hedging the subject of these proceedings was not undertaken for speculative purposes. 7. The stated and actual purpose at all times of oil price risk management was to limit the potential for financial loss arising from unfavourable movements in oil prices affecting returns from sales of crude oil products sold by Woodside Energy. 8. A specific hedging policy was developed with respect to the Laminaria Project. Its purpose was to provide certainty in cashflow by locking in oil revenue against an anticipated drop in oil prices generated by the significant availability of oil produced from the Project itself in the early years of its operation. 9. It was a purpose of the Laminaria hedging policy to lock in oil prices received by Woodside Energy above the project economic assumption of US$18.50 in order to assure the availability of revenue flows so that the Woodside Group could exploit opportunities in the future including acquisitions of further assets. 10. The approach to hedging in respect of Laminaria oil reflected a shift from a purely defensive or risk minimisation hedging. 11. In the relevant period the Woodside Group adopted an approach to hedging designated "active management" which involved placing or lifting hedges within policy guidelines but at times most opportune for the greatest return or smallest loss. This involved an element of risk leverage which was not precluded by the overall objective of risk mitigation. It included strategic position taking and tactical trading. 12. 13. All of the revenue from the Laminaria Project was earned by Woodside Energy. All of the hedge expenses, the subject of these proceedings, were born by Woodside Energy. 15. Payments and receipts upon the settlement of hedging transactions were recorded in the accounts of Woodside Energy and not in the books of Woodside Petroleum. 16. Woodside Energy's only use of the oil produced from Laminaria was to sell it. It had a limited capacity to store oil for a week or so on the FPSO. 17. Each of the Laminaria joint venturers was required to lift its share of oil production under a lifting agreement between them. 18. There was a close correlation between production forecasts and expected sales of oil for the project. 19. anticipated sales in relation to cargo specific hedging. 20. Subject to the particular case of the Highlander transaction, strategic, cargo and basis risk hedges were placed and lifted by reference to anticipated sales of Laminaria oil primarily to mitigate risk associated with price movements in the global crude oil market. 21. Consistently with the preceding purpose, the Woodside Group staff with responsibility for hedging transactions endeavoured to place and lift hedges at the most opportune time. However the term "taxable profit" takes its meaning from s 22 of the PRRTAA. 263 The statutory purpose stated in the long title of the PRRTA, which may be taken as a reference to the statutory purpose of the PRRTAA, is the imposition of tax "in respect of" the profits of petroleum projects. The purpose is not to impose a tax on profits. The words "in respect of" leave open the question how tax is to be calculated. They leave room for a concept of "taxable profit" which, while narrower than "profit", is a function of it. However the receipts and expenditures relevant to the calculation of taxable profit are not left to be determined by reference to the ordinary meaning of receipt and expenditure, but by reference to definitions in the Act. So "taxable profit" is assessable receipts less deductible expenditure (omitting for simplicity the reference to transferred amounts under ss 45A and 45B). 265 The classes of receipts which comprise assessable receipts are set out in s 23. The only class relevant for present purposes are those referred to as "assessable petroleum receipts". The use of the term "receipts" in ss 22 and 23 is not suggestive of net payments calculated after some deduction. That is consistent with the structure of the Bill as it existed prior to the amendment to what was then cl 24 of the Petroleum Resource Rent Tax Assessment Bill on 25 March 1987. 266 The receipts from marketable petroleum commodities which have been sold comprise "the consideration receivable, less any expenses payable, by the person in relation to the sale". Consideration in this context may be taken to refer to payment received in return for the delivery of the commodity pursuant to the sale in question. It is not a net concept. It cannot sensibly be construed as a sum calculated by reference to hedging losses. It is the payment received for sale of the relevant commodity. The assessable petroleum receipts, for the purposes of s 24(b) comprised payment for a particular sale less expenses payable in relation to that sale. The language of the section suggests a close connection between the expense and the sale transaction. Such a connection may have functional and temporal aspects. While the word "direct" does not appear in the section to qualify the relationship between expenses and sale, the language of the section, in my opinion, suggests such a limitation. 267 So much emerges from the terms of s 24(a) and (b) themselves. There is, however, a powerful contextual consideration which also militates against a wide construction of the connection between sales and the expenses which may be deducted from their proceeds in determining assessable petroleum receipts. The governing principle underlying the definition of taxable profit in s 22 is that it be calculated by subtracting deductible expenditure from assessable receipts. That principle is compromised by providing for the calculation of assessable petroleum receipts net of expenses payable in relation to sales. Division 3 sets out in some detail the classes of deductible expenditure to be brought to account in determining taxable profit by subtraction from assessable petroleum receipts. The wider the range of outgoings and their connection to sales that can be accommodated by s 24 the less work Div 3 has to do and the less coherent the scheme of the Act becomes. Division 3 picks up a range of exploration and general project expenditures as well as the so-called GDP (gross domestic product) factor expenditure which in various ways form part of the deductible expenditures brought to account in assessing taxable profit. A narrow definition of the expenses relating to sales referred to in s 24(a) and (b) is therefore supported by the principle informing the calculation of taxable profit as disclosed by the scheme of the Act. 268 In my opinion therefore the expenses contemplated by s 24(a) and (b) are outgoings incurred in connection with the actual sale process, that is to say, the formation of the relevant contract, delivery of the commodity and receipt of payment for it. Such a construction picks up the kinds of outgoings mentioned in the Explanatory Memorandum which referred to "... freight, insurance and demurrage in relation to the sale of a marketable petroleum commodity". It does not extend to expenses incurred in relation to hedging contracts. Although such contracts reduce the risk to which the company is exposed by reference to oil price fluctuations, they are contracts in relation to different products and in a different market. As Mr Carroll accepted in his evidence, the timing of the entry by Woodside Energy into a sale contract was not dependent in any way upon the pre-existence of a hedge contract. While there was a good correlation between the production forecasts on which strategic hedges were based, the strategic hedges were placed well in advance of any particular contracts or deliveries. They were not functionally related to particular sales of marketable petroleum commodities. Such sales and deliveries pursuant to them are able to be affected independent of the existence of any hedging contracts. In so saying I allow that a functional connection may include expenses which are commercially necessary even if not required by the terms and conditions of any contract of sale. Insurance expenses in relation to a particular sale might fall into that category. 269 Hedging transactions were part of an overarching corporate plan to minimise the risk associated with oil price fluctuations. They had the related objectives of securing stable cashflow to the company. But however closely they are related, temporally and in terms of the extent of cover provided, to a particular sale, the expenses incurred in relation to them were not, in my opinion, payable in relation to the sale within the meaning of s 24(b). Moreover, they are strictly speaking costs incurred outside the framework of the project which is the focus of the RRT. They operate with respect to commodities other than those produced by the project and in different markets. 270 As I said in the interlocutory decision in Woodside Energy [2006] FCA 1303 ; 155 FCR 357 at 374, the words "in relation to" and similar terms such as "in respect of" or "in connection with" or just "in" have been considered in many cases and many contexts. All of them indicate a necessary connection between two subject matters which may be activities, events, persons or things. The nature and closeness or remoteness of the connection sufficient to answer the statutory description depends upon its context. The term "in respect of" was said to "[gather] meaning from the context in which it appears ...": Workers' Compensation Board (Qld) v Technical Products Pty Ltd [1988] HCA 49 ; (1988) 165 CLR 642 at 653-4 per Deane, Dawson and Toohey JJ. The term "in relation to" has been called a "prepositional phrase" which is "indefinite" and which "subject to any contrary indication derived from its context or drafting history ... requires no more than a relationship whether direct or indirect between two subject matters": O'Grady v Northern Queensland Co Ltd [1990] HCA 16 ; (1990) 169 CLR 356 at 376 (McHugh J). As the present case illustrates the extent of the relationship required depends upon the context in which the words are used. See also Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549 ; (2001) 114 FCR 472 at 482. Context and purpose are everything in the construction of such indefinite phrases as "in relation to". The citation of authorities, a number of which were canvassed in argument, is of limited assistance where they relate to different statutory settings. The case was concerned with whether a proposed acquisition of an interest in an electricity base load generator by an electricity retailer would have, or be likely to have, the effect of substantially lessening competition in a market in Australia. The question of the relationship between derivative contracts and sale of the relevant commodity which, in that case was electricity, was relevant to the question whether there were separate markets to be considered, one for the purchase and sale of derivatives and the other for the sale of electricity. The observation which was quoted from the judgment in that case reflects what Professor Garnaut had to say about the way in which an economist would regard hedging expenses in relation to sales. For the reasons which I have already outlined in discussing his evidence, that kind of equation does not assist in the construction of s 24(a) and (b). 272 Echo Bay Mines Ltd v R [1992] 3 CF 707, a Canadian Trial Court decision, was cited but was of little assistance. It was a case concerned with the calculation of income tax. The Court there held that the price received by the taxpayer for the silver it produced was the sum of receipts from delivery of actual production and from settlement of forward sales contracts. The judge applied observations made in the Supreme Court of Canada in Atlantic Sugar Refineries v Minister of National Revenue [1949] CTC 196, another income tax case concerned with whether profits on sugar futures formed part of income. Where, as in the present case, the trader elects to close out his short sales and take a profit, this is, in my opinion, properly classified as profit from carrying on the trade. The business of the plaintiff was silver production. In these circumstances where the plaintiff participated in forward sales contracts and settlements, however, as a hedge against price fluctuations in silver, and in which the commodity traded was silver futures, I do not conclude that the plaintiff was involved in futures speculation for investment purposes. There was a clear business purpose in its sales and settlement of silver futures contracts, a purpose integrated with its sales of product to yield income; the plaintiff was trying to obtain an assured price for the sale of the silver it produced. ... Here the forward sales transactions were in respect of the same commodity as the plaintiff's production; both were, in my view, integral aspects of the plaintiff's business of producing silver, and returns from these activities were income from production of metals within Regulation 1204(1). In that case the Supreme Court held that hedging transactions fixed the price for the output of a mine. It approved the reasoning of Gillese JA who dissented in the Court of Appeal of Ontario: Placer Come Canada Ltd v Ontario (Minister of Finance) (2004) 190 OAC 157. Woodside Energy relied upon a passage from the dissenting judgment of Gillese JA as supportive of the position taken by Woodside Energy. However, there is no reason to refer to anything but the first type of consideration in the definition of "proceeds" if the purpose of that provision is limited to taxing output. The apparent purpose of including the second and third types of consideration is to tax gains arising from specified types of financial transactions (ie hedging, future sales or forward sales) that are related to the output of the mine. 274 The question in this case is not whether the hedging transactions in issue did or did not have a relationship to future sales of crude oil by Woodside Energy. The question is whether that relationship fell within s 24(b) of the PRRTAA. For the reasons I have expressed, which turn upon the particulars of the statutory scheme and its legislative history, the relationship between hedging transactions and crude oil sales in this case does not fall within the narrow range of relationships contemplated by the section in question. Section 38 defined general project expenditure for the purpose of assessing deductible expenditure of the classes mentioned in s 32(a) and (c) namely classes 1 and 2 augmented bond rate general expenditure. General project expenditure refers to payments of a capital or revenue nature liable to be made "in carrying on or providing the operations, facilities and other things comprising the project" and "in carrying on or providing operations and facilities preparatory to" such activities. 276 In my opinion the requirement that expenditure contemplated by s 38 is liable to be made in carrying on or providing operations, facilities and other things comprising the project is incapable of covering the hedging expenses the subject of these proceedings. The section contemplates a close connection between the expenditure and the physical activities involved in the petroleum project. As indicated above, for reasons which I have given, I do not accept that proposition. And it is plain that so far as s 38 is concerned it cannot extend to expenses of the kind in issue in this case. I certify that the preceding two hundred and seventy-seven (277) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | petroleum resource rent tax taxable profit assessable receipts less deductible expenditure assessable petroleum receipts whether a net concept net of expenses payable in relation to sale of marketable petroleum commodities whether such expenses include hedging losses range of expenses covered by connection direct relationship to commodity sales required text of provision context and scheme of act legislative history explanatory memorandum hedging expenses not able to be taken into account in determining assessable petroleum receipts whether expenses comprised deductible expenditure incurred in carrying on or providing operations facilities and other things comprising the project insufficient connection with the conduct of the project hedging losses not general project expenditure evidence expert economic and accounting opinion economic rent taxing model said to underpin statute evidence that proposed model initiated process leading to enactment of statute economic model equating hedging losses insufficient evidence of connection to actual terms of statute to provide assistance in construction expert accounting evidence treatment of hedging losses as expenses of sale utility dependent upon anterior construction of statute taxation |
The proceedings arise out of alleged contraventions of s 45 of the Trade Practices Act 1974 (Cth) (the Act) and the Competition Code of Western Australia (the Code), by reason of an oral and written agreement, made between the companies and the business not to offer discounted tuition fees to students for whom they operated as go-betweens or brokers in arranging their enrolment in various schools, colleges and universities. 2 The detailed background to the proceedings has already been set out in the judgment, which I delivered on 10 January 2008: Australian Competition & Consumer Commission v Kokos International Pty Ltd (No 2) [2008] FCA 5. At that time injunctive orders were made by consent against the first to fourth respondents. Pecuniary penalties were imposed on them after consideration of agreed statements of fact and submissions by the parties. Declaratory relief, which was sought by the ACCC, was stood over pending the finalisation of proceedings against the seventh respondent, Study Overseas Now Pty Ltd (Study Overseas Now) and the resolution of issues concerning the joinder of its principal, Mr Seow Bing Yeo, who is as yet not a party to these proceedings, but against whom a motion for joinder is pending. 3 The position of the fifth and sixth respondents was not resolved by that judgment. They are Sang-Hong Jung, trading as the Nanuri Education Centre (Nanuri) and Rebekah Cabalt, her former office manager. Although they were represented earlier in these proceedings, and while represented filed defences effectively admitting various of the contraventions alleged against them, they have for some time been unrepresented and have been given time by the Court to consider their position and to make submissions. The position today is that the ACCC has identified three contraventions of the Code on the part of Sang-Hong Jung, trading as Nanuri, and one count of involvement in Ms Jung's contraventions by Ms Cabalt, as her employee. 2 Nanuri, by making a written agreement with Kokos, IAE, Study Overseas Now Pty Ltd ( Study Overseas Now ) and Jobbok in mid 2004 as defined in the Statement of Claim ( Written Agreement ) made a contract or arrangement, or arrived at an understanding, which contained a provision or provisions that had the purpose or the effect or was likely to have the effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of a discount, allowance, rebate or credit in relation to Education Consulting Services supplied by the parties in competition with each other within the meaning of section 45A(1) of the Code and accordingly had the purpose or the effect or was likely to have the effect of substantially lessening competition and thereby engaged in conduct in contravention of section 45(2)(a)(ii) of the Code. 3. Nanuri, by refraining from engaging in the practice of offering or agreeing to accept a Discounted Tuition Fee (as defined in the Statement of Claim) for various periods totalling approximately four weeks on dates unknown to the Applicant but in approximately the last six months of 2004 and/or the first six months of 2005 gave effect to a provision or provisions of the Oral Agreement and/or Written Agreement in contravention of section 45(2)(b)(ii) of the Code. They do not dispute the orders sought so far as they relate to declaratory relief and so far as they relate to the proposed injunctions and, in the case of Ms Jung, the proposed requirement to attend at a trade practices compliance seminar. The only issue that remains is the determination of pecuniary penalties. 5 The general principles governing the imposition of pecuniary penalties under the Act and the Code, were canvassed in Australian Competition & Consumer Commission v Kokos International Pty Ltd (No 2) [2008] FCA 5 and I will not repeat them here, save to emphasise the significance of their deterrent purpose. I also observe the necessity to take account of relevant distinctions between different contraveners in the context of the deterrence principle, which informs the penalties that are imposed. 6 As with each of the other parties who have been dealt with, it is not disputed that Ms Jung and Ms Cabalt were unaware that they were breaking the law by entering into, and being involved in, the implementation of the agreements not to offer discounted tuition fees. There was no question of any concealment. They have admitted the contraventions and as the ACCC acknowledges, have cooperated with it in its investigations into the agreements that had been made. Neither has been involved previously in any contravention of the Act or Code. In an affidavit sworn by Mr Hilton for the ACCC, documents which are exhibited, including material from the former solicitors for Ms Jung and Ms Cabalt, indicate that the Nanuri business had a net income of approximately $19,000 for each of the financial years ended 30 June 2006 and 30 June 2005. Ms Cabalt's annual income during the relevant period as its office manager, was $30,000. The gross commission income of the business, according to a profit and loss statement with which I have been provided by Ms Jung, was $340,247 in 2004 and $266,378 in 2005. In 2004 there was additional income derived from consulting fees and other fees. It is apparent that Ms Jung's business was by far the smallest of the operations with which the Court has been concerned in this case. The turnover of the first and third respondents was three to four times greater than the turnover of this firm. The net operating profit for 2005 was $19,925. A loss of $51,474 was shown for 2004. 7 It appears from the submission by Ms Jung, which is not contested by the ACCC, that after the agreements were struck and implemented, her business actually lost clientele because she was not in a position, adhering as she did to the agreements, to offer discounted tuition fees. Absent discounting, the size and facilities of her competitors made them more attractive to students. 8 Both Ms Jung and Ms Cabalt are of limited means which is well evidenced by the fact that they have been unable to afford ongoing legal representation. The anticompetitive conduct which was entered into in this case, as I remarked in the judgment given on 10 January, was blatant price fixing. It was blatant, I suppose, because nobody who participated in it seems to have been in the least aware that they were breaking the law. Indeed, they even set up a council of competitors to enforce the agreements. I have no doubt that their exposure to these proceedings and the expense and time that has already been involved have themselves had a significant deterrent effect on Ms Jung and Ms Cabalt in respect of any repetition of this conduct. I see very little, if any, risk of further contraventions on the part of Ms Jung, who continues operating the business. Ms Cabalt is no longer involved in the business. 9 In the circumstances, having regard to the deterrence requirement and the relevant distinctions between Nanuri and the other respondents and the factors I have mentioned, I will impose a penalty on Ms Jung of $3,000 in respect of each admitted contravention, making a total of $9,000. As to Ms Cabalt, in respect of her participation, I impose a penalty of $1,500. The declaratory orders sought against the fifth and sixth respondents be stood over to the completion of these proceedings or to such earlier date as may be sought by the ACCC. 2. The fifth respondent is, within three months from the date of this order, to attend a trade practices compliance program seminar relating to the provisions of Part IV of the Code (including s 45 of Part IV) conducted by an independent external professional with trade practices law experience who is acceptable to the applicant or otherwise approved by the Court. 4. Within one week of attending the seminar, the fifth respondent must notify the applicant of her attendance. 5. A pecuniary penalty of $3,000 is imposed on the fifth respondent for each of the three contraventions of the Trade Practices Act 1974 (Cth) referred to in the statement of contraventions filed by the ACCC on 11 January 2008, a total penalty of $9,000. 6. A pecuniary penalty of $1,500 is imposed on the sixth respondent in relation to her involvement in the contraventions set out in the statement of contraventions by the applicant filed 11 January 2008. 8. The fifth and sixth respondents are to pay the applicant's costs, to be taxed if not agreed. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | price fixing consent orders pecuniary penalties deterrent principle relevant factors small business admission of contravention cooperation with accc no prior contraventions lack of awareness of law disadvantaged by anti-competitive agreement little or no risk of re-offending trade practices |
Each maintains and operates a telecommunications network for the purpose of carrying telephone calls and other kinds of telecommunications traffic. Those networks are interconnected in accordance with Schedule 1 to the Telecommunications Act 1997 (Cth), which provides the regulatory framework for the provision of such services. The interconnection permits the carriage of telecommunications traffic generated by customers of one party on the other party's network. The terms and conditions upon which the telecommunications networks of Optus and Telstra are interconnected are set out in an agreement entered into by them (and a related entity of Optus) dated 14 August 1992 as amended from time to time ('the Access Agreement'). This agreement was entered into pursuant to s 137 of the then Telecommunications Act 1991 (Cth). Prior to 1991, telecommunications services in Australia were provided by a statutory monopoly service provider. In 1991, the Telecommunications Act 1991 partially deregulated the Australian telecommunications industry by allowing Optus to enter the Australian telecommunications market as a second general carrier. Optus (and its subsidiaries) entered the Australian market at that time with no telecommunications network of its own but with the intention of developing over time its own telecommunications network infrastructure. In the interim and beyond the establishment of its own network, Optus required interconnection arrangements with Telstra's telecommunications network. Initially, Optus required interconnection with Telstra to enable it to compete as a second telecommunications carrier immediately in relation to some telecommunications services, primarily domestic long distance services and international long distance services. In November 1992, Optus commenced providing domestic and international long distance services. At that time, all customers for telecommunications services in Australia were physically connected to Telstra's network and Optus had not established a network to which customers were able to be directly connected. Optus established its own 'trunk network', which enabled its own telecommunications links to be established between the major Australian metropolitan areas and between Australia and international destinations. This progressively enabled Optus to offer domestic long distance and international long distance services to the Australian market over its own network and facilities in competition with Telstra. However, Optus was only able to offer such services by means of its network being interconnected with and having access to Telstra's existing network, particularly so as to gain connection through to customers. For this purpose, Optus and Telstra agreed to provide certain services, called originating and terminating call access services, to each other to, for example, enable a customer to originate a call on Telstra's network then connect into the Optus network for long distance trunk network carriage and then connect back off the Optus network to the Telstra network for local terminating delivery. Further, a customer had to be able to select or designate whether such a call was to be made using the services of Telstra or those of Optus for the long distance or trunk network part of the call. Over time, Optus further developed and built its own network. However, the networks of Optus and Telstra were still required to be interconnected. (2) Optus also required access to Telstra's network so that customers who were not directly connected to the network of Optus could make calls using Optus' services. The majority of fixed customer phone lines remain Telstra connections. In such cases, Optus' customers could make calls using Optus as a carrier through Telstra's network by either pre-selecting Optus networks as their preferred long distance call carrier, or by using a call override dial code prior to making a particular call. Where the telecommunications networks of two carriers are interconnected, and telecommunications traffic generated by customers of one carrier passes across the network operated by the other carrier, the latter carrier has access to certain information relating to that telecommunications traffic. This includes information regarding the quantity, source, destination, duration, time of occurrence or kind of the telecommunications traffic, as well as the value of the telecommunications traffic whether in terms of its aggregate billing value or individual customer billing details and value (collectively, 'traffic information'). Certain kinds of traffic information are required to be recorded by the carrier across whose network such telecommunications traffic passes so that it can bill the appropriate interconnecting carrier for the passage of the traffic over its network. Telstra recorded traffic information on its network, both its own traffic information and that of Optus, and after 1997 the traffic information of other carriers that used Telstra's network, by application of a computer system known as NUMIS 100. At [85] and [86] below I have set out Telstra's answers to interrogatories and summarised those answers as well as Telstra's pleadings. Those answers and that summary shed some light on what Telstra claims was (1) the information recorded on NUMIS 100; and (2) the information extracted from it, In this proceeding Optus alleges that, at least since 1995 and until at least September 2003, Telstra has used Optus' traffic information for marketing, promotional and related purposes without the knowledge and consent of Optus by the preparation and use of weekly reports containing information as to Telstra's market share in the STD and IDD segments of the Australian telecommunications market ('market share reports'). Telstra denies that it used Optus' traffic information to prepare the market share reports. The only information it admits to having used was NUMIS 100's recordation of the aggregate traffic information over its network. Such information was, Telstra claimed, Telstra's information and for these and other reasons relating to the definition of Confidential Information and the terms of cl 15.1 of the Access Agreement prohibiting the use of Confidential Information of a party by another party except for limited purposes, Telstra's use of information to prepare the market share reports was neither a breach of the Access Agreement, a breach of confidence under general law principles or a contravention of s 51AA of the TPA. The issues reserved relate to Optus' entitlement to injunctive and pecuniary relief and the quantum of any such pecuniary relief, including the extent of Telstra's use of Confidential Information by the preparation and distribution of market share reports to officers of Telstra in the relevant years. Accordingly, the hearing was confined to what might generally be called issues of liability, including the question whether the alleged breaches and contraventions have occurred, and Optus' entitlement to consequential declaratory relief. At the end of the day, senior counsel for Optus conceded that if there was no breach of contract, specifically cl 15 of the Access Agreement (as to which see [26] --- [31] below), neither of the alternative causes of action pleaded --- breach of confidence under general law principles and unconscionable conduct in contravention of s 51AA of the TPA --- had any 'legs'. I think this concession was correctly made. On the other hand, he said that if breach of contract is established, the equitable cause is still relevant to Optus' claim for an account of profits and that damages under s 82 of the TPA may be not the same as the claim for ' Hadley v Baxendale ' ((1854) 9 Exch 341) damages in contract, although it is difficult to see how Optus could do better in damages under s 82 of the TPA for contravention of s 51AA, than it could do on the contract claim. (2) If Telstra used Optus' traffic information in the preparation of the market share reports, was that the use of Confidential Information of Optus for the purposes of the Access Agreement? (3) If the answer to issue 2. is 'yes', is Telstra's use of Optus' traffic information a permissible use of such information under the Access Agreement? (4) If the answer to issue 2. is 'no', is Telstra's use of Optus' traffic information a permissible use of such information under the Access Agreement? (5) Did the market share reports themselves contain Confidential Information of Optus for the purposes of the Access Agreement? (6) If the answer to issue 5. is 'yes', is the use to which the market share reports are proven to be put a permissible use of such information under the Access Agreement? (7) If the answer to issue 5. is 'no', is the use to which the market share reports are proven to be put a permissible use of such information under the Access Agreement? It lies at the heart of Optus' case that Telstra used Optus' traffic information in the preparation of the market share reports; that that information was Confidential Information for the purposes of the Access Agreement; and that the use of that information in that way, and the use to which the market share reports were themselves put by the management of Telstra, was an impermissible use of that information under the Access Agreement. It lies at the heart of Telstra's defence that it did not use Optus' traffic information in its preparation of the market share reports; that irrespective of the identity of the information so used, it was not Confidential Information of Optus for the purposes of the Access Agreement; and that the use of that information in that way, and the use to which the market share reports were themselves put by the management of Telstra, was not an impermissible use of that information under the Access Agreement. None of the amendments are material for present purposes. The significance of CLI requires explanation. Telephone users could only select Optus if the network to which the user, or customer, was connected had CLI capability; that is, had the ability to both identify the caller's calling number and could forward that number across interconnected telecommunications networks. In a small proportion of cases, CLI functionality was not available and Optus could not provide telecommunications services to that caller. The market share reports during 1994 and 1995 distinguish between contestable market and total market for IDD. The former expression means that market comprised of customers using a network with CLI capability and to whom Optus was able to provide services at that time. The latter expression (total market) includes the former and also that proportion of the market representing customers without access to a CLI network or to whom Optus was not providing services at that time; who could only be serviced by Telstra. These include disclosure to the party's directors, officers, employees, agents, contractors or representatives (subject to compliance with cl 15.2); disclosure to the other party; disclosure to the party's professional advisors; disclosure as required by law; disclosure with the consent of the other party; disclosure in accordance with a directive issued by AUSTEL (the relevant regulator) or the government; and disclosure to AUSTEL for the purpose of registration of the Access Agreement or any amendment to that agreement. 'Section 88 of the Act' (to which cl 15.1 is also expressed to be subject) is a reference to s 88 of the Telecommunications Act 1991 which was in force when the Access Agreement was entered into. This was a detailed provision which, in general terms, made it an offence for employees or former employees of telecommunications service providers to disclose or use information relating to telecommunications traffic, subject to certain exceptions. The reference in cl 15.1 of the Access Agreement to this provision does not bear upon the issues in dispute in this proceeding. The remaining provisions of cl 15 of the Access Agreement (cll 15.3A to 15.7) deal with ancillary matters such as conditional disclosure of Confidential Information by consent, co-operation in actions to protect confidentiality, certain acknowledgements and the permitted use of CLI (calling line identification). Because the effect of cl 15.1 is to prohibit the use or disclosure of such Confidential Information falling within sub-paras (a) or (b), except for the purposes of the Access Agreement or the other purposes referred to in sub-paras (c) or (d), it is necessary to have regard to some of the other provisions of the agreement. In particular, cll 3 to 9 impose requirements and set out the terms and conditions for the provision by the parties to each other of various relevant services (interconnect services, access services, transmission capacity and short order capacity, facilities access and the like), and cll 12 and 13 require the parties to take certain steps or measures in relation to the operation of their interconnected networks. Clause 10 is significant. It deals with certain obligations of the parties to provide information to each other pursuant to the agreement. Optus submitted, and the submission is analysed below, these various provisions in cl 10 are relevant because they provide a context for the interpretation of cl 15. In particular, it is said that they confirm that traffic information of the kind in issue in these proceedings is Confidential Information of a kind intended to be protected by cl 15. The remaining provisions of the Access Agreement deal with other matters which are not material for present purposes. 1); the second sworn 11 December 2007 (Ex. 2); and the third sworn 6 June 2008 (Ex. 5). Only Mr Petts was required for cross-examination. A). Only Ms Wood's affidavit was read and she was required for cross-examination. At this stage, I would merely observe that her evidence, in my view, had no utility whatsoever to a resolution of the ultimate issue identified in [16] above, nor any of its component parts. However, her evidence in cross-examination did lead Optus to seek leave to amend its Fourth Consolidated Amended Statement of Claim in a couple of minor respects (paras (15) and (29)), which was not opposed by Telstra, and I granted that leave. By the same order, I relieved Telstra from filing any amendment to its Fourth Amended Defence. 6. (2) Telstra Annual Reports from 1992 to 2000: Ex. 7. The relevance of these was said to be that they disclosed Telstra's revenues per annum and total minutes sold in the IDD and STD markets. But their relevance to the ultimate issue or its component parts was not made good. (3) Three volumes of documents being applications for access to MEIS and SAMURAI: Ex. 8. The relevance of these applications was put in the following way: MEIS was a function which was introduced in about June 1997 to access the market share information available on the NUMIS 100 system. The MEIS function of accessing information on NUMIS 100 was then replaced by the SAMURAI function. But again, their relevance to the ultimate issue or its component parts was not made good. (4) Paragraphs (1) --- (17) and (32) of the affidavit of Noel Ian Eldridge sworn 11 April 2008: Ex. 9. (5) Paragraphs (1) --- (16), (63) --- (101), (140) --- (177) and (279) (together with the heading on the cover page and the name and date on the final page) of Outline of Evidence of Stuart Alan Newton Lee dated 5 February 1996 ('the Lee Outline') and attachments 'SL8-C' and 'SL26-C' to the Lee Outline (as referred to in orders made by this Court on 26 July 1996 in proceeding No. 731 of 1995) being documents behind tabs 7A, 10 --- 12, 14 --- 26 and 29 of Vol. 5 of the Court Book identified in the index of documents forming part of Ex. 11: Ex. 10. The background to the Lee Outline and the issues arising on the admission of the relevant paragraphs and attachments into evidence are dealt with in [41] to [45] below. (6) The documents behind tabs 2, 4, 6, 7, 8, 9, 13, 21, 27, 31 --- 35 and 37 --- 40 of Vol 5 of the Court Book; behind tabs 41 --- 46 and 48 --- 81 of Vol 6 of the Court Book; behind tabs 82 --- 93 and 96 --- 100 of Vol 7 of the Court Book; behind tabs 101 --- 199 and 122 of Vol 8 of the Court Book; and behind tab 129 of Vol 11 of the Court Book, including the index describing the documents tendered, their date (if any) and their provenance: Ex 11. (7) The interrogatories and answers to same I gave Optus leave to administer on 12 June 2007: Ex. 12. (8) The licence to operate as a General Telecommunications Carrier dated 22 November 1991 granted to AUSSAT Pty Ltd (now Optus) effective 26 November 1991: Ex. 13. G731 of 1995 between Telstra, Optus and the Australian Telecommunications Authority, namely, paras 86 --- 93 and 166 --- 177, and attachments 'SL8-C' and SL26-C' to the Lee Outline: SingTel Optus Pty Ltd v Telstra Corporation Ltd (No. 1) [2006] FCA 1752. Telstra opposed the tender of those paragraphs of the Lee Outline and the attachments, the subject of the grant of leave to use referred to in [41] above, on the ground that they were privileged, but fairly conceded that the weight of authority, in particular authority binding on me, was against its submission. The prevailing authority in this Court is in favour of the filing and service of an outline of evidence being a full waiver of privilege, such that the outline is then protected only by the implied undertaking to the Court not to use the document other than for the purpose of the proceeding without the leave of the Court: Liberty Funding Pty Ltd v Phoenix Capital Limited (2005) 218 ALR 283 at [20] --- [23]; Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 88 ; (2008) 246 ALR 137 at [15] --- [19] per Gordon J; ACCC v Construction, Forestry, Mining and Energy Union [2008] FCA 678 at [122] --- [130] per Finn J; Australian Medi-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (No. 3) [2008] FCA 976 at [15] per Lander J. Once leave is granted to use the document, the party seeking to do so is released from the implied undertaking and may use it accordingly. Optus also sought to tender the balance of the Lee Outline in opposition to the same submission, but subject to the same concession, on the part of Telstra. However, I indicated to the parties that, consistent with the leave granted on 15 December 2006, only those parts of the balance of the Lee Outline as were contextually relevant should be the subject of a grant of leave; as agreed between the parties or, in default, as I may rule. I then heard the parties' respective arguments on the question of admissibility. Optus argued that the Lee Outline was admissible as an admission adverse to interest by reference to the pleadings. Telstra argued that the Lee Outline was not an admission by Telstra; it was nothing more than an admission as to the evidence Telstra expected Mr Lee to give. However, at the end of the day, senior counsel for Telstra conceded that the Lee Outline was 'against our interest generally in the proceedings', putting aside the confined nature of the hearing on liability. Consequently, I allowed Optus to tender paras 1 --- 16, 62 --- 85, 94F, 101, 104 --- 165 and 279 of the Lee Outline in addition to the tender of those paragraphs and attachments referred to in [41] above. In doing so, I indicated to senior counsel for Optus that unless I was taken to a particular paragraph of the Lee Outline, I was not going to look at it. I am authorised to make this Affidavit on behalf of the Respondent. I have no personal knowledge of any of the matters raised by the Applicant in the notice to answer interrogatories annexed to the orders of the Court made on 12 June 2007 ('Interrogatories'). At the time, I indicated that I would give my reasons for setting aside the notice to produce as part of these reasons, and I now do so. Optus conceded that the communication between Ms Paatsch and any persons for the purpose of answering the interrogatories was properly the subject of a claim for legal professional privilege, but argued that the filing of the affidavit amounted to a waiver. Optus did not expressly identify which of the answers to the interrogatories prompted it to issue the notice to produce, however, it became apparent in the course of submissions of senior counsel of both parties that it was the answer to para 3(e) which was the catalyst. However, on the question of the sufficiency of an answer to an interrogatory, it was established 125 years ago that the whole of the affidavit in answer had to be referred to, not just the answer to a particular interrogatory: Lyall v Kennedy (1884) 27 CLD 1 at 15 per Cotton LJ. The sufficiency of the answer to the interrogatory in para 3(e) has to be read in this context, that is, in the context of the answer to the interrogatory in para 1(e) and so read, there cannot be any doubt, in my mind, as to its sufficiency. In determining whether a party should be required to make further answer to interrogatories the court considers whether the existing answer is sufficient and not whether it is truthful: Lyall v Kennedy at 21; McBride v Sandland [1917] SALR 249 at 262. The requirement of sufficiency is now embodied in O 16 r 8 of the Rules. Interrogatories are a form of discovery. An affidavit verifying answers to interrogatories has the same status as an affidavit as to documents verifying discovery. The general rule in relation to such an affidavit is that it is conclusive unless it is self-evident that the discovery is insufficient: see Mulley v Manifold [1959] HCA 23 ; (1959) 103 CLR 341 at 343 per Menzies J. That is not this case. I agree with Telstra's submission that the issue of the notice to produce was a 'backdoor' attempt to overcome the conclusiveness of Ms Paatsch's affidavit; in substance, an abuse of process and on that ground alone I set it aside, para 2 of the notice no longer being in issue. While it was not material to my conclusion, I would add that contrary to the submission that was pressed on me by senior counsel for Optus, I am not persuaded that Ms Paatsch's verification of the answers to the interrogatories by affidavit in accordance with O 16 r 2(2)(b) of the Rules works some waiver, under s 122 of the Evidence Act 1995 (Cth), of the privilege attaching to documents regarding or being the enquiries referred to by Ms Paatsch in paras 3(c) and (d) of her affidavit and communications between Ms Paatsch and any other person made for the purposes of responding to the interrogatories. Under s 122 of the Evidence Act , privilege will be waived where the party concerned consented to the document being adduced, or if the party 'knowingly and voluntarily disclosed to another the substance of the evidence'. Certain exceptions apply to the latter, including (but not limited to) if the disclosure was under compulsion of law (s 122(5)(a)(iii)). Senior counsel for Telstra submitted that there was no voluntary disclosure because the Rules (O 16 r 2(2)(b)) mandated the verification of the answers by affidavit; indeed, he submitted that the disclosure was made under compulsion of law and so fell within the exception specifically referred to in [63] above. He further submitted that he was not seeking to read Ms Paatsch's affidavit and that contrary to Optus' submission, he was not deploying an answer, based on privileged communications, 'for forensic or commercial purposes'; Bennett v Chief Executive of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 at [68] per Gyles J. On the other hand, I think there is a more fundamental response to Optus' submission that there has been a waiver of any privilege in the documents referred to in [62] above. First, para 3 of Ms Paatsch's affidavit says no more than that Telstra's answers to the interrogatories are based on her review of relevant documents and enquiries of current and former employees of Telstra. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication. Although the validity of his state of satisfaction and the exercises of his discretion are key issues in the substantive proceeding, as indicated earlier, the mere acknowledgement of the relevance of privileged documents to the key issues does not amount to an act inconsistent with the maintenance of privilege. As we have seen, so far as the Commissioner was concerned the relevant inquiry was whether, having regard to the material before the decision-maker, the contested decisions were vitiated on Avon Downs grounds. If the particulars merely disclosed that the Commissioner took into account legal advice in reaching his state of satisfaction and exercising his discretions, then that disclosure would not be inconsistent with the maintenance of privilege. Nor has he said that he took them into account in so doing. We interpolate that a document may be relevant to a decision without evidencing any matter taken into consideration in the making of it (as, eg, an instrument conferring authority to make the decision). The Commissioner could have identified his bases for satisfaction and exercises of discretion by listing the matters he took into account in each case, but he did not do so. Instead, he identified his bases for satisfaction and exercises of discretion as the matters evidenced in the scheduled documents. In so doing, the Commissioner did more than make an assertion about the relevance of these communications . In his particulars, the Commissioner has said that he took into account the matters evidenced by numerous documents, including the eight privileged scheduled documents. In so doing, the Commissioner has made an assertion that puts the contents of these eight documents in issue, or necessarily lays them open to scrutiny, with the consequence that there is an inconsistency between the making of the assertion and the maintenance of the privilege. (Emphasis added. The difficulty with determining this particular issue is that the only party which knew what information had been used in the preparation of the market share reports, Telstra, led no evidence on the matter. There was some 'evidence from the bar table' in the form of submissions but, apart from its answers to the interrogatories I gave Optus leave to administer, there is no direct evidence. There are documents in evidence which, arguably, enable one to draw inferences and conclusions as to what information might have been used, in particular, the market share reports and internal Telstra communications, but the element of uncertainty that attends that task, makes it a less than satisfactory course to take. So confined, the starting point for determining this issue is, as it is in most cases, the pleadings. But it denied that the information, which it called 'traffic information', was Confidential Information within the meaning of cl 15 of the Access Agreement; see [6] of its Amended Defence to Fourth Consolidated Amended Statement of Claim ('ADFCASC'). In response to Optus' pleading at [15] of its FCASC that Telstra has used until at least September 2003 the traffic information for purposes which are not permitted purposes pursuant to the Access Agreement, namely, in the preparation of market share reports, Telstra denied these allegations: see [9] of its ADFCASC. In response to Optus' pleading at [16] of its FCASC, Telstra admitted that at least from 1995 its prepared market share reports of the type described in Optus' pleading which provided various estimates of percentage measures of Telstra's share of STD and IDD traffic of the total STD and IDD traffic which was recorded in Telstra's NUMIS 100 database, but said that it had not prepared any market share reports since about November 2000: see [10] of its ADFCASC. In response to Optus' pleading at [18] of its FCASC, Telstra said that the market share reports were partly generated from information about total calls to and from particular interconnect charging areas originating on Telstra's network, which it called 'Aggregated Traffic Information', which was recorded in NUMIS 100, but denied that the information which was used to prepare the market share reports was confidential information for the purposes of the Access Agreement: see [12] of its ADFCASC. In response to Optus' pleading at [19] of its FCASC, Telstra admitted that until December 1997, the information recorded by NUMIS 100 only related to customers of Telstra and customers of Optus: see [13] of its ADFCASC. In response to Optus' pleading at [20] of its FCASC, Telstra admitted that it records information about the origin and destination of calls and the start and end times of calls made by Optus customers which pass through Telstra's network, but said that the information used to derive the information in [17] of Optus' pleading (see [76] above) was generated from Aggregated Traffic Information in NUMIS 100: see [14] of its ADFCASC. In response to Optus' pleading at [22] of its FCASC, Telstra said that the market share reports were partly generated from Aggregated Traffic Information which was recorded in NUMIS 100 but denied that information which was used to prepare the market share reports was confidential information for the purposes of the Access Agreement: see [15] of its ADFCASC. Many of the remaining responses of Telstra to Optus' pleadings substantially repeat the responses detailed in [73] --- [80] above and do not shed any further light on the issue of what information did Telstra use in the preparation of the market share reports. For present purposes, it suffices to set out the first set of interrogatories and Telstra's answer to them because the answers to the other two sets are almost identical. (i) The Traffic Information was sourced from call records generated at Telstra's telephone exchanges of telecommunications traffic which was carried on Telstra's network and passed through one of Telstra's telephone exchanges. This involved aggregating all of the call records which related to a single call and deleting duplicate records and correcting incorrect records. As part of that process the CCRs were sorted and were aggregated by summing up the CCRs to and from different interconnect charging areas to obtain the total number of call minutes and calls to and from particular interconnect charging areas for calls originating on Telstra's network. This aggregation process included aggregation by STD and IDD call streams and calls made by Telstra customers. Other fields were calculated or derived from those files. For example, the DEST_ICCA_GRP_CODE was a code which identified the Interconnect Charging Area being a geographical division of Telstra's network where the called-party, also known as the B-party, was located. The DEST_ICCA_GRP_CODE is extracted from the B-Party number, such as an '02' area code could be extracted from a B-Party number to identify that the B-Party was located in Sydney. Similarly, the CALL_MONTH is calculated from the CALL_DATE, which was in turn taken directly from the input CCR file fed into NUMIS100. The weekly summary table contained Aggregated Traffic Information as described at paragraph 12(b) of the Defence variously grouped (for example by STD and IDD traffic stream) and Telstra's percentage share of that traffic (collectively the 'Market Share Information'). Telstra's share was separately identified and reported based on Telstra CCR information. Non-Telstra CCRs are included in the Aggregated Traffic Information. These files allow the SAMURAI user to specify certain criteria so as to display on the graphical user interface particular categories of information. (e) Yes. (2) It admitted that Aggregated Traffic Information was partly derived from traffic information, but denied that Aggregated Traffic Information included traffic information. (3) In consequence of the admissions in 1 and 2, it admitted that market share reports were indirectly and partly generated from traffic information. According to Telstra, what this all means is that Telstra measured the entirety of the traffic travelling across its network without identifying whether the call was made by a Telstra customer or a customer pre-selected to another carrier, including Optus. Telstra then reprocessed in NUMIS 100 the aggregated details of calls made by its own customers and by comparing those aggregated details to the total calls travelling over Telstra's network, Telstra was able to estimate its market share. The means by which the market share information was calculated by the NUMIS 100 database detailed in the answers to interrogatories, is confirmed in paragraphs [7] --- [17] of Mr Eldridge's affidavit sworn 11 April 2008 tendered by Optus (as part of Ex 9) and in paras [1] --- [14] of Mr Lambert's statement dated 21 April 1999 tendered by Optus (as part of Ex 11). Subject to the matters referred to in [106] and [107] below, Optus seemed to accept Telstra's description of the information it used to prepare the market share reports and how the market share information was calculated by the NUMIS 100 database. Optus nevertheless maintained that this involved the use of Confidential Information of Optus for the purposes of the Access Agreement. Issue 2: If Telstra used Optus' Traffic Information in the Preparation of the Market Share Reports, was that the use of Confidential Information of Optus for the Purposes of the Access Agreement? Optus' case was that even if Telstra used Aggregated Traffic Information recorded in NUMIS 100 to prepare the market share reports this involved the use of Optus' traffic information which was Confidential Information of Optus for the purposes of the Access Agreement. This contention was advanced in reliance on a number of collateral arguments. Telstra's response was that its use of Aggregated Traffic Information to prepare the market share reports did not involve the use of Optus' traffic information; and that even if the Aggregated Traffic Information was derived in part from Optus traffic information, this did not involve the use by Telstra of Confidential Information of Optus for the purposes of the Access Agreement. It is thereby subject to the restrictions on use and disclosure imposed by clause 15 of the agreement. That this is so, Optus submitted, is apparent from a number of matters. First, it is apparent from an examination of the nature of the traffic information itself. The traffic information includes various details relating to telecommunications traffic generated by customers of Optus, including in each case the quantity, source, destination, time of occurrence and kind (e.g., long distance or international) of that telecommunications traffic. It falls within the definition of 'Confidential Information' in the Access Agreement because it is 'information ... of a confidential nature ... relating to or developed in connection with or in support of the business of [Optus]' and falls within the specific inclusion of 'any matter concerned with or arising out of this agreement'. Such information is 'of a confidential nature'. The law recognises the information of a business concerning its customers as an established category of confidential information which attracts the protection of the Courts at general law: see, e.g., Lansing Linde Ltd v Kerr (1990) 21 IPR 529 at 536 per Staughton LJ. Second, provisions of the Access Agreement expressly provide that traffic information is subject to confidentiality restrictions on use and disclosure imposed by cl 15. Clauses 10.1 (obligations to provide information under the agreement are subject to the requirements of confidentiality imposed by cl 15), 10.4 (the parties must provide each other with certain traffic information), 10.7 (the information provided under the agreement may only be used for the purpose for which it was given) and 10.10 (establishing a limitation on the obligation to provide certain traffic information), as well as cl 15.1 itself; all make express provision. Third, the evidence to be given by the witnesses would confirm that such traffic information is of a confidential nature, and was intended by the parties to be subject to the restrictions imposed by cl 15. Optus referred to the nature and context of the negotiations that led up to the entry into the Access Agreement, which was dealt with in evidence by Mr Petts. Optus also relied upon the fact that the traffic information is not released or disclosed by Optus other than pursuant to the provisions of the Access Agreement. Fourth, the contemporaneous documents confirm that such traffic information is in fact treated as confidential by those dealing with it. In particular, documents evidencing steps taken by Optus to seek to maintain the confidentiality of the information was tendered. For example, in notes of a meeting held on 2 March 1993, representatives of Optus (which included Mr Petts) expressed concern about the misuse by Telstra of proprietary information in the form of marketing information derived from interconnected services. As can be seen from the documents, this issue has a very long history which dates back to the entry into the Access Agreement itself. Fifth, Telstra has acknowledged on many occasions that traffic information of the kind in question is of a confidential nature and should be subject to appropriate restrictions as to its use and disclosure. This is apparent from a number of documents tendered by Optus. (d) Telstra's internal documents incorporating such traffic information or information derived from it, such as the market share reports, are almost invariably marked with the word 'confidential' or other wording reflective of attempts to limit disclosure. Thus, the market share reports themselves are labelled 'Telstra Secret --- Do Not Copy'. It is important that Telstra regards its traffic information as confidential. The market share reports which Telstra prepared are headed 'Telstra Secret --- Do not copy' or 'Telstra Secret Do Not Copy or Forward'. Paragraph 175 of Mr Lee's 1996 statement (which Optus has leave to use) claims that the market share reports are confidential to Telstra. For these reasons, and others developed in the course of argument, Optus submitted that it is clear that Optus' traffic information is 'Confidential Information' within the meaning of the Access Agreement. Two matters are particularly important. First, that the data is generated entirely by Telstra without the assistance or provision of any information by Optus. Second, the way in which NUMIS 100 aggregates and calculates market share does not make use of the fact that a call has been made by an Optus customer. Market shares are derived by making use of the calls identified as being made by Telstra customers. Therefore, the only data that is being used is the fact that a call has been made over Telstra's network or is a call by a Telstra customer, not that a call has been made by, for example, an Optus customer. In these circumstances Telstra contended that no Confidential Information of Optus had been used. All that had been used is Telstra's information which has been independently developed by Telstra --- namely, details of the total traffic travelling across its network. Further or alternatively, the information used is information which has been independently developed by Telstra. Clause 1.1(iii) of the Access Agreement has been satisfied. Looked at another way, the information which has been used is not information which came into Telstra's knowledge or possession in connection with the Access Agreement. It came into Telstra's knowledge or possession because customers connected to Telstra's network made calls over the network (clause 15.1(b) of the Access Agreement is therefore not satisfied). Looked at another way, the information is not information only in relation to Optus' business --- it is information in relation to Telstra's business. To accept Optus' contention that Confidential Information of Optus was used would lead to the absurd conclusion that the total traffic travelling across Telstra's own network was in fact Confidential Information of Optus. The information which CCRs captured included the categories of information recorded at 1B(d)(i)(A) and (B) of Telstra's answers to interrogatories. Optus submitted that the fact that NUMIS selected from the whole field of potential Confidential Information, part of that Confidential Information does not mean that the part selected loses its character as Confidential Information. What was selected was information which Telstra regarded as important. The extent of what was not selected has not been proven by Telstra. Telstra's answers to interrogatories show that the identity of the carrier was included in the aggregated traffic information (see 1B(d)(iii) (sixth bullet point paragraph, third and fourth bullet points): 'CARRIER ID' and 'PRESEL_CARRIER ID')). Telstra chose not to call any witness who could explain what those codes meant. Whilst relying on submissions which assert factual questions as to how the aggregated traffic information was assembled, and what information it contained, according to Optus, Telstra made a deliberate forensic decision not to call anyone who could give evidence as to what the true position was. Telstra submitted that the identity of the carrier was not included in the aggregated traffic information. It submitted that that information did not include the identity of a customer pre-selected to another carrier including Optus. Optus submitted that there was no evidence to support these submissions and that the answers to interrogatories suggest that it is not correct. Optus submitted that if the whole body of information was confidential, selection of part of the whole, for the purpose of the definition, does not mean that the part is not confidential within that definition. Telstra asserted that total traffic travelling across its network belonged to Telstra. Optus submitted that whether it belonged to Telstra is not the question posed by cl 15.1 of the Access Agreement. The question under cl 15.1 is whether Telstra owed an obligation under that clause with respect to traffic information recorded by Telstra of communications by Optus customers on the Telstra network because that information was Confidential Information of Optus. The definition of Confidential Information identifies what is the Confidential Information of Optus. Once a CCR records information in relation to a call made by an Optus customer, that information becomes the Confidential Information of Optus because it falls within the definition of 'Confidential Information'. According to Optus, Telstra must prove that notwithstanding that the information satisfies the inclusory element of the definition, it is excluded because it falls within exclusion (iii). Optus makes the point that Telstra bears that onus. Traffic information recorded by Telstra of calls is developed in connection with the business of Optus. It is also developed in connection with the business of Telstra, but Telstra only records the information because an Optus customer makes a call and Telstra's obligation to provide an access service is engaged. The expression 'developed in connection with ... the business of the party (Optus) ...' is to be compared, and contrasted with, the operation of the exception using similar language ('independently developed by another party' (Telstra)). The exception 'independently developed' is the counterpoise to the inclusionary words 'developed in connection with'. Any information developed in connection with the business of Optus is not independently developed. Optus took issue with Telstra's submission that, because Optus and Telstra entered into an agreement which contemplated that Optus could require Telstra to provide customers of Optus with access to Telstra's network, and Telstra provides that access service to a customer of Optus, the traffic information did not come to Telstra's knowledge or into its possession in connection with the agreement. (b) The second is that the customer has no right to require Telstra to do anything. (c) The third is that the customer has contractual relations with Optus. (d) The fourth is that Optus has contractual relations with Telstra and can require Telstra to provide an access service to a customer with Optus. According to Optus, Telstra submitted that information can only be confidential to one party, and not both. But Optus submitted that Telstra's submission introduces into the definition of Confidential Information the word 'only'. The reference to the Schedules to the Access Agreement being included as Confidential Information shows that the definition expressly contemplates that the same information can be confidential to both parties. The contents of the Schedules are treated as confidential to both parties, as are matters arising out of the agreement. Optus' submitted that its argument does not mean that Telstra's traffic information is Confidential Information of Optus, as Telstra submitted. Telstra does not record its traffic information in the performance of, or in order to satisfy, any obligation under the Access Agreement, or provide that information to Optus. According to Optus, Telstra did not dispute that traffic information was regarded, within the telecommunications industry, as confidential. Mr. Petts said that such information was regarded as confidential as between competitors. Telstra did not seek to contradict that evidence in the cross examination of Mr. Petts. Nor did it call any evidence to contradict his evidence. That Telstra regards traffic information as confidential is, according to Optus, established by a large body of its documentary evidence. All of the market share reports are marked 'Telstra Secret --- Do Not Copy'. Telstra has an internal classification procedure which requires documents which are to be used externally to the organisation, to be marked to indicate their relative level of confidentiality. Mr. Lee's Outline [Ex 10] claims that the following classes of documents are confidential, including: business plans (para 76), pricing policies (para 82), extracts of a monthly BUPARIS Report which Mr. Lee received monthly as a product portfolio manager (para 87), weekly market share reports (para 90), documents recording strategies to defend Telstra's market share (para 97(a)), documents recording an analysis of cultural features of its customers (para 97(f)), documents recording its product plans (para 97(c)). Telstra's argument that it only used the total aggregate traffic that travelled over its network and calculated Telstra's market shares in the various categories from its knowledge of Telstra's own traffic, and therefore did not use traffic information of Optus, is facile in the face of the indisputable fact that Telstra could not calculate the total aggregate of traffic that travelled over its network without bringing to account, and in that sense using, the aggregate of Optus' traffic that travelled over Telstra's network. Moreover, it is clear from at least December 1997, from which time carriers other than Optus were using Telstra's network, that Telstra used traffic information of Optus, not only in calculating the total aggregate of traffic that travelled over its network, but in identifying directly the quantity of Optus' traffic that travelled over its network independently of the traffic of other carriers that travelled over Telstra's network and that of Telstra itself. The STD and IDD Market Share Report for the week ending December 6, 1997 illustrates such use. The inclusion of all carriers resulted in market volumes being over 3% greater in STD and about 20% greater in IDD. Prior to June this year the only significant other players offering IDD capability were AAPT and World Exchange, both via a product called National Connect. The volumes being carried on national Connect were increasing rapidly, albeit from a small base. By June the exclusion of the National Connect volumes was resulting in Telstra's IDD market share being overstated by about 4%. Those changes have only recently been redressed such that the total market is again capable of quantification. The entry of several new carriers has provided a significant volume stimulus. YTD compared to the same period last year the market is growing at a rate of about 12%. Telstra is growing at about half that rate, while Optus' has experienced a decline of about 4%. The decline in Optus volumes accounts for about one third of the volume increase attributed to other carriers. The balance represents new volumes. Our estimates of Telstra's share of the broader outgoing international market between December quarter 95 and June quarter 97 ranged between 58.1% and 60.3%, and was in fact increasing slightly. These estimates excluded resellers, the inclusion of which would increase market share to the point that it was comparable. It is estimated that other carrier volumes have about doubled in the last 6 months, but at this level the other carriers only account for 3% of the total market. The market share movement as a result of broadening the definition of the market is far less than in the IDD instance. This is indicative of growth in Telstra's volumes which approximates that of the market. Optus is recording volume growth in excess of that achieved by the market, but this disguises a volume outlook which has been flat for some months. The fact that it is also within the knowledge of Telstra by reason of Optus' access and use of Telstra's network, does not make it any less 'Confidential Information' of Optus; a party's knowledge of confidential information of another party is contemplated by the terms of the definition itself in that it encompasses 'the contents of the schedules (and matters concerned with or arising out of this agreement) ...'. Further, such traffic information of Optus is clearly not excluded from the definition of Confidential Information by the exclusions in sub-paras (i) or (ii) of the definition; nor is it excluded by the exclusion in sub-para (iii) of the definition; it is not information which has been independently developed by Telstra; it is information which Telstra had access to simply because Optus had access to and used Telstra's network. Furthermore, even if such traffic information of Optus was not '... disclosed, communicated or delivered to [Telstra] by [Optus] pursuant to this agreement', within para (a) of cl 15.1 of the Access Agreement, it '...[came] to [Telstra's] knowledge or into its possession in connection with this agreement', within para (b) of cl 15.1. It is, therefore, subject to the mandatory restrictions of sub-paras (c) and (d). First, it cannot be used or copied except for the purposes of the Access Agreement or the other purposes, not presently relevant, referred to in sub-para (c). Second, it cannot be disclosed or communicated, or otherwise made available to any third person other than those specified in sub-para (d), and then only for the purposes so specified. Issue 4: If the Answer to Issue 2 is 'No', is Telstra's use of Optus' Traffic Information in the preparation of Market Share Reports a permissible use under the Access Agreement? On the stated hypothesis, Telstra did not submit, correctly in my view, that such a 'use' was a permissible use under the Access Agreement. Optus submitted that it was also an impermissible disclosure, or communication, of that information. Other provisions of the Access Agreement seem to impose restrictions on the use by one carrier of the traffic information of another carrier even if it is not Confidential Information under the Access Agreement. For example, the term 'Communication Information' is defined in cl 1.1 in similar fashion to the way in which the term 'traffic information' is defined in [8] of these reasons. It is defined as meaning information in respect of 'Designated Communications' (a defined term) made during the relevant 'Billing Period' (a defined term) comprising the elements referred to at [8] above. While the quantity of such communications during the relevant period is not one of those elements, clearly the aggregate of such communications during the relevant period is part of 'Communication information' as defined by the threshold words of the definition. As such, it is subject to the requirements of confidentiality imposed by cl 15, by force of the operation of cl 10, even if, contrary to my conclusion in [116] above, it is not 'Confidential Information', as defined. Issue 6: If the Answer to Issue 5. is 'Yes', is the use to which the Market Share Reports are proven to be put a permissible use of such Information under the Access Agreement? Issue 7: If the Answer to Issue 5. is 'No', is the use to which the Market Share Reports are proven to be put a permissible use of such Information under the Access Agreement? It extended to uses to which the market share reports were put. Telstra submitted that it is clear from an examination of each of the market share reports that they contained considerably more information (including public information) than the market share data, none of which it is said constitutes Confidential Information of Optus. Telstra submitted therefore that it cannot be assumed that a use of a market share report, for example by circulating it within Telstra is a use of Confidential Information of Optus. The following market share reports were in evidence as part of Exs. (2) IDD market share report for the week ending 04/12/93. (3) IDD market share report for the week ending 06/05/95. (4) IDD and facsimile market share report for the week ending 01/07/95. (5) STD and IDD market share report for the week ending 04/01/97. (6) STD and IDD market share report for the week ending 11/01/97. (7) STD and IDD market share report for the week ending 25/01/97. (8) STD and IDD market share report for the week ending 01/02/97. (9) STD and IDD market share report for the week ending 08/02/97. (10) STD and IDD market share report for the week ending 06/12/97 (see [115] above). (11) STD and IDD market share report for the week ending 23/05/98. (12) STD and IDD market share report for the week ending 30/05/98. (13) STD and IDD market share report for the week ending 05/02/00. There is little doubt that some, although certainly not all, of these reports contain Confidential Information of Optus for the purpose of the Access Agreement. Even where the information so identified does not qualify as Confidential Information there is no doubt that it qualifies as Confidential Information for the purposes of the Access Agreement and is subject to the same requirements of confidentiality imposed by cl 15, by force of the operation of cl 10 including the mandatory restrictions of sub-paras (c) and (d) of cl 15.1; it cannot be used or copied except for the purposes of the Access Agreement or the other purposes, not presently relevant, referred to in sub-para (c); and second, it cannot be disclosed or communicated, or otherwise made available to any third person (including employees of Telstra) when, relevantly, disclosure is necessary for the purposes of the Access Agreement (sub-para (d)) and is reasonably required to be disclosed for the purposes of the Access Agreement (cl 15.3(a)). Insofar as these market share reports contained Confidential Information of Optus for the purposes of the Access Agreement or, even if they do not, insofar as they contained Communication Information of Optus for the purposes of the Access Agreement, which is subject to the confidentiality requirements of cl 15 of the Access Agreement by force of cl 10 of that agreement such uses of the market share reports, admitted by Telstra, are not permissible uses of such information under the Access Agreement. Nor, if it matters, is the disclosure of such information a permissible disclosure under the Access Agreement. I also find that such information is Confidential Information of Optus for the purposes of the Access Agreement, or is otherwise subject to the requirements of confidentiality in cl 15 of the Access Agreement, by force of cl 10 of that agreement. I also find that neither such use of such information nor its disclosure for such purposes is permitted by the Access Agreement. It follows, in my view, that Telstra has breached the relevant provisions of the Access Agreement and is liable to Optus for such breaches. In this part of the proceeding, I am not concerned with the extent of such breaches or other issues going to quantum. I am not, at this point in time, convinced that there is any utility in making such declarations. I have found that Telstra is in breach of the relevant provisions of the Access Agreement by reason of its conduct and doubt whether, in the exercise of my discretion to grant declaratory relief, anything is to be gained by merely recording conclusions reached in my reasons for judgment. However, I am happy to hear the parties on the issue of relief in relation to the matter of liability in the proceeding at a mutually convenient date. I certify that the preceding one hundred and thirty-one (131) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | principles of construction the meaning of confidential information as defined by the contract whether telecommunications traffic information is confidential information whether telecommunications traffic information is subject to confidentiality requirements under the contract whether use of such information in the preparation of market share reports and the subsequent use of such reports were permitted under the contract. contract |
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